How capitalist politicians dilute social reforms

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Every four years the U.S. presidential election sea­ son sprouts another set of politicians singing songs of social reform, a chorus as predictable as carolers at Christmas. Winter voices ring with words of cheer: “Peace on earth, good will to men”—words as routine and meaningless as any campaign promise of “hope and change” or “Make America Great Again.”

Every four years candidates vow to improve on the failed policies of their predecessors. New slogans and new reforms are freshly wrapped, as if they had never been offered before, as if they were tidings of comfort and joy. The election-time promise of change and re­ form is like catnip to capitalist politicians.

Even with a do-nothing Congress, though, new laws are passed. What happens when reform legislation is adopted? Why do the reforms that were to deliver so much so often fail to live up to their promise? Is it re­ ally possible to overhaul the political and economic systems of this country by a series of reforms, a kind of New Deal for the new millennium?

A look at several reform movements and laws is re­ vealing in the kind of pattern that emerges, one that shows how reforms are made to be limited.

First, one major change initiative this season centers on income inequality. Currently, a national effort is underway to oppose the worst excesses of executive salaries and to create more equitable workplaces. The standard difference in pay between the top floor and the shop floor is simply staggering. The disparity and injustice are real and almost beyond belief.

Number One on a CEO Rogue’s List would be the chief of Discovery Communications (owners of the Discovery Channel, TLC, and Animal Planet), whose income is 1951 times higher than a worker in the company. Second place goes to the CEO of Chipotle Mexican Grill, whose pay ratio is a more modest 1522, which still yields bragging rights against the CEO of CVS Health, who lags behind with an income only 1192 that of a typical CVS worker.

These are the most extreme examples, but they are not so far removed from the typical corporate CEO, in whose heart the spirit of Scrooge still lives. According to the Economic Policy Institute, 50 years ago a Chief Executive Officer (CEO) was paid 20 times more than the average worker. By 2013, the difference had sky­ rocketed to 300 times a worker’s income.

It’s no surprise, therefore, that income inequality is the rallying point for the Bernie Sanders presiden­ tial campaign. Sensing the importance of this issue and the likelihood of popular support, Democratic presidential candidate Hillary Clinton also criticized income inequality in America when she formally an­ nounced her campaign. When a candidate so closely connected to Wall Street makes some noise against her corporate sponsors (presumably with their per­ mission), the situation must be dire indeed.

Is there, then, much comfort to be found in the re­ form legislation that has already been proposed or put into place? For people with faith in the system, the answer is a disheartening “no.” Reforming capitalism 4 SOCIALIST ACTION OCTOBER 2015 by changing the laws is as effective as tying up Jell-O with rope.

In California, for instance, legislation has been pro­ posed to offer incentives to companies that exploit their workers less obscenely. Let the CEO be paid only 25 times more than the median income of the com­ pany’s workers, and the business tax rate for the com­ pany will be lowered to 7%. When the CEO is paid 250 times or more than the average worker, the business tax rate would remain at 9%. But even this modest legislative reform has not been passed.

Of course, if some incentive-reform rule is enacted, companies have at their disposal numerous ways to beat the intent of the law. Numbers can be rigged and legal definitions can be rewritten. Companies could “outsource” their lowest-paid workers by re-hiring them as “independent contractors” who are not tech­ nically part of the workforce. As a result, the “average” worker salary would automatically rise, even if the same people were still doing the same jobs, and the CEO pay ratio would look better to government regu­ lators. The result would be lower taxes for the com­ pany and no change at all in the CEO salary.

Progressive groups across the country that have been campaigning for corporate responsibility are excited about changes that are afoot. A new rule by the Securities and Exchange Commission, to take ef­ fect in 2017, will require large companies to disclose pay ratios and thereby expose the exorbitant rates of CEO salaries.

But public disclosure is the full extent of the reform. Within the law itself, no further action is intended or implied. Corporations are required to make no chang­ es whatsoever. Having forced out the truth about the executive pay scale, the power of Law and Govern­ ment dares do no more. The people’s elected officials approach Private Profit, not with a raised fist, but with the raised hands of surrender.

When the Law trembles before Capital, who will force real change? Workers have the greatest potential to resist corporate greed, but workers also bear the greatest risk. Most public workers are not in unions, which could provide them some support and protec­ tion. Companies find plausible-sounding excuses to isolate and fire potential “trouble-makers.” The dan­ gers of “going-it-alone” will likely limit the amount and extent of organized resistance, especially in an economy where jobs are scarce and precarious.

