di Umair Haque
Go ahead and take a look at the chart above. What does it tell you? It tells me I’m looking at a society having the economic equivalent of a heart attack. From which there might well be no recovery. Let me explain.
The chart above is the “labour share of GDP.” What? It simply means how much of the economy goes to people who..work for a living. Who earns incomes from wages and salaries and tips and so forth.
(Now. I bet you thought that was something like 99% of the economy. Point number zero: it’s not. It’s around 55% — and falling fast. Wait, what? Just 55% of the economy is made of…working people’s incomes and salaries? What about the rest? The rest, my friends, is “capital income”: dividends, interest, and so on. That makes up about half the economy — and always has. Are you beginning to already see a problem here? Let’s try to unpack all that.)
The whole point of a modern economy — the first and fundamental point — is for labour’s income share to rise. That is, people who work for a living should see more and more of the gains an economy produces. Why? Because they are the ones who really create those gains. The rest is mostly rent-seeking, money skimmed off the top. If an economy’s mostly “capital income” for example, dividends and interest —think about it — who’s really creating anything new, doing anything of real worth? Nobody is the answer. Nobody’s ever earning a penny more for regular, average jobs, like nursing, teaching, plumbing, carpentry, or even not so regular ones, like astrobiology and nanotechnology. As a result, because capital income is taking about half the economy…a society can never afford things like public healthcare, education, childcare, elderly care, and so on, develop a social contract of expansive public goods. Bang! Nobody’s life ever gets better, except maybe a tiny number of people at the very, very top. Doesn’t that sound a little…well..medieval to you? It should. I’ll come back to that.
When an economy looks like America’s, the fact is that wealth is just being siphoned off forever from everyone else to the rich — and living standards stagnate for all. And yet that’s more or less the point America’s at. Hence, inless labour income rises, the result is usually social instability and unrest and revolution. But not all revolutions, as we will see, are progressive ones — some can be viciously regressive, too.
Think about history for a moment, to really understand this point. A millennia ago, nobody really “worked” for a living in the modern sense. There were peasants, and there were “nobles”. The “nobles” let the peasants keep some paltry share of what they produced — harvests, timber, grain — in exchange for…not killing them. That was called “chivalry”, the idea that I can do violence to you, but I’m very noble and romantic because…I don’t. Labour’s share of income in such an economy was…about 50%. That’s usually about how much nobles took: half the harvest, timber, grain, etcetera.
Fast forward a millennium to now. What progress has this group called “the people” really made? Well, they’ve won rights and constitutions and democracies and so forth. But all of those exist, really, for one reason. So that they win an increasing share of a nation’s income — and so it can’t just be taken from them by “nobles” extorting them. We should want average people to enjoy most, if not all, of an economy’s gains — precisely because they…well, work for it. (There’s no real point to an economy being made of capital income — when most of it is, it’s more properly called “tribute” to “kings” and “nobles”, people who don’t work for a living, but only do some kind of violence, exploitation, or harm.)
And yet in America…despite all the “innovation” and the trillion dollar companies and whatnot…the labour share of income has only increased from the medieval era’s 50% to…55%. LOL — what the? Five percent of a gain? If we subtract benefits, and just count wages and income, America’s labour share of the economy is…less than 50%, which is at or below…medieval levels. LOL. What on earth?
Contrast that with Europe. In France, for example, labour’s share of income is about 80%. That’s because the French fight for it. They’ve been on strike — the whole country has — for a month, for example, against “pension reform” — but the American media will never tell you that. You might get ideas — and nobody wants that.
America resembles something much more like Les Miserables than a modern society. America’s and France’s labour shares of the economy couldn’t be more different. That’s because America’s closer to a medieval society than it is to a modern social democracy, while France, despite its problems, is the epitome of the latter — with the vast majority of the economy going to working people, average people, for doing simple, regular jobs, like teaching, carpentry, plumbing, nursing.
America collapsed into its own dark age because labour income has fallen dramatically for the last seventy years. There has never been a point in modernity where America’s labour income has risen over a long term horizon. What the? Labour’s share of the American economy has fallen since the 1950s? Why is that?
That’s a Soviet outcome. And yet the reason, ironically, is capitalism. What the chart above really shows us is the failure of capitalism, as a socioeconomic system, in the hardest possible terms. Capitalism’s a raging success — for capitalists. It’s increased their share of income, capital income — to an absurd, almost medieval point. But the price has been that labour’s share of income — everyone else, working people, the average person — has fallen since the 1950s. Hence, the surreal dystopia that American life has become now — something like 75% of people can’t afford to pay the bills.
