Thinking Through “Runaway Inequality”

It is absolutely wonderful that the Communications Workers of America are buying books and teaching classes on “Runaway Inequality” by Les Leopold. It stirs a lot of thinking.

runawayinequalitybook

The core argument is that something has been seriously wrong in America since the mid 1970s, when wages stopped rising at a rate similar to the increasing productivity. Productivity is the amount of wealth that one average worker creates in one average working hour.

productivity-wages

As the graph shows clearly, wages and productivity seemed to rise together from the late 1940s to the mid-1970s, then productivity continued rising with the same upward slope, but wages flattened out. Profits rose, but wages didn’t. The change, Les Leopold says, came about because of deliberate policy changes. The book is full of other graphs showing the policies that changed, the resulting inequality, and the amazing effects of this incredible rise in inequality. Leopold then concludes by saying that ordinary Americans must band together and change those policies. In other words, wage-earners have to do what the bosses have been doing. It’s a “must read” book, and the classes (I’ve taken them twice) are inspiring!

There are further questions

  1. Is the period 1947-2016 a representative period of history, or is it unusual?
  2. Is the problem local or systemic?;
  3. Given the situation described in the book, is there really a solution for wage-earners?

What period of economic history is “normal?”

The entire book and all its conclusions come from the hypothesis that something went wrong in the 1970s. I have my doubts. The unusual period in American history was not 1974-2016, as Leopold suggests, but 1947-1974, the first part of the graph. In other words, there is nothing unusual about wages being suppressed in a capitalist economy. The unusual period was 1947-1974.

Take a quick look at how unusual was the post-war world:

  • Europe and Asian were bombed flat. American had virtually no competitors in the capitalist world
  • American unions were far stronger than in any time in history
  • The United States set the terms for all economic transactions in the capitalist world
  • The United States had almost all of the world’s gold

Then look at how things changed: By 1974, German and Japanese automobiles were flooding the world. President Nixon had given up America’s control over gold. Unionism had peaked around 1957 and was clearly slipping. The Chinese were having tea with Nixon and had broken up their alliance with the Soviet Union. Economic competition between nations was getting back to “normal.” What every nation had to do, to compete, was lower their costs. Their costs are our wages and benefits.

Is the problem local or systemic?

Our problems derive from the system we live in. American working families are having pretty much the same problems that other capitalist nations are facing. We have probably lost more than the families in other nations since the mid 1970s, but we had more to lose. The lords of American industry and finance have been able to hold on to their hegemony in the world only by sacrificing our wages and benefits.

Even worse, the long-term process of robbing working families entails destroying our democracy. The end of World War II was a triumph of democracy, and nowhere was democracy stronger than here, in the land of the winners. Several of Les Leopold’s graphs show how democracy is diminished. A very striking one is the graph showing that the United States has more people incarcerated than any nation of any size in the world! Today, many people are saying that we live under a plutocracy and that democracy is dead and gone.

It isn’t true. The absence of democracy is fascism, and we don’t have fascism in America. Even in 1947, our democracy was not complete. It was partial. Since the mid-1970s, our democracy has faded, but not disappeared. If the process continues as it is going now, it would be fair to say that fascism is the logical outcome. But it hasn’t happened yet.

Is there a solution?

Given the system we live in as described in “Runaway Inequality,” are we likely to be able to reverse the policies that have brought disaster for working families since the mid 1970s? No. What happened since 1974 is not unusual, it’s part of the ordinary process of world capitalist economics.

If there is a solution for American working families. it will come from a different system.

Gene Lantz

I’m still on KNON radio, 89.3FM, every Saturday at 9AM Central Time. If you’re interested in what I really think, check out http://lilleskole.us

 

 

 

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