Occupy, in contrast, was and remains at its core a forward-looking youth movement—a group of forward-looking people who have been stopped dead in their tracks. They played according to the rules and watched the financial class completely fail to play by the rules, destroy the world economy through fraudulent speculation, get rescued by prompt and massive government intervention, and, as a result, wield even greater power and be treated with even greater honor than before, while they are relegated to a life of apparently permanent humiliation. As a result, they were willing to embrace positions more radical than anything seen, on a mass scale, in America for generations: an explicit appeal to class politics, a complete reconstruction of the existing political system, a call (for many at least) not just to reform capitalism but to begin dismantling it entirely.
That a revolutionary movement emerged from such a situation is hardly new. For centuries now, revolutionary coalitions have always tended to consist of a kind of alliance between children of the professional classes who reject their parents’ values, and talented children of the popular classes who managed to win themselves a bourgeois education, only to discover that acquiring a bourgeois education does not actually mean one gets to become a member of the bourgeoisie. You see the pattern repeated over and over, in country after country: Chou En-lai meets Mao Zedong, or Che Guevara meets Fidel Castro. U.S. counterinsurgency experts have long known the surest harbinger of revolutionary ferment in any country is the growth of a population of unemployed and impoverished college graduates: that is, young people bursting with energy, with plenty of time on their hands, every reason to be angry, and access to the entire history of radical thought. In the United States, you can add to these volatile elements the depredations of the student loan system, which ensures such budding revolutionaries cannot fail to identify banks as their primary enemy, or to understand the role of the federal government—which maintains the student loan program, and ensures that their loans will be held over their heads forever, even in the event of bankruptcy—in maintaining the banking system’s ultimate control over every aspect of their future lives. As n+1’s Malcolm Harris, who writes frequently on generational politics in America, puts it:
Today, student debt is an exceptionally punishing kind to have. Not only is it inescapable through bankruptcy, but student loans have no expiration date and collectors can garnish wages, social security payments, and even unemployment benefits. When a borrower defaults and the guaranty agency collects from the federal government, the agency gets a cut of whatever it’s able to recover from then on (even though they have already been compensated for the losses), giving agencies a financial incentive to dog former students to the grave.6
It’s also not surprising that, when the Great Recession that we’re still struggling through struck in 2008, young people were its most dramatic victims. In fact, this generation’s prospects were, in historical terms, uniquely bleak even before the economy collapsed. The generation of Americans born in the late 1970s is the first in U.S. history to face the prospect of living standards lower than their parents’. By 2006, this generation was worse off than their parents at a similar age in almost every register: they received lower wages and less benefits, were more indebted, and are far more likely to be either unemployed or in jail. Those who entered the workforce on finishing high school could expect to find themselves lower-paying jobs than their parents found, and ones that are far less likely to provide benefits (in 1989, almost 63.4 percent of high school graduates got jobs that provided health care; now, twenty years later, the number is 33.7 percent). Those that entered the workforce after finishing college or university found themselves with better jobs, back when there were jobs, but since the cost of higher education has been growing at a rate that outstrips any other commodity in U.S. history, larger and larger portions of this generation have been graduating with crippling levels of debt. In 1993, less than half of those who left college, left indebted. Now the proportion is over two thirds; basically, all but the very most financially elite.
The immediate effect of this was to destroy much of what was most valuable in the college experience itself, which had once been the only four years of genuine freedom in an American’s life: a time to not only pursue truth, beauty, and understanding as values in themselves, but to experiment with different possibilities of life and existence. Now all of this was relentlessly subordinated to the logic of the market. Where once universities held themselves out as embodiments of the ancient ideal that the true purpose of wealth is to afford one the means and leisure to pursue knowledge and understanding of the world, now the only justification for knowledge was held to be to facilitate the pursuit of wealth. Those who insisted on treating college as anything but a calculated investment—those who, like my friend at the radical bookstore, had the temerity to wish to contribute to our understanding of the sensibilities of English Renaissance poetry despite an uncertain job market—were likely to do so at a terrible personal cost.
So the initial explanation for the spread of the movement is straightforward enough: a population of young people with a good deal of time, and every reason to be angry—and among whom the most creative, idealistic, and energetic tended to have reason to be angriest of all. Yet this was just the initial core. To become a movement it had to appeal to a much larger section of the population. And again, very quickly, this began to happen.