Capitalism’s entire point and purpose is to increase capital income, not labour income — and yet too many Americans fail to understand this elementary point. Your boss doesn’t ever want to give you a raise out of the kindness of his heart, hence you have to beg and scrape — and nobody’s been successful, in net terms: American average incomes have been stagnant since the 1970s. That’s precisely because capitalism is busy filling its pockets and gorging itself. The rich became super rich then mega rich then ultra rich. Once being a millionaire was rich — today, Bezos, Gates, and Buffett are worth trillions combined.
Hence, decades of capitalism meant that the American economy grew fatally lopsided. Capital incomes were growing — but labour incomes falling. The rich became absurdly rich — but the middle imploded into the new poor, and the old poor simply were left to rot and die. Yes, really. The average American can’t raise a tiny amount for an emergency, and then dies in debt. That’s what “falling labour income” means in hard terms.
Remember my medieval comparison — or Les Miserables? What do you call people who never effectively own, earn, or save anything their whole lives — which is what dying in debt really means? They are something very, very much like serfs. They aren’t free, in any real term — because owning anything is out of their grasp, just like peasants never even owned their own land. The same has become true in America. Capitalism reduced Americans to something very much like neo serfs — who live lives of despair, anger, rage, poverty, and bankruptcy. You don’t really “own” that house, the bank does. If you need healthcare for a serious illness, good luck — odds are you’re going to end up broke.
A labour share fallen to near-medieval levels also means a society that’s beginning to resemble a medieval one. It’s a caste society, with a stratum of ultra rich, who are untouchable, who flit about in private jets, and are whisked between luxury penthouses — palaces in the sky. Meanwhile, on earth, the grubby masses toil in the gutters, to make them richer. Read: as Amazon warehouse workers and “content moderators”, if they’re lucky. If they’re not…they just end up homeless, broke, and increasingly, dead. If it sounds like Les Miserables, it’s not far off — that kind of squalor is what a collapsed society looks like, and America is one.
The difference, though, is that in the days of the serfs, or Les Miserables, revolutions tended to be progressive. The French revolted against the monarchy and created the world’s first real democracy (sorry, America — you were still a slave state.) The serfs won, after centuries of bruising battles, real rights. But modernity is different.
When middle and working classes fall apart — as America’s have done — they don’t tend to turn on their masters and overlords. Serfs and Les Miserables, you see, had no one below them to turn upon. But middle classes do. And so when a society’s labour income implodes, as America’s has done, who’s the fury, rage, despair, and violence taken out on? It’s much easier to hate those even more powerless than you. And that is precisely what happened in America.
Capitalism implodes into fascism. Middle classes who are downwardly mobile seek refuge in older forms of order, in atavism. Instead of looking forward to an open, cosmopolitan society of equals, they turn insular, closed-minded, embittered, narrow. A demagogue comes along, and says: “If you go back to the old ways, you will be Great Again!! Those dirty, filthy people — they never belonged here! They’re not part of the True Us! The tribe, the clan, those of pure blood — they must rise again, supreme!!” Bang! The fascist spark is lit.
Do you see the point? Let me say it again. Those poor serfs and Les Miserables had nobody much to punch down at. They were at the very bottom of the social hierarchy. But modernity’s trap is that declining middle classes and working classes aren’t. There’s a stratum below them, many, in fact. In America, blacks, Latinos, Muslims, Jews. In Britain, Europeans. In China, Uighurs. In India, Muslims. It’s not a coincidence all these groups have been targeted by majorities and dehumanized as capitalism fails. It’s a relationship. As middle classes and working classes collapse, they seek those below them to abuse, dominate, enslave, and control.
Maybe that way, they will gain what capitalism promised them, but never delivered. Power, dominion, a sense of superiority, status. “At least this way, by going back to tribalism, by dehumanizing those filthy, dirty, people, I’ll be above someone! And maybe I’ll have real powert and resources at last.” Hence, the SS officer who’d only ever been a drunken thug — and suddenly found himself one day living in a fine mansion full of cultured art and gilded furniture — which belong to a Jewish merchant.
Let me tie up all those threads.
Capitalism implodes into fascism by way of middle and working classes declining into rage, fury, despair, and violence, as labour income falls, and capital income increases, to genuinely absurd levels — medieval ones.
Now think again about the chart above. Who are the Trumpists? They’re the people whom that fall in labour income has hit the hardest. They’re the Rust Belt factory workers who are so desperate they’re willing to turn to anyone or anything. They’re farmers who’ve been ignored so long they barely even feel American anymore. They’re middle class people in second cities who feel that the system has never worked for them.
