City governments around the nation have driven Occupy Wall Street demonstrators into the streets—sometimes with unusual force—depriving “Occupiers” of a physical claim on ongoing protest in public space. But the movement no longer depends on privileged sites of occupation. It may be on its way to becoming something much more—a force for economic democracy, a contemporary vision of society and economic justice that has deep roots in Catholic and Protestant social ethics.
It was not a coincidence that the Protestant social gospel, the modern Catholic tradition of social teaching, various socialist movements, the fields of social ethics and sociology and the ideas of social structure and social justice all arose during the 19th century. They were all cultural products of the clash between corporate capitalism and a rising trade union movement. A call for the common good and economic democracy, the social gospel was a response to the story of its time.
The story of our time is that the common good has been getting hammered for 30 years. Today’s debates about busting public unions, cutting Medicaid and privatizing Medicare are the culmination of three decades of economic globalization and of massive structural, and to some degree politically engineered, inequality. Social contracts have vanished under threats of obsolescence and ruin, while the global market exploits resources, displaces communities and sets off wealth explosions in wild cycles of boom and bust.
Every recent trade deal signed in Washington has resulted in well-paying jobs leaving the United States. Partly as a result of such free trade commitments, wages have been flat for 35 years and wealth inequality has accelerated dramatically. In the 1980s the United States cut the marginal tax rate from 71 percent to 28 percent and the capital gains rate from 45 percent to 20 percent. Since then the share of U.S. income held by the top 1 percent has more than doubled. The top 10 percent of the U.S. population holds more than 70 percent of the nation’s wealth; the top 1 percent alone commands an astonishing 39 percent share. Meanwhile the bottom 50 percent can claim just 2 percent. The United States needs economic democracy now more than ever.
The global integration of two radically different models of growth—debt-financed consumption and production-oriented export and saving—created a wildly unstable world economy featuring asset bubbles and huge trade imbalances. During this period nearly every manufacturing-oriented society not only outperformed the United States in income growth; they did this with more equitable distribution of income. Why didn’t the United States do the same?
For over two centuries, our nation has debated two fundamentally different answers to the question of what kind of country the United States should be. The first envisions a society that provides unrestricted liberty to acquire wealth. The second envisions a “realized democracy,” in which rights over society’s major institutions are established.
In the first view, the right to property is lifted above the right to self-government, and the just society minimizes the equalizing role of government. In the second view, self-government is considered superior to property; and the just society places democratic checks on social, political and economic power. Both of these visions are ideal types, deeply rooted in U.S. history, that reflect inherent tensions between classic liberalism and democracy. Both have limited and conditioned each other in the American experience. But in every generation one of them gains predominance over the other, shaping the terms of the debate and telling the decisive story of its time. Today an extreme version of the first of these two views is being asserted aggressively. According to this perspective, a great people is stymied by a voracious, intrusive federal government; Americans are overtaxed; and government is an incompetent, even malicious social force.
Claims of this sort have deep cultural roots; the Tea Party did not invent them. But this ideology finds no endorsement whatsoever in the modern Catholic and ecumenical Protestant traditions of social ethics. That ethical system begins with the acceptance of mutual obligation and a firm belief in the common good.
From this standpoint, three practical points should be made about contemporary debates over tax policy and social inequity:
1. Americans are not overtaxed. In 2011 the total burden on U.S. taxpayers reached the lowest point since 1958. In 1999 Americans per capita directed 28 percent of their income to federal, state and local taxes; today the number is 23 percent. As a percentage of gross domestic product at 14.8 percent American taxation is at its lowest level since 1950.
2. The shift to lower taxes is a major reason the United States fell so deeply into debt. If the United States had followed the revenue and spending track set at the end of the Clinton administration, the national debt today would be negligible to nonexistent. Instead, U.S. total debt exploded. Why? Because during the Bush years the marginal rates on income taxes and capital gains taxes were sharply reduced at the same time the nation launched an expensive new drug prescription benefit and two wars. These vast expenditures and deep tax cuts were not offset by new revenue or spending cuts. They doubled the nation’s debt in seven years. The costs associated with that fiscal recklessness keep mounting, accounting for three-fourths of the new debt that has accumulated during Barack Obama’s presidency.
Today the wealthiest Americans pay minimal income taxes, owing to favorable tax policies in Washington. Investment managers earning billions a year are allowed to classify their income as “carried interest,” which is taxed at the same rate as capital gains, 15 percent. A tax system that serves the common good would create additional brackets for the highest incomes, as the United States once did. It would lift the cap on the Social Security tax, taxing annual salaries above $102,000 or, at least, creating a “doughnut hole” that adds a Social Security tax for individuals earning more than $250,000.
3. Tax rates are not the most important contributor to economic growth. Creating a healthy and productive workforce, educated for 21st-century jobs, is more important than fluctuations in tax rates. Investing in research and technology is more important. Sustaining a middle class that buys goods and services is more important. Developing a strong infrastructure (the United States ranks 23rd in the world) and saving for investment (most Americans have no savings) are at least as important as tax rates.
Building a Movement?
