Cool Papa Marx strikes again. Just in case you thought the IPE Zone had gone all neoliberal on you, here's news to stir every left-leaning reader and worry even the most rabid pro-globalizer. It's a pattern which repeats itself in other parts of the developed world, especially the US of A: Labor's share of income (GDP) in the European Union has fallen to yet another all-time low. If you apply a classic Marxist critique, the inherent contradictions of capitalism are becoming evident: capitalism is such that there is a tendency for the bourgeoisie or capitalist class to accumulate an ever-greater share of the fruits of production at the expense of the proletariat or working class. (The culprit? Technologically-enabled globalization.) However, this system cannot continue indefinitely for there comes a point when exploitation of the working class is such that all the wonderful fruits of capitalism can no longer be purchased by labor since its share of income has diminished so much. Then you get revolution and the eventual dictatorship of the proletariat. Does that sound convincing? Make up your own minds; I've featured Marxist-types of analysis to some contemporary issues [1, 2], though there are far more sophisticated readings you can find elsewhere on the Web, comrade.Believe it or not, I am irked that this news has been buried in the media as it is of undoubted importance. Have people become so sheep-like as to expect this trend to continue without complaint? It's a shame in particular that American academics do not apply Marxist styles of analysis to political-economic questions. As this blog's manifesto [!] notes, there are three main IPE perspectives--liberalism, realism, and Marxism. Their loss, I guess; those of us here in Europe have the bases covered with more leftist academics than you can shake a stick at (excluding yours truly who's more of a centrist). Yes, mainstream economists, you can also say that this phenomenon may be Hecksher-Ohlin at work, but Marx is so much more...evocative (and hirsute):
European workers' income as a percentage of the economy has fallen to a 40-year low as globalization increased labor supply and technology improved manufacturing processes.Labor income share of gross domestic product in the European Union fell to 57.8 percent last year, compared with an average of 64.2 percent since 1960, the European Commission in Brussels said in a report today. That compares with a 60.2 percent share in Japan last year and a 60.9 percent share in the U.S. in 2005.
"Technological progress made the largest contribution to the fall in the aggregate labor income share," according to today's report. "Globalization also had a negative impact" as the supply of labor worldwide quadrupled between 1980 and 2006.
Technological advances in machinery and production processes have allowed companies to boost output without adding workers, which can boost economic growth without an increase in labor income. Still, unskilled workers are more negatively affected, as capital and new technology "complement skilled workers," according to the report.
The EU's labor income share, which measures the part of value added allocated to labor in GDP, peaked at 69.9 percent in 1975. The Japanese rate also reached its highest that year, at 76.4 percent, while the U.S. achieved 65.9 percent, its highest level, in 1970.
