http://en.wikipedia.org/wiki/Immiseration_thesis

Also related is the capitalist crisis, which tends to destroy the accumulated wealth of workers in recurring boom-bust cycles.

http://en.wikipedia.org/wiki/Crisis_theory

Every once in a while it's okay, but this isn't exactly a place that's friendly to criticisms of capitalism.

I haven't read Marx, but if you two have, then maybe you can explain what feature of the Immiseration thesis is acting here, what changed when in the economic or political landscape, etc., in order to correspond with the evidence.

On the broad whole, over multiple generations, "capitalism" seems to have been good for workers: http://25.media.tumblr.com/tumblr_lzdx1tJidd1qc38e9o2_500.pn... (via @delong)

---------

As far as the crisis theory goes: is it true that workers' wealth was destroyed more than let's say upper-middle-class to upper class wealth? Stock prices declined a lot more than home prices in 2009. (Important because the medium and lower quantiles' wealth is mostly the house—but higher quantiles own liquid assets like stock shares. Some of the lower quantiles also have pensions coming to them; pension funds invest in equities and bonds and CDO's and other things. I don't know if pension funds experienced a greater hit than, let's say, hedge funds (which only take top-quantile money).) So in order to justify that "the workers" lost more wealth than "the rich" (who, obviously, have more to lose)—I'd want to see some numbers on decline in home values versus other assets, as a start.

If you haven't read Marx, then I'm not interested in having this discussion with you, sorry. It'd take far too long to even get basic terminology straight. Here is a copy of the "Grundrisse der Kritik der Politischen Ökonomie" which introduced this theory: http://www.marxists.org/archive/marx/works/1857/grundrisse/

Or maybe Capital I, which develops it (and the rest of Marx's ideas and provides his critique of capitalism) here: http://www.marxists.org/archive/marx/works/1867-c1/ David Harvey's lectures are a great guide if you decide to give it a read: http://davidharvey.org/reading-capital/

Plenty of online forums are more than happy to provide you with a basic outline of Marx's theories, including /r/communism101 and /r/debatecommunism.

> is it true that workers' wealth was destroyed more than let's say upper-middle-class to upper class wealth?

I will point this out though: this question does not make sense in a Marxist analysis. There is no 'middle class' or even 'upper class,' these are vulgar economists' terms.

Surely you can answer my question why the wages went up and then down.

oscilloscope posted a part of Marx's theory that's hopefully topical and has some insight to share with those of us who haven't yet set aside the time to read something long. It doesn't seem unreasonable to me to want to discuss that.

harvey

Thanks for the references, I will keep them in mind. I love video lectures.

There is no 'middle class' or even 'upper class,' these are vulgar economists' terms.

OK, all I intended was rough percentiles. Let's say the 30th–60th percentiles are "all house", 60th–99th are "house and equities", and >99th may be invested in a hedge fund. Speaking of the USA.

I don't mean to imply some unified psychology to a social class, or anything like that.

You wouldn't even understand an answer I'd give you, because it'd be in Marxist terminology.

Maybe Oscilliscope will be willing to explain their comment, I don't care to at this time.

> Thanks for the references, I will keep them in mind for the future.

No problem. Glad to be of help. I think that understanding Marx is really important, but I don't think that he has correct answers for today, exactly.

> all I intended was rough percentiles.

Right, this is fundamentally wrong. The only thing that matters is your relationship to the means of production: 'middle class' people are proletariat just like 'lower class' people are. It has absolutely nothing to do with your positioning in the table of income.

This is an example of the terminology issue. It's common to most philosophers.

I understand what you mean. I can see how that relationship might be important to the theory. But what I said about "classes" (bad word: s/classes/quantiles/) is actually true. So if we're going to discuss whether, in fact, workers lost more wealth than capitalists (or, s/capitalists/correct terminology/), those empirical issues should still be addressed.

For example, I may be a "worker bee" consultant at IBM, but holding stock factually altered my exposure to wealth shocks.

You wouldn't even understand an answer I'd give you, because it'd be in Marxist terminology. Maybe Oscilliscope will be willing to explain their comment, I don't care to at this time.

Fair enough.

