Interview with noted economist, Richard D. Wolff: Part Two

An in depth examination of the current economic crises plaguing our continent and a closer look at the issues with capitalism itself

Interview by: Konstantine Roccas

Konstantine Roccas has an intimate conversation with noted economist, Richard D. Wolff, about a number of issues, spanning the current economic crisis, a comparison of economic systems, and a discussion about the flaws of capitalism and their proposed solutions.

According to the Economic Policy Institute, real wages have flat-lined since the 1970’s while productivity has sky-rocketed, especially these past few years. Why are we not seeing the benefits of our increased labour?

Well you’re seeing them; you’re just not getting them. The productivity of the American worker is roughly a measure of the goods and services produced per hour of a workers effort. So when John and Mary come into work and spend an hour, the productivity statistic measures what on average is the flow of output that an hour of their work produces. [Or in simpler terms], what you give to your employer for every hour you work.

Keeping that in mind, let’s turn to the real wage: the bundle of goods and services that you can afford to buy with an hours’ worth of your pay. Your real wage represents what your employer gives you for every hour that you work.

Taking the numbers from the Economic Policy Institute, real wages had been constant over the last 30-40 years, and that’s pretty much correct. The average worker gets pay which allows him/her to buy a bundle of goods and services about the same as what he/she could do with an hour’s worth of pay in 1975; so the wage paid to workers by the employer has been constant. But the bundle of goods and services provided by an hour of a workers work has gone steadily up over the 30 years. It’s not rocket science to understand that if what you give every hour to your employer goes steadily up for 30-40 years but what he gives you remains flat, the employer is having the time of his life. Profits are skyrocketing. Not because of technology or because ‘capitalists are smart’ or ‘entrepreneurs are creative.’ They are skyrocketing for a much simpler reason. You’re not raising the wages of your workers and you’re getting more out of them. Not only by new and better machines and technology, but by working them harder, faster, longer, training them better, having them frightened about their job security, etc.

So there have been gains for rising productivity but they have accrued to the employers of America, not just on Wall Street, but right across on Main Street as well. Employers everywhere have been dancing the jig of rising productivity from their workers while they don’t have to pay their workers any rising real wage; which by the way they had to do for the workers for over a century up until the 1970s. This productivity shows but in what?

[First], a record stock market explosion from roughly 1980 to the 2000 mark, unlike any we had seen before. Secondly, we pay the top executives of our major corporations’ way more than they get anywhere else on Earth. That was not true in the 1970s and has become obscenely true ever since. A good bit of that extra wealth has found its way not only into the dividends and capital wealth of shareholders, but to the extraordinary pay packages we pay to the top executives of corporations down the line.

So yes, rising productivity and flat wages have produced enormous gains, but they have accrued to what we now refer to as the one percent and they have eluded the 99%, creating in the United States the following summary statistic.