Skip to main content

A single graph proves that the birth of neoliberalism coincides with a dramatic loss of power for the working class


The following graph depicts the radical divergence between productivity and compensation of a typical American worker after 1973. It essentially proves that the upper class has been overwhelmingly benefited during the last four decades or so, at the expense of the working class:



As described by the source, the hourly compensation of a typical worker essentially grew in tandem with productivity from 1948 to 1973. After 1973, these series diverge markedly. Between 1973 and 2014 productivity grew 72.2 percent, or 1.33 percent each year, while the typical worker’s compensation was nearly stagnant, growing just 0.22 percent annually, or 9.2 percent over the entire 1973–2014 period. Further, nearly all of the pay growth over this 41-year period occurred during the seven years from 1995 to 2002, when wages were boosted by the very tight labor markets of the late 1990s and early 2000s.

This divergence of pay and productivity has meant that the vast majority of workers were not benefiting much from productivity growth; the economy could afford higher pay but was not providing it.



Costas Lapavitsas, professor in economics at the University of London School of Oriental and African Studies, explains analytically how the working class has lost dramatically with the rise of financial capitalism and the accompanying neoliberal ideology during that period depicted in the graph above:

Finance is a sector of the economy in mature countries which has grown enormously in terms of size relative to the rest of the economy, in terms of penetration into everyday lives of ordinary people, but also small and medium businesses and just about everybody, and in terms of policy influence. Finance clearly influences economic policy on a national level in country after country. The interests of finance are paramount in forming economic policy. So that is clear. Finance has become extraordinarily powerful. And that, in a sense, is the first immediate way in which we can understand financialization. Something has happened there, and modern mature capitalism appears to have financialized.

Financialization is basically a profound historical transformation of modern capitalism that began in the 1970s, and it's now been running for about four decades.

What's happened to big business is very interesting. Two things have happened to it. First, big business has become increasingly capable of financing investment out of retained earnings. It retains its profits, and on a net basis it finances investment pretty much out of that. Of course, it still uses banks, but it doesn't rely on banks on a net basis to finance investment. That gives it a certain degree of independence from banks. In addition to that, big business has made so much in retained profits - currently US big business is sitting on piles of cash - that it can use those funds to play financial games, to engage in financial transactions and financial activities on its own account. So big business has financialized. Large enterprises have acquired some of the character of financial institutions, have become bank-like, and they engage in these transactions, and they change the structure of their own organization as they do that.

Second economic change, and very, very important, too, relates to banks. If big businesses is doing that, banks must do something else to make profit. They lend less to businesses for investment and so on, and they play more games in the financial markets. They become transactors in financial assets, and they make profits increasingly not from lending, but from fees, commissions, and trading. They become traders in financial assets. At the same time, banks have also turn households. Households have become a very profitable activity of banks, a new activity. This is a new phenomenon in the development of capitalism.

The third change has to do with households, workers, ordinary people. And what we see there in the last three to four decades is that ordinary people have been drawn into the financial system like never before. Households have become financialized. Finance has become a fundamental part of household life.

Why is that? Partly because wages have been stagnant. Wages have been absolutely flat in [the US] for decades. Partly because of that, people have turned to debt.

The financialization of everyday life, of households, is a bit of a complex story. What is actually happening is not simply that you borrow in order to consume. That also happens. What is actually happening is people need access to health, education, housing, and a variety of other needs. Every country has systems of provision for these things. These modes of provision have historically, traditionally, incorporated public provision, some methods of public provision. What we've witnessed the last three to four decades is a retreat of public provision. Public provision has retreated, private provision has taken its place. As this is happened, finance has emerged as the facilitator of that. So we turn to private provision to solve our housing needs, our health needs, our education needs, and finance makes profits out of that, basically, without having any skills in doing these things.