It is true within the framework you have set up to analyze the situation. One of Marx's theses is that that analysis is not adequate to explain capitalism's tendancy towards crisis, the falling rate of profit, the alienation of the worker, and many of its other features.

You're saying "but no, it's true that you can measure things in degrees" and Marx is saying "my theories and equations are all using radians."

I really should be coding, not typing on HN, so I'm going to gracefully bow out of this conversation, but thank you for continuing it, you've been great. Two thoughts as I leave you: 1. the fact that many people have things like stocks in their 401Ks is one of the reasons that I think Marxist theories need updated, though I think of them as generally sound. Luckily, many people have since Marx's time (First Lenin, then Mao, and many, many others) and 2. Marxism is really about a methodology than a strict set of answers: you use the tools of dialectics and historical materialism to produce a scientific analysis. That applies to Marxism itself as well, and like any science, its theories will come and go, be made stronger or weaker as history marches on. That's not a flaw, it's a strength, and it's why Marxist analyses have been used across a variety of fields, not just economics.

Thank you for this break as I work on the documentation for the impending Rails 4 release.

For anyone who cares to pick up the thread, steveklabnik has left you with:

Marxism is really about a methodology than a strict set of answers: you use the tools of dialectics and historical materialism to produce a scientific analysis

I do think it's interesting to look at class from the Marxist perspective, but eh, the Marxist terminology I know is sloppy and inexact at the intersections of class; where a whole lot of the action happens.

Petite bourgeoisie refers both to me, the owner-operator of capital goods who must add his labour in order for those capital goods to produce value, as well as to those who own nothing but manage everything; managers of large companies who might not own any stock at all except for the options given as payment, people employed by the capitalist class to do the actual work of managing capital (and yes, it is complex and difficult (difficult in the sense of difficult to get right, not difficult in the sense of physical difficulty) work.)

I can not imagine two classes of people who are more different. I mean, your owner-operators? The means of production we own? we know intimately and control absolutely. Sure, we might take on apprentices from time to time, and we might delegate some of the less critical work, but room for delegation is limited, mostly because any mistake or misfortune that decreases the value of the capital good we operate generally harms us directly. I still assemble all my servers, because nobody else cares about 1 in 10 or 1 in 100 errors introduced by improper ESD control. But me? I care because I'm the one who has to get up at 4am and deal with the problem. I'm the one who has to make apologies to the customers, and I'm the one who gets to watch my customer base shrink when those sorts of problems happen. So yeah; I'm sure I could pay some kid ten bucks an hour to assemble servers... but generally speaking? I don't. I have people I trust with root that I won't let touch hardware. It's better, sometimes, to do some things yourself.

Your managers? Generally, they have much broader and shallower knowledge. They are all about delegation; not only delegating the decisions, and the work, but also delegating the risk. If a manager screws up, the worst thing that might happen is that they lose their job and any future compensation, usually not even that.

Managers? Managers control the largest corporations around. Owner-operators, usually, control very small operations.

Moreover, the Manager's customers are the owners. Really, the Manager only needs to be perceived as compitent by the capitalists that own the company; the perceptions of the employees and customers don't matter except in how they change the perceptions of the capitalist-class owners of the company.

Personally, I would argue that this manager class; those hired by the owners to manage what the owners have no time, ability, or interest in managing, are now a more powerful class than the actual owners. Mutual funds and index funds are very popular. How many here actually vote the stock they own? Not many, I'd wager. The Managers control most corporations, really, to a greater extent than the owners do. I mean, yeah, every now and again, one of the capitalists tries to fight the managers; even when the capitalist is clearly right he often loses to the manager.

I would say that your definition of 'sloppy and inexact' is sloppy and inexact. ;) But that's slightly trolling. The definitions are pretty simple, I'd argue that you're meaning to say that you don't feel they map to today's class structure cleanly.

> I can not imagine two classes of people who are more different.

There's two things about this: 1, in Marx's time, this was generally much simpler. Things were more clear then. 2, the idea is that your incentives are the same: you'll be upholding bourgeoisie society. The whole point of the 'petite bourgeois' designation refers to the awkwardness of a group of people who _should_ be proletariat, but have juuuust enough incentive to act against that interest, because they're almost bourgeoise.

