This Is the End


Markets, Risk and Human Interaction

May 7, 2012

Class Warfare

I spoke recently at a conference where I was followed to the podium by Fox's Tucker Carlson, who, among other things, railed against the instigation by the left of “class warfare”, pointing out that doing so is little more than singling out an unpopular minority group, (i.e., the rich), for higher taxation. (Though the minority group that happens to have the largest share of the item that is the war's objective). Tucker said we are seeing an ever shrinking number of people paying an ever greater portion of the taxes. (Though they also are the ever shrinking number of people acquiring an ever greater portion of the wealth).

There is little that matches the artfulness in waving off criticism of the widening income gap as “class warfare”. And there is little that matches the gullibility of those who follow along. There seems to be agreement all around that action to change the situation, for the poor to improve their lot at the expense of the rich, is an affront to civil society. I am not picking sides in this, but I believe such a "war" can be justified, and indeed ultimately is inevitable.

It is hard to discuss class warfare without referring back to the industrial revolution. Then class warfare centered on the length of the working day. A tightly defined working day only appeared with the advent of the industrial revolution. Before then laborers worked when they needed money, and then quit for a time once they fulfilled their needs. But regimentation and a dependable workforce became necessary once there was machinery to run and capital invested, and so with industrialization came an enforced workday. So it is not surprising that Marx stated the central battle of class warfare at the time in terms of the working day:

The capitalist maintains his rights as a purchaser when he tries to make the working-day as long as possible, and to make, whenever possible, two working-days out of one. On the other hand...the laborer maintains his right as seller when he wishes to reduce the working-day to one of definite normal duration. There is here, therefore, an antinomy, right against right, both equally bearing the seal of the law of exchanges. Between equal rights force decides. Hence is it that in the history of capitalist production, the determination of what is a working-day, presents itself as the result of a struggle, a struggle between collective capital, i.e., the class of capitalists, and collective labour, i.e., the working-class. – Marx, Das Kapital

Marx begins with an acknowledgement of the perception of rights on the part of both the capitalist and the laborer, but then argues that the question of the length of the working day cannot be solved by an appeal to rights, but only through class struggle, wherein “force”decides between “equal rights”. (Force can mean physical force, but can also mean the force of the political process).

The central point is that there is no way that this question of the working day or any number of other social questions, though posed as rights by the groups in conflict, can be resolved without being reformulated in terms of class struggle or class warfare. Unlike civil rights – the rights which our society regards as inalienable – it is difficult to do much more than simply take sides when it comes to economic rights, because what we call economic rights are really nothing more than the bargaining in an exchange between those providing labor and those providing capital, those creating jobs and those taking the jobs, or whatever. There is class warfare because the social and economic pie has to be split, and there is no objective way to do so. The war can be active or passive, the sides can have a truce, one side can temporarily be resigned to its lot or be held in check through force, but the conflict never ends. A change in generations or in social consciousness, and things will flare up again. There are some areas of fairness in the civil sphere – freedom from slavery, torture and piracy – but what are the rights inherent for a particular term of exchange between the parties in a trade?

Given this, we are left in a quandary because we don't know what to make of class warfare. And we don't know because we are not trained to make anything of it. It is not part of any self-respecting course of economic study. The introduction of class warfare marks a radical departure from the tenets of contemporary economics because as far as economics goes, the terms “class”, “warfare”, and “struggle” are, well, radicalized. Yet there has been an epic, historical struggle over the length of the working day writ large, extending to issues like retirement, the definition of the time worked, and the share of economic rents, and this is the struggle that is still with us. Clearly fundamental to our economic history and our capitalist system, this is ignored in our economic studies.

The time spent working and the share of that labor that accrued to the capitalists during the emergence of the industrial revolution is akin to the taxes and redistributions from the entitlement programs and government subsidies that are in the cross hairs today. Indeed, the timeline extends back even further. The benefits that we call entitlements are similar in our more advanced society to the rights of subsistence for the serfs during Feudal times – rights which were implicit in the social contract between lord and serf, and which were broken at the peril of revolt. The social contract between the lord and serf, as with any contract, had obligations on both sides. The serfs paid a portion of their production and provided service to the lords. The lords organized the serfs to defend against invasion, enforced a rule of law, and assured the serfs, as much as possible in that age, of subsistence. Is this so different from social contracts of today?