At the same time, we've had changes in institutions and in ideology. The changes in institutions are very clear. We've had wave after wave of deregulation. Labor market has become more deregulated, and financial markets have become more deregulated. And in addition to deregulation what we've had is the rise of the ideology of neoliberalism. Deregulation goes hand in hand with neoliberalism, the idea that the market is good, the state is bad. In [the US], this is a very powerfully held idea, more powerfull here than anywhere else. It's extraordinary how powerful this perception is and how a lot of social issues are understood in this way.

What have we got after four decades of this? These changes, seen very clearly in the United States, have created, firstly, a deeply unequal country, a deeply unequal society. Financialization is fundamentally about inequality. We see this inequality in terms of income, where the top 10 percent and the top 1 percent draw an extraordinary proportion of income annually, but we see it in terms of the functional distribution, the distribution of income between capital and labor. Labor has lost dramatically during the last three to four decades in [the US] and in just about every other mature capitalist country that has financialized.

Comments

Popular posts from this blog

Trump's "brigades" are ready to start a civil war in case he loses November's election

globinfo freexchange
Signs show an extremely explosive situation now in the America of Donald Trump. 
Starting with the murder of George Floyd, we witness almost in daily basis some very disturbing incidents, which unveil a deeply divided society that was hiding for decades behind the "American dream" facade. As the facade now rapidly collapses, due to a major financial crisis and a pandemic, in less than fifteen years, the reality looks terrifying.
In a latest incident, Common Dreamsreported that members of a far right militia group were arrested Monday evening in Albuquerque after a standoff at a statue of a notoriously brutal conquistador in the New Mexico city turned violent with a demonstrator advocating for the removal of the monument shot and sent to the hospital.
As dusk fell, demonstrators began attempting to pull the monument down from its pedestal on the Albuquerque Museum grounds. At that point, members of the New Mexico Civil Guard militia group moved in, attack…

Αντίο δημόσια, δωρεάν παιδεία ...

globinfo freexchange
Μετά τα σχέδια για ιδιωτικοποίηση του νερού, το Μητσοτακικό καθεστώς ετοιμάζεται να ισοπεδώσει με το νεοφιλελεύθερο "οδοστρωτήρα" και τη δημόσια παιδεία.
Από τη χθεσινή ομιλία Κεραμέως στη βουλή, το μόνο που χρειάζεται να κρατήσετε είναι η εξής φράση:
                        Εμείς, λοιπόν, κάνουμε πράξη τη δέσμευσή μας, για πανεπιστήμια πιο ελεύθερα και αυτόνομα. Για πανεπιστήμια, τα οποία μπορούν να ρυθμίζουν τα του οίκου τους.

Όταν ακούτε έννοιες όπως "ελευθερία", "αυτονομία" και "αυτορρύθμιση", να βγαίνουν από στόματα φανατικών νεοφιλελεύθερων, όπως των στελεχών της κυβέρνησης Μητσοτάκη, να ετοιμάζεστε για ιδιωτικοποιήσεις, ξεπουλήματα και όλες τις επακόλουθες συμφορές. 
Πίσω από τα ωραία λόγια της Κεραμέως, κρύβονται οι αληθινές προθέσεις του καθεστώτος και για τον τομέα της παιδείας. Δηλαδή, σταδιακή ιδιωτικοποίηση των δημόσιων πανεπιστημίων και τελειωτικό χτύπημα στη δημόσια, δωρεάν παιδεία.
Απ'ότι φαίνεται και μ…

Protests against police violence expand in Europe

RT America
It began in Minneapolis but has since spread across the US, and now the world. The death of George Floyd has sparked protests against police brutality and chants of Black Lives Matter. Former UK MP George Galloway and Pulitzer prize-winning  journalist and host of On Contact Chris Hedges join In Question to discuss.

