Labor vs. Capital re: share-of-the-pie
Industrial capitalism developed during the 18th and 19th centuries. By 1850 there was a new social force: industrial labor.
And there was an industrial labor movement. Some of its adherents espoused socialism.
By 1935 a whole section of the capitalist power elite was frightened. Socialism was a growing force worldwide. The Great Depression of 1930–1935 riled up the working class and also seemed to give credence to the Marxist idea that the capitalist system was crisis-prone, inclined to implode. By 1935 an awful lot of workers were listening to those ideas. The enlightened wing of the bourgeoisie said: “Make concessions. Let labor have their industrial unions. Let the unions negotiate higher standards of living. The dreaded alternative could be the kind of socialist revolution witnessed in Bolshevik Russia.”
So from 1935 to 1970 union membership grew enormously, wage rates rose impressively, and by 1975 labor’s share of GDP was higher than ever before.
Then two things happened that would result in a reversal of the decades-long accommodative trend: For one thing, corporate profits were declining due to relatively high labor costs. Capitalists were distressed. Meanwhile, the socialist revolutions that had resulted in significant systemic change in one country after another since 1917 were floundering. The appeal of the idea of socialism was fading. So capitalists felt emboldened to resist labor demands and to offshore jobs. The era of neoliberalism began. Union membership levels declined and profit rates rose.
Jack Rasmus says another reversal is about to become evident:
