A Vital Resource in the Struggle to Change the System
by Derek Seidman
November 25, 2003

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Review of Michael D. Yates’ Naming the System: Inequality and Work in the Global Economy (Monthly Review Press, 2003), 288 pgs


* Read Derek Seidman's interview with Michael Yates

The short lived economic boom of the 1990s brought in a wave of self-congratulatory praise on the part of neoliberal partisans. We had entered a “new economy”, where serious recessions were a thing of the past and the development of technology provided limitless possibilities for workers to obtain high paying skilled positions. The stock market was on an unswerving ride up to hitherto unimaginable peaks, and the trend would (of course) only continue. Furthermore, underdeveloped nations that would just follow the neoliberal prescriptions and kneel down obediently to the law of the market would surely experience similar growth—eventually.

With the loss of 2.7 million jobs in the USA and the economic collapses in nations that most openly embraced the neoliberal program, we are now presented with quite a different picture, one as bleak and miserable as the proclamations of the 1990s were saucy and untouchable. Inevitability and invincibility in the success of the market have given way to uncertainty and an anxious pessimism.

In his new work, Naming the System: Inequality and Work in the Global Economy, radical economist and labor educator Michael D. Yates attempts to illustrate the reality of the post-1990s-boom global capitalism for the people of the world. He debunks the myths of the “new economy”, showing how the major problems we see in the world today—once dismissed by neoliberal advocates as a thing of the past—are in fact inevitable byproducts of the capitalist system. In doing so, he paints a compelling picture—pillared by up-to-date facts and trends and personal stories—of the miserable reality that capitalism has rendered for the majority of the world’s inhabitants. If these facts and illustrations weren’t enough to discredit the reigning economic system, Yates in turn uses them, as well as the basic tenets of radical economic theory, to issue a scathing critique of neoliberalism.

While it would be impossible to lay out all of the essential points in this very important and timely study, I can touch on some, allude to others, and urge everyone to grab the book as soon as they can.

Yates states early on what his three main goals are with Naming the System.  “The first goal”, he writes,  “is to give readers a good understanding of the capitalist world economy and the position of workers within it” (28). The majority of the book deals with fulfilling this first goal.

The first half of the book discusses specific features of the dim reality that capitalism has imposed globally on the people. Chapter 2 delves into a discussion of inequality both within and among nations, and on the global scale. Neoliberal economists pride themselves on their theory that, if the market is permitted to work its magic, the inequality gap between nations will shrink over time. While this may be the case in abstract models and academic theories, it has been anything but the truth in reality. As Yates tells us, using the valuable report of ex-World Bank economist Lant Pritchett, the gap between rich and poor countries actually grew formidably between 1890 and 1960. Furthermore, the wealth of rich and poor nations has continued to diverge since the 1960’s—and during the bulk of this period it was the neoliberal model which dominated international economics. Additionally, this divergent trend between rich and poor has been the reality here in the USA, where for the past three decades our ruling class, aided by aggressive state policies and actions, has been voraciously pursuing every method to shift wealth further from the working class and public sector into their own hands.

If one abides by true principles of justice and democracy, any more inequality in a world already so polarized as ours is a repulsive trend. Nevertheless, it could be argued that a growing inequality is not necessarily harmful, as long as the tide lifts all boats. Naturally, this is the excuse neoliberalists fall back upon. Yates confronts this glib rationalization. He draws on recent studies that illustrate “that inequality, in and of itself, has harmful social consequences” (59). Besides the obvious fact that the few who benefit from inequality will have enormous advantages and opportunities from the get-go, a growth in inequality has many negative social consequences. Yates draws on a important study which observed that those states in the USA with greater inequality in turn have higher levels of mortality, sickness, incarceration, and unemployment; a higher percentage of people without health insurance and needing food stamps; less spent per person on education and less books in schools, accompanied by poorer educational performances; and higher rates of low birthrate, violent crime, tobacco use, and inactivity. As Yates observes, “[i]t seems that the psychological damage done to poor people as they contemplate the gap between themselves and those at the top of the income distribution has an independent effect on a wide variety of individual and social health outcomes” (60).

