Occupy Wall Street: Origins & Prospects

31 October 2011

The ancient discussion about the purposes of wealth and the conflict between oligarchy – rule of the rich – and democracy – the rule of the demos/the people comes to the fore once again with the Occupy protests.

As Nobel Prize winning economist Amartya Sen recounted in his (1999) Development as Freedom, thousands of years ago Aristotle, in his Nicomachean Ethics, noted: “wealth is evidently not the good we seek, for it is merely useful…for the sake of something else.” This line resonated strongly with a similar discussion between a husband and wife recounted in the Brihadaranyaka Upanishads around roughly the same time. Much of the rest of Sen’s book is devoted to noting the potential role of wealth and public investments in increasing human capability, going on to redefine poverty as “capability deprivation.”

Today’s Occupy Wall Street protests continue this ancient discussion about the purposes of wealth, with its slogan – we are the 99% - echoing too Aristotle’s famous distinction in his Politics about the conflict between oligarchy – rule of the rich – and democracy – the rule of the demos/the people, most of whom are without property, or poor. As Simon Johnson, former chief economist of the IMF, noted recently, “the U.S. is unique…just as we have the world’s most advanced economy, military and technology, we also have its most advanced oligarchy.” The great moral philosopher and economist Adam Smith, long ago critiqued what he called “prodigals and prospectors,” defined by the 1616 Shorter Oxford English Dictionary as “a promoter of bubble companies; a speculator; a cheat,” echoing today’s anger at promoters of subprime mortgages and credit default swaps, the latter having grown from $631.5 billion of over $62 trillion in notional value between 2001 and 2007, expressed too in 2008 Republic Presidential candidate John McCain’s critique of the “greed of Wall Street.”

The statistics are compelling. In 2007, for example, the Congressional Budget Office (CB0) revealed that the increase in the incomes of the richest 1% of the US population from 2003-2005 came to $524.8 billion, a change of 42.6%, greater than the total combined income of the poorest 20% of Americans.

Today, the top one percent of the income bracket in the US has greater wealth than at any time since 1929, the eve of the Wall Street crash. The Great Depression was end result of the speculative mania that characterized the roaring twenties, a decade eerily similar to the speculative housing bubble of the 2000s that culminated in the 2008 global financial crisis and Great Recession. Moreover, a newly released CBO report reveals that average inflation-adjusted after tax income of the top one percent of the US income bracket between 1979-2007, increased by 275 perecnt. At the same time, recently released figures reveal that US student loan debt has topped the $1 trillion mark. This is not surprising given skyrocketing tuition costs combined with savage cuts to public education and programs supporting these struggling students.

Today, we are told by the 1% and their political representatives that we can no longer afford money for public education, even as trillions go to Wall Street. One is reminded of the words of the famous educator, philosopher and sociologist John Dewey, who noted that "Nothing in the history of education is more touching than to hear some successful leaders denounce as undemocratic to attempts to give all the children at public expense the fuller education that their own children enjoy as a matter of course." Dewey said: “the price that democratic societies will have to pay for their continuing health is the elimination of an oligarchy-the most exclusive and dangerous of all-that attempts to monopolize the benefit of intelligence and of the best methods for the profit of a few privileged ones, while practical labor, requiring less spiritual effort and less initiative remains the lot of the great majority.” Already, the movement, with many students in the forefront, is achieving success. Just this week President Obama bypassed the Republican Congress by signing a new executive order so as to provide some relief to students overburdened by the crushing weight of student loan debt.

Along with this concentration of income at the top 1%, the Great Recession has seen astonishing declines in incomes for the vast majority, but most especially for racial and ethnic minorities in the US, with wealth gaps between whites, blacks and latin@s hitting historic highs. Between 2005-2009, the median wealth of Latin@s, blacks, and Asians in the US fell by 66, 53 and 54 percent, respectively. And despite massive pain and suffering for ordinary people, as the Wall Street Journal and New York Times recently reported, corporations are holding greater shares of cash than at any time in nearly half a century, with banks in particular awash with cash. The global distribution of wealth is even more skewed. As detailed in the UN’s study, The World Distribution of Household Wealth, the richest 1% of the world’s population owned 40% of global assets in 2000, with the richest 10% accounting for 85% of total world wealth, in contrast to the world’s bottom half, which owned “barely 1% of global wealth.”

