A New Birth of Freedom

Rw005g

Rw005g
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Major General
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I root out and destroy secession, wherever it is found.

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JUNE 23, 2011 3:38PM

Is Capitalism Destroying the Learned Professions?

Rate: 27 Flag

In the second chapter of "Zombie Capitalism," Chris Harman notes one of the major neoclassical and marginalist rebuttals of the "labour theory of value" (as developed by Adam Smith, David Riccardo and Karl Marx) is the idea that specialist labor operates according to a different logic than normal labor, and that there is no way of reducing expert labor units, so to speak, into unskilled labor units, so to speak. Neoclassical economists argue, in a way, that a unit of anything must easily be combined into a higher unit and by that same token, easily divisible into a lower unit, in much the same way that a gram can combine into a kilogram, or be divided, into miligrams.

The problem with the classical "labor theory of value," (as it was developed by classical economic theorists) was that not everything could be reduced to labor. For example, there are rents, investments, and other forms of economic "energy" that can be used, not just labor. Riccardo had a good rebuttal for this, which is that capital in the form of stocks or bonds or investment is merely "dead labor," or capital acquired through the prior labor of some worker at a previous time in the economic cycle. For example, Mr. X employs alot of workers to grow crops. He sells the crops for a profit. This profit is in the form of Capital and this is later invested. Ergo, this capital is a form of residual labor value. This makes sense.

But what about specialist labor. How can one compare specialist labor to non-specialist labor? Do they even operate according to the same economic rules? Is specialist labor even exploited? Many would say no. But Marx, and many others say yes. And they also say that the rules that apply to normal blue collar laborers today, eventually, over the course of time, inevitably apply to skilled laborers as well, and drive them down the socio-economic ladder. This is inevitable, and its not hard to see why. Some call this the process of "proletarianization" or "the pauperization of the working and middle classes."

Wherever you look in the economy, if you look at it over a course of time, this process invariably happens.

Harman notes that the increased wages or prices that skilled labor can charge for their skills, is something that only exists for a short period of time in an economic system. Skilled laborers could be master brewers, master carpenters, master optical lense crafters, attorneys, doctors, pharmacists, computer programers, IT folks, systems administrators, accountants, etc...

Harman notes that Capitalism, by its nature, does not want to pay higher costs for any form of labor, skilled or unskilled. It is anethama to the profit-motive. Hence, it will try to do anything it can so as to make these skills more affordable by the capitalist system, and therefore, drive down costs, even if this means ruining the wages and livelihoods of the skilled craftsmen or professionals in question.

The FIRST thing Capital will do, according to Harman (and Marx) is train new groups of workers to acquire these skills. Now, an initital problem with this is that only the skilled workers know how to perform these skilled tasks. Capitalists can't train unskilled workers to train other unskilled workers so that the latter can become doctors, lawyers, computer programers or accountants. Indeed, usually it is only the skilled workers who can train newer skilled workers. And they do this by way of apprenticeship programs, licenses, degrees. Guilds existed for this purpose, and still do, in many parts of the world and in regard to many different professions.

As such, because skilled workers can control the influx of new skilled workers, the interests of the skilled workers are maintained, albeit temporarily. Harman states that "If their skills are monopoly skills (nobody else can do them) and they produce goods (or services) that cannot be produced by unskilled workers, however many work together at the job, then those who own those goods (or services) will be able to charge monopoly prices that do not reflect labour values, but simply how much people are ready to pay." (Harman at 52, emphasis added).

Harman notes that "this will be true of certain skills and certain goods (as well as services) at any particular point in time. But over time, this labour too will be reduced to some objective ratio of other labour. Capitalists everwhere in the system will actively seek out new technologies (and methods of organization and investment, no doubt) that undermine such skill monopolies by enabling the tasks to be done by much less skilled labour. In this way, the reduction of skilled labour to unskilled labour over time is a never ending feature of capitalist accumulation. If enough unskilled labour is trained up to the level of skilled labour needed to produce particular commodities (or services) those commodities will cease to be scarce and their value will fall to the level that reflects the combination of the labour needed to reproduce average labour power and the extra costs in training." (Id. at 52, emphasis added).

Harman quotes Carchedi, another Marxian economist: "Due to the introduction of new techniques in the labour process, the level of skills required of an agent is lowered. The value of his or her labour power is then devalued. We can refer to this process as DEVALUATION of labour power THROUGH DEQUALIFICATION OF SKILLS. It is this process which reduces skilled to unskilled labour and thus (at least as far as the value of labour power is concerned) alters the exchange relations between commodities of which those different types of labour power are an input. It is this real process which justifies the theorhetical reduction of skilled to unskilled labour, or the expression of the former as a multiple of the latter..." (Id.)

"The process of devaluation through dequalification is a constant tendency in capitalist production, due to the constant need capitalists have to reduce the level of wages. On the other hand, the same techniques create new and qualified positions (the counter-tendency) which, in their turn, are  also subjected to dequalification...At any moment in time, we can observe both the tendendcy (the dequalification of certain positions and thus the devaluation of agents' labour power) and the counter-tendency (the creation of new, qualified positions for which agents with a high value of labour power are needed." (Id. quoting G. Carchedi, "Frontiers of Political Economy at 133).

I have seen this process unfold throughout human history in regard to skilled laborers, but especially today in the IT, legal and medical community, which is interesting, because my generation (Generation X and Y) was told that these careers would be the quickest way out of the working class and into the middle class. It seems that the forces of globalization have put a damper on these dreams, so to speak.

For example, I have a good friend in the IT field. Originally, only a few people knew how to do anything related to computers, which meant that those who could do IT work could make a killing in the United States, or any other nation, for that matter. What's happening, though, is that the labour pool of potential IT workers has inundated the world, due to the spread of computer education labs throughout the world and computer tech teaching programs and university programs. Furthermore, many of the more complicated processes one once needed an IT person for, are now done away with, because these functions have been standardized and mass produced (anti-Virus protection, other services and packages), such that the need for a highly skilled computer person, at any stage of the computer process, is necessarily minimized. New IT management agencies are coming into the fold and are undercutting the individual operator. Businesses now only do business with established agencies, and these serve to push down the costs and wages of even the brightest and most creative computer person, many of whom are now drawn not just from the US, but from all over the world. This, too, causes wages to drop.

 In the legal field, it used to be the case that a JD and a license guaranteed you a decent wage and shot at the middle class. No longer. Law Schools are dumping massive numbers of law school graduates into the economy with lightening speed, many of whom cannot find a job. This massive "reserve army of legal experts" serves to drive down the wages and benefits of first year associates in many firms, as well as the crap they have to deal with on the job. This has never before been seen in the legal field. Lawyers treated like fungible commodities. Like blue collar workers from 100 years ago. It scares the crap out of alot of people.

Basic legal research and the ability to synthesize and integrate competing caselaw and statutes is an important skill taught to most lawyers, as was the ability to operate gracefully in a law library and "shepardize cases," i.e., find out which case is the newest and most modern manifestation of the rule or law at issue. Lawyers once spent many years perfecting these skills. Now, electronic programs like Westlaw and LexisNexus have served to minimize the time and drastically increase the number of attorneys who can do basic and even expert-level legal research. This drives down lawyer wages (of course, many readers of mine will be very happy about this...but this can also have the effect of lowering the quality of service rendered, in many ways).

There are now law school graduates graduating from all over the country who do nothing but specialize in wierd, esoteric aspects of legal services. For example, I know many lawyers that do nothing but work as document reviewers. These folks sit behind a giant computer, all day long, and use a special computer program to seek-out key words in thousands and thousands of pages of emails and business documents all day long. They charge next to nothing for these services, like $30/hour, and this is what they are forced to do, because they cannot find a real attorney job. This drives down the wages of lawyers, but also serves to maximize the profits of corporations that hire them, as well as the profits of the large law firms that utilize such services.

There are also massive numbers of lawyers who are semi-employed and do nothing but engage in part-time, piece-bit work for various firms all over their jurisdiction. For example, many may specialize in, let's say, workers compensation legal research, or bankruptcy forms, or writing appellate briefs. They can't do or haven't been trained in anything else, but they specialize in these functions and they perform these things for various law firms each weak, doing many, many different pieces of bit-work here and there. This causes the profits of law firms to increase, and the wages of entry-level associates, as well as many mid-level associates, to decline. (Partners and Big Firms, as well as big corporate clients, gain, in terms of decreased costs).

