government to interfere in people's lives, which they cal "coercion." But are people who lack the basic resources of society free from interference with their lives? Do they not face
continuous interference from policemen, social workers, landlords, loan sharks, and
employers? Are these not the people most vulnerable to interference with their lives?
Perhaps the concern is only about interference in the lives of the rich, who might be taxed
to redistribute wealth.
In fact, certain necessities of life can be provided with virtual y no government interference.
Retired workers get social security checks in the mail each month. That's hardly an intrusion
on their liberty. The Social Security system seems to operate efficiently with a minimum of
bureaucracy. If medical care were free, there would be much less interference in peoples'
lives then with the present hodgepodge system. If col ege education were free of al the
financial rigmarole connected with federal loans—if there were a civilian bil of rights for
education as there was a GI Bil after World War II—there would be less interference than
there is now.
The economist Milton Friedman worries about coercion.36 No one should be compel ed to
share their greater wealth with someone else, he says. And he gives us examples. It is
always interesting to see a scholar choose examples. Friedman chooses two. First, he says,
let's imagine four Robinson Crusoes marooned on four neighboring islands, and one of them
finds his island ful of good stuff and the others are barely surviving. "Would the other three be justified in joining forces and compel ing him to share his wealth with them? Many a
reader wil be tempted to say yes."
Of course. Especial y if the survival of the other three is at stake, or they wil be living in a
miserable state, hungry, sick, and unhappy. Friedman doesn't like the reader's response to
this example. So he moves to another one, saying to the reader: "But before yielding to this
temptation, consider precisely the same situation in different guise." (Let's see if this wil be precisely the same situation.) "Suppose you and three friends are walking along the street and you happen to spy and retrieve a $20 bil on the pavement. It would be generous of
you, of course, if you were to divide it equal y with them, or at least blow them to a drink.
But suppose you do not. Would the other three be justified in joining forces and compel ing
you to share the $20 equal y with them? I suspect most readers wil be tempted to say no."
Friedman has moved his example from the issue of survival or quality of life to the issue of
a few dol ars or a drink! And so he entices his reader to say no, such coercion is unjustified.
As it is, in that case.
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But why doesn't he give an example that wil accurately reflect the serious question under discussion? Why doesn't he ask if the lawyer Roy Cohn (who made (100,000 a year in salary
and perhaps a mil ion dol ars a year in "expenses" and whose contribution to society seems to have been more negative than positive37) should have been "coerced" (taxed) into giving up half of his phony expenses and half of his overblown salary? That tax money could then
be used so that old people living in Cohn's city could live in their own apartments, with the
help of various paid social workers, rather than having to live in an institution where there is
not enough help to push their wheelchairs down to the dining room.
Let's grant Roy Cohn was extraordinary, but not alone in his use of the tax system to retain
a luxurious life-style. We could ask the same question about more ordinary wealthy
taxpayers. A report of the House Ways and Means Committee in 1989 showed that in the
period 1979-1987 (the last two years of the Carter administration and the first six years of
the Reagan administration), the poorest fifth of the population had their family income
decrease by 9.8 percent (the report said this change was affected by the fact that "more
jobs now pay poverty level wages or below"—so it is not simply a matter of people on
welfare). In the same period, the wealthiest fifth of the population increased their family income by 15.6 percent.38
Now would it be coercion for the government to tax that rich fifth by the amount of its gain
and contribute this to the lowest fifth? Wel , al taxation is coercion, so the real question is
when is it just and when is it unjust? To pretend that leaving alone the present disparities in
wealth increases our freedom hardly makes sense, unless you interpret the "our" to mean
only the wealthiest portion of society.
Is the working class free from coercion under the capitalist system? Friedman describes our
"complex enterprise and money-exchange economy" as one in which "individuals are
work."39
Is this a realistic picture of the work situation for most people in the United States? Perhaps
it describes high-level professionals who have a choice of employers. It does not describe
secretaries, factory workers, waiters, or even teachers and social workers and certainly not
most people in the arts. Most people who work for a living have zero or limited choice of
their employers. The permanent body of unemployed people ensures that employers have
the upper hand; whatever freedom there is seems to be unevenly distributed.40
Incentives and the Profit Motive
One of the ways in which the corporate rich protect their incomes is to warn al of us that if
they are taxed more heavily, (to give help to poorer people), they wil lose their incentive to
produce. The motive of high profit, they say, is necessary to keep the economy going.