(Sure — there’s racism there. But if you objected, you missed my point. The decline of fortune is what triggers and ignites latent racism. Racism, bigotry, hate — these things will always be with us, beneath the surface. Human beings are not simple and pure creatures. The only answer we know of for them — the only one — is prosperity. Maybe then, the true-blue American living next to the Jew or Muslim or Latino says: “Hey, those guys aren’t so bad” — translation: I don’t find them so threatening. But hoping that people who are growing poorer and more desperate…for something like eighty years…are going to magically get along…instead of fracture into tribes at each others’ throats? That, my friends, is a fairy tale.)
Capitalism failed as a socioeconomic system. That is a fact that everyone should understand about the modern world. It’s not my opinion, really. You can see it in cold, hard terms in the chart above. How badly did it fail? So badly that it’s barely produced a society capable of living above medieval levels of inequality, inequity, injustice, and squalor. Nobles took fifty percent of the harvest from peasants. Capitalism takes 45 percent of the American economy for itself. That’s a catastrophically high number, as I hope you understand now. So high that it results in men like Bezos and Gates, so rich that they individually could fund America’s entire education budget, several times over. What the? One person worth as much as an entire society spends on its kids?
In previous ages, we’d have called such people kings, counts, dukes, or barons. And the people that they effectively ruled over serfs and peasants. Today, we call them billionaires, and the rest of the people who they ruled don’t have a name. Those people don’t have an identity, because identity politics apparently stops at what’s in your pants, not in your wallet. They don’t have a consciousness. They have no idea, really, that they are something like Neo-serfs, Neo-peasants, united in their misery and squalor and despair and rage — the only difference between them, really, is that they’re at each others’ throats.
Bang! Fascism begins to rule, as the middle class punches down on the working class, the working class punches down on the people they think of as subhumans — and the idea of a modern society of equals, all investing in each other, falls apart. That is the story of American collapse in a nutshell. And while I don’t think Americas will learn anything from it — the world, my friends, might.
Americans remind me, increasingly, of Les Miserables. But that’s not a metaphor. I mean it quite literally. The French, though, had their revolution. America still hasn't — unless you count this one, taking us backwards, to the dark ages.
Go ahead and take a look at the chart above. What does it tell you? It tells me I’m looking at a society having the economic equivalent of a heart attack. From which there might well be no recovery. Let me explain.
The chart above is the “labour share of GDP.” What? It simply means how much of the economy goes to people who..work for a living. Who earns incomes from wages and salaries and tips and so forth.
(Now. I bet you thought that was something like 99% of the economy. Point number zero: it’s not. It’s around 55% — and falling fast. Wait, what? Just 55% of the economy is made of…working people’s incomes and salaries? What about the rest? The rest, my friends, is “capital income”: dividends, interest, and so on. That makes up about half the economy — and always has. Are you beginning to already see a problem here? Let’s try to unpack all that.)
The whole point of a modern economy — the first and fundamental point — is for labour’s income share to rise. That is, people who work for a living should see more and more of the gains an economy produces. Why? Because they are the ones who really create those gains. The rest is mostly rent-seeking, money skimmed off the top. If an economy’s mostly “capital income” for example, dividends and interest —think about it — who’s really creating anything new, doing anything of real worth? Nobody is the answer. Nobody’s ever earning a penny more for regular, average jobs, like nursing, teaching, plumbing, carpentry, or even not so regular ones, like astrobiology and nanotechnology. As a result, because capital income is taking about half the economy…a society can never afford things like public healthcare, education, childcare, elderly care, and so on, develop a social contract of expansive public goods. Bang! Nobody’s life ever gets better, except maybe a tiny number of people at the very, very top. Doesn’t that sound a little…well..medieval to you? It should. I’ll come back to that.
When an economy looks like America’s, the fact is that wealth is just being siphoned off forever from everyone else to the rich — and living standards stagnate for all. And yet that’s more or less the point America’s at. Hence, inless labour income rises, the result is usually social instability and unrest and revolution. But not all revolutions, as we will see, are progressive ones — some can be viciously regressive, too.
Think about history for a moment, to really understand this point. A millennia ago, nobody really “worked” for a living in the modern sense. There were peasants, and there were “nobles”. The “nobles” let the peasants keep some paltry share of what they produced — harvests, timber, grain — in exchange for…not killing them. That was called “chivalry”, the idea that I can do violence to you, but I’m very noble and romantic because…I don’t. Labour’s share of income in such an economy was…about 50%. That’s usually about how much nobles took: half the harvest, timber, grain, etcetera.