These facts and figures, coming in the context of the recent global financial, economic and related social crisis, are not coincidental. For it is these very wealth inequalities, as in the 1920s, that provide the most fertile ground for financial bubbles and their bursting and concomitant crises, as the rich awash in cash seek to make money off financial speculation while the majority of the population tries to stay afloat by taking on increasing levels of debt. For a time, the speculative boom, like in the roaring twenties, was kept afloat by new forms of financing via household indebtedness, but with the bursting of that superbubble in 2008, ordinary working people, the poor and middle income families have increasingly run out of options.

For a time, protest over the trillions of dollars going to bail out the super-rich on Wall Street was stymied by the President Obama’s electoral victory and the hope of many Americans that he would take steps to address the financial and larger economic crisis. Instead, for the most part, the Obama administration turned to the very Wall Street figures that were responsible for the deregulation of finance that produced the financial crisis in the first place, such as Larry Summers. Feeling like they had exhausted the formal channels of the political system, people have now turned to mass protest. This too has resonance in American history. People often forget that FDR, following what was then called the Wall Street-Treasury view, was cutting the federal budget as late as 1937, triggering off the so-called Roosevelt recession. The Roosevelt recession, in turn, provided the final death knell for the Wall Street-Treasury view, and led to the overthrowing of the Money Trust that had dominated US politics since the late 19th century. So it should come as no surprise, then, that initial reactions to the crisis by the political elite have been enact massive cuts to health, education and social welfare, with devastating consequences to communities in both the US and across the globe.

Today’s global protests represent the rebellion of reasonable minds, with the overall message that the economies should serve the people, not the super-rich top 1%. In his landmark “Beyond Vietnam: A Time to Break the Silence” speech, exactly a year before he was assassinated, on April 4, 1967, the Reverend Martin Luther King, Jr., put it this way: “we as a nation must undergo a radical revolution of values. We must rapidly begin the shift from a thing-oriented society to a person-oriented society. When machines and computers, profit motives and property rights, are considered more important than people, the giant triplets of racism, extreme materialism, and militarism are incapable of being conquered.” At the time, King was talking about integration as “shared power and radical redistribution.” Unfortunately, since King’s death there has been a radical redistribution of wealth and power, but in the opposite direction, towards the top 1%. But King’s critique here of the entwined evils of militarism and materialism and the related need for a revolution of values, have been echoed recently, most notably by Cornell West, in the context of the new monument to King and the civil rights movement on the National Mall in Washington, DC.

King’s words also echoed that of other religiously inspired activists, before and after. For example, Peter Maurin, one of the founders of Dorothy Day’s Catholic Worker movement, in his “A Case for Utopia,” noted: The world would be better off if people tried to become better and people would become better if they stopped trying to become better off. For when everyone tries to become better off nobody is better off. But when everyone tries to become better everybody is better off. Everyone would be rich if nobody tried to become richer and nobody would be poor if everybody tried to be the poorest. And everybody would be what he ought to be if everybody tried to be what he wants the other fellow to be.”

Father Ignacio Ellacuria, then rector of the University of Central America in El Salvador, put it this way in Europe, speaking to the West, just a few days before he was assassinated by US-trained government forces in San Salvador in November of 1989: “[You] have organized your lives around inhuman values…inhuman because they cannot be universalized. The system rests on a few using the majority of the resources, while the majority can’t even cover their basic necessities. It is crucial to define a system of values and a norm of living that takes into account every human being.” Perhaps today, the world is finally heeding these eloquent messages about the purposes of wealth and the need to subordinate the economy to the needs of society - as Karl Polanyi argued in his Great Transformation - most especially the vast majority, and above all the global poor, with its echoes too in liberation theology. That is the great hope and clarion call of this new global movement.

On Friday, October 18, 2011, police arrested some 50 protesters in San Diego, California, and they have been moving steadily to arrest resisters all across the US. But as saying goes, you can jail the resisters, but not the resistance, with the latest count of Occupy Wall Street protests reaching 1,039 occupation events in 87 countries (see map below). As one sign in the Occupy Wall Street movement put it, The Beginning is Near. The global protest movement is out for nothing less than remaking the world, on a more just, democratic and egalitarian basis. There are not enough jails in the world to jail all those who will stand in solidarity with that message.