Another new thing in the legal field is outsourcing. Many law firms are outsourcing legal research, legal form drafting (motions, interrogatories, requests for production of documents) to low income, Third World countries that share a commonlaw legal system with the United States, such as India or the Philippines. The Rules of Professional Conduct mandate that a locally licensed lawyer manage or oversee these acts (i.e., if you are licensed in PA, and outsource research to Manilla, you need to have a PA licensed lawyer overseeing the Indian researcher), but this is hard to do and there are many loopholes. Again, this has the effect of lowering the wages of the legal profession.

Another thing I see is that many attorneys in many big firms do nothing except check for "conflicts of interest." Here, they sit behind computers all day long and enter constant streams of data pursuant to large, unwieldy cases. They enter the names of every plaintiff, every defendant, into the computer. But that's not all. They have to research the names of every corporate entity and pull up and enter the names of their parent companies, subsidiaries, etc...They have to pull up the names of the law firms involved, the attorneys involved. Many companies have been sold, so they have to research who owns what company now, etc... And this all needs to be checked with firm databases, to ensure that there is no conflict of interest with a current Firm client or attorney. Normally, paralegals or secretaries could do this. The work is basic, tedious and mind-numbing, not to mention highly boring. Its basically hyper-glorified data-entry.

But more and more firms want attorneys to do this, and since there is a massive "reserve army of unemployed attorneys" in the market, willing to work for incredibly low wages, they jump at the opportunity to do this, even if it means throwing their education away, wasting their skills at critical thinking, writing, oral communication and the like. And this, too, no doubt, has the effect of lowering the entry-level wages and entry-level expectations of law school graduates throughout the nation.

We can never, ever forget the fundamental rule of economics, pertaining to supply and demand. In a vacuum, you can increase prices by increasing demand, or decreasing supply. If you decrease supply, the item or service becomes scarce, and you can charge higher values for the selling of said thing. If the thing is in great demand, and you can provide it in sufficient quantity, you can make money in this way, too.

But you can manipulate markets by playing with supply. If workers are demanding too much in terms of money, one of the key things employers have done throughout history, has been to increase the supply of laborers. This means they are competing with eachother for jobs and undercutting eachother. Because its harder to get a job, each person will feel compelled to accept a lower wage, and harsher treatment, too, by the way. (this is why uber-Kapitalists and their intellectual lap-dogs, libertarians, love the concept of "free movement of labor"---they can multiply labor supply and thus drive down wages anywhere in America or the world, almost at will---at least this is what they want).

The same thing happens with personal computers. When they were new, they were expensive, and relatively more rare. Today they are all over the place and they are not only more powerful, but also much cheaper to buy. Workers working for such companies are also making less money, too. Its a constant drive to the bottom, with capitalism (law of diminishing returns) and the system is always looking for ways to prevent this "bottom falling out" from happening, but they are, in ways, running out of options these days... 

In any event, many of you may be happy that lawyers are getting screwed in this manner, by making less money in terms of lower wages. But the fact of the matter is that the average price for legal services isn't coming down for the average purchaser of said services. In fact, it is increasing, relative to inflation. And yet real wages for everybody else are not. So this means your costs for legal service are actually going up. What it ALSO means, though, is that fewer and fewer lawyers are able to afford a middle class lifestyle, and the feel let down and abandoned by our system as a result. Many are becoming radicalized. Perhaps even more so than in the 1960s, because back then, we didn't have a recession or globalization. Its something totally new in American politics and we have no idea what's going to happen here.

It also bodes poorly for the American economy. We have seen the blue collar workers fall victim to the forces mentioned above. We have seen unskilled laborers fall victim to the forces of mechanization, the inflating of the "reserve army of labor" through outsourcing and immigration, so as to reduce the negotiating power of labor to command a higher wage. We have seen how specialization can lower costs, but also, in many ways, gradually decrease wages, too. And now these economic forces which have permeated and sucked dry the lifeblood of the American economy are now on the doorsteps of the IT profession, the Medical Profession and the Legal Profession. The Leaders of our nation. Our Best and Brightest.

With every decade, another class of people keeps getting socio-economically decapitated and forced into the lower bowels of our larger, and more pervasive, proletariat. Yesterday's working class folks are lumpenproletarii today. Yesterday's Middle Class folks, are now working class or shackled to some low-paying service-sector job and today's upper middle class professionals are quickly following in their wake.

We shall see what comes of it. Whether they protest and give credence and legitimacy to the cries of the forgotten and disenfranchised, by lending their authority, credentials, education and experience to their plight? Or whether they will slip away into the night, silent, with nothing more than a whimper?

All I have to say is that the economic ideas mentioned above were hard for me to understand. I may not have totally grasped the full measure and total nuances inherent to the labour theory of value. But I know one thing is certain. There is a major economic crisis in this country. And it is spreading. And nobody of significance is aware of the REAL ways it is impacting us. The ways mentioned above, when one of the most traditionally stable and affluent professsions in the history of the nation, is now at risk of total economic implosion. That is something to be worried about.

 

 

 

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I had an idea about the IT companies but the outsourcing for lawyers?
That is insane!
When is it going to stop.
Well done kind sir.
rated with hugs
Linda: and its not just the big firms, but many of the smaller firms that are doing it, too, especially those run by immigrants, who are able to use language and cultural networks abroad for their own economic gain. I have a good pal, a Filippino lawyer, who partners with his brother and they have a small firm. But they cut down on paralegal and secretary costs by outsourcing almost all of these administrative tasks to Manilla---research, writing, analysis, pleading, etc...
It's a global world and with fast internet connections borders mean little. Neither does loyalty to One's own countrymen.

"Itz only bizzNess" and shareholders expect 'efficiency' and dividends.
Every country does it and think outside the box etc.

We may not like it but there's no turning back now or an international site like OS would have to stop too.

Current circumstances in the Middle East and others could be said to be because the people therein have facebook, twitter and streaming internet. I suppose if they were like China and denied it then they'd still be less aware of the rest of the world????

Shit Evolves...
Excellent analysis and ...

Spot-on and ...

(you predicted it) So what?

I can now incorporate for less than a hundred bucks. Through Legalzoom.com I can purchase many items that used to cost hundreds/thousands from a lawyer. (yeah, yeah, yeah ... I have a one-in-a-thousandths chance of getting f----ed by faulty legal advice/documents, but much of life is an examination of the risk-reward ratio)

The "traditional" business models of law firms, accounting firms, insurance companies, physician groups, etc. are all changing. And most times the consumer/customer is benefitting.

The question for this blog author (and others) is, what to do about it? You can't stop progress, production efficiencies, and smarter ways to do business.

If the conclusion is, that there won't be enough jobs to sustain the population in the next generation and the proposed solution is forced family-size limitations of one-child per household, then all kinds of screamin' would occur about Big Brother interference.

What's the solution? Probably something too radical to ever be carried-out in the U.S. So everyone must cope or work within the system to advance themselves.

[R]
Here's the flaw in the ointment: "Harman notes that Capitalism, by its nature, does not want to pay higher costs for any form of labor, skilled or unskilled. It is anethama to the profit-motive. Hence, it will try to do anything it can so as to make these skills more affordable by the capitalist system, and therefore, drive down costs, even if this means ruining the wages and livelihoods of the skilled craftsmen or professionals in question. "

no, nyet, nah, negative. Higher costs--labor, materials, overhead (lighting, lawyers, etc.) that are not market driven are anethama to the capitalist. Example: The electric company can strangle me by raising rates so high I can't make ANY profit on my product, ditto a union, or lawyers. I owned a company with 100 employees, including many machinests and a couple of tool and die guys. Tool and die makers are at the HIGHEST end of the skilled/machinest spectrum. It PAID me (that is, it helped profits) to employ the HIGHEST skilled (and therefore highest paid) tool and die guys, and the MOST skilled (therefore highest paid) machinests because--and here's the key--their skills LOWERED costs. The marketplace gave me options: Hire lesser skilled employees with the result of lower prodictivity and increased overall costs, or higher the best which INCREASES productivity, therefore making my products more competitive. I paid top dollar; them's that try to cheap out lose, in the market. The people you quote are academics who, as usual, don't know squat about how the MARKET really works. AND, if at the end of a long day I show a profit and my workers are highly paid and happy, that's OUR business, as well as good fortune. The true 'capitalist' isn't clipping bond coupons, but MAKING something. Now, if he has to borrow capital to do that, well, than the bond holders can clip coupons, nothing wrong with that. Henry Frod started the shorter work week and the five-dollar-day because it was a four-fer: increased productivity, happier employees, increased sales, and increased profits. Ford DEFIED conventional wisdom by treating his workers better. The conventional wisdom he defied is long dead. Was Ford 'wrong'? No, except to communists. Your academic 'thinkers' have no tether to reality.
My eyes won't permit me to read all of this; all I know is that university culture is fading fast under pressure from the commercialization in the USA...
Easy to see how this happens. Law school is the only graduate program that requires no prerequisites whatsoever. As a result, your average lawyer is one of the brightest people you will ever meet who can't do simple math. Thus you have a profession which is the last refuge of dilettantes.