Exclusive images from inside British court expose Assange’s un-democratic treatment, physical deterioration

Photographs surreptitiously taken inside a British courtroom and provided to The Grayzone show a visibly disoriented Julian Assange confined to a glass cage and unable to communicate with his lawyers.
by Max Blumenthal
Part 4 - Assange’s hearing postponed, his isolation extended
The Belmarsh supermax prison where Assange has been held is regarded as the UK’s version of the US facility at Guantanamo. Aside from Assange, the jail is home to mafia henchmen, al-Qaeda members, and neo-fascist enforcers like Tommy Robinson. Around 20 percent of prisoners in Belmarsh are murderers, and two-thirds have committed a violent crime.
117 licensed medical professionals from around the world have written to the British and Australian governments to condemn “the torture of Assange,” “the denial of his fundamental right to appropriate health care,the climate of fear surrounding the provision of health care to him” and “the violations of his right to doctor–patient confidentiality.
Since the doctors’ …

Η κυβέρνηση Μητσοτάκη ετοιμάζει το μεγάλο ξεπούλημα του νερού

globinfo freexchange
Ήταν θέμα χρόνου. Η ιδιωτικοποίηση του νερού δεν θα μπορούσε να ξεφύγει από τα νύχια των νεοφιλελεύθερων αρπακτικών της κυβέρνησης Μητσοτάκη, η οποία φαίνεται να έχει ξεκινήσει τις υπόγειες διαδικασίες για ακόμα ένα μεγάλο ξεπούλημα στους ιδιώτες. Και μάλιστα, το ξεπούλημα του πολυτιμότερου αγαθού που θα έπρεπε να είναι ελεύθερο και δημόσιο.
Όπως αναφέρεται σε ρεπορτάζ του tvxs.gr:

Την ιδιωτικοποίηση μέσω σύμπραξης δημοσίου και ιδιωτικού δικαίου (ΣΔΙΤ) όλου του εξωτερικού υδροδοτικού συστήματος της Αττικής φαίνεται πως μεθοδευει η κυβέρνηση, προκαλώντας έντονες αντιδράσεις εκ μέρους των εργαζομένων της ΕΥΔΑΠ κι όχι μόνο. 
[...]
«Στην ουσία απομειώνεται την περιουσία της ΕΥΔΑΠ, καθώς της παίρνουν από τα χέρια όλα αυτά τα υδάτινα αποθέματα. Δεν είναι εύκολο να έρθει μια εταιρεία μικρή και να τα διαχειριστεί όλα αυτά. Δεν ξέρω κατά πόσο, παίρνοντας από την ΕΥΔΑΠ, θα διασφαλιστεί η αδιάλειπτη παροχή νερού στην Αττική» σημειώνει μιλώντας στο tvxs ο εκπρόσωπος…

Pentagon war game includes scenario for military response to domestic Gen Z rebellion

by Nick Turse
In the face of protests composed largely of young people, the presence of America’s military on the streets of major cities has been a controversial development. But this isn’t the first time that Generation Z — those born after 1996 — has popped up on the Pentagon’s radar.
Documents obtained by The Intercept via the Freedom of Information Act reveal that a Pentagon war game, called the 2018 Joint Land, Air and Sea Strategic Special Program, or JLASS, offered a scenario in which members of Generation Z, driven by malaise and discontent, launch a “Zbellion” in America in the mid-2020s.
The Zbellion plot was a small part of JLASS 2018, which also featured scenarios involving Islamist militants in Africa, anti-capitalist extremists, and ISIS successors. The war game was conducted by students and faculty from the U.S. military’s war colleges, the training grounds for prospective generals and admirals. While it is explicitly not a national intelligence estimate, the war game, …

Σκάνδαλο Novartis: Λοβέρδος, Πατούλης, Στουρνάρας στο μικροσκόπιο του FBI από το 2017