Yet, pushed too far, workers still fight back. At Walmart, where the CEO received $25.6 million last year—about half a million dollars a week—workers organized as OUR Walmart have been agitating for a $15 hourly minimum wage. They have forced a com­ pany concession: a pay raise to $10 an hour in 2016 for 500,000 of the company’s 1.4 million workers.

Of course, Walmart offered something so that it will not have to give up even more. The company intends to divide the OUR Walmart workers between those who will accept the concession and those who will reject it and keep fighting. The dilemma is difficult. Many Walmart workers are so badly off that the cer­ tainty of a small pay raise will outweigh the possibil­ vious over time. First, to qualify for 12 weeks of leave, full-time workers must have been employed at the same firm for 12 months. Most important, all of the leave is unpaid. Without an income, it’s estimated that only 40 percent of eligible workers can make much use of the law that was supposed to help them. In real­ ity, this reform applies best to those with a trust fund or with a spouse earning an outsized salary—a corpo­ rate CEO, for instance.

Last January, in his State of the Union Address, Presi­ dent Obama said, “We are the only advanced country on Earth that doesn’t guarantee paid sick leave or paid maternity leave to our workers. Think about that.” In Washington, “thinking” is definitely encouraged. The Secretary of Labor has put together a program that would offer $500,000 to any state willing to conduct a paid leave feasibility study. But that amount of think­ ing has not led legislators to action.

No actual law has been passed. No federal law is like­ ly to be enacted in the foreseeable future. The United States will continue to offer a Family and Medical Leave Act that will prevent most women from taking a medical leave when they start or add to their family. Reforms with built-in limitations This apparent paradox—reforms designed to make no substantial changes—is evidenced throughout the political system. Consider President Obama’s Home Affordable Modification Program, intended to provide mortgage relief to struggling homeowners. A report by government officials charged with overseeing the program shows that 887,001 borrowers have ob­ tained loan modifications, but some four million have been rejected.

A recent New York Times article (Aug. 2, 2015) notes, “It appears that the program has allowed big banks to run roughshod over borrowers again and again.” How is it possible? The answer is that this reform legisla­ tion was built with “two design flaws: making the pro­ gram voluntary for the banks and letting those banks that participated run the process on their own.” The result is that 72% of eligible applicants have been re­ jected, since the actual criteria for relief is profitability for the banks, not assistance to the homeowners.

The history of federal campaign finance reform is another story beyond any paradox. Significant bipar­ tisan measures had been achieved, at least on paper. A 2002 federal law prohibited unlimited contributions to political parties, and while the Supreme Court later shredded the substance of that law, its loopholes were always huge.

In real life all the presidential candidates from both parties find it easy to skirt the laws, including the $2600 limit that a single donor can give to a single candidate. According to a New York Times report (July 26, 2015), “[P]residential hopefuls have been romanc­ ing donors, hiring staff and haunting the diners and senior centers of Manchester and Dubuque.” All this activity, all this fundraising and spending, technically occurred outside of campaign finance law.

Regulations can be made to disappear; money can be shifted into different accounts; candidates can even pretend not (yet) to be candidates—scenes from an “Alice in Wonderland” world. An illusion of legality is even better than the real thing. Candidates need only claim that “the much-promoted campaign staff they hired had other jobs. And their many, many trips to New Hampshire and Iowa had nothing to do with run­ ning for president.” It is an outrage to common sense (continued on page 5)

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(continued from page 4) but agreeable to the law.

The same New York Times article quotes a former lawyer of the Federal Election Commission who said, “We’re in uncharted territory.” Campaign reform, in other words, has been bypassed, and big money will continue to dominate the elections. It’s another re­ form that made few or no changes.

In recent years the most significant and divisive so­ cial reform has centered on the health and medical industry with the enacting in 2010 of the Affordable Care Act (A.C.A.), or “Obamacare.” It has withstood re­ peated “no” votes by Congressional Republicans, Sen­ ate filibusters, a government shut-down, and a legal challenge brought to the U.S. Supreme Court. With this much right-wing opposition, it would seem that the health-for-profit system itself is on life-support.

Though much about the A.C.A. is complex and con­ fusing, that conclusion would be ill-founded. Booklength evaluations of this controversial legislation are beginning to appear, and more will certainly be published in the future. Sufficient time has passed, though, for reasonable judgments to be made.

The Washington Post summarized the findings of journalist Steven Brill’s new book, “America’s Bitter Pill,” by noting that his study “details the backroom deals that allowed the Affordable Care Act to become law … and why he believes the law won’t do anything to keep health care costs from running wild. His as­ sessment: the deals Democrats struck with industry to get the law passed ensured that the flawed system would remain intact” (Jan. 5, 2015).