In addition, law school, with large classes and no laboratories, is one of the cheapest graduate programs to operate. Thus, a large influx of unemployable lawyers.

Furthermore, much of the work in a law firm is done by paralegals. These professionals are so far only licensed in California (and in Canada, in Ontario) but the handwriting is on the wall that you can get clean, comfortable work in a law firm for only a few years at a locally based college.

With the advent of computerized legal research, there is no need to leave your home computer or to dress up in anything but pajamas, so more and more J.D.s are becoming independent contractors. Like strippers, these are a good deal for management: no employees, no worker's comp, no unemployment tax.

Who knows? In the next generation the words employer/employee sound as archaic as "master/servant" does today.
Interesting. Got a lot out of Bad Scot's perspective.
I am writing rebuttals but they aint sticking WTF
I with to pursue the lawyer thing a little further as an illustration of what this author is getting at as I understand it. And by the way, for someone who claims not to have completely wrapped your head around all the concepts, you did an excellent job of conveying this one.

The thing you did not mention in the legal profession is the progression to in-house counsel in large companies. Yes, these companies traditionally have had in-house counsel who usually sat on the board, but they did not have vast legal departments within the company handling nearly all the company's legal work. Instead, in the old days they hired lawyers in the private practice who services were monitored by in-house counsel.

The best example of this is in the liability insurance industry, which traditionally hired lawyers in the private practice to handle their litigation work. The trend now, however, is to staff large in-house legal departments consisting of defense attorneys to do their courtroom work. These lawyers are of course not paid by the hour, they are paid a wage . . . . wait a minute. No, they are not paid a wage. They are paid a “salary” and are therefore not subject to the Minimum Wages and Hours Act, most particularly the provisions relating to overtime.
BadScott: Did you even read my essay, as Joisey Shore did? It seems like you only read the first paragraph. Mencken wouldn’t approve. Throughout human history, highly skilled laborers have been put out of business by increases in technology, organization and increases in the pool of available skilled labor.
The German optics industry was #1 in the world and was manned by highly skilled master optics makers. They were put out of business by US industry, which mass produced optics at an almost equal quality (not nearly as good, but good enough, considering the savings).
I am glad you mentioned TOOL AND DYE MAKERS. This industry has VERY POOR PROSPECTS, precisely for the reasons I mentioned throughout my essay. Increasing mechanization, globalization and improved methods of industrial organization are ensuring they are going the way of the dodo bird in the USA.
http://en.wikipedia.org/wiki/
Tool_and_die_maker#Job_outlook
For some reason OS wont let me post more than a few lines in my comments. And some stupid facebook plugin shit wont stop coming up, even though my facebook is OFF., WTF
Sorry. I spoke with a lisp there in the first line.
Of course I read your entire piece; do you think I'd comment if I had not? You do that regularly, accuse people of "not reading" what you wrote, which amounts to saying those readers are intellectually dishonest or buffoons. It's a BS strategy on your part. Maybe you either did not make yourself clear, or, as in this case, parroted lightweight psuedointellectualism. By the way, it's DIE, not DYE, and I did employ them, and you have not nor will likely ever do so. This is all more mush from the academy.
'pseudo'...lest the spelling police strike.

The marketplace is far more complex than you imagine, based on your reading of politically-motivated pseudo-intellectuals. Some regulation: Yes. Liability for faulty products: Yes (although that opens the barn doors to the litigating classes). Child labor laws: Of course. But when all is said and done, if the Chinese can hire a tool and DIE guy for less than I can, and all other things being equal, the Chinese will be more competitive. The unions in the U.S.--along with management miscues, to be sure--priced American products out of the market, and therefore priced themselves out of jobs. When you finally get a job, if it's in the private sector, you'll understand. There is not any sort of conspiracy on the part of American management to keep skilled labor down on the farm; that would be shooting oneself in the foot. (Early) in the previous century: Yes. You can cite coal mines and Detroit strikes and strike breaker goons 'till the cows come home, but that's old news. For the last 40 years American industry has tried to compete, but the enemy is in Washington. At last, too late, the unions are waking up.
This is a great piece...I feel no need to give my opinion...except to say I am happily enjoying the best of both worlds...making money from my own work and enjoying the fruits of my education in science by assisting my nephew in his engineering endeavor...xox
Bad Scot: Thanks for the numerous ad hominems. You still didn't address the issue. You claimed your personal example disproves the argument. It didn't. In fact, it bolsters my argument.

I do not wish to hire such people. However, I would one day like to hire "The A-Team."
Spelling police? Like you are? die vs. dye? hahahahahaha
Debating aside, I do agree with you regarding the Henry Ford approach. I admire it and thought he did a wonderful job combining innovation and employing a well-paid labor force. He said he paid them high, so that "they could all afford to buy Fords."
Rw - There are problems with Harman's logic here, but not what bad scot has in mind. With b.s.'s example, Harman is right. According to the logic of a system that makes labor into a commodity in a marketplace rather than an activity to fulfill social need, the factory owner who pays top dollar regardless is paying his workers "too much," and another capitalist, if he's able to, through outsourcing or a reduction of labor, could out-compete him. In this sense, what the system incentivizes is the brutalization of labor: it pays to be nice, but it pays even better to be cruel. This is the logic of the system everywhere.

At the same time, Harman ignores something by drawing on Carchedi, who more or less just repeats the classical position verbatim. Contemporary labor markets, however, also draw on new categories of workers that help to split up the work done by the traditional ones. Temp workers (offshored or not) can be employed to do part of a job normally done by skilled workers. This reduces the number of skilled workers needed, since part of their job was always "padding," that is, dedicating themselves to simpler tasks than their main one in the organization.

The simpler work done by the layer of temp and other workers is in part due to technological changes that require more "human extensions" of machines, computers--people to read scripts in CSR work, data mining and entering--but they also represent labor's resegmentation hierarchically. In other words, some of the work they do used to get done as part of positions at higher pay grades, like in sales or administration, but it's been split off and concentrated at a lower grade. There are even organizational theories, many of them, that see this as a good thing--it's usually subsumed under the category of "streamlining" when it's specifically applied to the reorganization of tasks, and not to production per se (where it's a nice term for eliminating positions).

The reorganizing of tasks and creation of whole new layers of labor, almost always at the lower end of the pay spectrum, is a major focus of organizational theory today, especially since many large companies have gone about as far as they can in driving down wages every other way. This process of finding a sub-basement below the current lowest level often causes bureaucratization, and lateral spread, at the bottom of very big organizations...
I knew you'd come back with die versus dye, but that's a fundamental error on your part, versus a typo on mine. More to the point, robin sneed adds nothing to your/our discussion. I wish you well rw, and hope to 'romp' someday woth you and your kids. Really. you're a good guy.
Bad Scot: Thank you. And even though I frequently disagree with you, I know, fully well, that you are a decent human being who only wants what's best for his country. In my book, that goes far.
Of course, I want what's best for the "common people" of both my country, and all other countries of the world as well...8)
Rw - This process also accounts for why so many positions in big organizations, at the entry- to mid-level, are nearly incoherent to those who work in them. "What do you do?" is not always a simple question to answer anymore because many big organizations have gone through several restructurings like I described--with task complexes being broken up and reformed so that the more "basic" work can be pushed down, or redistributed laterally to new mid-management slots. (If things are done this way laterally on a large scale, either all at once or over several successive restructurings, with the attendant "organic" bureaucratization, the result can be mid-level bulge, and the predictable prescription is usually "downsizing," the overly polite, familiar term for firing middle management.) The overall result is that the current "jobs" in the organization make less and less sense--they're overdetermined by factors outside the work itself, and they become artifacts of organizational tinkering.

