After Five Years: Report Card on Crisis Capitalism

Monday, 09 July 2012 00:00
By Richard D Wolff, Truthout | News Analysis

After five years of crisis - with no end in sight - it's time to evaluate what happened, why and what needs to be done. One key cause of this crisis is the class structure of capitalist enterprises. I stress that because most treatments miss it. By class structure, I mean enterprises' internal organization pitting workers against corporate boards of directors and major shareholders. Those boards seek first to maximize corporate profits and growth. That means maximizing the difference between the value they get from workers' labor and the value of the wages paid to workers. Those boards also decide how to use that difference ("surplus value") to secure the corporation's reproduction and growth. The major shareholders and the directors they select make all basic corporate decisions: what, how and where to produce and how to spend the surplus value (on executive pay hikes and bonuses, outsourcing production, buying politicians etc.) Workers (the majority) live with the results of decisions made by a tiny minority (shareholders and directors). Workers are excluded from participating in those decisions: a lesson in capitalist democracy.

US capitalism changed in the 1970s. The prior century of labor shortages had required real wage increases every decade (to bring in immigrant workers). In the 1970s, many capitalists installed labor-saving computers, while others relocated production to lower-wage countries. Demand for US laborers fell. Simultaneously, women moved massively into wage work as did new immigrants from Latin America. The supply of laborers in the US rose. Capitalists no longer needed to raise real wages, so they stopped doing so. Since the 1970s, what capitalists paid workers stayed the same. Meanwhile, computers helped labor productivity to rise: what workers produced for capitalists to sell kept increasing. Surplus value (and profits), therefore, soared (stock market boom, rising financial sector etc.) while the wage portion of national product/income fell.