by John Reimann

The time was back in the early 1990s when “entrepreneurship” was all the rage in the US. I’d just offered a socialist newspaper to a young man who was hanging out at a junior college. His reply: “I ain’t interested in that s__t. I deal drugs. I’m an entrepreneur.”

Like so many other young people of that era, he’d been infected with the idea that there is an individual solution to poverty under capitalism, that all that’s needed is a good business plan and some hard work and anybody can escape poverty and become rich.

Historical Basis in US

Maybe more than in any other country, that idea has a historical base in the United States due to this country’s peculiar heritage. It’s the only industrialized capitalist nation that has no feudal heritage and therefore no feudal aristocracy. As a result, divisions based on birth are a little more blurred here. Added to this was the period lasting up until the early 20th century of westward expansion. This period opened the way for millions of workers to get their own piece of land and become small business people in the form of becoming farmers. The two factors combined to allow a few others such as Andrew Carnegie to rise from impoverished working class backgrounds to becoming captains of industry - the “robber barons” as they became known.

Workers Movement

In the decades that followed, a powerful, militant workers movement developed. This movement reached its peak in the 1930s with the mass picket lines and strikes like those of the Minneapolis Teamsters’ strike, the Toledo (Ohio) Autolite strike, the San Francisco General Strike (all in 1934) and the sit down strikes of 1937. However, this wave of militancy was not consolidated into a mass political party. There were attempts, but no mass workers’ political party was built. Partly as a result of this, the full lessons of the workers’ struggle weren’t consolidated, nor were the material gains fully.

Capitalist Propaganda Offensive

Fast forward to the 1980s. The ideas of socialism had largely been associated with the corrupt, inefficient and repressive Soviet bureaucracy. The unions were largely controlled by a conservative bureaucracy that collaborated with the capitalist class to repress the traditions of the struggles of the 1930s. The industrial sector of the US working class - traditionally the sector that is most conscious and most strongly carries those traditions - had been decimated by “deindustrialization”. The capitalist offensive was in full swing, including the propaganda offensive.

The leadership of the revolt of black people had also passed on to those who often parroted the capitalist propaganda offensive. The way to alleviate oppression and poverty was through individual hard work, they too said. While there’s nothing wrong with individuals working hard to escape poverty, when this is put forward as the one and only solution, then the idea of a collective struggle to eliminate the conditions that necessitate poverty in the first place is buried. That’s what that individual drug dealer was expressing.

Economic Crisis

Today, with the growing global economic crisis of capitalism, that approach is somewhat discredited. Part of the reason for it is the growing gap between the rich and everybody else. To this is added the increasing attacks on all social programs that help the poor such as early childhood education. This shows up in all sorts of different statistics. For instance, in the last 30 years the share of the national income taken by the top 1% has doubled in the US, according to economist Joseph Stiglitz.

Another part of the reason for the downward mobility of the majority is the fact that most of the new jobs created are at low wages. As another economist, Robert Reich, explains, “Most of the new jobs being created are in the lower-wage sectors of the economy – hospital orderlies and nursing aides, secretaries and temporary workers, retail and restaurant. Meanwhile, millions of Americans remain working only because they’ve agreed to cuts in wages and benefits. Others are settling for jobs that pay less than the jobs they’ve lost. Entry-level manufacturing jobs are paying half what entry-level manufacturing jobs paid six years ago.” (http://www.csmonitor.com/Business/Robert-Reich/2012/0207/The-downward-mobility-of-the-American-middle-class) Another study found that of those whose parents were in the bottom fifth in terms of wealth in the US, 65% ended up in the bottom or second to bottom fifth. This is the least “intergenerational mobility” of any industrialized nation. (source: wikipedia)

NGO’s in Underdeveloped World

The propaganda offensive, coupled with the attacks on the pitifully few social services that existed in the US led to the rise of the “non-governmental organizations” - NGO’s - in the United States and around the world. The idea of the great bulk of these NGO’s (although maybe all) is to alleviate poverty by helping individuals and individual communities. In general, they use their campaigns in order to avoid organizing poor and working class people to struggle against the system of capitalism itself. One of the ways they have done so is through the rise of “micro financing”. This means granting small loans of a few thousand dollars for some poor person to go into business.

As “Makingit’ online magazine explained: “A political economy explanation for the growth of the microfinance movement is that micro finance campaigners successfully projected the image of the movement, such as empowerment of women, which resonates well with the donor community. The birth of the movement roughly coincided with the rise of neo-liberal ideas in the late 1970s and early 1980s.”

There never was a chance that micro finance could have any real affect on poverty in the underdeveloped world. According to studies (http://en.wikipedia.org/wiki/Grameen_Bank) there is a demand for micro loans for some 1 billion people globally and the total amount needed is some $250 billion. However, the amount available is only one tenth of this. And for those unlucky few who do get loans, in most cases the need is so great that the money is spent on immediate consumption. Then, when the loan officer comes knocking, the response often is to get a second loan to pay the first one, and then a third and a fourth one.

So, far from helping poor people - often peasants - up and out of poverty, this approach has been a disaster. In India, for instance, it is estimated that a quarter of a million farmers have committed suicide in the last 16 years, the majority due to inability to repay their loans. This is a rate of one such suicide every 30 minutes.

Cannot Work

It simply stands to reason that this micro finance strategy cannot work under capitalism. Small individual businesses can never successfully compete with the giant corporations simply because they lack the economies of scale. If there is a potentially profitable market that big business has not entered, as soon as it is discovered by the small business (as financed by a micro loan), the big businesses will swoop in and corner the market. Sometimes the initial investment may be too tiny or the market too scattered for big business to take it away. Such was the case with a few women who got micro loans in small villages to buy mobile phones. They then charged a fee for others to use these phones. The first few that did this made money. This then attracted competitors and ultimately the price they could charge was driven down so low that the profits fell out of the business.

The material results of this strategy - to alleviate poverty by individuals becoming entrepreneurs or in some other way pulling themselves up by their bootstraps - this strategy has been proven to have failed. In the United States, the richest country in the world, there are more people living in poverty than at any time in the last 50 years, and 37% of families with young children were in or near poverty in 2010. In the underdeveloped world the situation is far more dire. In that same year - 2010 - there were 925 million people going hungry in the world. The causes range from global climate disruption (caused by the mode of functioning of capitalism) to wars to economic crisis. In neither the rich, industrialized world nor in the former colonial world can a few possibly well-intentioned NGO’s make a serious dent in this. In fact, they haven’t. What they have served to do is to help distract from a mass struggle against the system that is destroying hundreds of millions of lives while it destroys the very planet on which we all live.

From Greece to China, workers and small farmers are voting on this strategy. They are voting with their feet, tapping out a steady drum beat, rising up against the onslaught of capitalism. Repression, such as the slaughter of some 40 odd striking miners in South Africa cannot prevent this uprising. Nor can the distractions and false promises such as those of the micro finance industry. The working class in the United States will increasingly throw off the “rags to riches” myth here too, as they too join this uprising of workers the world over.