September 11, 2011

On the "Middle Class" and Modes of Income

by Lil Joe and David

Republican debate of September 7, 2011

The language referencing of a "middle class" that the Republican Mitt Romney Presidential campaign refers to in his Monday Manifesto and against the Obama government at the Republican Presidential Debate, on Wednesday, is to appropriate the rhetoric of the Democrats. Romney’s Presidential campaign aims at the jugglers of the ‘defend the middle class from the Republican crazies attacks’ demagoguery of the Democrats, to displace the Democratic Party itself with that of a Republican man with a plan to defend of the ‘middle class’.

By presenting itself as the ‘true’ defenders of the middle class’ and the Obama economic policy as ‘hurting the middle class’ –against which this ‘middle class’ needs to be ‘saved’ and enabled to ‘prosper’ by a Romney Presidency. Nonetheless, this is a falsehood in either case because there is in reality no such thing as a ‘middle class’ that is ‘under attack’.

The working class is under attack, not consumption lifestyles.

The capitalists actually need workers to purchase the products associated with a 'middle class' consumer pattern, having money to increase demand schedule to meet their supply.

Classes are based upon empirical socioeconomic relations of production and distribution of labor power and its products. The capitalists purchase as commodities and consequently own the productive forces and appropriate as commodities the labor power of workers.

Workers are compelled to regard their labor capacity as commodities because historical capitalist conditions of production and consumption has deprived the overwhelming majority of means of producing their own means of subsistence – food, clothing, shelter, transportation, medical care and so on. These must be purchased as commodities.

Therefore, workers, in the United States, the same as everywere else that the capitalist mode of production and appropriation of wealth exists, having no means of production of their own must sell their labor power as commodities to capitalists in order to purchase commodities – in order to live.

Workers receive, in exchange for their labor power, wages in the form of money. The working class is a class of wage workers, which expand throughout the economy, including those working for commercial capitalists, finance capitalists, government employees, doctors offices and hospitals, lawyers and law firms -all socially-necessary labor time is sold as commodities. It doesn’t matter the quantity of wages or the quality of labor sold, whether in industrial or agricultural production, office, factory or field labor, commerce or service labor.

Whether they are paid by capitalists in the so-called 'private sector' or by the State - the so-called 'public sector', in all cases the materials used in production, distribution or service are products that were produced as commodities, capitalist commodity production on the basis of appropriated and exploited wage labor. Moreover, all labor that contributes to Society- including public servants - is socially necessary labor time has a material usefulness. All labor therefore contributes to social wealth.

The capitalists, on the contrary, and indeed as and together with all appropriating classes, past and present, do not work or produce any wealth, neither private nor public, but are a class of economic parasites.

Even the taxes capitalists grudgingly pay are not portions of wealth they themselves have created, but extracts taken from the hide of the labor they appropriate and exploit. Just the same, the State uses these taxes, indeed all taxes in capitalist's collective interests, from rails and interstate highways for circulating capital and transporting commodities, ports, bridges, training schools, labor statistics, agriculture and other statistic gathering and reports, not to mention police to protect their wealth domestically and armed military forces with modern weapons to impose their interests abroad.

Public works 'job creation'
In the production or repair of rails, bridges, highways, schools, dams and other 'infrastructure projects', the 'government' does not on its own account purchase building materials and hire workers. Rather, this money appropriated from taxes is transferred to capitalist suppliers, contractors, building and construction companies. These capitalist firms then use portions of this tax money to purchase labor power, and derive profits from the wealth created from these 'work projects'.

The 'military-industrial complex'
Wealth is appropriated by the State in the form of money taxes that are then used to pay capitalists to produce means of destruction. This is produced by those industries purchasing of productive forces, raw materials and labor power, which in these labor processes, the same as in the production of means of production and consumption, labor valorises: it's commodity production and so the capitalists then make a profit by selling those weapons systems to the government.

The working classes and toiling masses produce the wealth and the appropriating classes take it. This is especially true of the 'interests' and 'dividends' of coupon clipping and stock gambling capitalists. They do not perform any labor, have no social necessity, as even the management of the firms these capitalists own the managerial labor is work did by wage workers - at any rate 'salaried' employees.

Capitalist's politicians and ideologists therefore create an imaginary function for capitalists, euphemistically calling them 'job creators' and essential to the economy, i.e. to the capitalist economy, to divert from recognizing and presenting them as the lazy, economic parasites that they are, appropriating and exploiting the labor power and labor of others.

What's necessary in the 'economy', that is production and distribution of means of production and consumption is labor, not parasitic capitalists, notwithstanding being masqueraded as 'job creators'.