A July 2015 article in Harper’s magazine, (“Wrong Prescription? The failed promise of the Affordable Care Act,”) points out, “The A.C.A. was sold to the pub­ lic on the pledge of ‘affordable, quality health care.’” The result, given the history of reform legislation in the U.S., was predictably different. “Instead, the A.C.A. was a canny restructuring of the American health-care market place, one that delivered millions of new cus­ tomers to insurance companies, created new payment mechanisms for hospitals, steered more business to pharmaceutical companies, and dictated expensive, high-tech solutions for a wide range of problems.”

Obamacare is riddled with shortcomings, not be­ cause of a failure of legislators’ intelligence, but “be­ cause of a failure of nerve and the immense power of health-care stakeholders [so that] the A.C.A. has re­ inforced and accelerated many of the system’s most toxic features.” Designed to prevent a movement for universal health care, which would have been in the people’s interest, and to preserve a market-driven health-care structure, on behalf of business interests, Obamacare has actually succeeded in its most impor­ tant objective.

The example reveals the general rule. The apparent paradox in logic of any particular reform can be clari­ fied by understanding the nature of the contradictory social forces that shaped it. Less a compromise, a re­ form is a hostile stand-off between ultimately compet­ ing class interests. Or, as Neil Young once sang, “They give you this/But you pay for that.”

Of course, when the needs of the working class—the majority of the population—are represented by one of the two ruling-class parties, the conflict between them is an argument over the best and most effective means of sustaining corporate rule. In the debate on health care, a debate on the quality and even the sav­ ing of people’s lives, the people never had a voice.

Hillary Clinton has declared her desire to be that voice, to run for president because “everyday Ameri­ cans need a champion.” Bernie Sanders calls for peo­ ple to stand with him and start a political revolution, one that draws its inspiration from the New Deal. His is a politically adroit move, as recent polls show, but not one that will ever lead to any revolution.

In the popular imagination, the most far-reaching and successful reform of the past century was Presi­ dent Franklin Delano Roosevelt’s New Deal. The re­ ality of that program is more complex and troubling than many realize. Howard Zinn, author of “A People’s History of the United States,” wrote that the New Deal was “tentative, cautious.”

Zinn pointed to the limits of the New Deal reforms: “It created many jobs but left 9 million unemployed. It built public housing but not nearly enough. It helped large commercial farmers but not tenant farmers. Excluded from its programs were the poorest of the poor, especially blacks. As farm laborers, migrants or domestic workers, they didn’t qualify for unemploy­ ment insurance, a minimum wage, Social Security or farm subsidies” (The Nation, April 7, 2008).

The lessons of the recent past and current practice point to the same conclusion: The intent of a political reform—its potential socio-economic benefit—can be blunted or neutralized in its implementation or enforcement. Limits may be found, exceptions can be made, and loopholes can be created. A reform meant to aid workers and youth runs counter to the logic of capitalism, counter to the imperatives of a profit- making system. The value of a new law must never threaten the law of value. People must never be placed above profit. Hence, the promises of a reform are often unrealized when the reform is retrofit to a system not designed or prepared to accept it.

And yet, history also shows that ruling classes can be forced to make concessions; the profit system, in order to continue, must bend when popular pressure becomes sufficiently powerful. Reforms, however par­ tial and fragmentary, are valuable in themselves. Cer­ tainly, Obamacare is thoroughly inadequate and no substitute for single-payer, universal health care, but the Affordable Care Act did provide medical insurance to 17 million people who had previously gone with­ out. A small raise in pay—again, not adequate—will better enable half a million Walmart workers to buy groceries and pay the rent.

Reformism’s dead end In addition to any specific reform, or series of re­ forms, there is much to consider about the best and most practical way to bring them into being. Lobbying efforts, mailing campaigns to Congress, even confron­ tations with presidential candidates may seem neces­ sary to many activists. Some would argue, with appar­ ent logic, that reforms can best be implemented by support for a reform party, like the Green Party in the United States. Some supporters of reform go further to suggest that the creation of reforms, one by one, can ultimately replace capitalism. That belief can be a fatal illusion, as it was for President Salvador Allende and the Chilean working class in 1973.