How can the nation begin to shift direction toward that contested path to economic democracy? It may already be happening. Occupy Wall Street hardly represents the kind of force many progressives imagined would arise to promote significant economic and social reform, but it is building a social movement that prizes radical democracy and radical hospitality and measures a distinct blend of nonviolence and outrage. It is committed to an egalitarian, autonomous, leaderless process governed by consensus. It has nurtured a powerful sense of community, building a global protest community that is transformative in the lives of those who are joining it.
The Occupy movement is no left-wing counterpart of the Tea Party. The Tea Party, from its beginning, identified with the Republican Party and tried to take it over. To a significant extent it has done so. The Occupy movement has no similar relationship to the Democratic Party. To many occupiers, President Obama is a bigger obstacle than a President Romney or a President Gingrich would be, because loyalty to Mr. Obama restrains many progressives from breaking with the system.
The movement has been clear about what it is against. The O.W.S. New York City General Assembly declared that it is against allowing corporate economic power to run the government. It is against predatory banking and foreclosures, the bailing out of megabanks, the perpetuation of inequality and discrimination based on race, sex, age, gender identity or sexual orientation or age. It is against monopoly farming and the poisoning of the food supply, the abuse of animals, unsafe working conditions, the outsourcing of labor, the legal status of corporations as persons, lack of health coverage, the erosion of privacy and the abuse of military and police power.
Can the movement figure out what it is for?
Becoming a force for economic democracy seems a sensible direction to take. Here are some positive positions worth consideration:
1. Support the creation of public banks. The nation spent trillions of taxpayer dollars bailing out banks and eating the toxic debt of the insurance conglomerate American International Group and “too big to fail banks,” like Citigroup. It ought now to establish public banks at the state and federal levels that could finance startups in green technology and provide financing for worker cooperatives that traditional banks spurn.
2. Support real bank reform. In 1999 the Gramm-Leach-Bliley Act repealed the Glass-Steagall Act of 1933, tearing down the New Deal wall between commercial and investment banking and opening the door to the megabank empires of the Bush years. Today seven banks control 66 percent of the nation’s assets. The government, by paying off the very people who created the mortgage meltdown, has made these banks more powerful than ever. The big banks are already back to gambling in the credit swaps market. They fought every reform in the Dodd-Frank financial reform bill and spend $50 million each quarter to obliterate the minimal reforms that did pass, like the bill’s watered down and overly complex Volcker Rule, named for the former Federal Reserve chairman Paul Volcker. The measure was intended to prevent banks from making risky trades for their own profit in securities, derivatives and other financial products, but industry groups have campaigned for broad exemptions and now the rule’s regulatory impact is unclear. A social counterforce could push back to protect common sense reforms.
3. Support alternative production models. Can we imagine and invest in real-world alternatives in the nation’s diminished manufacturing sector that move beyond the traditional dualism of worker and capitalist? People work harder and more efficiently when they have a stake in a company. In Spain, the Mondragon network of worker-owned manufacturing cooperatives is spectacularly successful; in the United States there are already 14,000 firms with worker-ownership plans, and approximately 1,000 companies are fully worker-controlled.
The nation’s political leaders in this time of grave crisis may opt for muddling through another lost decade. They may savage public sector unions and slash Medicaid and Medicare, hoping that austerity and limited social and political expression for workers will somehow restore national vitality. An alternative approach would be to renew the country by investing significantly in a clean energy economy and rebuilding our crumbling infrastructure. Labor, equipment and capital costs will never be lower. A bet on human capital and the nation’s future, rather than retrenchments aimed at restoring its past, could offer a payoff well in excess of its economic impact.
Most of our traditions in social theory and Christian social ethics have operated with unitary ideas of capitalism and socialism, as though each were only one definitive, mutually exclusive whole. Economic democracy must be built from the ground up, piece by piece, breaking from the universalizing logic of state socialism, taking seriously the idea that there are different kinds of capitalism. Economic democracy is about building up institutions that do not belong wholly to the capitalist market or to the state. Economic democracy extends the values and rights of democracy into the economic sphere, encouraging the development of environmentally sustainable economies.
Economic democracy features mixed forms of worker, community and mutual fund or public bank enterprises. It begins by expanding the sector of producer and consumer cooperatives, community land trusts and community finance corporations. Factors of production do not trump everything, but those who control the terms, amounts and direction of credit play a huge role in determining the kind of society everybody lives in.
The Occupy movement will soon have to raise its voice on important policy decisions like these. All Americans would benefit if the movement were to become a voice for economic democracy. But whatever course it sets, Occupy Wall Street represents a large-scale social force that can make a difference. In one month it spread from lower Manhattan to more than 900 cities and four continents. Coalitions are forming that were not possible six months ago. There is opportunity here for religious communities to play a significant role as well.
Wall Street is by far the most commanding force in the nation’s economic and political life. It requires a certain stubbornness and moral passion for any movement to set itself against something that powerful. Can these stubborn occupiers move from seizing public sites to seizing this moment in history to begin building a better social order?
Gary Dorrien answers questions on the Occupy movement.