Even admitting to the term “class warfare” concedes a lot. To warn against class warfare only makes sense if there are classes, and more than that, if there might be a reason to be answered for one of the classes to do battle. (For otherwise there is the simpler course of pointing out that no differences exist). There is only so much to go around, and the efforts of one group or the other to assert a claim to a larger share can be called class warfare. It can be a war waged through changes in the taxes, in a restructuring of incentives and pay scales, an increase in the benefits given to the poor, or revolt. The first three are legitimate battlegrounds in a democratic society such as ours, and it is really taking a good joke to far to suggest it is damaging to the body politic for members of society to look at the differences in income and take action to redistribute in their direction.


  1. It should be emphasized that "class" is a distinction that comes about through the penchant of human society to segregate itself into a pyramid like structure with a top down hierarchy. This is useful in many situations the functional efficiency of the structure determining in some cases if the "clan" survives or perishes.

    Who gets to be at the top can be fairly arbitrary or it may be fully predetermined. Mostly it is a matter of chance. It depends on who your parents were. What level of training and education you received, where you were born relative to your siblings etc. Individual ability has an influence at the margins only.

    Do you think those who manage to gather much more than their fair share of resources believe that they were not born a lot more deserving than any one else? Of course not. You need a strong sense of entitlement in order to accrue a large amount of stuff in the first place. And that "greed" is largely tolerated and usually redefined as ambition. Which is of course good.

    These days in addition to good parents, education, training and luck there is another thing that will determine how well you do or how much of available stuff becomes yours. That is access to capital and the ability to use it. In fact a superior ability in this regard theoretically may allow one person to end up with virtually all the stuff there is.

    Such is capitalism. It's not a perfect system. IMOP it makes perfect sense to, beyond a certain point, make it very difficult to accrue further wealth. A bit like antitrust or monopoly laws. This would make it less worth while to pursue financial gain single mindedly above all else. It is possible in a pure capitalist system to gain such a command of resources that you may guarantee the security of your children for many generations. This may well be at the expense of society at large and that is not really the point of human penchant for a hierarchical structure.

  2. I have received a number of comments that are diatribes and I will not be publishing them. Some are offended by this post and view it as being "communist propaganda" because it includes a quote from Marx. It is natural to refer to Marx when speaking of the industrial revolution. Marx was a notable, even preeminent, social philosopher of that time.

  3. "Marx was a notable, even preeminent, social philosopher of that time."
    So you believe that's a good enough reason to constantly quote him, not only in this, but other posts as well?
    Everyone knows who Marx was. Nobody claims he was not a notable social philosopher. It's the terrible impact of Marxs' philosophy, the millions slaughtered thanks to his ideas, which offends people terribly, and therefore garners so much negativity when you quote him.
    So you see, the fact that he was indeed such a prominent philosopher, is what caused humanity so much hurt. If he'd be an insignificant individual with no one paying attention to his philosophy, maybe, just maybe the world would be spared of communist mass murderers the likes of Stalin, Mao, Castro, Che, Pol Pot etc. most of whom are revered and quoted amongst Leftist Academics and main-stream Liberals such as yourself.
    Is this really beyond your comprehension? Although, I wouldn't be surprised if that is the case. White House communications director Anita Dunn famously quoted Mao as one of her "favorite political philosophers." Yet When Glenn beck criticized her, the leftists came running with their MSM pitchforks and condemned him profusely. Why? Because Ms. Dunn didn't specifically praise Mao's atrocities! That's a mind-boggling feat of ethical line-drawing! The level of your intellectual dishonesty is simply stunning! Yet you don’t see the error of her, or your ways.
    Let me put it to you in simpler terms: You can't separate the man's political philosophy from the actions that flowed from it. It's the same as saying you look to Mein Kampf as a masterpiece of political philosophy but don't support Hitler's actions.
    I rest my case.

