Why America has ‘low-road capitalism’

While Bernie Sanders calls himself a democratic socialist and Elizabeth Warren also is promoting progressive policies, we should be clear that neither is a socialist in the classical sense. They are advocating a system similar to certain other developed countries, all of whom are fundamentally capitalist but with policies to smooth out its rough edges. So how did it come to be that the US, when compared to many other developed nations, has much greater inequality, no universal health care, low wages ,high job insecurity, and a rotten social safety net.

Matthew Desmond has a good label for what we have in the US. He calls it ‘low road capitalism’. In an article (pages 30-40) in the 1619 Project that I discussed earlier that looked at the massive impact that slavery had on the history f the US, he says that many of the current ills in the US can be traced straight back to the way that slaves were exploited. Slavery enabled employers to impose harsh working conditions on slaves but even after slaves were freed, there was a determined effort to not give them anything but the barest minimum. That impacted the entire society since the floor for treatment of workers was set so low.

In a capitalist society that goes low, wages are depressed as businesses compete over the price, not the quality, of goods; so-called unskilled workers are typically incentivized through punishments, not promotions; inequality reigns and poverty spreads. In the United States, the richest 1 percent of Americans own 40 percent of the country’s wealth, while a larger share of working-age people (18- 65) live in poverty than in any other nation belonging to the Organization for Economic Cooperation and Development (O.E.C.D.).

Or consider worker rights in different capitalist nations. In Iceland, 90 percent of wage and salaried workers belong to trade unions authorized to fight for living wages and fair working conditions. Thirty-four percent of Italian workers are unionized, as are 26 percent of Canadian workers. Only 10 percent of American wage and salaried workers carry union cards. The O.E.C.D. scores nations along a number of indicators, such as how countries regulate temporary work arrangements. Scores run from 5 (‘‘very strict’’) to 1 (‘‘very loose’’). Brazil scores 4.1 and Thailand, 3.7, signaling toothy regulations on temp work. Further down the list are Norway (3.4), India (2.5) and Japan (1.3). The United States scored 0.3, tied for second to last place with Malaysia. How easy is it to fi re workers? Countries like Indonesia (4.1) and Portugal (3) have strong rules about severance pay and reasons for dismissal. Those rules relax somewhat in places like Denmark (2.1) and Mexico (1.9). They virtually disappear in the United States, ranked dead last out of 71 nations with a score of 0.5.

Those searching for reasons the American economy is uniquely severe and unbridled have found answers in many places (religion, politics, culture). But recently, historians have pointed persuasively to the gnatty fields of Georgia and Alabama, to the cotton houses and slave auction blocks, as the birthplace of America’s low-road approach to capitalism.

If today America promotes a particular kind of low-road capitalism — a union-busting capitalism of poverty wages, gig jobs and normalized insecurity; a winner-take-all capitalism of stunning disparities not only permitting but awarding financial rule-bending; a racist capitalism that ignores the fact that slavery didn’t just deny black freedom but built white fortunes, originating the black-white wealth gap that annually grows wider — one reason is that American capitalism was founded on the lowest road there is.

It is an excellent article.

UPDATE: At the rally yesterday in Queens, New York where Alexandria Ocasio-Cortex endorsed Bernie Sanders for president, she described what low-road capitalism looks like for working people.


  1. sonofrojblake says

    Just baffles me why anyone who has a choice would want to visit, much less live and work in, the USA.

  2. ardipithecus says

    It’s worse in some places. Chileans are taking to the streets as I write because too many workers cannot afford $1.20/day for bus fare.

  3. jrkrideau says

    @ 3 mnb0
    Even on that traditional selling point, social mobility (also called the American Dream), the USA loses to other developed country.

    President Donald J. Trump, son and grandson of very wealthy, albeit rather dubious, entrepreneurs.

    Vladimir V. Putin, son of a shop foreman (father) IIRC and a factory worker (mother) and grew up in a shared apartment in Leningrad.

    Was Obama the poorest US president elected since 1900?

  4. Curious Digressions says

    @ sonofrojblake
    Just baffles me why anyone who has a choice would want to visit, much less live and work in, the USA.

    Because my partner and kid have chronic health issues. Good luck finding a country with socialized medicine which would let those money-pits into their system. Not that I’m bitter that we have limited options…

    Ok, I’m bitter.

    We’re lucky because so many people who are suffering the most are too poor to move to a new apartment, let alone another country.

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