The clap trap about 'small business' being the 'engine of the economy'. The petty-bourgeois so-called 'small business owners' may hire five or so workers, but it is not a necessary class. The petty-bourgeois is totally dependent upon big industrial, agricultural and transport capitalists to provide what these 'small businesses' stock and sell to local customers.

The classical 'mom-pop' petty-bourgeois works right along side their few hired helpers, and as such function as outlets working for big capital. It is not 'minimum wages' or 'taxes' that are driving the mom-pop grocers and corner liquor stores out of business, but is big commercial capital - Wal-Mart and Food For Less. Under the pretext of protecting the petty bourgeoisie 'small business' from high wages and high taxes, what the Republicans - and Democrats also, for that matter - are doing is protecting Wal-Mart and Food For Less, which hire tens of thousands of low wage non-union workers. The petty bourgeois is not a necessary class.

Yet, workers are told we need capitalist's appropriating our labor as a precondition for 'jobs', and that we should be on our knees begging them to do it, thanking them for getting rich from profits, interests and rents extracted from our unpaid labor time, and that we should show our gratitude for enabling that labor to make them wealthy, by making them all the more wealthy by reducing our wages and benefits in order to maximize their profits - 'interest', 'dividends'; and reducing the taxes they pay out of the profits they appropriate.

Interest is earned from money lent, for example from bonds.

Dividends are earned from stock or equity ownership and are derived from profit which is ultimately derived from surplus labor. Dividends are the profits of exploitation of workers, a share in the value that is produced by requiring the workers to continue to produce value beyond that amount of value represented by their wages, i.e., the part of the value that is produced by labor that is not compensated by wages.

A capital gain is a profit that results from investments into a capital asset, such as stocks, bonds or real estate, which exceeds the purchase price. It is the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the investor.[1]

Capital gains are earned from speculation, perhaps occasionally by wages investment but, on the whole, by capital investment.

In addition, economists use the concept of financial wealth -- also referred to in this document as non-home wealth -- which is defined as net worth minus net equity in owner-occupied housing. As Wolff (2004, p. 5) explains, Financial wealth is a more 'liquid' concept than marketable wealth, since one's home is difficult to convert into cash in the short term. It thus reflects the resources that may be immediately available for consumption or various forms of investments.

Table 1: Distribution of net worth and financial wealth
in the United States, 1983-2007
Financial Wealth
Top 1% Next 19% Bottom 80%
1983------ 42.9%-- 48.4%-- 8.7%
1989------ 46.9%-- 46.5%-- 6.6%
1992------ 45.6%-- 46.7%-- 7.7%
1995------ 47.2%-- 45.9%-- 7.0%
1998------ 47.3%-- 43.6%-- 9.1%
2001------ 39.7%-- 51.5%-- 8.7%
2004------ 42.2%-- 50.3%-- 7.5%
2007------ 42.7%-- 50.3%-- 7.0%

Only 7% (as of 2007) of financial wealth (net worth minus net equity in owner-occupied housing) is held by the bottom 80% of wage and salary workers.

Wages are the workers basic means of income – just as profits of capital is the mode of ‘income’ of capitalists, interests from finance of finance capital and rent the form of ‘income’ for landed property.

Classes are based on production and the relations of productions corresponding form of appropriation, not on preference for what one consumes or how much. There is no ‘middle income’ of a ‘middle class’, that, is supposedly 'based' on consumption patterns.

Capitalists are a gluttonous class, and may or may not be 'greedy' and 'fat cats'. But, despicable though they might be, that is not what defines them as capitalists.

Neither is the working class defined as 'middle class' if they have more money wages and comforts than other workers, the so-called 'lower class'. Working class because we are the class that sell our labor capacity, and depend on wages in order to live, not by what we live on or what neighborhood we live in.

“Salary” is just a pretty euphemism for ‘wages’. Were a 'middle class to exist', as a class separate and apart from wage workers and capitalist appropriators, there would have to exist a separate, empirical, verifiable class relation of production to other classes with its own, specific and corresponding form of appropriation.

The reference to the working class, dependent upon wages in order to live, as a ‘middle class’ is a cruel oxymoron, because it suggests there is no relation of production that separates the working class from the capitalist class: the labor power of the former, the workers, is sold to – i.e. appropriated and exploited by the latter, the capitalists. There is no in between. What means of subsistence, the quality or quantity of means of subsistence qua subsistence does not determine their class.

