Political Economy

Most economist, whether they be professors or practicing economists in the real world, fail to look beyond the numbers in most scenarios.  Some even go as far as to disregard the existence of Political Economy all together.  In Introduction to Political Economy by Charles Sackrey and Geoffrey Schneider the issues and complexities of Political Economy are covered in depth.  The ideas discussed in the book are quite eye opening for most people, many of whom have not been taught the existence of the key role politics actually plays in economic practices, and how it affects everyone in every class, treating some with the benefit of money and power, and leaving others in the shambles of a society built to keep them down.

Chapter Five in Introduction to Political Economy discusses the social classes in U.S. capitalism.  It goes in to detail about how being of an upper class does not only have to deal with money and goods.  In normal economics, your class is merely determined by the level of income or number assets you have acquired, but the book shows that these are not the only advantages of the upper classes.  While being in the upper class, an individual is privy to political power and change.  Because politics is fueled by money, politicians are more likely to bend to the wills of those willing to pay them.  Politicians only listen to those that can help them later or already helped them.  Marx was on the forefront of idealists that first looked at class as a major player in economic change and policy.  He described class as a "relationship to the means of production" which held true in his time, and holds true today as well.  Although the workers of a factory are the ones that actually make a good, work the machines, come in for the long hours, and sacrifice other parts of their lives to keep the factory moving, they don't reap the benefits like the owners do.  Because the owner owns the machines the workers are using, and the land, they see all the profits and rewards from the labor of the lower classes.  So the relationship is fairly easy to see, the owner buys the land and machinery, the worker operates them.  The United States is an ownership society, so the owner will be the only one to see the profits of production, even though it's the workers and lower class that puts all the labor into whatever the factory is producing.  This keeps the lower class down, because with little pay and long hours they will never move to a place in society to which they could be the owner of a factory.  They are stuck working just to make ends meet, and the owners keep reaping the benefits and profits, further separating the gap between the classes.  An example the book goes in to depth on is the situation at Bucknell University.  The president pulls in about $200,000 a year, supplemented even further by benefits.  Meanwhile, the "support staff" ranges from $13,000 to $50,000, most of which make the lower portion of that range.  Even though this support staff is responsible for keeping the college running, and most of its day to day activities, many of the support group does not even make in a year the amount of benefits the president sees yearly.  It's a classic example of the rich getting richer, and the poor staying poor.  As long as you are on top, you pull more benefits, with less work.

Chapter Seven discusses U.S. monopoly capitalism.  "Fifty-one of the world's top 100 economies are corporations (the other 49 are countries)" the book illustrates.  This means that 51 corporations pull in more money than many countries economies.  These corporations don't even have to deal with famine, feeding citizens, war and violence, which many countries do, even more so the poor countries.  With very little to worry about beyond paying a few taxes and paying wages to employees, these corporations are accumulating massive amounts of profit with very little interference from outside sources.  200 corporations produce 27.5% of the worlds output, but employ less then 1% of the world's population.  If this were truly equal, they would also employee 27.5% of the world's population, but because they don't have to because of relaxed monopoly laws and corporate benefits, they are responsible for killing millions of possible jobs that could be made if they were split up into lower profit, lower output small companies.  And corporations do everything they can to make it seem as if they are looking out for the average person and the lower classes. An example the book discusses is Bill Gate's comments during the anti-trust suit against Microsoft.  He proclaimed that Microsoft was doing a great service to the consumer, and they had recently dropped the price of their Windows operating system.  He failed to mention that Microsoft had a 90 percent profit rate on the operating system already, because the cost to further produce Windows had dropped to such a low point.  The corporations are keeping the lower classes and workers blind to how much money they are making in reality, and try to sweep it under the rug by "lowering prices to help the consumer."  The consumer is never told how much Microsoft is actually making, so they don't know if they are getting the short end of the stick or not.  In the end, the U.S. capitalistic society grows more and more because the large corporations stifle competition, by buying them out, or forcing them out of a market completely.  Truly, this is an irrational system.

Politics has become a major player in economy, especially in the United States.  With high economic power comes high political power, which stacks the deck even further in favor of the corporations, dividing them more and more from the poor and working classes.  The people are further blinded by the profits of the corporations, thinking that if they work hard under them, they will one day become rich and powerful, which is vary rarely the case.  Introduction to Political Economy does a great job illustrating the points of economic policy that are rarely discussed by mainstream economists, and points out the growing divide in the system in the U.S., and worldwide.