Whenever someone suggests raising taxes on millionaires, defenders of the wealthy are quick to remind us that we should let the rich hang onto their money so they can invest it in business and thereby create jobs for the rest of us. They seem almost hurt by the idea that we might have so little appreciation for what they do. It must remind them of the old saying that “No good deed goes unpunished.” They must think us ungrateful. Not to mention stupid if we are in fact setting out to kill the goose that lays the golden egg.
I’ve been giving this a lot of thought, and it certainly does make sense that jobs come from business and business comes from money and since the wealthy have most of that, then they’re the ones who create the jobs that everyone depends on for a living. So, why not just leave them alone so they can get on with it?
Because like so many things that make perfectly good sense, it is only part of the truth, and that part can look very different when you step back and see it in the context of the whole.
When I step back, the first thing I see is a bit of history that reveals that the ‘jobs’ wealthy people create are a relatively new thing. When capitalism first started out hundreds of years ago, there were no jobs in the sense of people working for someone else in exchange for wages. The first capitalists had occupations – they were either craftspeople who made things on their own or traders who bought those things and sold them somewhere else where they could get more than they paid because people couldn’t get them otherwise. The ‘job’ as we know it only came into being when successful capitalists began using their wealth to hire other people to do the work for them. They made money by paying the workers wages that represented only part of the value of what they produced and keeping the rest for themselves.
So, while the shoemaker before made a pair of shoes and sold them to a customer for 10 francs (or whatever), the wage earner now makes the same pair of shoes in a factory and gets only 5 francs in wages. The capitalist keeps the rest.
This is no sure thing for the capitalist, of course, especially with competition from other capitalists. The risk involved coupled with wanting to get still richer, encourages them to produce goods as cheaply as possible, which they do mainly by paying workers as little and for as much work as they can get away with. Add in industrialization in the 19th century and the technology of today and companies going public by selling shares to investors, and you have modern industrial capitalism.
What hasn’t changed is the basic dynamic of the ‘job’ and the tricky relationship between capitalists and just about everyone else. Employers need workers to make things or provide services, but they also have to pay them as the major cost of doing business, and the more they pay, the less they get to keep for themselves.
This creates a basic contradiction. The less you pay workers, the more you keep for yourself. But if you pay them too little or don’t employ them at all, then they have no money to spend and cannot buy the goods that businesses are trying to sell.
So, there is a love-hate thing going on here: capitalists need workers but also have a vested interest in needing them as little as possible, including getting rid of them altogether. Which brings us back to the idea of the wealthy as creators of jobs.
When I hear that phrase – ‘job creator’ – I imagine someone who, quite simply, sets out to create jobs. As with any creator, the creation is a goal, an aspiration, a matter of pride, and when it contributes to the well-being of others, you’d think it would be an occasion for gratitude. And yet, there is a movement afoot to raise taxes on the rich, those very same job creators without whom there would be no jobs.
So, how can we be so ungrateful, not to mention shortsighted if not stupid?
I think it’s because we know – even though we are reluctant to say so out loud – the simple truth that creating jobs is not now and never has been what capitalism is about. Capitalism has never been about the well-being of anyone but the capitalist and their relations unless caring about people or families or communities can in some way enhance the bottom line.
People invest in business for many reasons – to make money, to produce a product, to satisfy customers – but not to create jobs. A business creates jobs only because it needs workers as a means to an end, and whenever it finds a way to become more “efficient” by getting rid of workers, then that is what it will do.
This isn’t exactly news for anyone familiar with the long history of business replacing workers with machines or closing factories and ruining local economies as they ship production overseas only because the labor there is cheaper and less protected. Or to anyone who knows that corporations today are sitting on a mountain of cash but will not hire new workers until they are sure it won’t hurt their bottom line and the interests of their shareholders.
Capitalism is a system organized around the single-minded pursuit of wealth. Business is simply a way of turning wealth into more wealth. If that includes creating jobs, then fine and good, but if it does not, then that is fine and good as well. Creating jobs is not the point, nor is supporting families or communities.
This doesn’t mean that wealthy people are cold and heartless individuals who don’t care about their workers or their communities. What it does mean is that whatever they may feel is not supported by the capitalist economic system that makes their wealth possible. An ‘employee,’ after all, is someone who is employed, a word that means ‘to use,’ as you would use a tool. Now, it is certainly possible to feel affection for a tool, as any carpenter will tell you. But when it breaks, well, you feel bad for a moment and then you go get another.
So, capitalists may feel badly when they lay off workers or close or relocate the plant or refuse the increase in wages, but nine times out of ten they will do it anyway. And when they don’t, they will be written up in the New York Times because it is so rare a thing to see.
The image of the wealthy as job creators is a myth, a myth that goes unchallenged in no small part because their wealth gives them tremendous power. As they seem so fond of reminding us, they can always decide to withhold their wealth or go somewhere else and leave us high and dry with no jobs at all. And where would we be then, the ungrateful masses? And so, we are supposed to keep quiet and not challenge that power, or at least not too strongly or for too long, lest they become annoyed.
This is the reality behind the myth, and so we must answer, which will it be?
Copyright © 2013 by Allan G. Johnson. This article may be quoted, reprinted, or distributed for noncommercial purposes only and with an attribution to Allan G. Johnson, www.agjohnson.com, and this copyright notice.
Similar essays and more can be found at Allan’s blog, “Unraveling the Knot.” To visit, click here.
For more on this subject, see:
Richard C. Edwards, Michael Reich, and Thomas E. Weisskopf (eds.), The Capitalist System.
Jacob S. Hacker and Paul Pierson, Winner Take-All Politics: How Washington Made the Rich Richer and Turned Its Back on the Middle Class.