What this makes clear is the degree of conscious control involved in the evolution of big organizations today, or what I call the intervention of the consultancy class. In contrast to how things are depicted in classical economic theory, where the process of labor specialization happens mostly as a consequence of technological advancement, currencied in a market context as devaluation through dequalification, many of the changes today are a result of organizational "innovation." This enormous intervention happens at the same time that people at the top of the capitalist establishment blather on about "free markets" and "leaving corporations alone." But as Harman points out, enormous interventions are necessary at every level--including the organizational one--to keep the system afloat. The growth in the consultancy class is a necessity of late capitalism, as the main crisis trends re-exert themselves and ruptures and structural breakdowns become more likely. And this continues, in spite of all the slicing and dicing and shifting around of tasks, jobs, investments.

So in spite of the more than minor redefining of innovation as primarily planning for profit rather than just technological advance (which of course also continues), the contradictory logic described as the core of the system in classical economy is quite real and ultimately deadly to the system as a whole. Harman, via Carchedi, provide a good description at the total systems level, but the matter is more complex than the way they depict it. In some ways, it's worse.
Redmon Barry: You are absolutely correct about that, regarding the insurance industry and the proliferation of captive firms. Attorneys have normally not had to worry about "exploitation" because they charged alot of money, by the hour. Since the pay and benefits were always very good, nobody minded working long hours, because for some, at least, they enjoyed their jobs.

Many attorneys don't like the billable hour. Its a hassle to constantly record how much time one is devoting to a given case, down to fractions of an hour. Sometimes, an attorney just wants to do the best job they can do, and charge a flat fee (this is what I would like to do). But many bosses want you to work hourly and bill by the hour, and they dont want you to give client X as much billable hour time as client Y, because one has more of an ability to pay (this is BLATANTLY UNETHICAL and against the rules of professional conduct, mind you).

Furthermore, many firms have quotas in terms of billable hours (how much profit the attorney must generate for the firm), and they grind many of their attorneys into powder, as they work endlessly to fulfill their billable hour requirements.

Interestingly, the older partners work less, and the new attorneys and associates do all the work. And its the associates, in many ways, who are exploited by the Partners in many (but not most, and definately not all) firms.

I know many ivy educated attorneys at top firms who spend 5 years for a firm, and generate impressive amounts of billable hours, but they have still never stepped foot in a courtroom, don't know how to manage or run an entire case, can't counsel clients, don't know anything really about the law, outside the highly specialized and esoteric area of the law they dealt with as an associate.

Smaller firms force attorneys to generalize a bit more, and this creates a bit more competence in terms of trial skills, pleadings, client counseling, nuance, etc....they just dont try to engulf you with paper. They can't afford to.

But there are two sides of the billable hour. It can help lawyers. But when taken to an extreme by an oppressive group of Partners, a salary could be a nice escape route. In many ways, working for billable hours is like working for commission.

A salary is crucial to give the lawyer "peace of mind" in many cases...
Ricardo was wrong about rents and investments standing outside the system, and then re-entering it, by the way. It's part of the same process. The only value in the system is surplus labor, everything else is derivative, although the objectification of it in a capitalist system into other forms can obscure this fact for a while.
great to see someone take marxian economics analysis seriously. more on Corporatocracy in my latest post & have some posts on wealth inequality etc.. its strange that marx is considered a political theorist more than an economics theorist. maybe that is partly how he is falsely debunked.
Boko: I agree with you about Ricardo. Maybe I meant Marx? I stated above that even rents and income are abstracted forms of surplus labor.
No, it was Ricardo who made the claims about other objectified forms having real value. He tries to have it both ways, which might explain why there are very few Ricardians around today (although there are some, they just have very particular definitions for things that are all their own, and in my opinion don't make much sense). On the organizational comments I made above...

It might still be possible (in all fairness to b.s.) to pay people top dollar on a small-shop scale, in a limited market, especially in certain types of specialized manufacturing, without being undercut on labor costs by your competition. But this doesn't work as well in all environments, and when a crisis hits, it becomes very difficult to maintain. And in a generalized crisis, like the present one, other fatal problems emerge.
BOKO wrote, "It might still be possible (in all fairness to b.s.) to pay people top dollar on a small-shop scale, in a limited market, especially in certain types of specialized manufacturing, without being undercut on labor costs by your competition. But this doesn't work as well in all environments, and when a crisis hits, it becomes very difficult to maintain. And in a generalized crisis, like the present one, other fatal problems emerge."

I'll buy most of that. BOKO's right. Yet, I'd ask, WHO will 'manipulate' markets and/or wages in order to 'adjust' the inconsistencies, and (normative word coming up) 'injustices' in the system? Who? Economists? Regulators? Whiz kids at the Department of Readjusted Economies? Barney Frank?

It's muddled. Just keep the economists off my shop floor. Life is hard enough.
Who? Who, you ask? Well, I certainly hope its not these guys...David Icke is one kookie mofo....

http://en.wikipedia.org/wiki/Reptilians
(One of the things I genuinely love about political and economic debate on OS is that nobody is crazy enough to seriously cite crazy nutso crap like "reptillians" and other wierdness...OS is definately a step-up from AM talk radio...LOLOLOL)
The big money will go to extremes, they are just warming up. It is an open season and the gloves are off. Thank you for writing this; intriguing and well said. R
Still reading the article at time of this comment: What immediately comes to mind is that of will. If only humans could develop the will...they could move mountains. I see the economic prisons around us existing because humans are unable to exercise their willpower nerves. Everyone settles back into a level of comfort that acts as a building block for one's own prison. Now I'll return to reading the article....
The same can be said for doctors I'm sure. Turning them out in the mill...lowering quality for consumers. As far as lawyers go...I've never had much luck with them. They tend to operate on precedent, general consensus, and trend. Rarely do lawyers ever use their skill to actually achieve justice or pave the way for future generations of people...rather they check to see if it's been done, and more importantly, if they can make money off the case. Not too impressed...nor sympathetic to lawyers becoming less in demand and less paid. Sorry. Good article though...well written.
glad to hear it. the middle class bought cheap electronics from overseas, and pauperized the electroncs assemblers. cheap foreign cars, and car manufacturing jobs went overseas. etc, etc.

some day americans may catch on the core idea of democracy: if you want help when things get tough for you, take care of your fellow citizens. it's too late, though. america will meet india soon, going in different directions. watch 'slumdog millionaire' again, it's things to come.
Believe me, as a legal secretary with my husband working at a law firm as well, I am very worried. As of last year our firm - major worldwide firm- issued a moratorium on staff Christmas bonuses which, as you can imagine, is awful for morale. I seems they used this money to open 4 new offices. The middle class, indeed, are the new poor.
You might want to add a new category for skilled fraudulent labor as well. This would include anyone who does skilled work, usually white collar, which is designed to scam the public to increase profits for the corporations. Lawyers would be high on this list; so would marketing people that study how to convince fools to buy products with little or no practical use; or researchers that study consumer complacency for the purpose of increasing profits and planned obsolescence.

Not that it isn’t already a good analysis.

;-)
Now traditionally, high legal fees were justified by incoming young lawyers by the fact that they were highly in debt, due to the high expense and student loans of law schools. Law schools, in turn, work with the ABA and are subject to a rigorous accredidation process that is rife with collusion and anti-competitive activity. Milton Friedman wrote about this a great deal, how structures built into the practice of law ensured high costs, but did nothing to improve quality.

For example, in many jurisdictions, it is against the rules to explicitly advertise prices, to compare prices of your firm to that of another, or to compare your skills to that of another attorney. This has the effect of weakening the public's ability to make an informed economic choice, which would, in turn, enable (in a free market), prices for legal service to drop, due to price-based and bid-based competition.

This isn't happening in the legal field because of the Rules of Professional Conduct. The ABA states that this is because advertising "demeans the profession," but a side-effect is that, economically speaking, the price of legal fees remains high.

What's new, today, is that we have lots of highly indebted JDs without any jobs. As such, they have nothing to gain by protecting the system. Its not buttering their bread. The Petit Bourgeoisie has been abandoned by the Haute Bourgeoisie and it is starting to rock the boat, and posssibly form alliances with an already vastly enlarged, but presently unconscious, proletariat.
In Chapter 9 of "Capitalism and Freedom," Milton Friedman discusses how occupational licensure and the ABA's monopoly on law school accredidation inadvertantly serves to raise the price of legal fees.

Mind you, this is not doing anything to increase legal salaries. We must recognize that the salries commanded by lawyers are DECREASING. Meanwhile, Law firms are making MORE MONEY, which is counter-intuitive, but true.

