The low wage economy

[stpioc]

Interesting stuff..

But we might now be back in a phase of a positive-sum game. A recent paper by Servaas Storm argues that secular stagnation is due in large part to “the deliberate creation after 1980, through economic policies, of a structurally low-wage-growth economy.“

Low wages, and low wage growth deter firms from investing in new technology, and thus causes low productivity growth. This echoes a point recently made by Ben Chu, and is consistent with the fact that the neoliberal era has seen falling productivity growth. In this sense, low wages aren’t just bad for workers, but for capitalists too – because low productivity means falling profit rates (pdf) and low real interest rates and hence low returns on savings. Of course, low wages are good are any individual capitalist. But they are not necessarily good for all.

Stumbling and Mumbling: The crisis of positive-sum capitalism