It is an interesting argument, because it is usual y coupled with the statement that if we
help the poor they wil have no incentive to work. In other words, monetary incentives wil
make the rich work harder and the poor work less. Frances Piven and Barbara Ehrenreich,
writing about the welfare state, respond to this kind of thinking by asking. Do the poor and
the rich have different human natures?41
In the early years of the Reagan administration when tax cuts for corporations were
proposed, presumably to stimulate business, some enterprising reporter dug up Department
of Commerce figures showing that from 1970 to 1983 periods of lower corporate taxes did
not at al result in higher capital investment, but, in fact, much lower investment.42
134
Japan in the 1970s and 1980s came to be admired throughout the world as a model of industrial efficiency and productive growth. Yet according to economist Robert Kuttner,
Japan had the highest effective rates (that is the real rate paid, rather than the one cal ed
for by law) of corporate income tax—40 percent of corporate profits, compared to less than
15 percent in the United States.43
The issue of incentives is complicated. Different groups of people in the economy respond
differently to money incentives, and individuals respond differently also. There are
undoubtedly some kinds of economic activity that wil go on or not go on depending on the
rate of profit. But others wil go on, so long as there is some profit, because it is not easy to move capital from one enterprise to another.
Certainly, some of the most useful things done in society are done by people whose
monetary incentives are very low: teachers, social workers, nurses, musicians, actors, and
writers. There are many people who do their work because they love it. And the quality of
their work wil not change because their salaries go up or down. However, they must be
given some minimum economic reward, enough to al ow them to survive, in order for them
to continue their work.
How about doctors? If doctors who now make $100,000 a year would only make $60,000 a
year, would the quality of their work get worse? Surely doctors do their best because of the
motivation that brought them into medicine in the first place—the enormous satisfaction in
making people wel . Those who entered the profession to become rich are probably not the
best in their field. The fortunes that some doctors make distort their interest—perhaps
induce them to do unnecessary but expensive surgery or to spend their time doing cosmetic
surgery for the rich instead of life-saving medicine for the general population.
What is usual y missed in discussions on incentives is that there are al sorts of incentives
other than money to bring out the best work in people: the respect and admiration of others and an increased self-respect and self-satisfaction. George Bernard Shaw pointed out that
while there are menial and unsatisfying jobs that are not admired and don't give a feeling of
great accomplishment, people wil do them with the proper incentive of freedom— that is,
people asked to do such necessary jobs should perhaps be given a twenty-hour week as
incentive.
A good society wil use incentives—money and time, for example—in al sorts of imaginative
ways to bring out the best in people and get the most accomplished for society. But to
reward the rich with the incentive of high profits, no matter what work they do or what
contribution they make to society, and to punish the poor by withholding the necessities of
life (a disincentive, to force them to work) is both unjust and inefficient.
It is true that the profit motive, in the history of capitalist development, has stimulated
great industrial progress. Karl Marx, even while he looked forward to the disappearance of
capitalism, acknowledged that it had brought the greatest increase in the productive forces
of society, that it was a "progressive" stage in history. And it produced many useful,
worthwhile things.
But it has also had the most terrible human consequences. In 1984 a company making an
intrauterine birth control device—the Dalkon Shield—came before a court in Minneapolis to
make a monetary settlement for complaints from women who had been badly injured
internal y by the device. According to the judge, addressing the company officials:
Under your direction your company has in fact continued to al ow women,
tens of thousands of them, to wear this device—a deadly depth charge in
their wombs, ready to explode at any time … . The only conceivable reasons
you have not recal ed this product are that it would hurt your balance sheet.44
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The drive for profit is ruthless. Because its chief motive is making money, it may not matter how it makes this money, what it produces, and what happens to human beings in the
process. The capitalist drive for profit is based on what has been cal ed "rational self-
interest," and the idea is that if everyone pursues their rational self-interest, the economy
wil grow and the world wil be a better place.
However, as one economist said, "If … it pays to pol ute a lake, then rational self-interested agents wil pol ute. If crime is a rational response to poverty wages, we can expect crime to
rise."45 Certainly, the most terrible violence, and the proliferation of dangerous drugs,
including tobacco and alcohol, are provoked by the profit motive.
In the year 1989 the new American president, George Bush, announced a "war" on drugs.
He was talking about the il egal traffic in cocaine and similar substances. He did not speak of
tobacco, which brings immense profits to certain huge corporations and which is far more
murderous than cocaine. Indeed, American tobacco companies, not content with poisoning
people in this country, sought and received government help to push tobacco onto foreign
markets, especial y in Third World countries. Al under the guise of "free trade."
