Capitalism has counted centuries, the economist (socialist) and former minister Giorgio Ruffolo likes to say between serious and facetious. Of opinion a little’ different I’m two other economists of liberal school – the American Anne Case is English Angus Deaton, Nobel prize in 2015 – that lately they wrote a book in which they ask themselves and ask us about the future proper to capitalism. Coming to the conclusion that its end could be closer than you think, given the – wild – forms that this economic development model has assumed in the main country: the United States of America.
The analysis precedes the coronavirus crisis in which we live. We don’t want to interpret their thinking, but it is probable that the fluctuation caused by SARS-CoV-2 could be a catalyst for a necessary profound reform of this “economic system in which capital is privately owned”, as Treccani defines it.
Anne Case and Angus Deaton’s analysis is contained in a book recently published by Princeton University Press: Deaths of despair and the future of capitalism (Deaths of despair and the future of capitalism). The analysis, which mainly concerns the United States of America, is ruthless. In some ways surprising. But all the more significant because proposed by two scholars who do not hate capitalism, but on the contrary consider it the most valid of the economic models.
To briefly describe the content, we should use a news item (one of many) and some (sensational) data that emerged from the scientific investigation conducted by Case and Deaton. The fact and the data seem unrelated, but the two liberal school economists connect them. We will soon see how.
The fact, therefore. Last August 30, 2019 when a judge in Oklahoma (United States) sentenced a pharmaceutical company, Johnson & Johnson, to pay the state $ 572 million for intentionally minimizing the damage and magnifying the benefits of its opioids (analgesic derivative drugs). opium).
And now the data. Americans of working age, between 24 and 65 years old are 171 million. Of these, 62% are non-Hispanic whites (106 million). Of these, 62% still do not have a university degree (65.7 million). By degree we mean the so-called baccalaria, which in Italy has an equivalent in the short degree. Practically, non-Hispanic whites who do not have at least a short degree are 38.4% of the entire working population.
Well, it is this segment of the population that has seen its condition deteriorate more than any other. Just think that between 1979 and 2017 their income net of inflation decreased, on average, by 13%, while the domestic product per capita (the average wealth of the Americans) increased by 85%, for the same purchasing power of the currency. The non-Hispanic whites without a degree are not the group of the US population that is in absolute worst conditions. But it is the one that has had the most negative derivative, which means that it has seen its status deteriorate more than any other. The American economy is putting them on the sidelines. Just think that starting from 2010, after the great recession that started in 2007 and continued in 2008, 16 million jobs have been created in the United States. But only 3 million (19%) they were offered to people without a degree. Of these, only 55,000 jobs are offered to people who only have a diploma high school, of high school.
Now let’s try to draw a lesson from this data and from the news. Or rather, let’s try to draw the lesson that Case and Deaton derive from all this.
In 2013, one of the two authors, Angus Deaton, had written another book, The Great Escape (the great escape), in which he had analyzed the origin of the inequalities that characterize our era, but had proposed an absolutely positive narrative – of progress – of the last 250 years. Capitalism, the Nobel Prize then claimed, it has given us unimaginable material progress, the conspicuous decline of poverty and deprivation (at least in the West) and a no less conspicuous lengthening of the average life. All this has been possible thanks to the useful applications, technologies and knowledge produced by science. «A star of this show – confirm Case and Deaton – was capitalism … helped by the forces of globalization».
The two authors of the new book published by Princeton University Press a few months before the SARS-CoV-2 coronavirus-induced crisis erupted they are therefore not a priori critics of capitalism, also in the form taken with the new globalization. On the contrary, they are enthusiastic apologists for it. «We remain optimistic. We believe in capitalism and continue to believe that globalization and technological change can be used for a general benefit “.
But now they have to find that something is wrong.
Case and Deaton’s attention is drawn to the mortality rate of some sections of the American population. Among African Americans, notoriously the poorest part of American society, the mortality rate decreased between 1970 and 2000 and was literally cut in the first fifteen years of the 21st century. The average life span of African Americans over the past half century has lengthened. Conversely and somewhat unexpectedly the mortality rate of non-Hispanic white people of working age has increased. In other words, for a part of non-Hispanic whites, the average life has decreased.
As good researchers, Case and Deaton wondered why (and for whom). So they investigated more deeply the condition not of the minorities who have known the hardship for some time (African-Americans or Hispanics), but just non-Hispanic whites.