That said, point #1 is why I prefer to talk about later thinkers who have modified and extended Marxism over the years, rather than stick to Marx's teachings only.

It's more complex than that. And the explanation I always got was that the petit bourgeois acted against their own interest because they aspired to be and thought of themselves as likely to become part of the capitalist class, not that they shared real interest with the capitalist class.

Management actively steals from the capitalist class. The last thing that management wants, for instance, is shareholder rights. In fact, they side with labour more often than they side with capital, as far as I can see. Look at Yahoo in 2008. Any fool could have seen that the Microsoft buyout offer was the best yahoo could do. And Yahoo shareholders clamoured to make the deal. But management killed the deal, siding with the employees, and destroying a great deal of value for the capitalists.

One can argue, in fact, that labour rights (which is to say, making it more complex and legally dangerous to hire or fire someone) is in the best interest of management, as it means that a Capitalist would have to learn significantly more before they could take an active role in managing what they own.

Owner-operators... culturally, you see that same aspiring up against our own interest. Our interests are aligned with the capitalists on labour issues, certainly; Much like the capitalists and unlike management, we want to be able to hire and fire without complexity, and as a class, we generally don't value job security, or really even comprehend why job security is such a huge deal to the workers. But otherwise? We have radically different interests. Owner operators are just as likely, if not more likely to need 'safety net' type social services than similarly skilled workers. One can make a good argument that owner-operators benefited more than any other class from the affordable care act.

In fact, on one of the biggest issues of the day, owner-operators have interests aligned with the workers against the capitalists: Capital gains taxes. Nearly all owner operators, outside of real-estate, pay full income taxes on most of their income; We'd be better off if the government taxed all income as income and just lowered the income tax rate to make up for it. And the difference in what you pay is huge. Like more than 50%. This is the primary reason why everyone thinks that an exit strategy is so important; building up a company that can be sold to a capitalist is the most realistic way for an owner operator to pay that lower capital gains rate. It's hugely damaging, too; it makes us act like management; like our customers are the capitalists rather than the people who buy our products or services.

Capitalists and management (through stock grants/options) get to pay the (much lower) capital gains rate on most of their income.

Pretty funny - explain some complicated topic that scientists have probably been debating for decades in a HN comment. While you're at it, could you also explain Quantum Mechanics to me, I always wanted to understand how that works.

Not quite true. I would label the middle class as the portion of the proletariat or petit bourgeoisie with some savings or even investment income to keep them afloat.

The issue being that the middle class and the "poor" proletariat have different relations to swings in currency and investment values. Inflation, for example, is good or neutral for the portion of the population who live month to month or remain consistently in debt. But the middle class have net savings, which inflation destroys. Likewise, low inflation or even slight deflation is good for the middle class, who have savings and small investments, but strong deflation is good only for the "true" capitalist class.

http://en.wikipedia.org/wiki/Gi_bill

America is not a pure capitalist society. We have free public education, for instance. Capitalism also has obviously good effects, such as increased productivity and relatively efficient distribution of goods and services without central control. Profits from these effects can be distributed in the form of wages, if that's what employers choose to do.

In terms of the crisis, again I'm not sure. You'd have to consider not only the losses of the crisis, but the gains of the boom. Who benefited from the boom, and did those gains survive the bust?

19th century Marxist theory doesn't have the answer, but it frames these issues in an important way. Rather than crises and falling wages as abberations from normal steady growth, they are considered part of the capitalist system.

For a more modern perspective in the Marxist tradition, check out Max Weber or Georg Simmel. There are even radical, almost psychadelic strains of Marxism like Foucault, Deleuze and Guattari.

Surely Marx would still say that, because the means of production are privately owned, resource allocation is provided through a market, and wage labor is dominiant, that the states would be still absolutely captialist, no? "Free public education" doesn't really matter.

> Capitalism also has obviously good effects,

Certainly, and I think this is something that we should keep repeating to people who don't know Marx.

> There are even radical, almost psychadelic strains of Marxism like Foucault, Deleuze and Guattari.

