The third challenge to
capitalism going on around us
has to do with what I want to call,
because I believe that's what it is, the broad based
continuing assault
on the American working class,
which has analogs in other parts of the world, too.
That's why I believe telling the story about the U.S.
will have implications for those of you
watching from other parts of the world.
The last five years
have been extraordinary in their assaults.
Indeed, the last 30 years,
the assault on the working class is absolutely remarkable.
Here's how one can articulate it briefly.
By the end of the 1970s,
the long historical rise of real wages
in the United States came to an end.
By real wages, of course I mean, the relationship between the money wage
an average worker gets and the prices that that worker has to pay
when he or she or they purchase the goods and services they need.
Okay.
In that situation, it's important to recognize for about a hundred,
150 years before the 1970s,
real wages rose every decade in American history.
Even during the Great Depression.
Because even though wages fell then (money wages), prices fell even faster,
allowing people to at least buy things if they had any money.
Of course, the unemployed don't count in that relationship
and they were the source of the suffering.
Unemployment, you will recall, in 1933
was 25% of the American working class.
So since the 1970s, wages
did not rise faster than prices
as they had before.
And so real wages didn't go anywhere.
The real wage of an American worker in the late seventies
is very little different from what it is today.
The average growth of what you could afford to buy with
your average wage was next to nothing for the last 40 years.
Americans were shaken
by that because they had become of the opinion
carefully cultivated by the media
and the forces that run this society.
They had been told that they lived in an exceptional country
whose direction economically was always up and onward,
that there was this lovely American dream at the end of the rainbow
that they would acquire, if only they studied hard and worked hard.
They would then be able just to keep on accumulating.
Starting in the 1970s, that story
was no longer true.
Now, in an honest society, there would have been an honest debate.
Leaders would have said, Hey, we can't raise your real wages any more.
What are we gonna do?
We didn't have honest politicians then.
We don't have them now either.
So there was no discussion.
Everybody had to figure this out on their own and most didn't.
What most families did is try to figure out how to cope
with the fact that they still wanted that American dream.
They still wanted to give it to their children.
But the rising ability to do so from your job was gone.
And, you know what American workers did?
They knocked themselves out.
They tried to solve individually a problem that was a social economic problem.
And that never works out real well.
You got to face it.
A social problem needs a social solution.
A personal problem needs a private solution.
What did Americans do?
They worked more hours, took on more jobs.
But the big solution, the terrible one,
they borrowed money starting in the 1970s,
like no working class in the history of the world.
We've been borrowing money.
We've been living on borrowed money, and that means borrowed time.
You can't keep borrowing more
if the underlying real wage isn't going anywhere
because you're not developing the capacity
to pay these loans back.
And the American working class knew it,
and they got more and more anxious
about the level of debt.
Mortgage debt for your home, car payments
for your car, credit card debt you build up.
And the final one, the new one, 25 years old now:
load up the family with debt to send the children to college.
That's the basic squeeze on the working class.
But then in the last five years ago, much worse.
The economy crashed in the year 2008 and nine.
Because of what? Subprime mortgage.
That's a fancy way of saying people couldn't carry their debts.
The solution to the end of the working class’ rising wages-
cause American capitalism was unwilling and unprepared to continue to pay.
That's why they went overseas to China and India and Brazil,
those employers, because they could get work done for less.
And that way they screwed the American working class out of further gains
by shifting to working classes in other countries.
That's why they worked so hard
to replace workers with computers and robots and artificial intelligence.
That's why they brought in immigrants from poor countries
willing to work for all of that.
The charming ways capitalism has to maximize the profits
at the expense of whoever.
Over the last five years, it got worse.
We had another crash, the 2020
crash, one that started before the pandemic hit here.
And then we had the pandemic.
And as if that wasn't enough.
And let me remind you, in 2020-2021 half
of all American workers experience some period of unemployment
because of the crash, because of the pandemic, because of both.
That's amazing.
Half of our working class had some time of unemployment,
some a few weeks, some months.
A real blow.
Uses up your savings.
Stresses the family out.
Unbelievable treatment of your working class.
And as if that wasn't enough before the pandemic is even gone
we whack the American working class with an inflation.
And for those of you who don't know an inflation particularly bad for food,
one of the most basic expenditures all working class families have.
And those who were able to raise their wages,
across the board, the average level of wages going up [is]
much less than the price is going up, which means that you continued
to whack the working class with a harder and harder set of circumstances.
And then the Federal Reserve raises interest rates.
Another burden particularly difficult for the families most indebted,
which are who are working class families since the last 40 years
accumulating debt, which they now have to pay higher interest on.
Here's a point.
You cannot, you cannot do that to a working class
without severe psychological
political consequences.
You can try to hide it.
You can try to blame it on, I don't know, the Chinese or waves of immigrants
or whatever scapegoat you can look for, but you can't
evade terrible consequences.
And the rising shootings in this country
every day, the racism and the white supremacy
reviving as a desperate effort
to cope with what's going on.
The development each week of a new conspiracy theory
to come up with some wild explanation because people are wild with worry.
They know the system is in trouble.
They feel that it's falling apart.
And in many ways it is
except of course, in the world of the mass media,
of our corporate leaders and our political leaders.
They need to keep the pretense going
all the economy is recovering.
Really,
we have a higher percentage of people
living with their parents and grandparents than we have had in decades.
The polls all indicate that more than half the American
people feel the country is going in the wrong direction
and feel that quote, things are falling apart.
And in all of this horrible experience of the working class.
Nothing should be surprising about this fact.
Those who are criticizing capitalism
are getting an audience
the likes of which they have not seen
for nearly a century should surprise no one.
Capitalism has not solved its problems.
It's bringing them back to us big time.
This is a new century.
We've had three crashes, dot com crash in 2000.
Subprime mortgage in 2008.
COVID 2020.
Every 4 to 7 years in the 20th century.
Right on schedule in the 21st.
All the apparatuses of capitalism: monetary policy, fiscal policy,
the Federal Reserve, the tax and spend programs, the Congress,
the Chairman and Vice Chairman of the Council of Economic Advisors.
All the brain power capitalism can mobilize
cannot stop its instability
and the enormous cost
it takes out of the working class because those at the top
spend their efforts making sure that the instability
of capitalism doesn't impact them.
It impacts the workers thrown out of work.
It impacts the mass of working class people
who face the inflation in the supermarket every day.
The system is organized to put the burdens of itself
onto the mass of people and to keep those
at the top rich and comfortable.
But here's the big challenge
there is
in the United States, a coming together
of the critics of capitalism who've always been there
and the victims of capitalism.
They were kept apart in a variety of ways for many decades.
That is over.
They are coming together again.
And that is a powerful threat to capitalism.
The coming together, the merging,
the alliance between the critics
and the victims of the capitalist system.
I dare say it is the fundamental challenge
that that system is going to have to face
and it's not going to have an easy time
coping with it.