As firms, or any organization become more profitable, they must, by necessity, cut wages.

The problem is the VESTIGE of guild-based high entry-level fees and barriers into the legal profession, which is causing the surge of economically destroyed and massively indebted JDs and associates.

These barriers were originally used to ensure high quality lawyers (that is the official argument). That said, in many countries, lawyers make less money and learn law as undergraduates. In the US there are MASSIVE hurdles for entry, more than in most countries.

You need a Bachelor's degree, then you need a Law Degree, then you need to pass the Bar Exam, then you need to take constant Continuing education courses (many thousands of dollars each year), in order to be in good standing.

This has the effect of hurting working class folks who wish to enter the profession, because it is very difficult for them to afford each highly expensive hurdle (it costs money to go to college, law school, take prep courses for the bar, take CLE courses, etc...).

This isn't intentional on the part of the ABA. But it is an unanticipated and market-driven side effect. The fault is systemic and we need REFORM.
Now, I don't agree with all that Friedman says. He espouses the ideology of the Capitalist system. He is also advocating "Devaluation through Dequalification," which I think is wrong. He basically thinks that there should be NO admission standards for incoming lawyers and doctors, and no training or ethical requirements, and that it should be one gigantic, anarchic free-for-all, which I think is patently dangerous.

I am only concerned with decreasing costs for the common man and decreasing the debts of the professional classes. This way, even if their salaries are lower, it doesn't hurt them so much. $50,000 per year is fine, but not if you are $300,000 in debt, because if that is the case, you are worse off than somebody making half your salary (but who has zero debt)

Here is an interesting article by Friedman discussing the Medical Profession.

http://www.fff.org/freedom/0194e.asp
http://www.jstor.org/pss/827973

Good article on Law School accreditation process and how it raises fees for the profession (but not salaries, mind you)
The interesting thing is that normally, the ABA existed to protect the good salaries of attorneys. It was a guild, in all honesty. During various periods of American history, bar admission standards were dropped, and scores of uneducated charlatans entered the field. This served to push prices down, but it also caused quality to drop. Some lawyers wound up making less money, whereas others, who never would have had the opportunity to become lawyers (Abraham Lincoln, who didn't go to college or law school) wound up making a decent living.

In any event, the ABA was created to regulate the profession in this regard and set standards. I think the ABA has always recognized that there needs to be a balance between a sustainable wage and quality service. Some lawyers go overboard here, that is true, and they give the profession a bad name. I am not defending them. But most lawyers I know are honest and ethical and do good work.

The problem, though, is the student debt we graduate with. This forces firms and even solo practitioners to charge high fees. Without this debt, we could charge less, I am sure.

The problem is that if smaller firms charged less (they also have more humble academic and socio-economic credentials than the big firms), they would be able to undercut and compete with the bigger firms in terms of price, and this would steal clients, perhaps, from the larger firms. So perhaps that is one reason why the system, as it is, is self-perpetuating.

Now, I still don't know why the ABA isn't fighting to protect the interests of all these JDs and incoming associates, who will inherit the profession once all the baby boomers retire. The only ones who have anything to gain from all this outsourcing and downsizing and organizational wierdness are the very, very, very big firms.

Perhaps they have more voting members in the ABA? I don't know. But its interesting.
And by the way, Linda Seccaspinna's new essay on Japanese virtual performers and the music industry, has something to do with what I'm discussing above. You should all check it out, btw:

http://www.open.salon.com/blog/emileeeeeee_mcpheeeeee/2011/06/23/will_japanese_virtual_performers_hurt_the_music_industry
So then it follows that society should shift from capitalism as the supreme de la creme' force modus operandi to other means to measure and determine wealth, success and fame. A great appreciation for fairness, justice, virtue, civility and process would make the greatest lawyers in demand and the money grubbers less so. We need to develop that willpower that I was speaking about as a collective effort and stop enabling money to be the final say in what gets accomplished. As a Buddhist you realize that even the wealthiest among us get sick and die...our society should grow up and act accordingly.
There's an extent to which I agree with Bad Scot, and with Henry Ford. Sometimes it's cheaper to have really skilled labor. I'm in a specialized business highly dependent on engineering talent; without that talent, I couldn't make a living. If you look at serious talent in most industries, emphatically including the legal industry, they still make money.

One issue we should examine is the extent to which top management is viewed as labor and the extent to which it isn't. Top management, like the CEO, President, etc. at major corporations are paid insane amounts of money because the people making the decisions think they need top talent to be competitive - they'd argue that they're actually making what are essentially labor decisions. In some cases I'd say that these are bad decisions because these guys often aren't producing commeasurate with what they're being paid. If that's the case, if the problem is that paying a CEO a quarter of what he's currently making and taking the other 3/4 of his pay and distributing it strategically to actual labor would yield a more competitive result, then the problem may be the inverse of what we assume - too much corruption at upper levels and not enough actual capitalism at work.

Part of the problem is incomplete business education. Someone comes up with a model and a bunch of MBA's are taught the model. Then they get out into the field and the model is imperfect - there are respects in which it doesn't accurately reflect reality. The trouble here is that they've been trained in the model so, when push comes to shove, most follow the model over reality, which is counterproductive and idiotic but unfortunately typical. What am I talking about?

An MBA looks at a balance sheet and says: If I reduce costs, I increase profits. That's true up to a point. The problem comes when reducing costs interfere with productivity in ways that the MBA doesn't know how to document - his first inclination is to ignore them. That's a mistake. If you alienate workers who previously weren't, they go from being supportive to adversarial, and that is EXPENSIVE. Free extra hours essentially donated by excited workers disappear. QC drops. Personal taking of responsibility for issues drops. Vandalism rises. Theft rises. Acting as ambassadors of goodwill for the company reverses. None of this typically shows up in models.

This is worth more than a comment, but that's as much as I'll talk about today.
Precisely! Take the case of brokerage and investment firms. In the old days, they had to hire a room full of traders to manipulate the market. Now the supercapitalists can buy a big computer and do high speed trading 24 hours a day, thus eliminating the need for that high priced, "specialized" labor of seasoned Wall St. traders.

More and more for less and less. The flip side of the coin is less and less for more and more. That's why we have to do away with Social Security, Medicare, and Medicaid. And as we all know, the intensification of capital means the intensification of the class struggle, eventually leading up to capitalism's creative destruction.

I don't know whether we should be rooting for this Marxist/ Schumpeterian analysis or not, but it seems inevitable to me, and certainly not a damn thing is being done by DC to prevent this. Aren't da boyz just greasing the skids so we can go faster over the cliff?

And BTW, I commented in my post on your dust-up with Malusinka in my guy.
Rw - I think that the system locks itself into its own chosen set of conditions as it moves on to each new plateau of specialization and expansion (or contraction). Jobs associated with globalization--logistics, shipping--along with those that spring out of a consumer market--point-of-sale clerks, receiving, stocking--have become the vital positions today. They're necessary, and they can't be moved. And it's very hard to break up the tasks they represent and push them down any further on the chain. I'm sorry, but many so called "professional" positions are more alterable.

A good argument can be made that it's services work that is radically undervalued according to the position it has in the real economy today, just like factory work was undervalued before turn-of-the-(20th)century labor organizing. Factory workers originally were considered scum, and this persisted long after they'd become the main engine of the economy here and in Europe. They were radically undervalued due to capitalistic pressure, but also because of social impressions that compared them unfavorably to older handicraft labor, and the arbitrary valuation of "mental" v. "menial" work. The dignity that unions fought for, then, was not just another way of describing an increase in wages, benefits, the 8-hour day, and 40-hour week. It was also dignity in the normal, everyday, socially recognized sense. And this had very real economic consequences. In Britain, in particular, it was unthinkable for a long time to put down the working class in public. You'd get a mouthful of teeth. Even today, such criticism is considered stupid behavior over there.

This is why I bristle whenever I see some jackass--usually from my own generation unfortunately--mistreat a clerk in a big retailer. These people really do keep the economy running, and it's only the wide availability of labor kept in the system as structural unemployment that allows this abuse to continue. But people are getting wise, and workers in the services areas are starting to object and to organize.
I was viscerally aware that this trend was happening, but this is the first time I've read anything that spells it out so clearly. I think it's absolutely true that the devaluation of skilled labor is a fundamental product of capitalism, so there should be some mechanism that keeps this in check. What that could be I have no idea, but it sure would be nice if our national conversation were focused on these sorts of issues as opposed to the trivial nonsense that dominates the media.
I think, in the long run, it IS cheaper and better for a country, and the world, to have a large degree of highly skilled labor. It makes for a more cyclically sustainable economy. Its kind of like a washing machine. The clothes need to be balanced all around the central spool. If they are too concentrated anywhere, the washingmachine gets out of whack, it loses its momentum, and it stops. Same thing with ANY CYCLE IN NATURE, especially the economy, I suppose.

