Thursday, 29 November 2012

Inequality, Democracy and Trade Unions

Over the past year or so the public finally discovered that inequality of income and wealth in Canada and the United States has been steadily increasing. The short-lived Occupy Movement had one lasting impact: they had little trouble convincing the general population that the top 1% of our societies included the people who actually make the major decisions on political and economic matters.

Given the fact that the mainstream media has been in the back pocket of the 1% for a great many years, and our political leaders have all embraced the neoliberal agenda, it is interesting to discover that a majority of citizens still feel that rising inequality is an affront to democracy and steps should be taken to correct the problem. Public opinion polls even indicate that the majority is willing to accept an increase in taxes.

For those who want to seriously look at this issue, I highly recommend reading and studying Gregg Olson’s Power and Inequality: A Comparative Introduction. Olson is a professor of sociology at the University of Manitoba and has written extensively on the welfare state.

From egalitarian democracy to hierarchy and inequality

For around 90% of our existence, human beings lived in small groups, where the prevailing culture stressed collective, egalitarian values. These democratic societies were based on the concept of intrinsic equality – the right to existence with material and cultural support simply because we are human beings and residents of a community.

This changed with the development of agriculture and sedentary living. The creation of an economic surplus permitted the development of structured inequality based on castes, slavery,  class systems, gender, race/ethnicity, age and ability. Privilege was usually inherited.

As the Chinese philosopher Mencius wrote: “Those who are ruled produce the food. Those who rule are fed.” Western political philosophers like Plato and Aristotle, so revered in North America, did their best to produce political theories to justify inequality and hierarchy and denigrate democracy.

The rise of capitalism and liberalism
With the development of industrial capitalism, beginning in the 18th century, we have the solidification of society based on hierarchical divisions of social class. In all capitalist societies we have the capitalist class at the top (among the 1%), the owners of the large productive assets. As sociologist Max Weber stressed, they are supported by a strata of the “propertyless upper class,” top managers and administrators who are very well paid. The third class is the petit bourgeoisie, small scale property owners and those professionals capable of making a living with their own skills. At the bottom is the majority who are the working class, those who do not own the means of production but are required to sell their manual and mental labour to survive.

Capitalism brought with it the political philosophy of liberalism and individualism. This new world system is based on competition among individuals and among private businesses. Classic liberalism, viewed in a Herbert Spencer/social Darwinian manner, is the survival of the fittest with the winner taking all.

While we identify liberalism with basic political rights and liberties against state oppression, the most basic right is deemed to be the right to own private property. Thus, the early liberals forming constitutions and establishing liberal democratic representative governments limited political rights to men who own property. While more recent liberal ideology has argued for “equality of opportunity,” the followers of Adam Smith have been strongly opposed to any taxation system that redistributes income and wealth from rich to poor, and this includes inheritance taxes. The reality, of course, is that human beings are who they are largely because of the accident of birth. Should a person be condemned to a short life with hardship because of a basic condition over which they had absolutely no control?

Thus the democratic movement against liberalism has historically insisted that all human beings have an equal value and communities must provide basic supports necessary for a life of well being. As Olsen points out, the equality of outcome requires “a greater sense of community, solidarity, co-operation, and self-fulfillment beyond that of only individual gratification.”

Capitalism and democracy
There are certain basic rules and characteristics of the capitalist system of production that are found everywhere. After all, it is a system of production. At the core it is based on private accumulation of capital/wealth by individuals and corporations who invest to make additional profits. At the same time we know that capitalism operates somewhat differently in every country.

Why are there significant differences in capitalist systems among national states? The power of capital can be offset by the power of a country’s citizens who can control the government within the boundaries of the nation state. In a democratic society, sovereignty still rests with the people.

Olsen sets out to show the reader the differences between the more free market culture of capitalism in the Anglo-American countries of the United States, the United Kingdom, and Canada, and the more social democratic capitalism of the Nordic countries of Finland, Norway and Sweden.

To begin, he looks at the distribution of income and wealth. It is no surprise to see that the levels of income inequality are significantly greater in the Anglo than in the Nordic countries. This is measured by the use of the Gini coefficient, a standard tool used by social scientists. Looking also at the distribution of income among households, the data reported shows that the middle class is much larger in the Nordic countries and the percentage of household that are classified as poor or near poor is much smaller.

But it is also interesting to note that the percentage of wealth held by the upper 10% does not differ that much between any of the six countries. This suggests that even in the Nordic countries, with a much stronger social democratic tradition, the wealthy are still able to defend their special place in society.

The Nordic countries are known for their more comprehensive social programs. These include family allowances for the support of children and universal state-supported child care. Olson points out that in the Nordic countries social programs are universal, seen as entitlements based on residence. In contrast, the Anglo countries are moving steadily towards eliminating universality and limiting social programs to targeted groups.

Trade unions and social democracy
Olsen’s analysis demonstrates that national historical political and economic differences go far to explain the differences between the countries. The United States was born a liberal state, a white settler country based on seizing land from the indigenous population, most of whom were killed, and establishing a capitalist system which included the extensive use of slaves imported from Africa. Classical liberalism is deeply embedded in American culture and has made it very difficult to create a more egalitarian and democratic society.

Canada is also seen as a “new society,” a white settler country, like Australia and New Zealand,  without the fetters imposed by an old established ruling class aligned to a state religion. The “free land” created a vigorous farming community which identified with liberal entrepreneurship. The trade union movement was late to arrive and has been relatively weak; thus, social democracy has also been relatively weak.

In contrast, the Nordic countries all have a strong tradition of social democracy growing out of a more left wing political tradition, the Lutheran Church, and a liberalism which had a more social orientation.

To a large extent the differences between the six countries can be accounted for by the strength of their working class organizations and the success of their left wing political parties. Among the Anglo countries, the UK has had the most extensive system of universal social programs. It has also had the strongest trade union movement, and the Labour Party has formed the national government.

In 2003, only 32% of the working class in Canada was represented by a trade union, and only 12% in the United States. In contrast, in Finland 92% of the working class was in a trade union, 72% in Norway and 93% in Sweden. Trade unions make a difference.

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