    1. When I first learned about the tenets of communism in school, they sounded very plausible to me and I wondered why people did not see that the theory was sound and that sharing everything with everyone was a very commendable thing to do. When communist theory became practical experience by Stalin, et al., it became something else altogether.

      Now we have an opportunity to see what capitalism can do and it, too, in theory is a wonderful thing but look how it has morphed into extreme wealth inequality and has produced many people who have been reduced to extreme poverty. The proof of the theory is in the execution and neither system has fulfilled its promises.

    2. Capitalism by itself Is a wondrous thing, and , balanced with a moderate amt of gov't, it can be the way of the it when capitalism gets TANGLED with gov't--with the wealthy looking for ways to cut out competition, keep prices where the WEALTHY CO. OWNERS/STOCKHOLDERS like them,etc--that things go quickly and terribly downhill!!!!!...Both communism/socialism and capitalism look good on's just when you try to put them in operation that you find that one--communism(esp the modern American lefty,PC version--ignores human nature completely, and insists on itself(and its practitioners/pushers) as the One True Light and The Way to "fairness" and "equality" among all the people...except, of course(just like in Capitalism) those with power, money, and influence!!!!!!!!!!!!!!!!!!!!....also, while it(Capitalism) "has produced many people who have been reduced to extreme poverty", the REAL evil being committed here is that those who made big promises to raise the "poor" out of their predicament have done ZERO substantive to REALLY raise them(or even HELP them raise themselves!!) out of poverty..instead feeding those they claim to help a steady diet of "I'll help you/I'm helping you/I'm here to help" and get-even-ism BS like "I'll get you some money outta mean ol' whitey/richie rich/bigoil/big business-'s moneybags", and working to BLOCK those who try to REALLY help---whether they're trying to help thru legislation or thru actually directly helping folks get out of where they are and to a better place/situation......People who make attempts to put TRULY positive legislation thru their legislature-state, local, or federal--and get blocked by other people who don't WANT the "problem" solved because that would reduce their ability to get re-elected...should get their stuff passed anyhow....if you can't represent your constituents' best interests while you are supposedly representing ALL your constituents(and mebbe thinking of the COUNTRY's interests, while you're @ it!!) you don't belong in a representative republics political machine!!!!!....CITIZENS and local organizations(CHURCHES, MEBBE????....EVEN CHRISTIAN ONES??????) who make attempts to help their local po' folk shouldn't get run thru a political/regulatory/legal wringer, they should be allowed to do what they want....ESP if no gov't $$ is involved!!!!!!.....i'll sign off now B4 I get completely off my soap box and up onto my pulpit...and drive MYSELF crazy!!!!

  4. What I'm interested in is not your opinion of Marx, but your opinion of 'Class Warfare'. You seem to disparage Carlson for mentioning it, and yet you seem to speak of the essentials of it as a given,

    "The lords organized the serfs to defend against invasion, enforced a rule of law, and assured the serfs, as much as possible in that age, of subsistence. Is this so different from social contracts of today?"

    Is redistribution simply 'class warfare' by other means?

  5. So based on your premise, risk plays no role. In fact, the people who have acquired these fortunes did it for the purposes of establishing legacy for themselves and their progeny. They did so by risking more than others were willing to and by sacrificing more than others were willing to.

    However, by your argument, risk and sacrifice should not have anything to do with reward. That the end result of these should be confiscation of your property by the government for the ultimate enrichment of a ruling elite who, will through crumbs back to those who help keep them in power in order to maintain their own legacy. This is what happens in the case of Class Warfare. It in the Russian Revolution and every other regime that has successfully implemented this policy. The end result has always been that, as there was no reward for risk and sacrifice, the entrepreneurs would no longer start or operate the businesses. Therefore the government steps in to run the businesses. No one has any means of getting ahead of the game and therefore no one will even attempt or take risk. The only people who get ahead in this type of regime are the ruling class. Everyone else suffers. This is exactly why they United States became a world power, both economically and politically. Because we rejected this model. We need to reject it again as it seems to be making inroads into our society.