Whether ‘low wage workers’ can only ‘afford’ to live in inner city slum apartments and eat grits for breakfast and hot dogs cut up in pork’N beans for dinner, and take the train or bus to work because they can’t afford an automobile or their car has broke down or been repossessed, or, on the other end of town, they live in ‘suburbs’ in a two or three bedroom house, own a car and have steak and eggs for breakfast and similar diner, these are all still but so many kinds of means of subsistence that are purchased by the wages received from selling their labor potential to capitalists.

Talking about a ‘Ponzie scheme’! Duping workers into believing they are a ‘middle class’ and their wages are a ‘middle income’ so-called salary, is nothing but an ideological Ponzie scheme that bourgeois sociologists invented to ideologically tie the working class mentally to capitalism – the belief that ‘possessions’ rather than production and method of appropriation of wealth is what determine one’s ‘class’ and ‘success’.

The Romney ideological team is slick: two can play this ideological hustle! The same illusory ‘economic category’ of a ‘middle class’, referred to by the Democrats and Obama who accuse the Republicans of ‘attacking the middle class’, and pushing demagoguery that the Democrats are altruistic protectors of the ‘middle class’ from 'greedy fat cat' Republican encroachments is simply appropriated by the Romney campaign by giving their version of 'the middle class' attributes of capitalists.

So, what does Romney propose:

(Page 22 of 24)
But right now, the question is not the people at the -- that are not paying taxes at the low end. The question is not the people who are very, very rich. The question is, how about middle-income Americans?

(Page 23 of 24)
Who are the people most hurt by the Obama economy? And the answer is the middle class. The great majority of Americans are having a very, very difficult time. And our effort has to be to find ways to reduce to burden on those people.

And that's why I've proposed that anybody who's earning $200,000 a year and less ought to be able to save their money tax-free, no tax on interest, dividends, or capital gains. Let people save their money, invest in America, and not have to give more money to the government. The middle class needs our help.

Romney lumps together everyone – as individuals, separate and apart from relations of production and appropriation of wealth – into a single pseudo-class category of 'income bracket', pseudo because it is a purely quantitative relation without reference to the quality of which it is a quantity! In other words, its like saying that everything – say every material quantity that weighs 200,000 pounds are of the same quantitative value, say $200,000, without making reference to the quality of the quantity, say, rather it be 200,000 pounds of gold, diamonds, tungsten, steel, timber, horse shit, or human shit for that matter.

Yet, when Romney went on to specify the tax savings, or rather eliminations, unlike the Democrats and Obama’s call for a nebulous tax break on a non-existing middle class, to the contrary, Romney makes reference to actual class income categories – interests, dividends and capital gains. Yet, workers depend on wages in order to live, capitalists appropriate and exploit wage labor, derive profits in the language of dividends and interest. What Romney doesn’t say is as significant as what he does say; he doesn’t include in the category of ‘income’, wages! Romney excludes wages, he does not call for “anybody whose wage earnings are $200,000 a year and less ought to be able to save their money tax-free, no tax on wages"!

Besides, what does Romney mean by his exhortation that those who save from not paying taxes on interests, dividends and capital gains ‘invest in America’? Capitalists ‘invest’ in production and circulation of commodities, purchase labor power and the exploitation of it is the source of profits, this is the sole reason for capitalist’s ‘job creation’. Nobody invests in a barren desert patch of ‘America’, even the Nevada lands of what became Las Vegas was purchased as a speculative investment in order to build hotels and gambling casinos.

The "middle class" that Romney refers to are actually working class that earn their living by working and receive wages for said work. Thus, what Romney is proposing, is to eliminate taxes on forms in income that exclude wages, forms of income working class folks don't have. Households that earn $200,000.00 or less make up 97.13% of all household income in the US. What percentage of these households make their living from interest, dividends and or capital gains? Probably very few.


Those that earn $200,000.00 or less are working class who derive their incomes in the form of wages, and workers who do have investments and therefore some dividends, and interests, are few and this income is supplemental and not their primary source of livelihood.

But, regardless what Romney is proposing, his analysis brings into the discussion the forms of income, not generally associated with the working class, viz., interest, dividends and capital gains.

Romney is thus proposing tax cuts on forms of income that workers don't generally receive. Romney is proposing tax cuts on forms of income that capitalists receive.

These types of income (interest, dividends, capital gains) are forms of income associated with capitalists, not the "middle class"/working class. Those workers who do have money in savings accounts or possess government bonds, a few stock in utilities and so on, the income on these are at best suppliments to their primary income - wages or 'salaries'. They survive on wages.

Relationship between class and mode of income:

The owners merely of labour-power, owners of capital, and land-owners, whose respective sources of income are wages, profit and ground-rent, in other words, wage-labourers, capitalists and land-owners, constitute then three big classes of modern society based upon the capitalist mode of production.

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