Adapted from a talk at a Party for Socialism and Liberation public meeting in New York City on Sept. 8, 2006. Oriando is a student at the City University of New York.
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An Aug. 28 article in the New York Times highlighted the reality of the U.S. capitalist economy today. Titled “Real wages fail to match a rise in productivity,” journalists Steven Greenhouse and David Leonhardt point to the fact that despite huge increases in the productivity and profit of the capitalist economy as a whole, workers have not seen comparable benefits.
“With the economy beginning to slow,” Greenhouse and Leonhardt write, “the current expansion has a chance to become the first sustained period of economic growth since World War II that fails to offer a prolonged increase in real wages for most workers.”
The article points to new statistics from the Labor Department showing that “worker productivity rose 16.6 percent from 2000 to 2005, while total compensation for the median worker rose 7.2 percent in the same five year period. …”
Wealth is being extracted from U.S. workers at a higher and higher rate. The statistics reported in the Times illustrate the point graphically—although the article does not call it by its name: exploitation. It is the extraction of surplus value from workers to owners, from the proletariat to the bourgeoisie, from producers to profiteers.
And it is what socialists have been talking about since the times of Karl Marx. In his 1847 pamphlet, “Wage-Labor and Capital,” Marx explained that what is good for the boss is bad for the worker. “The interests of capital and the interests of wage-labor are diametrically opposed to each other,” he wrote. “Profit and wages remain as before, in inverse proportion.”
Marx began by analyzing production in the capitalist system—the system where factories, machinery, and other means of production are privately owned by a tiny elite of wealthy capitalists. Under this system, the bosses’ profits come from surplus value, which is produced from the part of work done above and beyond the amount required to cover the costs of wages, machinery and raw materials.
Productivity is a way of measuring the amount of value that the workers create in a given time. It depends on several factors, like the general skill level of the workforce and the level of technology available to do the work. But since surplus value is owned by the boss, being more productive does not necessarily benefit the worker. On the contrary, the gap between workers and bosses widens.
The rich get richer
 The wealth of society is not shared equally. Photo: Stock Connection Worldwide |
The statistics about productivity provide only part of the picture. For example, in 1970, corporate CEOs earned about 79 times as much as the average wage worker in the United States. By 2004, the ratio had jumped to 431 to one.
According to Fortune.com, the largest 500 U.S. corporations posted their highest profits and revenues ever in 2005, showing $610 billion in profit and $9.1 trillion in revenue. And oil companies alone have posted record-breaking profits each and every quarter of the current fiscal year.
That points to the bigger story of where the wealth is going. Between 1970 and 2003, the U.S. gross domestic product adjusted for inflation almost tripled—from $3.8 trillion to $10.3 trillion. The UBS investment bank called this “the golden era of profitability.” But how do workers see it?
According to the Times article, “In the first quarter of 2006, wages and salaries represented 45 percent of gross domestic product, down from almost 50 percent in the first quarter of 2001 and a record 53.6 percent in the first quarter of 1970, according to the Commerce Department.”
Keep in mind that wages and salaries are the only place that that the vast majority of workers see any share at all in the capitalist economy. So more than half of the wealth generated by U.S. corporations is never seen by the hundreds of millions of workers that produce it.
Hiding the problem
Like producers of any pro-capitalist propaganda, the Times writers are not just trying to relay information—especially information as damning as this. They need to put it in a “safe” perspective.
So they discuss various reasons that this enormous shift in wealth has taken place. They put it in the framework of the political disagreements between Democrats and Republicans, discussing how much these facts will become part of the blame campaigns between one or the other ruling-class party.
“Economists offer various reasons for the stagnation of wages,” the article states. “Although the economy continues to add jobs, global trade, immigration, layoffs and technology—as well as the insecurity caused by them—appear to have eroded workers’ bargaining power.”
According to this view, the declining share of wealth for the working class is an inevitable byproduct of changes in the global economy, perhaps exacerbated by the free trade policies of the Clinton and Bush administrations.
The more staunchly pro-big business view was expressed by New York Times commentator David Brooks. His Sept. 7 column, “Populist myths on income inequality,” addresses the statistics reported earlier in the week. According to Brooks, everything is working just fine. Nothing has really changed, he argues.
More than that: Brooks claims that now it is the right people getting the wealth! Paraphrasing Clinton administration official Lawrence Katz, he claims, “the market increasingly rewards people with high social and customer-service skills.”
“In other words,” Brooks asserts, “the market is not broken; the meritocracy is working almost too well.”
Class struggle can turn it around
Right-wing propaganda aside, the Aug. 28 Times article does point to a real source of the growing wealth gap: the attacks on the labor movement. They quote Goldman Sachs economists saying, “The most important contributor to higher profit margins over the past five years has been a decline in labor’s share of national income.”
Jared Bernstein from the Economic Policy Institute is more blunt: “[I]t comes down to bargaining power and the lack of ability of many in the work force to claim their fair share of growth.”
In other words, the decades-old war on the U.S. labor movement is showing up on the accountants’ ledgers. It is the class struggle—in this case, the ruling class’s attacks on working people to drive down wages and drive up profits.
But this also shows the way to reversing this trend. The United States has a rich history of working class struggle—although we are denied that knowledge at every step of our education, from kindergarten to college. Every one of the reforms we enjoy today, even though they are inadequate, was won in struggle.
Our class is able to do battle, through the unions for example. To that extent, we can win a greater share of the surplus value.
As socialists and communists, we do not have a perspective of doom and gloom. Rather, it is one of responsibility and action. It is up to us to find the way forward. Those of us in the unions need to be working to “fight to make our unions fight.”
But we know that this trend will not be turned around in shop-by-shop battles. That is where a national party like ours can have an impact, trying to intervene not just with local fights but on a national and international scale on a class-conscious basis.
So lock and load my brothers and sisters, and I will see you on the battlefield—the battlefield of the class struggle.