    I suggest that if you love the socialist ideal so much that you move to a socialist country where you can either govern over or be govern to and allow those of us who enjoy liberty and believe in the right to self determinationthe one country where there still is some vestige.

  6. I don't believe the arguement holds water. Unlike "Serfs", the citizens of America have the oportunity to become "lords".
    All one has to do is to study hard in school (an opportuinity provided to everyone but taken advantage of only by some),
    work hard, and take risks.
    Redistributing wealth as suggested only rewards those who do not take advantage of the opportunities, and does nothing
    to promote the betterment of society. "Give a man a fish..."
    The poor are poor because of the decisions they made, not because Bill Gates took a risk and as a result became rich.
    I became unemployed two years ago and instead of waiting for my "handout", I started my own business thanks to my
    education and decision to take a "shot" at going into business by myself.

  7. "(I)t is really taking a good joke to far to suggest it is damaging to the body politic for members of society to look at the differences in income and take action to redistribute in their direction."

    It would depend on who those "members of society" happen to be. If they are politicans demagoguing the 1% then yes, it is damaging. Two reasons come immediately to mind. One, ginning up resentment of one group toward another group is playing with fire. Since the members of our political elite who are currently demonizing the 1% are almost all members of that same group, it boils down to not so much a class war as an ideological war. Some 1%'ers - George Soros, Michael Moore, Warren Buffett - are apparently benign, or even 'good' while others - the Koch brothers, Mitt Romney, basically any rich person skeptical of progressive dogmata - are greedy and selfish, or 'evil.' This kind of framing in not conducive to civil discussion and problem solving. Where is the middle ground between good and evil? Ought one compromise with evil?

    The second reason is the practical effect of redistribution: it doesn't work all that well. In some small, largely homogenous countries like Sweden, it's worked quite well for a time, but even in Sweden the government has realized that economic growth flourishes when there is more economic freedom. The United States is very different from Sweden. A huge chunk of our population came from other countries with the single goal of achieving the American dream, which is not commonly understood as "from each according to his ability, to each according to his need," but rather as 'achieving success through hard work.' Americans who have achieved success tend to be very generous to others on the way up, but are typically loathe to have what they rightfully consider the fruits of their own labor expropriated by the government.

    Rich Americans, along with rich inhabitants of other countries around the world, are usually not stupid, and will figure out a way to avoid oppressive taxation. The result of such taxation is invariably a change in behavior. Perhaps they choose not to work so hard, as the return on their efforts diminishes when the government takes most, if not all of the money after a certain dollar amount. Perhaps they choose different investment vehicles, thus impacting certain sectors of the economy in unforeseen ways, which in turn may have detrimental effects on the lower %'s. Perhaps they even move to other countries, taking their income and wealth out of the picture entirely. Rarely, if ever, have huge increases in taxation on the rich led to large increases in revenue collected. In fact, it's very often the opposite that happens.

    It is tempting to put on the cloak of moral superiority but if we are to solve the problems facing our country today, demonizing the successful among us is distinctly unhelpful, and will be counterproductive in the long run. There will always be a 1%. If progressives have their way, however, in a few years it will consist almost entirely of retired government employees, college professors, progressive think tank denizens, and the Obama supporting owners of near or recently bankrupt 'green' technology companies. Everyone else will have given up or moved away.

  8. Interesting because we are not all clones and therefore can't be treated as such. Otherwise Dwight Howard would have to share his height and basketball prowess. Stephen Hawking his brain matter. Bill Gates his vision with no patents. Etc.

    To you it would see that even the Westminster Kennel Club Annual Contest is an affront to "fairness."

    If you would put away your literary expertise ( or share it with others. No not your writing but your ability to write since you must have inherited it genetically and not have worked for it per your assumptions) and form a company, hire people, deal with the employees on a daily basis and then turn a profit I think you could potentially have enlightenment.

    Until then, keep the socialism efforts to those countries who are not smart enough and dedicated enough to have a country based on liberty and freedom.

