Nike: Understanding How Wealth and Poverty are Created in the Global Capitalist System

Jeremy Cloward | Social Economics | Analysis | January 18th, 2018

"The dirty truth is that the rich are the great cause of poverty"

- Michael Parenti (American political scientist, 1933-present)

Though news to some commentators and scholars, wealth and poverty are natural consequences of global capitalism functioning exactly as it is designed to do. The more the owners of the commanding heights of the economy take for themselves, the less there is for everyone else. Though poorly understood or even discussed throughout much of US society, this planetary-wide system generates two basic classes: the owning class and the working class. Either you own the productive forces of the economy or you work for someone that does. And, the relationship between the two classes is exploitative by nature as the owning class lives off the surplus value (or profit) created by the working class. Indeed, though almost never acknowledged in the media or even at the university the wealth of capitalist society is produced by working people. Yet, they do not enjoy the fruits of their labor. Instead, those who produce nothing (and often do nothing to add to the value of the commodity produced, i.e., the owning class) reap the lion's share of the wealth that is created by the workers. Just as the slave owner sat on his porch drinking tea while the slaves labored in the fields to make him wealthy, the capitalist sits in his office while the workers, often in distant lands, labor for mere dollars a day to create great wealth for him. That is how the system works. The wealth generated by workers for owners may vary but not the relationship between the two classes.

In just one example of a highly-respected economist and scholar who apparently does not understand the cause of wealth and poverty in the world we might consider the position of Hernando de Soto in his much noted book The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. de Soto argues that the poor are poor in Third World countries because they have not created a "legal structure of property and property rights" for gathering wealth. Yet, the reality of a capitalist economic system is that if you guarantee the right of property and property rights in your society to generate wealth then you are also guaranteeing that you will have poverty in your society, as well. To be sure, wealth is the cause of poverty and poverty is the cause of wealth. They go hand-in-hand and cannot be unlocked from one another. To use the classic example, if an individual takes 4/5ths of a pie all for himself, then no matter how you slice it, there is only 1/5th of the original pie left over for everyone else to split. That this point is missed again and again by one political scientist and economist after another (including de Soto) makes one wonder what is being taught in our centers of higher education in the social sciences. In fact, one of the most prominent proponents of liberalism and defenders of "private property" clearly recognized this basic truth about property. John Locke (1632-1704) the historically respected political philosopher maintained that, "where there is no property, there is no injustice." In other words, the only way not to have economic inequality (and the classes that coalesce around property) is to not have private property at all. Without private property, neither wealth can be amassed or gathered nor can poverty be created. Instead, the level of material comfort for everyone in society rises and falls together.

One of the best examples (among hundreds) to illustrate this truism about capitalism is that of the "American" transnational company, Nike Corporation. Phil Knight, the founder of Nike, is worth some $25 billion. To generate that kind of wealth, Knight would have needed to personally make 25 million pairs of shoes and then sell them for $100 each all by himself. Has this been the case? Of course not. Instead, he is similar to the slave-holder on the porch in the days before the Civil War (1861-1865). For certain, Knight and the titans of commerce like him in nearly every industry one can think of, add virtually no value at all to the commodity that their companies produce. On the contrary, just as was the case with the slave, it is the worker who produces the entire value of the commodity produced by the companies that Knight and others like him preside over. Just as the master extracted the whole of the surplus value from the commodity produced by the slaves, today's owners extract the whole of the surplus value produced by the working class. Clearly, there are differences in working and living conditions between these two modes of capital accumulation. However, financially, the only difference between slavery and capitalism is that the profits are extracted after a wage is paid. Yet, often times and for the great mass of humanity, the wage is exceedingly low.

For example, Knight pays his labor force in countries such as Indonesia just $4.33 a day (or $100 a month) to produce his shoes. This type of pay would be acceptable to some, provided the cost of living in Indonesia was proportionate to the day's wage. However, just a cursory glance at the cost of living in Indonesia illustrates how out-of-line Nike's wage is with what a Nike employee needs to survive. For instance, the average cost of a loaf of bread in Indonesia is roughly $1; a pair of Levi's blue jeans is about $50; a three-bedroom apartment runs somewhere in the neighborhood of $1,000 a month; and a pair of Nike shoes, made and sold in Jakarta, Indonesia, are priced at approximately $75. In other words, a Nike factory worker living in Indonesia would need to spend approximately three-fourths of his or her monthly Nike salary just to purchase one pair of Nike running shoes. A three-bedroom apartment is simply out of the question. But, it is worse than that. That poverty wage, when paid by multiple corporations and industries across multiple countries and continents translates into not only global poverty but into all kinds of problems for the world's poor. Making up some 80 percent of the world's population, the global poor, who are in actuality the world's poorest laborers, are confronted by needless yet ongoing hardships such as preventable deaths from a lack of basic food and medicine, unsanitary living conditions from shack-house and slum living, and a shortage of clean drinking water on a regular basis.

Today, global capitalism continues to move towards its logical conclusion of amassing all of the world's wealth into the hands of just one person. This could never take place in reality as the system would collapse before it did causing massive and worldwide social unrest along the way. Yet, the system nevertheless continues to move in this self-devouring direction-with capital accumulating at summits never before reached in history. Without a doubt, the system has produced such dizzying heights of capital accumulation that the numbers have become difficult to believe with global capitalism generating such extreme wealth for the few while creating a massive-sized "wretched of the earth" whose ever-expanding numbers are threatening to not only undermine, but possibly even destroy, the whole system itself. For instance, almost half of the worlds' population lives on just $2.50 a day and at least 80 percent of the world's population-or some 5.6 billion people-live on $10 or less a day amounting to a mere $3,650 per year. In fact, just eight people in the world possess more wealth than the bottom half of humanity combined-some 3.5 billion people. Make no mistake about it, though not intended by the "wealthiest among us," their greed may very well be digging their own class grave.

In the end, Nike, ExxonMobil, General Electric, Ford Motor Company, Bank of America or any other giant corporation whose operations span the globe exist for one purpose - to generate as large of profits as possible for the board of directors and major shareholders as they can. This is done, and always has been done, by the owning class exploiting the working class. If things are to improve for great mass of humanity and we are to take the next major step forward in history - which is ending the exploitation of man by man which is the guiding principle of the global capitalist economic system-then we need to wake up to this basic fact. When we do we will see that it is we, and not the rich, who are members of the most powerful class ever-known to man. Possibly then we will have the courage to begin to take control of the whole of the productive forces of the global economy for the betterment of all of humanity instead of the wealthy few.

Jeremy Cloward, Ph.D. is the author of three books and multiple articles. His college-level American Politics textbook, Class Power and the Political Economy of the American Political System has been endorsed by author Michael Parenti , the Director of Project Censored Mickey Huff, and professor and former Central Committee member of the Black Panther Party, Phyllis Jackson. It is currently being marketed to a national audience of political science professors throughout the country. In addition, Dr. Cloward has run for public office on three occasions (Congress 2009, 2010, and City Council 2012) and has appeared in a variety of media outlets, including FOX and the Pacifica Radio Network (KPFA). Today, Professor Cloward teaches political science in the San Francisco Bay Area.