The thing is, those, like Sal sad, with MBAs, have a very narrow picture of the world. They don't envision all the externalities, all the negative ripple effects through the economy and society that their job-cutting and price-cutting has. They dont realize, also, how this can ruin their own company, too, in the long run.

In many ways, I suppose (and David Halbertram's book, "The Reckoning" discusses this), the banks and financial houses that supply companies with money don't really care, in some ways, about this, either. They, too, have a short-term quarterly profit-driven mentality and don't see the big-picture and they can strong-arm a big picture company into taking really bad actions, by way of the carrot and stick of finance.

This is also why some companies don't go public, from what I understand, but I need to do more research on this, to totally understand the economic phenomena more thoroughly.

What I really need is a reading list of about 40 good, solid, intellectually honest economics books, from all across the economic/political spectrum and spend a month in a cabin by a lake in the forest, with my laptop, and try to figure this stuff out for myself.

I also need a job, too. 8)
This is one can or worms that is both amusing and alarming.
RW: aside from generalized doom and collapse, is there an historical economic arrangement/structure which you perceive as reemergent, in a new, globalized form?
hey rw00 are you ever gonna explain how you picked your weird name on here?
looking at all these great comments makes me envious. geez dude I dont know how you do it. you dont even post that often [which seems to be the trick for many others on here]
anyway I stopped back to highly recommend the book called "red queen race" by matt ridley. promise to engage you copiously on the subj in comments if you end up reading the book [from the comments, you do enjoy engagement....]. this book is remarkable, very deep, and I would argue, not fully well appreciated for its implications. it basically argues that evolutionary arms races are quite ubiquitous in nature but very likely, also in human social situations. a good example which he explores deeply is dating. but, the parallels to capitalism are very strong. so yeah Ive made the analogy a lot myself, but basically unrestrained capitalism becomes like a economic or what was called social darwinism. economic darwinism sounds extreme, but its a highly accurate term. I think this is some of what marx attempted to elucidate, but marx seems to predate darwin slightly. [origin of species, published 1859]. the parallels between marx & darwin analysis deserve a lot of analysis. apparently they were contemporaries. it seems to me they may have been influencing each other without realizing it or attributing it.
PS I have worked in the IT field my entire adult life after starting in on tech as a pre-teenager. what you say is largely accurate, and its a way that we can certainly feel some affinity as highly educated professionals even though our fields are so different and I freely have laughed at many lawyer jokes. :p
anyway what you say about IT is basically accurate, and the offshorting to india in the early 00s which you didnt mention was a huge, major dislocation in my field. it seems to maybe have been played out but around the 00s I was seriously afraid I might have to switch occupations. all my friends were out of work too.
fyi its not so much capitalism that is grinding down the lower and middle classes, but the tools of the Establishment to preserve/enforce wealth disparity. these tools are subtle and not well recognized. there are many places where capitalism is practiced without such extreme wealth disparity. intense propaganda seems to be part of the equation in our country. Im gonna write more about wealth disparity in a little bit & point out what appear to be the basic drivers of it in our country
- 30 yrs of declining top tax rates
- pay disparity in corporations
- declining corporate regulation/enforcement
- propaganda
etc!
bad scott sounds like a great capitalist, he believes his own hype. a legend in his own mind!! chief of a 100 employee company!! well his perspective certainly tops all us laborers.

"Ford DEFIED conventional wisdom by treating his workers better. The conventional wisdom he defied is long dead. Was Ford 'wrong'? No, except to communists. Your academic 'thinkers' have no tether to reality."
dude, it is not communist propaganda to note that increasingly corporations exist to serve shareholders and employees are an afterthought. benefits have decreased, wages have been stagnant for decades. you dis "academic thinkers" but have you ever read a single study or basic statistic on economics that you can articulate? are you familiar with basic trends in US economics that point out that our system is dramatically different in character than just 3 decades ago? therefore, literally, this generation is experiencing a different form than that prior generation. this aint your daddy's oldsmobile.
a key statistic that nobody has mentioned so far is PRODUCTIVITY.
there are many good statistics on productivity over decades in this country from burea of labor etc.
now, productivity graphs show it steadily increasing over the last few decades.
good news, right?
bzzzzzzzzzzzzt.
productivity is *defined* as basically, cost to produce something vs the selling price. ie, profit. it is very close to the concept of profit that marx was talking about.
but, the cost to produce includes main, get this-- **labor cost** .
therefore this magic metric of productivity that is closely monitored as an economic health factor is, astonishingly, a measure of how much profit is exact *at*the*expense* of labor. because as productivity is defined, if laborers shared in the gains from increased efficiency or improved technology, paradoxically, productivity as it is defined would remain *constant*.
this is just a small example of all the economic statistics [employment statistics are an excellent example] that are built up and subtly shifted over time that basically *exclude* labors importance or role, they undermine it, they push it aside, they externalize it, they marginalize it. MARGINALIZED. that is the key word here.
all the *language*, concepts, and process, machinery, structure of the entire system is built in terms of favoring the corporation and vacuuming up every spare )( nanocent into the corporate profit margin.
but, the uneducated public goes along with it, as it always has.... not much different than serfs of centuries ago.... we have a high tech version of 21st century serfdom playing out in front of our eyes..... few have the awareness to see it.....
Wow RW as rw would say sorry I am late to the party. As I have said repeatedly we have elevated the cabbage merchant to aristocratic status and that is what aristocrats do RW they set the social precedents for their given environment. The only thing a merchant knows how to do is buy an item for a few penny's less so that he can bring it to market at the lowest price thus realizing the maximum gain for himself with as little time and effort expended as possible. So the direct results is that when you turn a nation over to a market place shrew the first thing he does is start looking for ways to cut the cost of running that nation. Like you said first he replaces all his unskilled labor with illegal aliens (from Mexico) at first he is unsuccessful because of annoying artists and intellectuals and some loudmouth war hero that you will be forced to tolerate till he gets tired of his messianic roll as president. Eisenhower turns out to be a real pain in the ass even worse than John Steinbeck he hurts you real bad when he rounds up all your slave labor in 1954 under ‘Operation Wetback’ and gives them one way tickets back home while making smug quotes from the NY Times: “The rise in illegal border-crossing by Mexican "wetbacks" to a current rate of more than 1,000,000 cases a year has been accompanied by a curious relaxation in nationalist racism extending all the way from the White farmers who exploited this migrant labor to the highest levels of the American regime”.



Fuck that clown all he knows about is killing Nazi’s you know how to sell a cabbage and while he only has 8 years you, with the inheritance laws the way they are, have forever. While you wait you purchase the NY Times and all the other sources of information distributed amongst the peasants, you also buy the publishing houses we can’t have no more Steinbeck's if they don’t go for Beatrice Potter just feed them Harry Potter till they do. Kill one president then get rid of another one because he had his Vice President point out that your control of the media amounts to a Fifth Estate. You let Zbigniew take a crack at it first after all it was mostly his idea but when nobody takes him and his pet peanut farmer seriously you are forced to reevaluate and let them elect a mildly retarded Hollywood actor and when the retard gets smart you fill him full of holes to. Now you are ready its taken 30 years but it will be worth it. First you use your recently purchased information outlets to turn your need for slave labor into a Civil Rights issue. First you open up the borders and breakup all the unions with an endless supply of “our Mexican brothers”. Then you notice that some of these Mexicans can even read a blueprint and crudely carry it out. Well who needs skilled labor either, Mexico city hasn’t fallen down yet, well once almost, now you also break up all the guilds and make apprenticeship a thing of the past. All the while you use your brand new NY Times to tell the peasants what a noble blow they are striking against racism by allowing you to replace their neighbor with Pedro who requires little pay and no medical care. Now you are at the pinnacle of your power but all these IT and lawyer guys think they are going to continue to get paid, fuck them they don’t know nothing about cabbages either. Mexicans don’t come with much more than a third grade education but there are 2 billion Asians that excel at doing nothing but learning. You have your information outlets rewrite history a little, just a little, and you change a few laws now you can outsource jobs, if not your precious money, directly to them. You also use all that power you have purchased, lobbying to be able to import these people to fill needs within your corporation all the while you fluoridate their water because it makes them even stupider than ‘Happy Days’. Welcome to twenty-first century America! Don’t you like it? Now you and vz are going to complain that they have taken your jobs to? I can’t really tell you what I think of that what do you think I think of it?
I some ways Harman is very pure in his critique. It's almost as if he doesn't want to get his hands dirty. But he wants a revolution.
I've been trying to figure if just some small thing went wrong and if there is some targeted change that could be made to put things back on track. A lot of this is discussed from a different angle in Clyde Prestowitz's book The Betrayal of American Prosperity, which I recommend. In addition to tackling the thorny issue of protectionism and trade policy, he discusses stakeholder theory. It's quite intellectually fascinating to see the places where a few simple choices have been made huge effects and scary to see the consequences of those effects.
Jack: You are correct that the Companies frequently package anti-labor approaches as civil rights struggles, by painting pro-labor rights protests as "racist."

