Neoliberal Reaction and the "Workhouse Economy"

I just found a great article by Doug Henwood in an old issue of Left Business Observer: "The New Economy and After"

Let's look at the world of work, which is where the late 1990s productivity revolution was happening. If we are in the early stages of a technorevolution, we're certainly not distributing its dividends in the form of a lighter workload: Americans have to work awfully hard to make ends meet. While average incomes have risen considerably over the last half-century - rapidly for the first twenty-five years after World War II, far more slowly thereafter - the amount of work necessary to earn those incomes has risen with equal relentlessness. A worker paid the average manufacturing wage would have had to work sixty-two weeks to earn the median family's income in 1947. In 1973, it would have taken seventy-four weeks; in 2001, eighty-one weeks. So, despite the fact that productivity overall is up more than threefold over the last fifty years, the average worker would have to toil six months longer to make the average family income than he or she did half a century earlier. And the increase in the work effort came at a more punishing pace in the 1990s than it did in earlier decades. Of course, it's not just individual workers who are putting in longer hours; an ever-larger share of the adult population has entered the paid workforce - mainly women, who aren't getting much relief in their household labors to compensate for their increased presence in factories and offices.

International comparisons confirm the picture of the U.S. as a workhouse economy. American workers put in more hours per year than do workers in Western Europe; only workers in East Asia spend more time on the job than do Americans. And our workers don't produce as impressively as people seem to think. Workers in the Netherlands, Germany, France, and Italy all produce more in an hour than do their American counterparts; Americans come in barely ahead of workers in Ireland and Sweden. Nor has the growth in U.S. productivity over the recent past been all that impressive; in a 1999 IMF study of nineteen major countries, the U.S. came in dead last in productivity growth between 1973 and 1996. It's only over the latter part of the 1990s that U.S. productivity performance ran ahead of that of its peers - though not all that far ahead, if you use comparable statistics, as more recent work for Credit Suisse First Boston by Julian Callow shows.

Why does productivity matter? Over the long term, rising productivity is what makes possible rising living standards. Possible, not inevitable; productivity gains in money form have to be divided between profits and wages. And for most Americans, the late 1990s were pretty good times, but hardly miraculous. Incomes rose modestly, but not spectacularly. And although productivity has continued to rise, according to the official stats, in the recent recession and so-called recovery, it certainly doesn't feel too good to most of us. Wage gains have disappeared. The latest chapter in the productivity miracle is more about overwork and speedup than any technological wonder. We're back where we were 100 words ago - in the workhouse economy. Or, to quote New York Times reporter Alan Cowell, the American way of economic life is all about "working longer for less."

Again, this is the result of reduced bargaining power of labor, brought about largely through state policies. Henwood quotes Michal Kalecki on the unacceptability of full employment from the perspective of the state capitalist ruling class:

[U]nder a regime of permanent full employment, the "sack" would cease to play its role as a disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow. Strikes for wage increases and improvements in conditions of work would create political tension.

Henwood elaborates:

That would mean the loss of "discipline in the factories" and would put "political stability" at risk - which sounds a lot like the 1970s, from the factory floor to the global scene. It looked like a loss of discipline in the whole social factory.

That indiscipline was met with the rightwing ascendancy of the late 1970s, a massively successful campaign of wage cutting, union busting, and public sector austerity on a global scale.

I wrote about that "ascendancy" myself--the shift in elite consensus in the 1970s from corporate liberalism to neo-liberalism--in a subsection of Chapter Eight of Studies in Mutualist Political Economy: "Neoliberal Reaction and Political Repression"