US workers’ real wages (money wages adjusted for the prices workers actually pay) have not risen from their levels in the 1970s. Recent Bureau of Labor Statistics data confirm that real wages continued to stagnate through 2009. Across the same 30-year period, the productivity of labor kept rising: the average worker produced ever more output for the average employer to sell. Thus, capitalists’ revenues rose relative to workers’ wages.
Capitalists used those rising revenues to intensify class war on US workers. First, capitalists weakened their adversaries by lending one portion of their rising revenues back to US workers as high interest “consumer loans.” Faced with flat wages, workers could only finance the homes, children’s schooling, medical treatments, etc. that they needed either by borrowing or by sending more family members, especially women, into more paid employment. While these developments benefited capitalists, they added serious interpersonal tensions to worker households struggling with mounting debts. Over recent decades, workers concentrated on coping with these problems; they spent less time and energy on civic affairs, union activities, their children’s school problems, etc. They bitterly resent anything the government might do, like tax increases, that would make coping still more difficulty. As one famous commentator wrote about the turning inward of working people, they took to “bowling alone.”
Second, capitalists used their rising revenues to finance (1) the relocation of production and other facilities outside the US and (2) computerization of production. By globalizing, corporations threatened employees and unions that rising wages or other job improvements could mean job loss. By computerization, fewer workers would be needed and their bargaining power with capitalists weakened.
Third, capitalist boards of directors used another portion of rising revenues to raise salaries and bonuses for upper-level managers (including themselves), people who contribute significant sums to politicians favoring conservative, pro-business laws and regulations. Corporations and upper-level managers thereby increased the dependence of politicians on their coordinated largesse. At the same time, many overstressed workers disengaged from political affairs. US politics increasingly became an extremely expensive spectator sport. Official politics shifted rightward even when mass popular opinion, when polled, clearly pointed elsewhere. Politicians understood that their careers and policies could not survive the money flood that capitalist corporations and rich upper-management personnel could pour into campaigns against them. They reacted to facts that workers increasingly did not learn about, let alone finance and participate in, politics. They were outspent by their class opponents and they had lost confidence in the ability or will of the Democratic Party and the unions to advance their class interests.
Thus, while majorities supported ending involvement in Iraq, large US forces remain there. A majority now opposes the Afghanistan occupation, but the administration proceeds. A majority favored government help for ordinary people alongside helping banks, insurance companies, etc., in the economic crisis, yet we have no real solution for the foreclosure disaster and no public employment program for the millions laid off by private employers. A majority favor medical insurance for all and lower-cost medical care, yet the emerging legislation falls far short of that. Majorities favor strict limits and controls on private funding of political campaigns, but the reverse happens.
In class war, capitalists deflect their adversaries’ anger and bitterness lest such feelings mobilize workers. Heavy spending on publicity, think tanks, mass media, celebrity spokespersons, and academics achieves this by blaming government, not capitalists, for workers’ difficulties. Consider the current campaign, financed chiefly by private medical insurance corporations, against extending public coverage to millions of medically uninsured citizens. It demonizes that extension as “imposing socialism.” The campaign taps citizens’ fears that another government program will cost them. It helps people “forget” (if they knew) that in 2008 some 87.4 million US citizens already had and strongly supported public medical insurance (Medicare, Medicaid, and the military’s VA system). It omits any mention that between 2004 and 2008, the median family deductible for in-network medical services in most private medical insurances provided by employers rose from $1,000 to $1,850. By suppressing awareness of rising private costs while exaggerating risks of rising public costs, the private insurers’ campaign alarms citizens into opposing the extension of government insurance. For the same reasons, few Americans grasp that the US private medical system is much more expensive than public systems in many other countries (that also deliver better public health); the World Health Organization ranks the US as 37th in the quality of its health system (France ranks #1).
Yet this class war — focused on shifting income, wealth, and power from workers to capitalists — cannot take from workers their most powerful weapon. Workers produce and deliver to their adversaries the resources then used against them — that difference between their productivity for employers and their wages from employers. The dilemma of capitalism is this contradiction: the workers that capitalists hire, exploit, and struggle to dominate are the same workers on whom they depend for the means to hire, exploit, and dominate.
Class war flows from capitalism’s deeply embedded structure that pits capitalists against workers. The 1970s end of rising real wages pumped additional resources into capitalists’ hands to step up class war while it weakened workers. But class war was not only a result, it also helped cause real wages to stop rising in the first place. Capitalism always drives employers to seek lower wages, in effect to wage class war to secure lower wages. However, labor shortages inside the US had long frustrated employers (even when they used massive immigration waves, automation, and other weapons of class war). When, by the 1970s, those conditions finally shifted (computerization and globalization reduced the demand for labor while women and new immigration increased the supply of laborers), employers stopped raising real wages with all the results discussed above.
In times of prosperity as in times of crisis, capitalism entails class war. Only system change will end that. Capitalists have fewer reasons to change the system. Workers remain, as always, in position to make the break. Meanwhile, they suffer the consequences of not doing so.
Rick Wolff is a Professor Emeritus at the University of Massachusetts in Amherst and also a Visiting Professor at the Graduate Program in International Affairs of the New School University in New York. He is the author of New Departures in Marxian Theory (Routledge, 2006) among many other publications. Check out Rick Wolff’s documentary film on the current economic crisis, Capitalism Hits the Fan, at www.capitalismhitsthefan.com. Visit Wolff’s Web site at www.rdwolff.com, and order a copy of his new book Capitalism Hits the Fan: The Global Economic Meltdown and What to Do about It.