Читать книгу Crisis and Inequality - Mattias Vermeiren - Страница 20

It would be wrong to believe that technological innovation and globalization are unrelated to inequality. Yet, from a political economy perspective, the neoclassical interpretation remains deficient for various reasons. As discussed above, income inequality has also increased within the top 10 per cent, between the 9 per cent and the top 1 per cent, which is difficult to explain on the basis of the theory of marginal productivity. Indeed, as Piketty notes in his book, ‘when we look at the changes in the skill levels of different groups in the income distribution, it is hard to see any discontinuity between the 9 percent and the 1 percent, regardless of what criteria we use: years of education, selectivity of educational institution, or professional experience’.¹⁵ The SBTC is even less well-equipped to explain differences in income gains within the top percentile (see table 1.1 above), whose members display even greater uniformity in skills than the top 10 per cent.¹⁶

Moreover, the neoclassical interpretation fails to explain why the trajectory of inequality has been so markedly different in the Anglo-Saxon countries and the continental European countries. After all, these advanced capitalist economies have been more or less equally exposed to exogenous market forces like technological innovation and globalization, making it difficult to understand why wage differentials between high-skilled and low-skilled workers rose faster in the former group of countries than in the latter. In fact, the more egalitarian countries of Northern Europe have been more open to international trade and more export-oriented than the less equal Anglo-Saxon economies. So although technological change and globalization may act as powerful forces for income inequality, continued cross-national diversity suggests that other factors influence both the magnitude and the rate of change in inequality and top income shares: from a political economy perspective, the effects of technological change and globalization on the distribution of income and wealth in the advanced economies have been shaped and mediated by a variety of public policies and economic institutions that should be central to debates on inequality.

Finally, the neoclassical view that labour productivity growth translates into a growth of wages and living standards for the average worker is clearly at odds with the fall in the labour income share since the 1980s. The constancy of the labour share of GDP was long seen as one of the ‘stylized facts’ in neoclassical economics: being equal to the marginal product of labour, wages are expected to grow in step with productivity growth, and the labour share of GDP should remain more or less stable over time.¹⁷ The fact that the labour share remained stable during the post-war era of egalitarian capitalism until the 1970s and has fallen ever since is a clear vindication of a central claim in the political economy literature, which states that the distribution of national income between the two factors of production is a function of shifting relations of bargaining power between capital and labour.

The typical starting point in the political economy literature is therefore that the distribution of income and wealth in an economy is intrinsically political, in the sense that it is always determined by the distribution of political and economic power between different groups and classes in that economy. All capitalist economies have an intrinsic propensity to fuel economic inequality due to the asymmetric relations of power between the owners of capital and the owners of labour, as Karl Marx argued forcefully in the first volume of Capital. Marxist political economists believe that owners of capital always have structural power in market economies through their control over the means of production: a fundamental feature of the capitalist mode of production is the commodification of labour; the majority of people have to sell their labour to capitalist employers to make a living, leading to a dependent relationship that allows employers to exploit the working classes by extracting ‘surplus value’ from their labour. For Marx and his followers, the exploitation of labour power through extraction of surplus value is the ultimate source of capitalist profits: workers’ wages will always be lower than the value added they produce for their firms. As such, Marxists reject the neoclassical view that wages tend to reflect the marginal product of labour: due to asymmetric bargaining relations between capitalist employees and wage earners in competitive labour markets, wages of the majority of workers will be typically below the value they produce for their firms.

The capitalist class also often has a structural power over the formation of the public policies of the government, which is reliant on the decisions of private businesses to invest in the economy and create a sufficient amount of economic growth and jobs: ‘a major, perhaps the major, function of government is to encourage businessmen to invest and produce, thus increasing GDP and improving everyone’s standard of living’.¹⁸ As Charles Lindblom argued in his 1977 book Politics Against Markets, the structural power of capital has two components.¹⁹ First, the owners of capital are able to cause economic disruption by organizing investment strikes – for example, postponing decisions to expand production or moving production abroad – whenever they disapprove of the government’s economic policies. The mere threat of such an investment strike can often be sufficient to convince the government to pursue policies that are more favourable to capital. Second, the capitalist class is able to exert ideological control by representing private business interests as synonymous with the national interest. Seen from this angle, economic globalization fuelled income inequality not by reducing demand for unskilled labour but by strengthening the structural power of capital: the removal of cross-border restrictions on trade, investment and financial flows enabled the owners of capital to threaten their government with capital flight to countries with more favourable conditions. The owners of capital were supported in this by the neoliberal ideology that served to change ‘expectations about the appropriate role of government, the importance of private enterprise, and the virtues of markets’.²⁰

However, as Jacob Hacker and Paul Pierson have noted, ‘the structural power of business is variable, not constant’.²¹ A variety of developments in the first half of the twentieth century enabled the working classes to strengthen their bargaining position vis-à-vis capital. On the one hand, workers organized in the form of trade unions to engage in collective bargaining, the key purpose of which is to make sure that the wages of the working classes grew in step with labour productivity. When universal and equal suffrage was introduced in the early years of the twentieth century in most industrialized countries (in most cases initially only for male voters), left-wing political parties striving to defend the interest of the working classes also gained influence and became increasingly successful in shaping public policies (either in government or in national parliaments) – particularly after the Great Depression of the 1930s, which revealed the blatant need for more extensive state intervention to protect citizens against the vagaries of markets.²² From the 1930s to the 1970s these democratic class struggles culminated in the development of national welfare states, ushering in a new era of egalitarian capitalism based on collective bargaining, full employment and expansion of social safety nets. These equality-promoting institutions were supported by restrictions of cross-border capital flows, which weakened the structural power of capital by constraining the ability of firms and capital owners to escape these institutions.

The post-war settlement broke down during the stagflation crisis of the 1970s, when a combination of economic stagnation and rising inflation pushed governments of the industrialized countries to liberalize trade, investment and cross-border capital flows. A central question for the emerging CPE and international political economy (IPE) literature since the end of the 1970s is to what extent economic globalization and the ensuing intensification of competition between firms and between states would undermine the main institutional pillars of egalitarian capitalism. Scholars of the VoC school have rightly noted that there continues to be a significant amount of institutional divergence between the Anglo-Saxon economies and the continental European economies in terms of organization of their labour markets, welfare state and corporate governance.²³ These persistent institutional differences go a long way to explain why income inequality rose faster in the former group of countries than in the latter. Nevertheless, economic globalization weakened the power of labour and strengthened the power of capital in ways that spawned varying tendencies towards neoliberalization – even in the more egalitarian European countries.²⁴ In the upcoming chapters we will examine these tendencies in various policy domains that have been most consequential in fuelling economic inequality in the advanced capitalist world.