Here, too, we witnessed something extraordinary. Beyond students, the constituencies that rallied the most quickly were, above all, working class. This might not seem that surprising considering the movement’s own emphasis on economic inequality; but in fact it is. Historically, those who have successfully appealed to class populism in the United States have done so largely from the right, and have focused on professors more than plutocrats. In the weeks just before the occupation, the blogosphere had been full of contemptuous dismissals of appeals for educational debt relief as the whining of pampered elitists.7 And it’s certainly true that historically the plight of the indebted college graduate would hardly be the sort of issue that would speak directly to the hearts of, say, members of New York City’s Transit Workers Union. But this time it clearly did. Not only were the TWU’s leaders some of the earliest and most enthusiastic endorsers of the occupation, with avid support from rank and file, they actually ended up suing the New York Police Department for commandeering their buses to conduct the mass arrest of OWS activists blocking the Brooklyn Bridge.‖ This leads to the third key question:
QUESTION 3
Why would a protest by educated but indebted youth strike such a chord across working-class America—in a way that it almost certainly would not have in 1967, or even 1990?
Some of it, perhaps, lies in the fact that the lines between students and workers have somewhat blurred. Most students turn to paid employment at least at some point in their college careers. Furthermore, while the number of Americans entering college has grown considerably over the last twenty years, the number of graduates remains about the same; as a result, the ranks of the working poor are now increasingly filled with dropouts who couldn’t afford to finish their degrees, still paying for those years they did attend, usually still dreaming of someday returning. Or who still carry on as best they can, juggling part-time jobs and part-time classes.8
When I wrote the story in The Guardian, the discussion section was full of the usual dismissive comments: these were a bunch of pampered children living off someone else’s dime. One commentator was obsessed by the fact that several of the women protesters immortalized in press photos had pink hair. This was held out as proof that they existed in a bubble of privilege, apart from “real” Americans. One thing clear about such commentators was that they had never spent very much time in New York. Just as styles that were in the 1960s identified with hippies—long hair, hash pipes, ripped T-shirts—became, by the 1980s, a kind of uniform for casually employed working-class youth in much of small-town America, so has much of the style of the 1980s punk movement, pink
hair, tattoos, piercings—come to play the same role today for the precarious, unsteadily employed, working class in America’s great metropolises. One need only look around at the people preparing one’s coffee, delivering one’s packages, or moving one’s furniture.
One reason the old 1960s antipathy between “hippies and hard hats” has dissolved into an uneasy alliance, then, is partly because cultural barriers have been overcome, and partly because of the changing composition of the working class itself, the younger elements of which are far more likely to be entangled in an increasingly exploitive and dysfunctional higher education system. But there is another, I suspect, even more critical element. This is the changing nature of capitalism itself.
There has been much talk in recent years about the financialization of capitalism, or even in some versions the “financialization of everyday life.” In the United States and much of Europe, this has been accompanied by deindustrialization; the U.S. economy is no longer driven by exports, but by the consumption of products largely manufactured overseas, paid for by various forms of financial manipulation. This is usually spoken of in terms of the dominance of what’s called the FIRE sector (Finance, Insurance, Real Estate) in the economy. For instance, the share of total U.S. corporate profits derived from finance alone has tripled since the 1960s:
1965
13%
1970
15%
1975
18%
1980
17%
1985
16%
1990
26%
1995
28%
2000
30%
2005
38%
Even this breakdown underestimates the numbers considerably, since it only counts nominally financial firms. In recent decades almost all manufacturers have gone into the finance business, and this accounts for much of their profits as well. The reason the auto industry collapsed during the financial meltdown of 2008, for example, was that companies like Ford and GM had by then for years been earning almost all of their profits not from making cars, but from financing them. Even GE earned about half its profits from its financial division. So while by 2005, 38 percent of total corporate profits derived from finance companies, the real number was probably more like half when you count the finance-related profits of companies whose ostensible business was nonfinancial. Meanwhile, only about 7 or 8 percent of all profits came from industry.a
When in 1953, GM chairman Charles Erwin Wilson coined the famous phrase “What’s good for General Motors is good for America,” it was taken in many quarters as the ultimate statement of corporate arrogance. In retrospect, it has become easier to see what he really meant. At that time, the auto industry generated enormous profits; the lion’s share of the money that flowed into companies like GM and their executives was delivered directly to government coffers as taxes (the regular corporate tax rate under President Dwight Eisenhower was 52 percent, and the top personal tax rate, that applied for instance to corporate executives, 91 percent). At the time, the bulk of government revenue was derived from corporate taxes. High corporate taxes encouraged executives to pay higher wages (why not distribute the profits to one’s workers, and at least gain the competitive advantage of grateful and loyal employees, if the government would otherwise take it anyway?); government used the tax revenue to build bridges, tunnels, and highways. These construction projects, in turn, not only benefited the auto industry, they created even more jobs, and gave government contractors the opportunity to enrich the politicians who distributed the booty with hefty bribes and kickbacks. The results might have been ecologically catastrophic, especially in the long term, but at the time, the relationship between corporate success, taxes, and wages seemed like a surefire engine for permanent prosperity and growth.