Σε "αυτοχειρία" εξελίσσεται η επιλογή του Ιωάννη Αγγελή να διαβιβάσει στη Βουλή αναφορές του FBI για την υπόθεση Νovartis, από το υλικό που έχει υπεξαιρέσει από το γραφείο της Εισαγγελέως Διαφθοράς Ελένης Τουλουπάκη. 
Τα εγγραφα των αμερικανικών αρχών, που κατατέθηκαν από τον Αντιεισαγγελέα του Αρείου Πάγου την Τετάρτη, διέρρευσαν στο  τύπο και  πιστοποιούν την ουσία του σκανδάλου Novartis, δηλαδή το συστηματικό χρηματισμό γιατρών και πολιτικών προσώπων και τις μεθόδους με τις οποίες η Novartis αναλάμβανε να αυξήσει τις τιμές και τα έσοδα από συγκεκριμένα projects σκευασμάτων όπως το Lucentis, το Exactly ή το Ηarvard Project. 
Τα έγγραφα δείχνουν ακριβώς τη διαδικασία εξαγοράς γιατρών καθώς και τις μεθόδους που χρησιμοποιούσαν με τους κυβερνητικούς αξιωματούχους αλλά περιγράφει με λεπτομέρειες και τον τρόπο με τον οποίο διάφορες εταιρίες επικοινωνίας και ΜΜΕ αναλάμβαναν να "ξεπλένουν" μαύρο χρήμα μέσω εικονικών τιμολογήσεων, όπως το γκρουπ του Μαυρίκου, του Βουλκί…

New court files expose Sheldon Adelson’s security team in US spy operation against Julian Assange

An exclusive investigation by The Grayzone reveals new details on the critical role Sheldon Adelson’s Las Vegas Sands played in an apparent CIA spying operation targeting Julian Assange, and exposes the Sands security staff who helped coordinate the malicious campaign.
by Max Blumenthal
I was the CIA director. We lied, we cheated, we stole.

–Mike Pompeo, College Station, TX, April 15, 2019
Part 9 - Spying, stealing diapers, and burglary plans
Stefania Maurizi, an Italian journalist who visited Assange regularly at the embassy in London, remembered relaxed encounters with minimal security and friendly interactions with embassy staff for the first five years of the Wikileaks founder’s stay. It was in December 2017 that everything changed.
During a visit to interview Assange that month, the Spanish security guards from UC Global demanded Maurizi hand over her backpack and all belongings inside for the first time. She protested the new and seemingly arbitrary procedure, but to no avail. 

Hong Kong’s ‘pro-democracy’ movement allies with far-right US politicians that seek to crush Black Lives Matter

As a Hong Kong protest leader promotes far-right condemnations of US anti-racism demonstrations and activists shut down a Black Lives Matter rally in the city, Hong Kong organizers forge close ties with hardline Republicans in Washington.
by Ajit Singh
Part 4 - Hong Kong’s opposition aligned with same far-right US politicians repressing Black Lives Matter
There are some within Hong Kong’s “pro-democracy” movement who have issued statements expressing support for the protests taking place in the US and the Black Lives Matter movement, arguing that both movements are engaged in a shared struggle against oppression and police brutality. 
Joshua Wong, a poster-boy for the Hong Kong protests, along with Nathan Law and other leading members of his political party, Demosistō, have stated that they stand with Black Lives Matter. “Many of you have asked me about the ongoing U.S. protests” wrote Wong in a June 2 tweet. “As a human-rights activist, I stand firmly on the side of the #BlackLivesMat…

The US imperialist machine calls for a G-7 expansion to tackle China's 5G penetration in its Western sphere of influence

globinfo freexchange

The US imperialist machine openly calls Western allies (and particularly the UK), to sabotage China's economic and technological penetration in its Western sphere of influence, through a Foreign Policyarticle.

Although the article adopts Trump-style anti-Chinese propaganda, it is clear that the US imperialists have difficulties to accept Trump's inconvenient proposal regarding the expansion of G-7, because it includes "hostile" Russia.

Instead, they think that London's proposal regarding the expansion of G-7 (into D-10), is the most appropriate.

Although according to the article, "The D-10 is not an anti-China alliance.", its hawkish style is more than evident, as can be depicted with that "United Kingdom's D-10 is the right size and shape ... covering only the Cold War West.", for a start.

Furthermore, according to the article, the UK appears to be the most suitable, among the US allies, to lead the race against China…