Occupy Wall Street is a movement that did not come from “nowhere” to engage people in cities as large as New York and as small as Lewisburg. It is not just the flash mob of the day, but rather has roots in issues that have long captured the attention of many economists and other social scientists for the past two centuries.
OWS is the latest tactic, of many earlier ones, to elevate these issues to the American public for an intelligent discussion. The willfully obtuse, such as columnist David Brooks, see no central core of issues being raised and speak scornfully of the notion that 99 percent of the population is supposedly engaged in this struggle against the remaining one percent. These figures used by OWS refer to the distribution of power between two groups and not the rate of participation in protests.
The core of this current movement is actually the same as that which motivates the Tea Party. Both find inspiration in Henry Simons’ (University of Chicago economist of the 1930s-1950s) notion that any aggregation of economic power leads inexorably to the corruption (in the sense of moral deterioration) of the democratic political process. As I noted in my last “My Turn,” Simons argued that both unions and large corporations should be broken up into smaller competitive units. This moves the Tea Party to its antigovernment position, but OWS takes another tack. They do not object to large enterprises, but only to the power their representatives gain to “buy” our elected representatives and instruct them to reduce regulation in ways that increase the incomes of senior corporate executives and then to reduce taxation on their ill-gotten gain.
The central issue is the use of private power in a democracy to the detriment of society as a whole. What the one percent has is income, of course, but of greater importance is the control they exercise over our democracy, something the 99 percent do not have.
Hence the recent data showing how the wealth of the one percent has soared rather astonishingly in relation to that of the rest of society. OWS does not appear to be in favor of an egalitarian distribution of income, but what energizes them is the fact that the current distribution of wealth and of income is not the result of activities that generate gains in the productivity of the economy.
When we understand OWS for what it actually opposes and endorses, it becomes clear that it is not explicitly in favor of income equalization, just that income be earned in accordance with its contribution to productive activity. It is not socialist or anti-capitalist - from their literature it would appear that they would be satisfied with a capitalism that functioned as it was intended to function by the great economists who designed it — Adam Smith, David Ricardo, John Stuart Mill and Alfred Marshall.
It may very well be that many in the OWS movement have become convinced through observing contemporary capitalism that it can not be reformed to achieve this ideal way of managing an economy.
If this is the case, then it is not that OWS supporters seek to undermine capitalism but rather that capitalism has ceased to be the sort of economic system that those who want the best lives for the 99 percent can continue to support.
Peter Karl Kresl is Charles P. Vaughan Professor of Economics Emeritus at Bucknell University.