After dealing with inequality, Yates moves on to a many-sided discussion of the reality of work for the most of the world’s inhabitants. In chapter 3 Yates discusses capitalism and unemployment. While it is indeed true that unemployment is epidemic in the most of the world, this doesn’t begin to tell the whole story. Official unemployment accounts omit vital statistics and groups that paint a clearer picture of the reality of employment. People who have not actively sought after a job four weeks prior to an unemployment survey, laborers who involuntarily work part time due to capitalism’s failure to provide them with fulltime work, those who involuntarily perform informal or unofficial labor—all this doesn’t figure in to official accounts. Thus, a much more accurate picture is given when we use underemployment as our criteria—the number of people without official, fulltime work. This more accurate view of employment is vital in a period like ours where an intensified globalization is rendering millions of people, often former rural inhabitants, to the wretched existence of the underemployed. According to the United Nation’s International Labor Organization, more than one billion people today worldwide are in the ranks of the underemployed.

Contrary to neoliberal myths about the growth of skilled jobs primarily located in technology, the work that most of the world does is anything but highly skilled, creative, and providing of opportunities. Yates illuminates the three main trends of work in capitalist economies. First, fewer and fewer people are employed in agriculture. The result is that, as former rural workers are pushed into the cities, there is an enormous growth in the surplus labor force in the metropolises of underdeveloped countries. Thus, in countries that comprise the majority of the world’s population—China, India, Mexico, Brazil— underemployment is rampant, with mountains of “not-in-the-labor-force labor” that can’t be organized in traditional ways. This surplus of labor, combined with the prevalence of child labor, the growth of women in the labor market (Yates’ second trend of work under capitalism), and the relentless incentive for corporations to simplify the labor process, keeps “jobs designed to stay low paid”.

The third and last trend that Yates mentions is the universal shift from the production of goods to the production of services. Indeed, four fifths of the labor force in the USA is now engaged in this type of labor. This global trend has been fueled by the growth of technology, the movement of production to low wage poor nations, and the growth of consumer spending in rich nations. It is essential to come to grips with this changing reality of the labor force (indeed, all these changing realities of the labor force), especially since they differ from more classical—and simple—schemes of the working class and the class struggle. In chapter 4 Yates also lays out some revealing facts and analysis of the reality of labor in the USA. By looking at the occupations with the largest employment (predominantly service sector jobs, naturally) we see that the majority of jobs in the USA are not only tedious and difficult, but astonishingly low-paying. This is vital reading for radicals in the USA.

This eloquent presentation of major statistics and trends in global capitalism that covers most of the first half of Naming the System facilitates Yates’ second goal in writing the book. He hopes to “stimulate readers to find out more about the global economy, especially about the billions of workers whose labor makes it function”(29). Indeed, by learning about the reality and trends in the realms of employment, quality and type of work, the increasing role of women in the workforce, and so on, one is presented with the challenge—and necessity—to further pursue an understanding of these phenomena, if only for the reasons that any serious attempt to change the world must confront this reality, which differs in important ways from classical notions. As we see later on, there are movements that are attempting to struggle within these new conditions—often successfully.

There are two great things about Yates’ writing style. First, he has a remarkable ability to express extremely complex phenomena in the simplest of words, while at the same time retaining the power and logic that makes the ideas so powerful. With many academics often communicating in such a way that only increases the intimidation of economics and Marxist theory, Yates is a welcomed relief. He eschews fancy formulations and excess verbal baggage to cut to the core of the issue. As his case is progressively laid out one finds him or her self ever more confident in grasping the real problems of the world. This is a great source of empowerment for readers, a clear demystification of the capitalist system.