Half a century later we are clearly living in a different economic universe. The profits to be won from industry have shriveled. Wages and benefits have stagnated or declined; infrastructure is crumbling. However, in the 1980s when Congress eliminated the usury laws (opening the way to a world where U.S. courts and police served as enforcers to loans that can go as high as 300 percent annual interest, the sort of arrangements one could previously only make with organized crime), they also allowed almost any corporation to go into the finance business. The word “allowed” in the last sentence may strike you as strange, but it’s important to understand that the language we typically use to describe this period is profoundly deceptive. For instance, we usually speak of changes in legislation surrounding finance as a matter of “deregulation,” of the government stepping out of the way and letting corporations play the market however they like. Nothing can be further than the truth. By allowing any corporation to become part of the financial services industry, government was granting them the right to create money. This is because banks, and other lenders, do not, generally speaking, lend money they already have. They create the money by making loans. (This is the phenomenon Henry Ford was referring to when he made his famous comment that if the American people were ever to figure out how banking really works, “there would be a revolution before tomorrow morning.” The Federal Reserve creates money and loans it to banks that are allowed to lend ten dollars for every one they hold as reserves; thus, effectively, allowing them to create money.) True, the financial divisions of car companies were limited to creating money that would be returned to them to buy their own cars, but the arrangement allowed them to derive hefty profits from interest, fees, and penalties, and eventually those finance-related profits dwarfed profits from the cars themselves.b At the same time, corporations like GM, GE, and the rest were, like the largest banks, in many cases paying no federal taxes at all. Insofar as their profits went to the government, it was given directly to politicians in the form of bribes—bribery having been renamed “corporate lobbying”—to convince them to enact further legislation, often written by the companies themselves, facilitating further extractions from citizens caught in their web of credit. And since the IRS was no longer receiving any appreciable amount of revenue from corporate taxes, the government, too, was increasingly in the business of extracting its money directly from citizens’ personal incomes, or, in the case of now cash-strapped local governments, from a remarkably similar campaign of multiplying fees and penalties.9
If the relation between corporations and government in the 1950s bears little resemblance to the mythical “free market capitalism” on which America is supposed to be founded, in the case of current arrangements it’s hard to see why we are still using the word “capitalism” at all.
Back when I was in college, I learned that capitalism was a system where private firms earned profits by hiring others to produce and sell things; on the other hand, systems in which the big players simply extracted other people’s wealth directly, by threat of force, were referred to as “feudalism.”c By this definition, what we call “Wall Street” has come to look, increasingly, like a mere clearinghouse for the trading and disposal of feudal rents, or, to put it more crudely, scams and extortion, while genuine 1950s-style industrial capitalists are increasingly limited to places like India, Brazil, or Communist China. The United States does, of course, continue to have a manufacturing base, especially in armaments, medical technology, and farm equipment. Yet except for military production, these play an increasingly minor role in the generation of corporate profits.
With the crisis of 2008, the government made clear that not only was it willing to grant “too big to fail” institutions the right to print money, but to itself create almost infinite amounts of money to bail them out if they managed to get themselves into trouble by making corrupt or idiotic loans. This allowed institutions like Bank of America to distribute that newfound cash to the very politicians who voted to bail them out and, thus, secure the right to have their lobbyists write the very legislation that was supposed to “regulate them.” This, despite having just nearly destroyed the world economy. It’s not entirely c
lear why such firms should not, at this point, be considered part of the federal government, other than that they keep their profits for themselves.
Huge proportions of ordinary people’s incomes end up going to feed this predatory system through hidden fees and, especially, penalties. I remember I once allowed a Macy’s clerk to talk me into acquiring a Macy’s charge card, in order to buy a 120 pair of Ray-Ban sunglasses. I sent in a check to pay the charge before leaving the country for an extended trip, but apparently miscalculated by some 2.75 when figuring the tax; when I returned a few months later, I discovered I had accrued something like 500 in late fees. We’re not in the habit of calculating such numbers because they are, even more than debts, seen as the wages of sin: you only pay them because you did something wrong (in my case, miscalculate a math sum and neglect to have the bills forwarded to my overseas address). In fact, the entire system is now geared toward ensuring we make such mistakes, since the entire system of corporate profits depends on them.