  9. When discussing Class Warfare, one must recognize that "class" is not only found in a particular culture, but in mankind as a whole. Therefore, expanding beyond just the United States, one must recognize that the "haves" and "have-nots" make up the world as it has been and as it is today and is the basis for a worldwide resentment among some. It would appear to me that because of the 'global economy' and since even the poorest in the US are more wealthy than many in other countries, the incomes of all Americans must be adjusted to meet the needs of those in these other countries. If one believes in equality of outcome and income, it must be for all people, not just for a particular country. I think it would be amazing if any true believer would lead by example and evenly distribute his income among several families in Africa. The standard of living of these people would rise incredibly, although it is true that the American's standard of living would also drop precipitously. But that is what equality is all about.

  10. Abe,
    You are awesome! I loved your comment. The left loves free speech as long as it's their speech!!!

  11. One of my issues with the use of Das Kapital in this piece and elsewhere is that one of the central themes of the work was brought into question while he worked on the book, the man's thesis on value was being shown as lacking and even incoherent on the south bank of the Chicago River six days a week by the first U.S. standardized forward contract market, a burgeoning derivatives exchange. Further, when one considers the influence of the Liverpool wheat market on the Chicago wheat market and vice-versa during that time, it is reasonable to conclude that such information was available to Mr. Marx. So what else was worthless within the work?

  12. Further to my comment above it should be added that along with the bias towards accepting a hierarchical structure in human society there comes a social compact. That is the majority will support the hierarchy as long as there is a perceived net benefit to them. Unfortunately very often the perceived net benefit may consist of them keeping their life as long as they tow the line. I read somewhere once that the threshold at which it becomes too painful to tolerate the status quo any longer is often much higher than any would credit. Which perhaps is an explanation as to why even when, to the casual observer, imbalances have become extreme things continue on their merry way for a long time.

    It is interesting to speculate that perhaps the social compact in Europe is begining to unravel. In the case of Europe, though, the tipping point is being reached rapidly due to inflexible financial mechanisms rather than outright exploitation of one section of society by another. That is unless you consider the north of Europe to be deliberately exploiting the south. I think it's more accidental than deliberate. Unfortunately the outcome is the same.

  13. Seeking wisdom from Marx regarding the modern "class struggle" is akin to looking to 17th century physicians regarding the treatment of your child's tuberculosis. Both end equally well for those involved.

    Marx lived in a mental model of static class membership. Hard evidence of historical and present-day mobility between the rich and poor "classes" negates much of his treatise. Hat tip to Ludwig von Mises for so eloquently decimating Marx as a credible font of socio-economic thought.

  14. We see a lot of comments about how the super-rich deserve all that money because of all those risks they undertake for the good of the rest of us.

    I am not sure how much the super-rich actually risk. Case in point: Mitt Romney.

    Even Bill Gates was born (fairly) rich and didn't really risk that much. If MicroSoft had failed, he would have gone back to college or gotten a job with some other high-tech firm.

  15. If you look at Mr. Bookstaber's own bio, you see he was s pretty successful financial wizard. Maybe in some abstract sense, he was taking a large statistical risk. But was he taking any real risks? Not really.

    His jobs weren't physically dangerous. They weren't even especially stressful, although I am sure he had his share of adrenalin moments. His work required a certain amount of specialized knowledge which not everyone can figure out, but there are lots of professions which are much more difficult to master and much less generously compensated. Basically, he was just a professional gambler: his work was one step up from playing poker online. If his gambles failed to pay off, he might lose out on huge bonuses, but even his basic compensation was very generous. This risks were all born by people other than Mr. Bookstaber: even his immediate clients were isolated from the damage done when their schemes didn't go as planned.

  16. "To warn against class warfare only makes sense if there are classes..."

    To justify class warfare, as you try to do (without taking sides, of course) only makes sense if there are classes. To warn against class warfare makes sense makes sense if a) there aren't classes, b) there are classes, but the warner doesn't wish to acknowledge them, or c) he simply doesn't want them to be at war with one another. Our common lexicon includes the term "middle class," which is almost as meaningless to us as it would be to Marx; the ludicrous "working families" is invoked more often than "working class" by the side you're not taking sides with. To recast the modern social welfare state in Marxist terms requires that its net beneficiaries think of themselves as serfs and for its net benefactors treat our Medicare system as subsistence. Good luck with that. There are grown-up conversations to be had about incentives, taxation, rents, the social safety net; Marxism and 99% twaddle have nothing to offer.