The second great thing about Yates’ writing style is his smooth weaving back and forth between theoretical discussion and mountains of compelling evidence, including snippets of real, often moving stories that bring his arguments to life. Whether illustrating the plight of Pakistani child laborers and South Asian sex workers, describing the misery of poultry and sweatshop garment workers, or exposing the idiocy of ex-Secretary of Labor Robert Reich (whom he debated), Yates’ humble words radiate an informed fury over capitalism’s calculated ruining of human lives. With this cumulative layering of simple (and simply-put) statistics, theoretical arguments and criticism, and real stories, the reader is presented with a fully rounded picture of the system Yates is exposing.

In chapters 5 and 6, Yates moves on to a more theoretical confrontation with neoliberal economics. In these chapters he successively posits the basic tenets of neoliberal thought and introduces a general criticism in the form of radical economic theory—also known as Marxism.

As Yates points out, “in neoclassical economics, the individual is the primary unit of analysis. Society is seen as the sum of the individuals in it; social outcomes are the result of the decisions made by individuals.” (120). Further, “the primary assumption of neoclassical economics is that all persons act out of self-interest” (121). According to neoliberal wisdom, if the market is given free reign to manifest its fruits, and individuals stand unfettered in the pursuit of their self-interest, the results will be desirable: greater equality, wealth, and living standards for all. While proponents of capitalism may disagree on subordinate questions such as the role of the state, they all “share a faith in the goodness of markets” (133).

However, almost all evidence and data fly in the face of neoliberal postulates. As Yates writes earlier on: “[T]he data on world poverty and unemployment make it difficult to maintain that a more global economy has done and more dependent upon economic forces over which they have no control. Neither in the poor nor the rich nations has globalization, and the new economy of which it was a critical element, created a large class of skilled workers who could anticipate years of high pay and intense employer competition for their services” (22).

Further, neoliberal thought has no real explanations for the pervasiveness of inequality and poverty, unemployment and underemployment, and the utterly alienating work life that capitalism imposes on most people. Neoliberal prescriptions have meant more inequality, more poverty, more austerity, more alienation. How is it that a theoretical system which rests on such faulty assumptions, that bears no relation to real trends, be so dominant?

To answer this Yates first makes a point about the early neoclassical thinkers. Unlike today’s zealots, the founders of modern neoliberal thought, Adam Smith and David Ricardo, were not driven to their conclusions by academic positions or media notoriety. They were motivated by a deep desire to understand the dynamics of the new system that was flourishing before their very eyes. Hence, their ideas are filled are more pure, filled with many valuable kernels of truth pertaining to the operation and dynamics of the capitalist system. As Yates writes, “[Adam] Smith could see clearly the tendency, inherent in the normal operation of the new system, for employers to find ways to destroy their competitors and monopolize markets. Ricardo could see clearly that profits are not a cost of production but a surplus”(159).

Advocates of neoliberal policies today are not driven by the same, pure motives. Yates conjures up such a scathing critique of the consequences of capitalist reality that it is impossible for one to ascertain, let alone defend, that this is somehow good for people. And still, our neoliberal cheerleaders maintain a staunch confidence despite the cold verdict of reality. There is only one conclusion to make of all this: “the fact that neoclassical economics is so wrong yet so powerful tells us that it is not a science but an ideology” (160). Indeed, it is an ideology, full of models and prescriptions divorced from the interests of the majority of the world’s people, based on defending an order that benefits the wealthy few while consigning the rest to abject misery. We are reminded of Bertrand Russell’s insightful words: “When you hear any body of men proclaiming lofty principles, you should ask yourself: whose income is likely to be increased by this “idealism?”

