The Power of Capital: An Introduction to Class, Domination, and Conflict By Alejandro Reuss An ECI Teaching Module on Social and Environmental Issues in Economics Global Development Policy Center Boston University 53 Bay State Road Boston, MA 02155 bu.edu/gdp Economics in Context Initiative, Global Development Policy Center, Boston University, 2020. Permission is hereby granted for instructors to copy this module for instructional purposes. Suggested citation: Reuss, Alejandro. (2020) “The Power of Capital: An Introduction to Class, Domination, and Conflict.” An ECI Teaching Module on Social and Economic Issues, Economics in Context Initiative, Global Development Policy Center, Boston University, 2020. Students may also download the module directly from: http://www.bu.edu/eci/education-materials/teaching-modules/ Comments and feedback from course use are welcomed: Economics in Context Initiative Global Development Policy Center Boston University 53 Bay State Road Boston, MA 02215 http://www.bu.edu/eci/ Email: [email protected] NOTE – terms denoted in bold face are defined in the KEY TERMS AND CONCEPTS section at the end of the module. 1 TABLE OF CONTENTS 1. INTRODUCTION.................................................................................................................... 3 1.1 Economics and Power Relations ........................................................................................... 3 1.2 Outline of the Module ........................................................................................................... 4 1.3 Economics and Market Relations .......................................................................................... 4 1.4 Non market Relations and Power .......................................................................................... 9 2. CAPITAL AND WAGE LABOR .......................................................................................... 11 2.1 Radical Economics and “Classes”....................................................................................... 12 2.2 Wealth Inequality and Labor Contracts .............................................................................. 13 2.3 Property, Power, and Incomes............................................................................................. 15 2.4 Threat of Job Loss ............................................................................................................... 16 2.5 Monitoring and Discipline .................................................................................................. 18 3. CAPITAL AND THE NATIONAL STATE ......................................................................... 20 3.1 The “Ruling” Class.............................................................................................................. 21 3.2 Insulation of State Institutions ............................................................................................ 23 3.3 Narrow Versus Broad Interests ........................................................................................... 24 3.4 The Collective Economic Power of the Capitalist Class..................................................... 26 3.5 The Geography of Power .................................................................................................... 28 4.CONFLICT AND CHANGE .................................................................................................. 31 4.1 Conflictive Bargaining ........................................................................................................ 32 4.2 Barriers to Labor Organization and Collective Action ....................................................... 35 4.3 Politicization of Class Conflict ........................................................................................... 36 4.4 The Future of Labor ............................................................................................................ 38 DISCUSSION QUESTIONS ...................................................................................................... 42 REFERENCES ............................................................................................................................ 44 KEY TERMS AND CONCEPTS .............................................................................................. 51 1. INTRODUCTION 1.1 Economics and Power Relations Social scientists and other observers often describe various actors, such as wealthy individuals, large corporations, governments, or international institutions, as exercising power over others. The term “power,” however, is used so widely that those using it do not always define precisely what they mean by it. Individuals may have to figure out what a particular commentator means by “power” by observing who they view as exercising power, or what kinds of actions they think of as uses of power. The German sociologist Max Weber (1864-1920) offered one of the most famous definitions of power as the “probability that one actor within a social relationship will be able to carry out their will despite resistance, regardless of the basis on which this probability rests.”1 Three useful aspects of this definition are: 1) One social actor’s power only exists in relation to other actors. The claim that a particular actor has “power” must be defined by both what this actor has the power to do and in relation to whom they can do it. 2) Power exists in situations where the objectives of different actors are in conflict. Weber defines power by the ability to overcome resistance, which implies that it is used against an actor who has opposing aims.2 3) Power is defined by the ability of an actor to achieve a desired outcome, which means that it must be asymmetrical. If two actors are in conflict, the power of one to cause a certain outcome cannot coexist with the power of the other to prevent it. Economic relations between different individuals or groups can be power relations. In human history, there have been many different forms of economic organization, each characterized by distinctive kinds of power relations. This module is about forms of power that are characteristic of capitalist economies. Capitalist economies are defined by three features: 1) Production goods (things used to produce other things, such as land, buildings, and machines) are privately owned and can be bought and sold in markets. 2) Labor power (a person’s ability to do work) is bought and sold in markets, primarily in the form of some people agreeing to work for others for pay. 3) Goods and services are produced for sale in markets, with the aim of private profit.3 1 Weber, 1978, pp. 53. 2 This aspect of the definition is problematic in at least two ways. First, it suggests that the actor over whom power is exercised is capable of some “resistance” action. However, such resistance may be deterred in highly asymmetrical power relations. Second, it suggests that the actor over whom power is exercised consciously opposes the actor exercising power. One actor’s power over another, however, could include the power to influence the other’s beliefs, in such a way as to get the latter to accept the aims of the former without opposition. 3 Bowles, et al., 2018. Bowles, et al., include wage labor (one person working for someone else for pay, in a formally voluntary exchange) as a defining characteristic of capitalism. An alternative definition includes any form While capitalism has only existed for about 500 years, it has spread and transformed societies around the world and is the dominant economic system in the world today. 1.2 Outline of the Module This module presents an overview of economic class, class power, and class conflict—all of which are key themes in radical economics.4 It addresses some aspects of economic power in capitalist societies today, highlighting relations among actors that are not regarded as power relations in mainstream (or “neoclassical”) economics. It is by no means, however, a comprehensive account of economic aspects of power. This module will focus on economic “classes” and the kinds of unequal power relations that exist between people in different economic classes in capitalist economies, such as business owners and managers on the one hand and nonsupervisory workers on the other. Unequal power relations also exist along lines of gender, race, ethnicity, and other kinds of social groups. “Class power” relations should be understood as part of a larger picture— one piece in an interlocking jigsaw puzzle—of power in contemporary societies. The following three sections of this module focus on class power in the workplace, class power in the political sphere, and how conflicts between classes in both the workplace and the political sphere can change these power relations. Section 2 focuses on the unequal power relations between employers and the people who work for them for pay (“the wage labor relation”). Section 3, on capital and politics, addresses the ways that business owners and managers can convert their economic power into political power, particularly to further their common class interests rather than narrower company or industry interests. Section 4 focuses on conflict and change—especially on workers’ collective action and how it can alter or could even abolish unequal “class power” relations. 1.3 Economics and Market Relations If people are to exist together in societies, they must develop ways to govern their interactions, including in economic aspects of social life.5 They must determine