  17. Rick seems to have touched a nerve or two. Good job. I would like to thank him for remembering the guy who gave us the notion of 'fictional' when it comes to capital (and finance). By the way, having 'marxist' thrown on you is not the worst thing that can happen. Marx ought to be studied more.

    This whole argument seems to have a flavor similar to those about 'tabula rasa' and its ilk: don't we all start from the same gate. So, pull yourselves up by your bootstraps (yes, Ayn, we know). Except, starting as a Rothschild is definitely not the norm. In that case, they want to preserve.

    How to start to accumulate if you're starting from way below the point-zero-zero-one-percent?

    We've solved that issue by sleight of hand. Yes, debt is what is accrued (its essence covered by perfume). The mass is told: that increasing burden of perpetual indebtedness that you're taking on is what the country and world needs. Doesn't that yoke feel good?

    But, wait! Even if you accumulate a little bit of asset, the idiots running finance (and the world) will contrive to extract it from your pocket (many ways), to reduce the value to near zero (inflation, if you would), or just to do plain thievery (even making you part of a 'smart' class ala Bernie).

    So, we can't call 'class warfare' what someone like Mitt (he's one of many) did with his rape-pillage mentality under the private equity gimmicks? I have seen many of these up close; never got burned. To tell you the truth, up close those of that vein are world-class jerks.

    How's that for a classist remark?

    The downfalls (near-zero games) of exploiting the unfortunate will be better understood in the future when a more full model is allowed to emerge. Yes, we'll claim that those who exploit are not the advanced ones (new meme which cannot be grasped if your pockets are too big).

    By the way, 'class' in this context is not a real stratification. Rather, it is a contrived notion, like many that we've allowed our abstract'd selves to create. We might start to overcome that 'class' notion with a system that inducted all (without exception) the youngsters into national service. Too, the games, rules, and playing fields (and much more) need serious rework (ah, those like the Rothschilds would not like that).

  18. It's interesting to see 'risk' thrown about. Yes, to those who take the risk go the rewards, it is said. Hidden in that argument is this: what is being risk'd, in many cases, is not the risky one's to risk. That's an issue of 'on the behalf of' which has become severely warped.

    Risk is an euphemism for betting which is, essentially, gambling. There is an open questions related to this. Ought business run 'risk' analysis similar to a mother's concern for her infant? Ah, I can hear the 'balls' gnashing their teeth.

    The real problem is that risk has been bailed out, time and again. Even Nobel winners. Sickening. Heads, you win; tails, I lose. Yes, this from those who thought that there was no 'risk' of a downturn about five years ago or so.

    Did we all forget about that little bit of stupidity whose pain was spread far beyond the illustrious 'risk' takers?

  19. Re: class warfare, well said, Rick. It is ever-present. It is a dynamic force in an ecology of dependencies and conflicting interests. If, as Clausewitz said, "[w]ar is a mere continuation of politics by other means," the opposite is also true. Politics is the civilized variant of warfare by which change is forced by persuasion more so than by bloodshed. As long as we have need of one another, our dependencies will prevent an end to our conflicting interests. When one side or the other suffers the delusion that they have no need of the other, the bloodshed begins. It is inconceivable that anyone could ever win such a war so long as dependencies hold. To ignore those dependencies is to invite the collapse of the entire ecosystem. Warfare, whether rhetoric or barbaric, seems to be our natural state. Our choices lie in the level of civility to which we aspire and in the level of barbarity we abhor.

  20. Much of the so-called "99 percent" built their wealth through capital gains, which in term, were made possible a financial market that lacked sufficient regulations. It also doesn't help that those who are in a position to actually make bring about reform are the very ones who profit from the status quo. So, instead of attacking the rich, it seems that attacking the system itself through the institution of better financial reforms, as well as limits on lobbying, would be a better way to create the conditions for prosperity for everyone.


Note: Only a member of this blog may post a comment.