If you read "The Jungle" by Upton Sinclair, he noted a similar phenomena in the turn-of-the-century Chicago stockyards.

When the Eastern and Southern European immigrants (as well as Irish) would go on strike, the Companies would go down south and hire trainloads of African American sharecroppers to come up for a few months and work in the factories as "Scab Labor."

Scabs were basically strikebreaker laborers, who would work at far below union-demanded wages, with no benefits, and they usually (because they came from another industry) lacked the same skills as the union labor.

The purpose of using scab labor was to maintain corporate profitability and starve the striking union labor into submission. (they would also use Pinkerton security agents to murder union leaders and burn down their homes, sometimes with their families inside, but this latter approach caused bad PR [dead women and children] and wasn't encouraged).

Now, the Eastern and Southern European union-men would mess up by attacking the scab labor on racial grounds. They would utilize racial slurs and epithets. This enabled the corporations to win the "moral high ground." They did this by rhetorically packaging their hiring of scab labor, as a PR stunt. They said they were doing this so as to "increase the labor opportunities for poor black laborers in the south" and to give "our brothers in the south help" due to the high unemployment, etc...

They would often take pictures in the newspapers, where they were shown shaking hands with prominent members of the NAACP, etc...

They would SPIN the entire attempt at breaking the strike through SCAB LABOR as some progressive example of proto-Affirmative Action.

The strikers would be painted as reactionary, angry, intolerant racist working class yahoos, whose beliefs should be ignored.

This tactic is STILL USED TODAY.

The #1 reason why racism should be attacked is because it is unethical and morally wrong.

The #2 reason racism should be attacked is because it is often used to the detriment of the working classes, as a tool to divide us amongs ourselves.

If the whole box of crayons is to stand together and not break, we must be united, all of the colors, together.
@TracyJack - I don't know about that. Harman was no patsie.
Rw - On your defense of professionals: I'm not sure that anyone is suggesting that modern societies can do without a large number of well trained professionals. But the direction of the economy here and elsewhere is to squeeze those in the middle in a way that used to be reserved for working people, while continuing to do the same thing or much worse to those at the bottom...all at the same time. Right now the problem for most big firms is not "bulge" in the middle (they've gone through several cycles of mid-level downsizing over the last three decades). The problem is "spread" at the botton. Mid-level professionals--and by this I mean to include administrators, who pretty much run the show at most big companies today--are chronically overworked and under-supported, and they're expected to put up with these conditions with no job security. It's endemic, and untenable.

It's also an indication of just what an awful situation the neoliberals have gotten themselves and all of us into. It's like we're still taking advice from the guys who just burned down our house. They're standing on the lawn heckling our efforts to put it out, claiming that what we're doing is too "expensive." How to deal with these people, the neoliberals at the IMF and American economic think-tanks, and neoconservatives at the Pentagon, who still think they're in charge? A two-by-four comes to mind.

Again, good post.
Really well-argued. rated.
I was just reading about the chicken farming industry at the library and it was very interesting.

Apparantly, there are two (2) types of chicken farmers.

First, you have the very, very, very large corporate chicken farms that are either directly run by companies like Tyson, Perdue and the like, or by very, very, very large contractors/corporate/large scale chicken farms. The folks that run these chicken farms are very, very rich and represent people who "got to the party early" and as such, have stolen all the grub.

The second kind of chicken farmer is the small-scale type. These are former family farmers, working class and middle class folks who are "given a break" by the large corporate chicken farmers, who promise to purchase from them, provided they conform to a variety of credentialing requirements, which are constantly updated and changed every year. Apparantly, the large chicken companies constantly add new and more stringent requirements every year, regarding the smaller chicken farms, in order to make them ever more indebted to the company (or the bank), and as a result, more easily pliable and controllable, in terms of what they sell their chickens for, how they raise their chickens, etc....In this sense, the large companies are able to manipulate the market through carrot/stick policies that impose debt on the lower-class and lower-income players in the game.
I just saw a documentary called "Food, Inc." They were also discussing this (which is why I went to the Penn library to read about it).

Apparantly, there are hundreds of small chicken farmers all over the country, and every year they get hit with new credentialing requirements by companies like Tyson. Oftentimes, meeting these requirements (updating the chicken coup, painting it a certain color with a specific type of paint, using a specific type of anti-biotic, purchasing a certain type of feed from a "corporate friend" of the parent chicken company, changing the chicken coop around so that it is pitch-dark and in a tunnel/funnel configuration [which is favored by the big companies---I don't know why] etc...) is very, very expensive. Meeting these requirements can cost up to $500,000 per year, and all of these costs are financed by way of DEBT.

At the end of the year, the smaller chicken farmers make a net profit of, on average, $18,000 per year (despite the fact that their sales are in the hundreds of thousands of dollars). This prevents them from getting ahead in the world, despite their high revenue.

Exogenously enforced and imposed indebtedness prevents socio-economic mobility, economic, social and political empowerment, and renders ultimate revenue meaningless, because the majority of this will be used to cover tha balance and finance charges on the debt.
Now, when we look at the Learned Professions, a similar situation seems to exist. You have the very rich folks who have parents and grandparents belonging to the same profession. They are not in debt, and come out of law school, medical school, etc... with zero debt and excellent job prospects at top firms, top hospitals/clinics, and/or prestigious family practices.

They depend upon very high wages and/or socially accepted billable hours, though. And in order to justify these, the other 80% or 90% of the members of the profession, who are much lower on the socio-economic ladder, must accept these high wages and billable hour rates.

This second group, which comprises the vast majority of the professions, is something I refer to as the "indebted professionals." They serve a unique purpose in the economics of the professions, due to the existence of massive forms of debt and their very high, prolific numbers.

Their numbers ensure that they out-compete eachother for suitable wages, thus causing their wages to drop.

On the other hand, once they get a decent attorney job, they are, by necessity, induced to charge a higher fee, to compensate for the money they lost, and high debt-costs they incurred, during their years "in the wilderness," i.e., when they were doing conflict checks, document review, paralegal work, temp work, etc...

This has an overall impact, perhaps, of serving to artificially boost the billable rates the attorney profession can commend, without resorting to typical guild-based collusion mechanisms, enforced endogenously (from without). By utilizing endogenous (from within), need-based mechanisms, they can create the VERY SAME BEHAVIORAL PATTERNS, but without resorting to overt market-manipulation behaviors, which is very interesting.

This is not intentional, I believe, but has come about unbenownst-like and since it is so profitable, is self-sustaining, self-referential and autopoietic, so to speak.

The way to solve all of this, of course, would be to eliminate the debt-system and law school/medical school cost-based system, so that all who start out in the profession, do so on an equal footing.
So, utilizing endogenous need-based mechanisms based on debt, can cause a guild to raise prices, in the same way that an exogenously, externally imposed, guild-based mandate to "raise prices" would accomplish, albeit in a less questionable and perhaps, noticeable manner...
So, that is ONE ECONOMIC FORCE acting on law school graduates.

On the other hand, you have the "Devaluation through disqualification" forces, and globalization, downsizing, outsourcing and offshoring forces mentioned above, which are simultaneously forcing down the wages of incoming attorneys.

Together, these dual economic forces come together like a scissor and cut up new lawyers like so many pieces of fine paper.

Together, these dual economic forces pose what a Marxian economist would call "The Essential CONTRADICTION" of the legal services economy.