The slogan free trade recal ed the "open-door policies" of the eighteenth and nineteenth centuries, when Western countries forced China to accept their products and when England
fought the Opium War to compel the Chinese to al ow British companies to bring opium into
China. In 1989 the United States was putting pressure on Thailand, which banned tobacco,
to accept American tobacco exports. But there was a strong dissenting voice from Dr. C.
Everett Koop, who was leaving his job as surgeon general of the United States, in obvious
disagreement with many government policies. Koop told a public hearing in Washington:
Years from now, I'm afraid that our nation wil look back on this application of
free trade policy and find it scandalous, as the rest of the world does now … .
At a time when we are pleading with foreign governments to stop the export
of cocaine, it is the height of hypocrisy for the United States to export
tobacco.46
Koop ended his testimony with devastating statistics. "Last year, in the United States, 2000
people died from cocaine. In the same year, cigarettes kil ed 390,000 people."
The reckless drive for profit also produces toxic chemicals that cause cancer. They pol ute
our rivers, poison our air, and dirty our oceans.47 Enormous numbers of fish are dying. Birds
are dying. The rush of the automobile industry for profits (why do we need 100 mil ion
vehicles in a country of 250 mil ion people?) has loaded the air with chlorofluoro-carbons
and produced the greenhouse effect, which may have catastrophic effects on the entire
world in the next generation. Profits also stimulate the war industries, producing nuclear
and other weapons.
Those who want government to stop interfering with "the market," with corporate profit, or with poverty should look back to the nineteenth and early twentieth centuries, to what
happened before the labor laws were passed. I have described in A People's History of the
United States the conditions in American cities at the end of the Civil War:
The cities to which the soldiers returned were death traps of typhus,
tuberculosis, hunger, and fire. In New York, 100,000 people lived in the
cel ars of the slums; 12,000 women worked in houses of prostitution to keep
from starving; the garbage, lying two feet deep in the streets, was alive with
rats. In Philadelphia, while the rich got fresh water from the Schuylkil River,
everyone else drank from the Delaware, into which 13 mil ion gal ons of
sewage were dumped every day. In the Great Chicago Fire in 1871, the
tenements fel so fast, one after another, that people said it sounded like an
earthquake.
136
Between the Civil War and World War I, the profit system produced remarkable results in the industrialization of the country. It also produced inhuman living conditions. The
sweatshops of New York, where the new waves of immigrants from Eastern Europe went to
work, were described by the poet Edwin Markham in 1907:
In unaired rooms, mothers and fathers sew by day and by night… . And the
children are cal
ed in from play to drive and drudge beside their elders … . Is
it not a cruel civilization that al ows little shoulders to strain under these
grown-up responsibilities, while in the same city, a pet cur is jeweled and
pampered and aired on a fine lady's velvet lap on the beautiful boulevards?48
With profit the motive, 500 garment factories sprang up in New York. A woman described
the conditions of work in those days of laissez-faire, saying there were
dangerously broken stairways … windows few and so dirty… . The wooden
floors that were swept once a year… . Hardly any other light but the gas jets
burning by day and by night … the filthy, malodorous lavatory in the dark
hal . No fresh drinking water … mice and roaches… .
During the winter months … how we suffered from the cold. In the summer
we suffered from the heat… .
In these disease-breeding holes we, the youngsters, together with the men
and women, toiled from seventy and eighty hours a week! Saturdays and
Sundays included! … A sign would go up on Saturday afternoon: "If you don't
come in on Sunday, you need not come in on Monday." … We wept, for after
al , we were only children.49
One wonders how those children would have responded to the bland claim that they lived in
"capitalism and freedom," that they were, as Milton Friedman described the system,
"protected from coercion by the employer because of other employers for whom he can
work."
Was it not the profit motive that caused the employers of the Triangle Shirtwaist Company
of New York City, in the year 1911, to keep the doors locked during working hours so that
the company could keep track of its employees? On March 25 of that year a fire broke out,
and with the doors locked, the workers on the eighth, ninth, and tenth floors were trapped.
They burned to death or jumped from windows; 146 of them, mostly women, died.
In the year 1904 approximately 27,000 workers were kil ed on the job, in manufacturing,
mining, railroads, and agriculture. The need to save money and to increase profits, led one
employer to substitute lead powder for talcum to mark the designs in his embroidery
factory. A report of the New York State Factory Commission in 1912 told of the effect of this