Yesterday I wrote on how economic injustice actually hurts the 1 Percent. Now it’s time to remember how it hurts the rest of us 99 Percent.
Some sobering, unfortunately unsurprising news from the New York Times this past weekend on Our Economic Pickle. At least, it’s unsurprising if you’ve spent any time reading Marx (which, for good or for ill, isn’t on most people’s reading lists anymore):
Wages have fallen to a record low as a share of America’s gross domestic product. Until 1975, wages nearly always accounted for more than 50 percent of the nation’s G.D.P., but last year wages fell to a record low of 43.5 percent. Since 2001, when the wage share was 49 percent, there has been a steep slide.
“We went almost a century where the labor share was pretty stable and we shared prosperity,” says Lawrence Katz, a labor economist at Harvard. “What we’re seeing now is very disquieting.” For the great bulk of workers, labor’s shrinking share is even worse than the statistics show, when one considers that a sizable — and growing — chunk of overall wages goes to the top 1 percent: senior corporate executives, Wall Street professionals, Hollywood stars, pop singers and professional athletes. The share of wages going to the top 1 percent climbed to 12.9 percent in 2010, from 7.3 percent in 1979.
Of course, the vast majority of income for the 1 Percent is not in fact wages at all, but income on assets. When we factor in all sources of income, the picture of inequality becomes even starker:
Emmanuel Saez, an economist at the University of California at Berkeley, found that the top 1 percent of households garnered 65 percent of all the nation’s income growth from 2002 to 2007, when the recession hit. Another study found that one-third of the overall increase in income going to the richest 1 percent has resulted from the surge in corporate profits.
You’d think, from such numbers, that the American economy was in deep trouble. But in fact, productivity has soared:
From 1973 to 2011, worker productivity grew 80 percent, while median hourly compensation, after inflation, grew by just one-eighth that amount, according to the Economic Policy Institute, a liberal research group. And since 2000, productivity has risen 23 percent while real hourly pay has essentially stagnated.
What reasons do mainstream economists have to offer for this paradox of increasing productivity and stagnating wages?
Conservative and liberal economists agree on many of the forces that have driven the wage share down. Corporate America’s push to outsource jobs — whether call-center jobs to India or factory jobs to China — has fattened corporate earnings, while holding down wages at home. New technologies have raised productivity and profits, while enabling companies to shed workers and slice payroll. Computers have replaced workers who tabulated numbers; robots have pushed aside many factory workers.
“Some people think it’s a law that when productivity goes up, everybody benefits,” says Erik Brynjolfsson, an economics professor at the Massachusetts Institute of Technology. “There is no economic law that says technological progress has to benefit everybody or even most people. It’s possible that productivity can go up and the economic pie gets bigger, but the majority of people don’t share in that gain.”
The waning power of labor unions has also played a role, as unions’ power in the workplace – especially their ability to strike and thereby bring the behemoth of capitalist production to a screeching halt – traditionally forced employers to provide higher wages. The high wages and benefit packages secured by the power of organized labor in large part undergirded the fabled prosperity of the 1950s and 1960s.
So allow me to quickly recapitulate what this mainstream media report, featuring extensive quotes from a number of mainstream economists, has to say about the effects of the Neoliberal Revolution of the past 30 years:
Capital’s flight from areas where labor is powerful and organized (and therefore able to set at least some of the bargaining terms) to areas where labor is more docile and the cost of living (read: value of labor-power) is lower, simultaneously driving down wages for everyone while ramping up the exploitation of surplus value (since corporations don’t have to pay an impoverished Vietnamese teenager as much as a card-carrying Pittsburgh steelworker)? Check.
Adoption of labor-saving technologies that, due to the fact that corporations are run not by workers but by private capitalists, do not actually save labor for the vast mass of people, even as they drastically improve productivity? Resulting in mass unemployment and underemployment, so that a constant supply of cheap (read: desperate) labor drives down wages even further? Check.
A political class struggle waged over the past thirty years (which began in the late 70s, hit its stride during the presidency of Ronald Reagan, and finds its most recent expression in Michigan’s “right to work” laws) to break the power of organized labor, abolish regulation of both industrial and finance capital, and scale back a progressive taxation system? Which, far from redistributing wealth “created” by the wealthy, can be a tool for the 99 Percent to reappropriate the vast surpluses that rising productivity has created, and that a deregulated market has concentrated in the hands of the wealthy capitalists who make the big economic decisions? Check.
The very real possibility that standards of living can rise at the same time as the rate of exploitation (and thus the concentration and centralization of capital in the hands of a wealthy few), contrary to those who glibly blow off the immiseration thesis? Check.
If I didn’t know better, I’d say Mr. Greenhouse, the author of this article, and the eminent economists he consulted to write it, had been reading Das Kapital.
Who said Marxism was dead?