Noting two surprises. First: in the United States the “deaths of despair” are increasing sharply in the non-Hispanic white population, which means deaths from three causes in particular: suicides, drug overdoses and liver disease caused by alcohol.
Second: almost all the “deaths of despair” are among people who have not achieved at least one baccalaria, which, as we said, in Italy we could call a short degree. Non-graduates get married less, many do not even know their natural lilies. They have low-level jobs paid less and less. They feel that society has less and less of them. Of course, African Americans are worse off, but their condition tends to improve. While that of non-Hispanic whites without a degree is deteriorating. This is what creates the perception that leads to depression. On the other hand, historian Carol Anderson had already noticed that those who have always been (or have felt themselves) privileged consider the condition of equality as an unbearable oppression.
It is not just a perception (and it would not be a small thing). It is a tangible reality. As Case and Deaton write: people who do not have at least a short degree “are devalued and even despised, they are encouraged to think of themselves as losers, and may feel that the system is made to go against them. ”
They have less work than ever. And when they work they go from a better job to a worse one. With ever lower wages. With an increasingly deteriorated quality of work. With a difficulty in finding protection from the unions, in turn increasingly marginalized. Hence the difficulty in getting married and starting a family. In addition, non-Hispanic whites see that for them too services deteriorate: schools, parks, bookstores. And most importantly, healthcare. “We believe that the healthcare system is an unparalleled calamity for Americans and is weakening their lives,” Case and Deaton say bluntly. A statement that could probably be strengthened in the light of when it is taking place in the USA in the fight against the Covid-19 pandemic. This condition makes them less and less integrated and increasingly uncomfortable. Their condition brings them closer to the temptation to commit suicide, to drugs, to alcohol.
The causes that Case and Deaton identify concern the current capitalist development in the United States. The financial economy, but not only. Even the hi-tech companies of communication are in the crosshairs: because it leads few companies to offer less and less work and to rake the majority of the profits. The two economists use a metaphor: everything works as if the Sheriff of Nottingham was driving the economy: it takes away from the poor to give to the rich.
This is the result, say Case and Deaton, of an unsustainable distortion of capitalism. Or, if you like, its regression, its return to the time when the industrial revolution began, when the wealth of nations increased at unprecedented rates, but to the benefit of very few, while the living conditions of the new urban workers, the workers it worsened, even compared to that of their fathers and brothers who remained in the countryside to cultivate the land.
This process finds no obstacle in politics. Indeed, it proves to be completely subordinate and favors it, with few differences between Republicans and Democrats. The cause of the worsening of a class that was once defined as medium is not to be found in the relocation (in Mexico, in China) of many companies. Other rich countries have undergone the same process but, especially in Europe, they have not incurred the same crisis. The social protection system in the Old Continent, albeit with its limitations, has worked much better than in the United States.
Now let’s go back to the news. What does the Johnson & Johnson conviction in Oklahoma have to do with all this? Case and Deaton have passed the American health system, founded on the insurance system, under the microscope, whose exorbitant costs enrich few and translate into a huge threat to the health and well-being of Americans, as the Oklahoma court seems to have pointed out . If the government does not intervene to regulate the health market – as other countries do, especially in Europe – tragedies are inevitable. “The dead of despair have a lot to do with America’s failure – a unique failure – in learning this lesson.”
This situation is unsustainable and dangerous. Not only for capitalism but also for democracy. The white working class, in fact, does not think that the solution to its problems is democracy. In 2016, over two thirds of this social group said they believed that elections are controlled by the wealthy and large corporations. On the other hand, such a large inequality, as claimed by the Supreme Court member Woodrow Wilson, is incompatible with safeguarding the democratic system.
We must not indulge in pessimism, say the authors, but it is clear that this regression must be stopped and today’s capitalism must at least be reformed. «Capitalism must not work as it does today in America […] The future of capitalism must be a future of hope, not of despair, “write Case and Deaton.
The solution is not (only) in increasing the number of graduates. It is good that more people get a higher qualification. But it is not said that those who do not graduate should be considered an outcast and treated as such.
In Europe this is not the case. Not yet, at least.
Nor is there a need (only) for a Robin Hood who fights the Sheriff of Nottingham and takes away from the few rich and gives to the very numerous poor, perhaps with a fairer tax regime. It is not (only) a question of redistributing wealth, argue the two liberal economists. It’s about changing the system.