The Capitalist Class

Sidney Horowitz’ Booklet, Chapter 3

Scrooge McDuck

Chapter 3

The Capitalist Class

Class is Fundamental          

           

In the field of labor relations, which explores the relationships between employers and employees, a class is “a group of people who have a common relation to the means of production.” It is a structural definition; it does not identify the ideas or the actions of groups within that class, or of the class as a whole.

Some ideas and actions benefit a class, and some do not. A class is said to have “interests.” A “class for itself” understands its own class interests and actively pursues them. A “class in itself” is a politically undeveloped class that does not understand its own class interests or pursue them actively.

           

The U.S. capitalist class is a “class for itself.” It knows its own interests and fights for them. Within the capitalist class, multinational corporations are the leaders. They dominate the U.S. economy and politics and exert hegemony (dominant ideological and political influence) over society. National corporations are fading in economic and political significance and local corporations, partnerships and single-owner companies are numerous but not as influential. Small business, contrary to popular belief, plays a subordinate and small part, taking its lead from big business. This chapter will provide some detail about the U.S. capitalist class and big business’ hegemony.

Big Business Makes the Profits

           

According to U.S. official statistics, in 2008 just 34,000 large corporations made $900 billion, or 91% of all after-tax profits. Firms with sales of $1-10 million each (0.9 million) had a net income of $75 billion, while the 4.8 million small companies with sales of less than $1 million suffered a total loss of $65 billion! Together, these 5.7 million companies, 98% of the 5.8 million companies that filed tax returns, made a collective profit of only $10 billion.^[i]

Who are the giant companies with the outsized profits? Fortune Magazine reports that in 2010, 28 American-registered multinational corporations made $350 billion in net income (after-tax), one-third of the $900 billion profits that all of business made in 2008. Petroleum, banking, and technology companies are particularly important, as the table below shows.

U.S.-BASED CORPORATIONS WITH $6 BILLION+ AFTER-TAX PROFITS, 2010
Corporation	Profits ($ bill.)	Corporation	Profits ($ bill.)	Corporation	Profits ($ bill.)
Exxon Mobil	30	Wells Fargo	13	Goldman Sachs	8
AT&T	30	Coca-Cola	12	Pfizer	8
Chevron	19	General Electric	12	American Intl Gr.	8
Microsoft	19	Intel	12	Cisco Systems	9
J.P. Morgan	17	ConocoPhillips	11	Ford Motor	7
Wal-Mart	16	Citigroup	11	Philip Morris Intl	7
IBM	15	Hewlett-Packard	11	PepsiCo	6
Apple	14	Google	8	General Motors	6
Johnson & Johnson	13	Berkshire Hathaway	8	Oracle	6
Procter & Gamble	13	TOTAL OF 28 COMPANIES:      $ 350 BILLION
Source: http://cgi.money.cnn.com/tools/fortune/compare_2010.jsp, data from May 23, 2011.

Big Business is the Major Employer

Big businesses employ the majority of American workers. 18,000 large companies employed 51% of American workers in 2008, some 61 million people. Of these 18,000 companies, just 981 employed 33 million, more than one quarter of all American workers! These 981 companies thus averaged 325,000 American employees each. The 33 million were spread among 678,000 sites (“establishments”) across the United States, with each company employing workers at 691 US locations, on average.^[ii]

These 981 multinational companies also have “establishments” in many other countries, where their foreign subsidiaries (and other parts of company-controlled supply chains) employ millions of additional workers. The Wall St. Journal reported, “U.S. multinationals employed 21.1 million people at home in 2009 and 10.3 million elsewhere, including increasing numbers of higher-skilled foreign workers.”^[iii] Many “American” companies now conduct most of their business outside the United States. For example, at the end of 2008, IBM employed 71% of its workforce overseas, and 65% of its revenue was from foreign countries.^[iv] Walmart’s workforce of more than 2 million included at least 600,000 abroad in 2011^[v], and General Electric’s workforce was 54% foreign, Merck (60%), Caterpillar 55%), and United Technology (65%).^[vi]

On the other hand, 4.6 million American companies with 1-9 workers (including the employer) employed only 13 million employees (11% of the workforce) in 2008. Since most employers are listed as employees, these companies only had 9 million actual employees, or 7% of the 121 million employed wage earners.^[vii] Conclusion: Small business is the tail on the dog.

Hegemony

Multinational corporations need to integrate and expand their domestic, regional, and multi-regional corporate webs and production chains. They want to improve their ability to shift and re-shift their operations (manufacturing, research, clerical, service and maintenance, mining, agriculture, etc.) to take full advantage of changing labor costs, taxes, and exchange rates – and to respond effectively to strikes, political threats, and natural disasters.

To accomplish their economic agenda, they seek to eliminate legal barriers to their seamless operations, privatize government agencies, slash the social wage (pensions and medical care), and cut direct labor costs (through wage cuts and destruction of labor unions).

Big business has organized national business organizations to promote their agenda. These include the Business Roundtable (chief executive officers of giant companies), National Association of Manufacturers (11,000 companies), US Chamber of Commerce (300,000 companies), and National Federation of Independent Businesses (350,000 companies).

Capitalist hegemony over the entire population is the ultimate requirement for the safety of the capitalist class, since it is a small part of the population. Thus, tight control over the media and the textbook market are crucial. In the US, seven corporations own the bulk of all traditional media: News Corp., CBS Corp., Time Warner, Walt Disney, Viacom, Bain Capital, and Comcast. Currently, two companies are competing to dominate American internet access and content: Google and Microsoft. Amazon and Apple want to take over the book market.^[viii]

Chapter III Vocabulary List

1. Labor relations	4. Hegemony	7. Foreign subsidiary
2. Class	5. Supply chain	8. Class for itself
3. Social wage	6. Class in itself	9. Multinational corp.

Discussion Questions

1. What is the “middle class,” according to the definition of class provided in this chapter.

2.  Are the interests of small businesses identical to those of big business?

3. What has been the main ideological contribution of the “Occupy Wall Street” movement and its focus on the 99% and the 1%?

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[i] US Statistical Abstract, 2012, Table 754, Corporations by Receipt-Size Class and Industry: 2008.

[ii] Statistics of US Business, Table 2a. Employment Size of Employer and Nonemployer Firms, 2008.

[iii] Wall St. Journal, April 19, 2011.

[iv] http://money.cnn.com/2009/03/31/technology/ibm.

[v] www.walmartstores.com/download/4993.pdf - Corporate Fact Sheet_1_1.pdf.

[vi] WSJ, April 19, 2011.

[vii] Statistics of US Business, Table 2a. Employment Size of Employer and Nonemployer Firms, 2008.

[viii] http://www.freepress.net/ownership.