obvious: Having made the initial decision to get the economy going to produce certain priority goods, and having either raised taxes or borrowed money to pay for this, the fact of the initiative itself generates an upward cycle of activity. And the people put to work begin paying taxes in amounts that circle back in the economy and repay the government. This is how, in most periods of modern history and in most societies, governments balance their budgets over time. There may be a “deficit” initially when, during recession, the government borrows money to put people to work. But this is repaid when, as the “multiplying” cycle of economic activity continues, more taxes are returned with greater subsequent economic activity. I do not want to burden this article with technical economics. My point is quite different: It is to recall that we know how to manage these things when we want to. Japan has maintained full employment mostly in the rage of 1 to 3 percent for 30 years; we have had eight major recessions since World War II. “Politics as Usual” Such observations help establish certain fundamentals. However, let me be clear that I no longer believe the traditional argument that “full employment” should be a primary immediate goal. This takes some explaining. For years many Americans have held that if only we could muster enough political power, we could alter the basic priorities of our corporation-dominated economy. (For many years I joined in this argument.) In retrospect, however, although there have been some gains, and some losses have been forestalled, what stands out is how little “politics as usual” has changed the fundamentals of the economic system. The constant media attention given to small improvements, and to fights over important “issues” like the war on poverty, obscure this. We tend to get lost in the forest as we peer intensely at small trees. Nevertheless, the fact is that the way in which income has been distributed in the economy has not shifted significantly for decades. In the entire postwar period, for instance, families in the top one-fifth of the society have received roughly 42 to 44 percent of the nation’s income, while the bottom fifth has made do on roughly 4 to 6 percent. Changes of definitions and categories may alter a few percentage points here or there, but they do not change the basic picture of a system that, next to South Africa and possibly France, has the most inequitable and, amazingly, stable pattern of income distribution among all the advanced nations. The same is true with the even more inequitable distribution of wealth. Small changes have often obscured the unyielding underlying reality of a nation in which the tiny top 1 percent of society holds—and has held for decades—more than one-fifth of the nation’s personally held wealth. Or consider unemployment. There has been a steady worsening over time, irrespective of “politics.” During the 1950s the unemployment rate averaged 4.5 percent; during the 1960s, it was 4.8 percent; during the 1970s, it was 6.2 percent. In the decade of the 1980s, unemployment has averaged 8.0 percent. The low point of the 1981-82 recession was 10.7 percent—the worst level since the Great Depression. All of these numbers are doubled, of course, for blacks and mere than doubled again for black teenagers. The amount of money the federal government has spent on the poor has varied between 1 to 2 percent of the gross national product (GNP) throughout even the most generous period of the postwar era. Meanwhile the amount spent for the military has varied in recent years between 5 to 7 percent of the GNP. Year in and year out, through Democratic and Republican administrations (including Eisenhower, Kennedy, Johnson, Nixon, Carter, and Reagan) there is remarkable stability in the fundamental outcomes of the economic system, no matter what happens in politics as usually defined. The distribution of income is little changed. The amount shifted to poverty by traditional politics varies at around 1 percent of the GNP, depending upon who is in power. The amount shifted back and forth on military spending varies at around 2 to 3 percent of the GNP. The number of unemployed increases steadily. Things have been getting worse lately, but the central point is not that “we live in conservative times,” though we do. The important point is that even in liberal times so little actually changed. Some people hope that a revival of liberalism might mean a reversal of the recent shifts of the Reagan administration. Undoubtedly there would be some improvement. But what I find most impressive is how little that which really matters in the economy has been shifted by conventional politics even in the best of times—and what lies ahead is not likely to be the best of times. Behind the unchanging facts of the basic economic “outcomes” is a rigid system of political deadlock that governs what can be approved (or even legitimately proposed) no matter who is in office as president. A major source of this deadlock is the deep racism of the nation. The United States has never developed a powerful coalition of forces among the broad “working class” in large part because blacks have been isolated either through outright repression, as for generations in the South, or, more recently, through political demagoguery that has used covert racist themes, such as “cheating welfare mothers,” as a way to attack public programs and divide the opposition. Viewed in larger perspective, the United States throughout the 20th century has been a society dominated by a political-economic system that centers on the giant, for-profit corporation. This institution, for better or worse, has been the mechanism by which we have managed our economic affairs. We have used the corporation to make our steel, build our roads, construct our automobiles, and create most of the everyday things we use in the home and office. In some respects the corporation-dominated economy has been an extraordinary success: No society has ever been so rich. It is no accident that the politics of our economy, through tax policy, regulatory policy, and a basic orientation, has given priority to this institution. On the other hand, we are beginning to understand in more profound ways the costs of our particular kind of economy: It generates inequality as a matter of course and indifference to those with less income; builds institutions that are hierarchical in nature and exaggerate social and status differences; tends to generate political processes easily manipulated by money and influence rather than participation and concern; leads to expansion abroad, intervention in the politics of other nations, and war; exploits the environment in unconscionable ways; and breeds people whose goals in life are excessively materialistic and selfserving. Throughout the 20th century, reformers have accepted the fact of the corporate-dominated economy and operated on the theory that major improvements could be made without altering its fundamental structure. Many gains were made, especially in times of crisis, such as the Great Depression. But the reformers’ premise, I believe, must now be questioned. There is powerful evidence that the power center of the politicaleconomy is itself at the core of our difficulties. We are approaching a new century; it is a mere 15 years away. I believe that just as the central political issues of the present century has been how to manage a society dominated by a corporate political-economy, the central issue of the coming century will almost certainly be how we organize ourselves to move beyond the corporation as the core institution of the system, particularly if, as seems likely, we head into ever more difficult economic waters. The Context of Affluence Despite the enormous economic pain many have suffered, the ironic fact is that the broader sweep of our emerging history is one of affluence. The GNP even today generates an average of $65,000 for every four people. Every 35 years or so, our national income per family has doubled. If it continues at this rate, by the year 2020, we shall have not $65,000 per family of four in potential Clinton St. Quarterly 33
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