You have a guild-based system utilizing endogenous methods (debt and entry level costs) that serve to raise costs and billable hour fees, (so that upper-tier lawyers can command higher wages).

Then you have globalization and macro-level economic phenomena working against this, such that new attorneys are unable to make the money that the above mentioned endogenous cost-raising mechanisms were designed to achieve in a limited, controlled economic environment.

The result is that legal services COST MORE for consumers, but PAY LAWYERS LESS, and LAWYERS HAVE MORE CRIPPLING DEBT.

Economically speaking, this is untenable and unsustainable, in the long run and I predict that the ABA will enact various reforms in conjunction with various overseas bar associations.

A similar thing happened to various guilds in 19th century Europe and 16th century Europe, when new markets and trade routes opened, which is very interesting. You can read about this in "The Great Wave," by David Hacket Fischer.

Books on the Hanseatic League and their interplay with guilds in the Baltic and North Sea area of Europe also have much to offer in this regard and can provide for very interesting reading here. Hanseatic history is a hobby of mine, actually.
Rw - That's a very good analysis, but there's no way to change or reform these things in the system right now, since all the people who control the levers, including debt, still believe in the failed neoliberal model. It's a zombie system in the political sense, too. I'm afraid, like John Ralston Saul has suggested recently, that we're going to spend the next ten years simply reacting to events, while the system implodes piece by piece--or rather, continent by continent. Talking about minor reforms at this point almost seems pointless. We need to think big, and to this end, Harman suggest a consciously organized economy built on radically democratic lines--a social-organic for the good of the vast mass of humanity. He's far beyond being a reformist, and acquiring his ideas for that purpose runs directly counter to his arguments and his thinking. It's a misuse. He was a revolutionary socialist.
I want to find the Preztowicz book that Kent talked about. I read his Trading Places and it influenced me tremendously. He's a really good analyst.
I just realized I still need to reply to everybody above! Give me some time and I shall!!!!

8)
Patrick Frank: you are absolutely correct. They are also doing this to academia, as well.

VZN: thanks for the compliment and I really need to check out your blog.

Monsieur Chariot: In some ways, it reminds me of feudalism, in other ways not so much. At least with feudalism, peasants controlled the means of production, had stable social networks, stable communities, stable economic system and rarely died from famine, homelessness or malnourishment. No such thing as rent, really, among the peasantry, as they were all landowners and owned homes (small thatched-roof wooden homes). That said, they had no real public, state-granted rights, only private contract rights by way of their feudal relationship with the local noble or clergyman.

In a way, then, I think its actually worse than feudalism. Perhaps more like the Gilded Age, which was horrible.

(the middle ages get a bad rap: this is partly due to capitalist and hollywood pop-culture propaganda)
Toritto: thanks

Sheila: thanks

ONL: Agreed, 100 percent

Thoth: thanks!

Algis: it certainly is...

Zachary Taylor: LOL

Erika K: its called "the pauperization of the middle classes." Its a Marxist concept that was supposedly "disproved" during the 1950s and 1960s, when we had prosperity. This prosperity, supposedly, disproved Marxism. But then we had the recent crash, which once again, proved some aspects of Marxian analysis to be correct (once again).
Kemstone: it scares the hell out of me

Joisey Shore: in some ways, consumers benefit in the ways you mention. In other ways, it hurts consumers, because legal costs are actually going up and are being artificially maintained through the processes I discuss above. People should be opposed to this. But the legal profession is self-regulating, so there's really nothing people can do about it.

Kent Pittman: I agree with KosherSalaami--> I need to read that book.
I haven’t read Morton Friedman’s “Capitalism and Freedom” yet but judging by what some others have written about him I suspect there must be serious problems with it. Critics include Noam Chomsky and Naomi Klein who went into great detail about the problems with his beliefs in the
Shock Doctrine. Her book clearly indicates that Milton Friedman seems to think that there should be few if any regulations that interfere with the profits of the corporations yet these concerns about regulations don’t seem to extend to those that benefit the corporations like trade secrecy laws that enable them to keep unethical and often criminal behavior secret and copyright laws that enable them to make it harder for the poor to get a good education.

Friedman’s idea of freedom seems to imply that those with the capital and political power should be free to enslave those without.
Zach: Friedman is a great analyst, the problem is WHY he analyzes X and the PURPOSE he serves in doing so.

Friedman wants to rip into the Legal and Medical Profession, because they are in the Democratic Party Camp, and contribute big time to those parties, and because insurance companies lose big time from doctor fees and legal fees (which can also, simultaneously, be unjustly high). You basically have two groups of capitalists, each in a different party, competing with eachother.

Friedman's critique of the Professions and how they pass-on costs to consumers is apt.

I disagree with him, though, in terms of his solutions. He wants to severely limit the power of the legal professsion, its independence, as well as the independence of the judiciary, which is THE WRONG THING TO DO.

Oftentimes, evil folks use SOLID INTELLECTUALLY HONEST ARGUMENTS to advance very evil ends.

Friedman is one of those.

That said, I think he was not evil, per se. I just think he was an incredibly naiive intellectual who lived in a bubble.
Mind you, conservative economists can often be 100% correct with their fact-analysis and diagnosis, but also be 100% incorrect when it comes to diagnosing a course of treatment.

Adam Smith and David Riccardo were brilliant, albeit highly conservative, pro-Establishment, pro-Capitalistic economic theorists. Karl Marx relied upon them a great deal in writing Das Kapital, and he agreed with much of what they wrote. He also disagreed with some of what they wrote.

The thing is, we must judge an argument on its MERIT, rather than the personality of the person who makes it.

If we commit the fallacy of association, or allow ourselves to be susceptible to ad hominems, then we become no better than the neofascists.

We must rise above all this, and be enlightened creatures of logic and compassion.
Sometimes, conservatives are right, albeit for the wrong reasons...lol
For example, Milton Friedman was the top conservative intellectual that supported the US abolishing the draft and establishing an all-volunteer army. He was correct in saying that this would create a more effective army and his analysis here was spot-on.

However, we need to read beneath the analysis, too. The reason he supported the abolition of the draft was because conscripts don't like engaging in wars of imperial conquest, particularly conscripts from a democratic nation. Volunteers are much better for this. Indeed, the British Army maintained the British Empire for hundreds of years without resort to conscription, because they knew conscription would destroy the legitimacy of the empire.

In this sense, the draft is a check and balance upon an unpopular war. Indeed, it helped end the Vietnam War. Today, wars in Afghanistan and Iraq continue, in part, because these aren't conscripts dying, but "volunteers."

That said, Friedman was correct in saying that a smaller, all-volunteer military was more effective and gung-ho and militaristic and less susceptible to pacifistic civilian cultural influences.
From what I know about Friedman I suspect he may believe his own BS; he may have been raised in an oppressive environment by elitists that taught him from birth to ignore the point of view of those from other classes and to believe what he's told without question. Sort of an upper class elitist cult.

However I can't be certain since as I say what I know is limited; mainly from what Naomi Klein wrote in the book previously cited.
Furthermore, I agree that reading those you disagree with can help understand their arguments and find their accurate points; I tried to do the same thing with Samuel Huntington a few months ago.
What a comprehensive piece that deserves great attention. Thank you for giving me the IT example; I needed it to understand your points better.

I see several of my good friends fresh out of university, with nowhere to go and no money to be made. One has been hired by the university as part of their research team, making 20 grand a year. In ten years, he MAY make 30 grand. What the eff? Oh...and he's not allowed to work elsewhere or he'll be fired. Nice.
Beth: I think the US gvt should serve the American people, including the learned professions. Why vote for a government and pay taxes to a government, if it doesn't represent your own interests and only "stabs you in the back?"

Our government represents the interests of foreign and multi-national corporations. Universities are included on this list. All must realize that the American taxpayer ultimately butters their bread. And if they continue to piss on our backs, we could have a Jasmine Awakening in America, too...
I agree with this completely. Both me and my wife are attorneys and we are barely middle class. Things will continue to get worse. Education was once viewed as a way to climb up the ladder and improve your economist status. Now a degree is necessary to keep oneself afloat.
Here is a recent article from the NY Times, discussing this phenomenon in regard to the medical profession.

"Calling the Nurse ‘Doctor,’ a Title Physicians Oppose" by Gardiner Harris.

http://www.nytimes.com/2011/10/02/health/policy/02docs.html?pagewanted=1&_r=1&hp