A Quick and Dirty Primer: The Inevitable Downward Spiral Of Capitalism (now with stick figure illustrations!)

I wrote once long ago about how the Civil War was not really fought for the noble ideal of ending slavery, but because slavery was anathema to capitalism because it does not give the elites the same measure of pressure to control costs such as labor.

In the last week or so there have been lots of outcries about the rise of unpaid internships. It's not surprising that when allowed to, businesses will stoop to not actually paying people for their work. These are the same members of society that brought us child labor, sweatshops, and the romantic lifestyle of the migrant farm workers, after all. The only difference is that unpaid interns tend to come from white, educated, middle class backgrounds. OMG we can't exploit the young white people! That's criminal.

But it was always going to come to this.

First, let's start with some basics. Economists (some, most even) and Libertarians will tell you that the job market is a market just like any other and there should be no restrictions on it because restrictions interfere with competition and the invisible hand. Employees and employers are considered equal in their negotiations.



If you don't like your job, you can find another job.



But anyone who has ever worked knows that's not how it really works.



Despite whatever its mission statement might say, all businesses have one, single, solitary function. To make profit.

First you have to sell something. You have to make something that people want to buy, you have to price it at a price people will pay, and your costs for making a thing have to be less than the price people will buy it at. You will probably have investors, or even stockholders who have put up their own money for your business in exchange for getting a piece of the profit.



Now this might all be fine if there wasn't massive constant pressure to increase profit. The shareholders want a bigger return on their investment, the CEO wants a bigger bonus payout. That screaming man on that money show will insult your company if it's not growing profit margins enough



So things must be done. Companies are always looking for ways to maximize sales and minimize costs



And negotiations between employee and employer end up looking more like this


And since companies compete with each other, not just for customers but for stockholders, all companies eventually end up in the evil labor eating blob phase, unless there is another force at work to keep all companies from becoming sweatshops.



But unions only work if companies can't do seedy shit to stop them. For that we need yet another external force


Government can do things like set minimum wages, create 40 hour weeks, mandate overtime pay and work safety standards. But they don't do any of this unless they have pressure put on them, by say a large group of organized individuals who have people who can lobby for them. Like a union. Government can also set rules for the establishment of unions and make it so that companies can't go around breaking the legs of striking workers.

But........



So with neither the government nor unions working to keep companies from doing everything they can to screw the workers to maximize profit, unpaid interns are inevitable. You can't go lower than zero on labor costs. Well yes you could. If companies start thinking that they would like to take a chunk out of the expensive college ed market by telling prospective students "You don't need to go to that fancy school for 4 years, come do an apprenticeship here. We'll only charge you half the tuition the university will, plus we'll throw in valuable on-the-job experience. Can your uni offer you that?"

(Shit, should not have typed that. Somewhere there is a CEO coming up with fee-based apprenticeships right now)