The business of business is to employ people—and if they don’t do that, what good are they?

By Michael I. Niman, ArtVoice 4/26/12

When I was a kid, futurists predicted that advances in automation would give us a three-day workweek. Their idea was that robots would increase productivity, releasing workers to a life of leisure. This is the problem when physical scientists don’t talk to social scientists. What looked good on the pages of Popular Science didn’t account for capitalism, assuming instead a socialist utopia where the workers would actually benefit from their own robot-assisted increase in productivity.

What we got instead is a mathematical equation where increased productivity drives down wages. This is because it now takes fewer workers to do the same work, allowing bosses to lay off workers, increasing competition for scarce jobs and hence driving down wages. Lower wages mean workers have to work more hours to earn the same money. Say hello to the 60-hour workweek—that is, if you can find work. So much for a life of leisure puttering around in our flying cars.

Then there’s neo-liberalism, which is the underlying economic principal behind today’s conservative economics. At its core is the removal of all regulations governing international trade. We call the result “free trade.” Free trade removed the tariffs that historically existed to protect workers and fragile economies from predatory economic practices. On the ground, such tariffs protected American workers from having their wages undercut by exploited workforces toiling for starvation-level wages. Ronald Reagan began to peel away our tariff protections in the early 1980s, and Bill Clinton finally annihilated them in the 1990s with the passage of the North American Free Trade Agreement (NAFTA) and a slew of sovereignty-busting free trade pacts governed by the World Trade Organization (WTO).

As a result of the Reagan-Clinton free trade pacts, corporations could transfer labor-intensive manufacturing overseas, laying off unionized middle-class workers and eliminating the expense of their comfortable living wages and benefits. Under free trade, these jobs are now filled by overseas workers who usually live under desperate conditions and toil long hours for a small fraction of what American workers previously earned doing the same job. Corporations could bank on the exploitation of their new work force, as it is usually institutionalized by totalitarian governments that suppress unions and collective bargaining rights.

In the course of one generation, almost the entire American manufacturing base collapsed, with American corporations underwriting the development of foreign sweatshops. At the same time, these corporations facilitated one of the greatest technology transfers in history, building high-tech economies in countries such as China. Back home in the US, the former Northeast-to-Midwest industrial corridor became littered with abandoned factories, earning its name: “Rust Belt.”

The combination of high-tech automation and the corporate transfer of the industrial base to places like China dealt a fatal one-two blow to American labor. The new reality is permanent unemployment and underemployment in the new low-wage, service-based McJob economy, which is unsustainably based on consumption of foreign goods rather than production of domestic goods.

As the floor fell out under American workers, corporate profits and executive salaries soared. The math is simple, a basic formula I learned in a freshman economics class: “Minimize L to Maximize P.” “L” is labor and “P” is profit. There is no “Q” for quality of life in this equation. No “S” for social responsibility. So I asked the instructor: “What about L? Doesn’t L have a family? Doesn’t L have to pay rent? Eat?”

Soon after I switched majors from “management” to “undecided.”

The “maximize P” mindset has driven the economy since the Reagan Revolution, with living standards for American workers spiraling downward. But this simple formula, while fueling boom cycles in the financial markets and lining the pockets of the one percent, misses the point on why we even have an economy, and why we use the might of government to keep it from collapsing.

The point is simple. The business of business is to employ people so that they can live happy, productive, rewarding lives without having to worry about food, health, or housing insecurity. That, and making widgets, is the function of business. Or, more specifically, it’s the job of business to provide healthy living wages and benefit packages for as many workers as possible.

This was the trajectory we were on before the Reagan Revolution, with unions successfully raising wage floors across industries, while workers won the right to vacations, healthcare, and pensions—things we once took for granted as our birthright as Americans. These workers in turn had money to spend, and they spent it on American-made products, sustaining the economy that gave them their jobs.

The “minimize L” economy has undermined all of this. Wall Street rewards corporations for laying off American workers. Investors—the folks who accumulate money that other people have worked for, profit, while the rest of us suffer—make their money in the short term, essentially shorting the economy. In the long term, you cannot sustain an economy solely on consumption. And you cannot sustain a democracy with such radical social inequality.

But corporations are multinational, so the question is whether they really care what kind of destruction they cause in the United States. The answer is no, because corporations are not people. They don’t “care.” They are conceptual entities that, by charter, exist solely to accumulate as much wealth as possible for stockholders. They were historically kept in check by labor unions, who were tasked with making sure that workers earned enough to sustain the economy. With the decline of labor unions, corporations are running amok.

The idea is that we support business and tolerate the indulgent greed of its leaders because a healthy business sector is supposedly good for us. Because we all benefit from a healthy economy. The reality is that an economy is not healthy, despite a healthy stock market and an enriched investment sector, if the bulk of its population is suffering under financial stress or poor, unhealthy working conditions. So what’s the point of tolerating business if the very formula that defines business has no toleration for humanity?

We need to impose a new formula that does not reward corporations for profiting at the cost of destroying the American dream and destroying the very fabric of our society. The primary job of business is to employ people in good jobs. A society that tolerates anything short of this from their business sector is destined to be a failed state.

Dr. Michael I. Niman is a professor of journalism and media studies at Buffalo State College.