To this neoliberal ideology Yates counterpoises an alternative: radical economic theory. “From the perspective of radical theory, there is no such thing as the society’s best interests, as neoclassical theory suggests. Rather, there are class interests: those of workers and those of employers” (176). Yates goes on to state further:

“What makes radical theory so different from the neoclassical theory is that it is both historical in its analysis and based upon the notion that classes rather than individuals are the best theoretical building blocks. The neoclassical theory sets up a completely abstract model of capitalism, devoid of any connection to reality, and then proceeds to trace out the logic of this abstract model and make predictions about the real world. In the process, most neoclassical economists seem to lose sight of the difference between their model and the real world. They say, in effect, that the real world must be made to conform to their model if we are to reap all of the good consequences of an economy that operates on the principles elucidated in the model. But they turn around and evaluate real world phenomena as if we were actually operating in their model economic world. They do not, for example, analyze an increase in the minimum wage in the context of the actual world in which it occurs. Rather, they examine this in the context of their model world. The fact that an increase in the minimum wage leads to undesirable results in their model world is given as evidence that it will do real harm in the real world. No wonder the theory’s predictions do not test well. What the neoclassical economists have is not really a scientific theory at all. They have an ideology, a belief system that they use to evaluate the world” (187)


Expounding on radical economic theory, Yates discusses the basics of Marxist political economy. In doing so he provides answers to the ills of capitalism that neoliberalism fails to address, and illustrates with great clarity how these ills are structurally produced and tied to the capitalist mode of production.


The capitalist system has persisted through world wars and severe depressions. It has accounted for the most tremendous leaps in the productive capacity of human beings and has stimulated unimaginable new vistas in creativity, science, and technological growth. Moreover, it is a system that has managed to convince many of those who benefit least from it that it is the only natural order. But, as Yates moves on to discuss, capitalism is riddled with unsolvable contradictions, built-in structural tensions that can’t be wiggled out of. Of these “chinks in the god’s armor”, the most inescapable is the contradiction between the freedom of the market and the “unfreedom” of work. While workers are free to sell their labor power to whom they wish, they must nevertheless sell it to survive. In doing so, they enter into a relationship where they have no freedom over their time, what they do with it, and what is produced from it. Moreover, this scenario is all the more nefarious: the worker’s labor, sold to this or that capitalist, results in further enriching the exploiter in the first place, strengthening their ability to exploit more. Given all this, and given the fact that modern capitalism has shoved masses of workers close together in large workplaces, it is only a matter of time until workers collectively see the contradiction themselves.


Thus, reaching this summit, Yates closes the book with an inspiring discussion of some of today’s struggles that are combating capitalism in different ways. He sketches a brief picture of the efforts of the anti-sweatshop movement at home to the struggle of the “Poors” of South Africa, from the Teamsters for a Democratic Union to guerilla efforts in Columbia and Nepal. While the global movement to resist capitalism is still in its infancy, in need of much ideological clarification, it is instructional to see the diverse ways in which different people react to their oppression in their specific, local context. As Yates says, “global movements must originate at the local level, the level at which people actually experience life”. The task is to fuse these local struggles into a powerful, coordinated attack on the big problem: global capitalism. While some activists are confused or hesitant to target this, it is objectively necessary. This is what Yates’ book is fundamentally about: naming and knowing the system that is at the root of the problem.


Yates has one last goal in Naming the System: “The third, and perhaps the most important, objective of this book is to encourage people to take action to change the nature of the economic system” (29). With a world spiraling into endless war and economic uncertainty, where so many potentially beautiful lives are destroyed and chewed apart by the daily grind of life in a capitalist world, it is up to our generation to dedicate our lives to creating a real alternative. Let  Naming the System inspire us all to heed Yates’ words:


“I hope that after reading this book, people in rich countries, normally so complacent, become angry enough to want to do something about the deplorable conditions in which most people live. And I hope that people in poor countries, already angry, become clearer in their understanding about what are the causes of these deplorable conditions. I hope as well that readers begin to see that their own lot in life is terribly constricted by the economic forces unleashed by those with power over them. In other words, what I hope for is an informed anger, one based on an understanding of what is going on” (29)

Derek Seidman, 23, is a co-editor of the radical youth journal Left Hook (www.lefthook.org). He is currently living in New York City. He looks forward to your feedback at derekseidman@yahoo.com

Other Articles by Derek Seidman

* Inequality and Work in the Global System: An Interview with Michael Yates
As the Iraqi Resistance Grows, So Does Demoralization of the Troops 




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