A few years prior to that catastrophe in South Amer­ ica, veteran socialist George Breitman wrote, “Revolu­ tionary Marxists, starting with Marx, have never been opposed to the struggle for reforms. … The essence of Marxist strategy, of any revolutionary strategy in our time, is to combine the struggle for reforms with the struggle for revolution. This is the only way in which to build a revolutionary party capable of providing reliable leadership … in action, from the struggle for reforms to the struggle for power and revolution” (see Breitman’s “Malcolm X and the Third American Revo­ lution,” page 230).

Unfortunately, these ideas and insights are not well known or yet understood among many supporters of reform-minded Democrats. Revolutionary Marxist or­ ganizations that have acquired tactical and strategic lessons from decades of political struggle have been ... Labor struggles (continued from page 2: “An upturn in U.S. labor struggles”)

cial disclosures indicate they have already commit­ ted at least $25 million to these campaigns—more than they can ever reasonably expect to recoup in dues. There hasn’t been this level of staff and finan­ cial support for low-wage organizing since the Min­ ers under John L. Lewis bankrolled new CIO unions in the 1930s.

Like Lewis, the present leadership of SEIU un­ doubtedly has motives other than pure altruism, but in any case, SEIU president Mary Kay Henry has charted a far different course than the rotten re­ gime of Andy Stern that she replaced. We, of course, don’t know what will be the duration or ultimate destination of this journey in a new direction. It probably remains to be determined. But for now, the door is wide open, the welcome mat is out, for all who want to participate in these struggles of and for low-wage workers.

I believe these examples are sufficient to refute claims that the labor movement is terminally ill.

Despite the decline in union density, despite the low numbers of major strikes, despite the spread of “Right-to-Work” legislation—all legitimate con­ John G. Mabanglo / EPA (Above) Bernie Sanders receives the endorsement of National Nurses United in August. too small and have too little influence to transmit their programmatic heritage. So, a new generation of activ­ ists has no road map for the difficult route it travels. A new movement must even learn the basic but not-soobvious task of distinguishing friend from foe.

Not all the advice is helpful. For instance, some so­ cialists argue that the Bernie Sanders campaign and the Black Lives Matter activists should merge to cre­ ate “the program needed by our society” and “per­ haps a movement for socialism.” This is the position of Solidarity National Committee member Dan LaBotz: http://newpol.org/content/sanders-and-black-lives­ matter-great-debate-our-time.

Yet, neither the Sanders campaign nor the BLM movement is explicitly anti-capitalist, and no plat­ form that such a “merger” might adopt in the electoral arena would go beyond the call for reforms within the present system. To paraphrase Lenin, bourgeois re­ formism is not a step towards socialism but is instead a means of combating socialism.

Such hard-won lessons from the past are markers on today’s political road map. As another socialist veter­ an once wrote: “It is clear that any further advance— whether in health care, public housing, labor law re­ form, Social Security benefits, civil rights, or any other area of badly needed social legislation—will be made only through strikes, massive protest demonstra­ tions, and other forms of independent political action against the employers and their political agencies” (Frank Lovell, “Health Care: key issue in coal strike,” The Militant, Jan. 27, 1978).

A political struggle independent of any bourgeois party, a fight aimed directly at the dictatorship of capi­ tal, is not a new idea, but it is still a necessary one. Political principles are not commodities subject to the mantra of Madison Avenue, which holds that “new” always means improved. An older idea may prove to be better.

The movement today requires the leadership of an independent and revolutionary socialist organiza­ tion that can offer clear alternatives to the reformist programs of the Sanders campaign, the Green Party, etc., which would limit political action to the orbit of capitalist elections. The most urgent and ultimately most effective task for activists is to join in the effort to build that kind of anti-capitalist party. n cerns—we are seeing workers wanting to fight still gravitate to the traditional mass working-class organizations. Even the worker centers that arose in a period of union inaction are mostly pursuing partnership alliances with trade unions.

The recent Browning-Ferris ruling by the NLRB has a real potential for galvanizing greater organiz­ ing and bargaining advances than at any time since the passage of Taft-Hartley. The shared responsibil­ ity of companies who contract out much of their work, or who operate through franchises, makes it possible to not only take on the fast food chain franchises. It will also put wind in the sails of orga­ nizing efforts among independent port truck driv­ ers, warehouse workers such as those in the great Chicago Logistics Belt—long a target of UE—air­ port service workers, taxi and “ride share” drivers, newspaper delivery carriers, and much more.

Whether this potential can be realized is far from certain. But certainly there will be some major at­ tempts. Socialists can both learn and teach in these efforts, possibly influence some of them, and surely recruit out of them. n Readers of Socialist Action who have suggestions for labor-oriented news or analytical articles for our paper can contact [email protected].

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