Huffpost Business
The Blog

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors

James P. Hoffa Headshot

Global Capitalism Is Destroying the Middle Class, Say the Global Capitalists

Posted: Updated:

Some of the most trusted institutions in the world are finally awakening to the dangers of unrestrained global capitalism.

Unions, of course, have for decades warned about the emerging global order. The reason for integrating regional economies into global networks has always been to shift power away from workers. The imbalance, we warned, was dangerous to all of our futures.

It gives me no satisfaction to say we were right. The world's economy is now dominated by multinationals roaming the globe to sniff out tax havens and cheap labor; out-of-control banks extorting governments for bailouts again and again; and politicians catering only to greed. All the while, America's middle class grew poorer, and smaller. Workers lost their jobs, their savings and their houses. Now their Social Security and Medicare are attacked.

The new organization of the world economy, dreamed up by the bankers and the multinationals, has failed. Don't take my word for it: This is what the World Bank, the International Monetary Fund and the Council on Foreign Relations are reporting.

The Council on Foreign Relations, for example, just published a paper that explicitly rejects the fantasy that everyone is better off when the free market prevails. The paper, written by economist Michael Spence, says that America will soon face a jobs crisis. He makes the striking argument (for the CFR) that so-called free-market solutions won't work. "That seems clearly incorrect and is supported by neither theory nor experience," he writes.

"Assuming that the markets will fix these problems by themselves is not a good idea... In truth, all countries, including successful emerging economies, have addressed issues of inclusiveness, distribution, and equity as part of the core of their growth and development strategies," he concludes.

You might think Spence was influenced by a union representative on the Council's board, but there are none. Its board consists of retired generals, bank presidents, Cabinet officers, prominent academics, and even one of the world's biggest union-busters, FedEx chairman Fred Smith.

Like the Council on Foreign Relations, the World Bank has long sided with powerful special interests in developed nations, often to the detriment of the lower and middle classes. So it was surprising to hear the World Bank call for justice and jobs earlier this month.

The Bank issued a report saying unemployment "was overwhelmingly the most important factor cited for recruitment into gangs and rebel movements." World Bank President Robert Zoellick said, "If we are to break the cycles of violence and lessen the stresses that drive them, countries must develop more legitimate, accountable and capable national institutions that provide for citizen security, justice and jobs."

This was a stunning statement coming from Zoellick, a former managing director at Goldman Sachs and President George W. Bush's trade representative. As a member of America's political and financial leadership, you would expect Zoellick to be blind to the need for justice and jobs, both as a moral duty and as a matter of self-interest.

The World Bank's sister institution, the International Monetary Fund, has typically taken a hard line against working people. For decades the IMF made emergency loans to troubled governments only after forcing them to cut spending on social programs. The IMF has even demanded worker's rights be weakened as a condition of granting a loan.

And so the IMF was perhaps the last institution you'd expect to argue that workers need more bargaining power. Yet the IMF came out with a paper last year that said exactly that.

The paper, titled "Inequality, Leverage and Crisis" presented evidence that extreme inequality between workers and the rich was a reason for the current Great Recession.

The paper said there will be "disastrous consequences" for the world economy if workers do not regain their bargaining power. It suggests radical changes to the tax system and debt relief for workers.

I am heartened that these respected institutions are sounding the alarm over the policies that are destroying the working classes around the world. Perhaps our combined voices will make some difference.

Make no mistake, however; the message cannot be denied, no matter who delivers it: Our economy rewards wealth, not work. It has impoverished the middle class and taken a savage toll on the growing ranks of the poor.

We need our leaders to hear this message clearly from all of us and to seek out a new economic course for our country. I've been waiting a long time for political leaders to show they understand this. I hope that I -- along with the IMF, the World Bank and the Council on Foreign Relations -- will not be waiting for much longer.