Fast forward a millennium to now. What progress has this group called “the people” really made? Well, they’ve won rights and constitutions and democracies and so forth. But all of those exist, really, for one reason. So that they win an increasing share of a nation’s income — and so it can’t just be taken from them by “nobles” extorting them. We should want average people to enjoy most, if not all, of an economy’s gains — precisely because they…well, work for it. (There’s no real point to an economy being made of capital income — when most of it is, it’s more properly called “tribute” to “kings” and “nobles”, people who don’t work for a living, but only do some kind of violence, exploitation, or harm.)
And yet in America…despite all the “innovation” and the trillion dollar companies and whatnot…the labour share of income has only increased from the medieval era’s 50% to…55%. LOL — what the? Five percent of a gain? If we subtract benefits, and just count wages and income, America’s labour share of the economy is…less than 50%, which is at or below…medieval levels. LOL. What on earth?
Contrast that with Europe. In France, for example, labour’s share of income is about 80%. That’s because the French fight for it. They’ve been on strike — the whole country has — for a month, for example, against “pension reform” — but the American media will never tell you that. You might get ideas — and nobody wants that.
America resembles something much more like Les Miserables than a modern society. America’s and France’s labour shares of the economy couldn’t be more different. That’s because America’s closer to a medieval society than it is to a modern social democracy, while France, despite its problems, is the epitome of the latter — with the vast majority of the economy going to working people, average people, for doing simple, regular jobs, like teaching, carpentry, plumbing, nursing.
America collapsed into its own dark age because labour income has fallen dramatically for the last seventy years. There has never been a point in modernity where America’s labour income has risen over a long term horizon. What the? Labour’s share of the American economy has fallen since the 1950s? Why is that?
That’s a Soviet outcome. And yet the reason, ironically, is capitalism. What the chart above really shows us is the failure of capitalism, as a socioeconomic system, in the hardest possible terms. Capitalism’s a raging success — for capitalists. It’s increased their share of income, capital income — to an absurd, almost medieval point. But the price has been that labour’s share of income — everyone else, working people, the average person — has fallen since the 1950s. Hence, the surreal dystopia that American life has become now — something like 75% of people can’t afford to pay the bills.
Capitalism’s entire point and purpose is to increase capital income, not labour income — and yet too many Americans fail to understand this elementary point. Your boss doesn’t ever want to give you a raise out of the kindness of his heart, hence you have to beg and scrape — and nobody’s been successful, in net terms: American average incomes have been stagnant since the 1970s. That’s precisely because capitalism is busy filling its pockets and gorging itself. The rich became super rich then mega rich then ultra rich. Once being a millionaire was rich — today, Bezos, Gates, and Buffett are worth trillions combined.
Hence, decades of capitalism meant that the American economy grew fatally lopsided. Capital incomes were growing — but labour incomes falling. The rich became absurdly rich — but the middle imploded into the new poor, and the old poor simply were left to rot and die. Yes, really. The average American can’t raise a tiny amount for an emergency, and then dies in debt. That’s what “falling labour income” means in hard terms.
Remember my medieval comparison — or Les Miserables? What do you call people who never effectively own, earn, or save anything their whole lives — which is what dying in debt really means? They are something very, very much like serfs. They aren’t free, in any real term — because owning anything is out of their grasp, just like peasants never even owned their own land. The same has become true in America. Capitalism reduced Americans to something very much like neo serfs — who live lives of despair, anger, rage, poverty, and bankruptcy. You don’t really “own” that house, the bank does. If you need healthcare for a serious illness, good luck — odds are you’re going to end up broke.
A labour share fallen to near-medieval levels also means a society that’s beginning to resemble a medieval one. It’s a caste society, with a stratum of ultra rich, who are untouchable, who flit about in private jets, and are whisked between luxury penthouses — palaces in the sky. Meanwhile, on earth, the grubby masses toil in the gutters, to make them richer. Read: as Amazon warehouse workers and “content moderators”, if they’re lucky. If they’re not…they just end up homeless, broke, and increasingly, dead. If it sounds like Les Miserables, it’s not far off — that kind of squalor is what a collapsed society looks like, and America is one.
The difference, though, is that in the days of the serfs, or Les Miserables, revolutions tended to be progressive. The French revolted against the monarchy and created the world’s first real democracy (sorry, America — you were still a slave state.) The serfs won, after centuries of bruising battles, real rights. But modernity is different.
When middle and working classes fall apart — as America’s have done — they don’t tend to turn on their masters and overlords. Serfs and Les Miserables, you see, had no one below them to turn upon. But middle classes do. And so when a society’s labour income implodes, as America’s has done, who’s the fury, rage, despair, and violence taken out on? It’s much easier to hate those even more powerless than you. And that is precisely what happened in America.
Capitalism implodes into fascism. Middle classes who are downwardly mobile seek refuge in older forms of order, in atavism. Instead of looking forward to an open, cosmopolitan society of equals, they turn insular, closed-minded, embittered, narrow. A demagogue comes along, and says: “If you go back to the old ways, you will be Great Again!! Those dirty, filthy people — they never belonged here! They’re not part of the True Us! The tribe, the clan, those of pure blood — they must rise again, supreme!!” Bang! The fascist spark is lit.
Do you see the point? Let me say it again. Those poor serfs and Les Miserables had nobody much to punch down at. They were at the very bottom of the social hierarchy. But modernity’s trap is that declining middle classes and working classes aren’t. There’s a stratum below them, many, in fact. In America, blacks, Latinos, Muslims, Jews. In Britain, Europeans. In China, Uighurs. In India, Muslims. It’s not a coincidence all these groups have been targeted by majorities and dehumanized as capitalism fails. It’s a relationship. As middle classes and working classes collapse, they seek those below them to abuse, dominate, enslave, and control.
Maybe that way, they will gain what capitalism promised them, but never delivered. Power, dominion, a sense of superiority, status. “At least this way, by going back to tribalism, by dehumanizing those filthy, dirty, people, I’ll be above someone! And maybe I’ll have real powert and resources at last.” Hence, the SS officer who’d only ever been a drunken thug — and suddenly found himself one day living in a fine mansion full of cultured art and gilded furniture — which belong to a Jewish merchant.
Let me tie up all those threads.
Capitalism implodes into fascism by way of middle and working classes declining into rage, fury, despair, and violence, as labour income falls, and capital income increases, to genuinely absurd levels — medieval ones.
Now think again about the chart above. Who are the Trumpists? They’re the people whom that fall in labour income has hit the hardest. They’re the Rust Belt factory workers who are so desperate they’re willing to turn to anyone or anything. They’re farmers who’ve been ignored so long they barely even feel American anymore. They’re middle class people in second cities who feel that the system has never worked for them.
(Sure — there’s racism there. But if you objected, you missed my point. The decline of fortune is what triggers and ignites latent racism. Racism, bigotry, hate — these things will always be with us, beneath the surface. Human beings are not simple and pure creatures. The only answer we know of for them — the only one — is prosperity. Maybe then, the true-blue American living next to the Jew or Muslim or Latino says: “Hey, those guys aren’t so bad” — translation: I don’t find them so threatening. But hoping that people who are growing poorer and more desperate…for something like eighty years…are going to magically get along…instead of fracture into tribes at each others’ throats? That, my friends, is a fairy tale.)
Capitalism failed as a socioeconomic system. That is a fact that everyone should understand about the modern world. It’s not my opinion, really. You can see it in cold, hard terms in the chart above. How badly did it fail? So badly that it’s barely produced a society capable of living above medieval levels of inequality, inequity, injustice, and squalor. Nobles took fifty percent of the harvest from peasants. Capitalism takes 45 percent of the American economy for itself. That’s a catastrophically high number, as I hope you understand now. So high that it results in men like Bezos and Gates, so rich that they individually could fund America’s entire education budget, several times over. What the? One person worth as much as an entire society spends on its kids?
In previous ages, we’d have called such people kings, counts, dukes, or barons. And the people that they effectively ruled over serfs and peasants. Today, we call them billionaires, and the rest of the people who they ruled don’t have a name. Those people don’t have an identity, because identity politics apparently stops at what’s in your pants, not in your wallet. They don’t have a consciousness. They have no idea, really, that they are something like Neo-serfs, Neo-peasants, united in their misery and squalor and despair and rage — the only difference between them, really, is that they’re at each others’ throats.
Bang! Fascism begins to rule, as the middle class punches down on the working class, the working class punches down on the people they think of as subhumans — and the idea of a modern society of equals, all investing in each other, falls apart. That is the story of American collapse in a nutshell. And while I don’t think Americas will learn anything from it — the world, my friends, might.
Americans remind me, increasingly, of Les Miserables. But that’s not a metaphor. I mean it quite literally. The French, though, had their revolution. America still hasn't — unless you count this one, taking us backwards, to the dark ages.
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