<3

Computational power is cheaply available and open-source software is free (as in freedom). With the internet, anyone can acquire knowledge, distribute a good, or work remotely.

I think there are gray areas, for sure, but the factories, the land, much of the computing, most of the telecommunications infrastructure, etc are all privately owned. The vast, vast majority is.

Of course. That's why I used the word "implementation". But I thought you had some kind of Marxist critique in mind that relates to some of the capitalistic aspects of the USA. (Since that is what this article is about.)

19th century Marxist theory doesn't have the answer, but it frames these issues in an important way.

Can you describe how you think it frames the present topic?

If you are talking about his vision and insights, like oscilloscope, you get respect. If you espouse socialism, you don't.

Marx actually did not espouse 'socialism.' He referred to an 'lower stage of communism,' and was incredibly critical of the utopian socialists of his time.

People in capitalists countries by and large are over a degree of measure living in better conditions than those living in communist countries.

And people messing up their financial lives by reckless borrowing, debt and bad decisions[like taking loans to study humanities] is not the fault of capitalism.

('communism' explicitly does not 'give everyone the same reward.' Read more, try again please.)

The problem with Marx, for me, is that he relied on the growth of industry to create an abundance of wealth that would satisfy everyone's needs, but he did not take into account that some resources are not material in nature, such as time and social status. Capitalism can quantify abstracts into material representations (money -> time and social status), whereas Marx had no way, as far as I'm aware, of creating an abundance of intangible satisfactions. In fact, that may be impossible where the desires are hierarchical in nature, since there can never be an abundance of top performers due to the relative nature of the rankings.

http://en.wikipedia.org/wiki/Marx%27s_theory_of_history#The_...

Among other things, yes. That's just a slogan, but it's based in the rest of Marx's theories, obviously.

> but he did not take into account that some resources are not material in nature, such as time and social status.

These things would factor into the 'socially necessary' aspect of 'socially necessary labor time,' I'd imagine, but what I will say is that thinkers who have built on top of Marx absolutely address these issues. Debord, for example, with his 'society of the spectacle,' which specifically address social status (see aphorisms 60 and 61) and time (the entirety of part 5).

I don't have to read more. I have been through a communist set up myself(India), And I don't want to try. You can bring it in your country and enjoy it as much as you want. As far as I'm concerned I am glad my country is rapidly getting rid of last vestiges of communist policies we have.

Now coming to your point. Contrary to whatever you have 'read'(looks like all you have done is 'read' about it), or whatever you will read, the ground reality faced by people under a communist regime is vastly more different. No progress is ever allowed to happen under the name of 'protecting the poor', whatever progress you would have seen in a country like India is only because of some competitive pressure, our immediate neighbors have posed. It was very common in my country pre-1990's free market reforms to see the best hard working talent leave. There was no individual incentive to do anything special. And the environment(movies, media, drama shows, stories you name it) depicted rich as some form of evil entity bent destroying humanity. Even today the states ruled by communist governments(West Bengal and Kerala) see the largest group of youth moving out of those state to work in cities like Bangalore. The conditions are so horrible, there are bandhs, strikes, shutdowns by unions and communist groups ever other day. No productive work ever happens. Investors are shit scared to invest or set up any long term ventures in those states. And by and large in the name of protecting poor, the poor are always ensured they remain poor.

You will not believe the height of problems communist policies had caused in India. Around late 80's we had nation wide strikes when our Prime minister announced computers will be introduced in the country. That is the degree to which progress was blocked by communist groups. Even today we continue to see pockets of communist feelings around. A national policy on foreign direct investment in retail sector is being blocked and opposed currently.

Go to any communist nation you want. And see for yourself the kind of miserable conditions communist policies have bought upon those people.

Just in case you didn't know in India there is a terrorist groups based on principles of communism called 'maoists', which is by far considered biggest threat to internal security of our country.

Which period of India would you consider communist? The 'late 80s' period you reference later? I don't know nearly enough about India's history, and understand that geographic regions are very important.

> the ground reality faced by people under a communist regime is vastly more different.

Just like the reality on the ground in a capitalist country is very, very different than what the theory says. How many Native Americans did my country kill again? How many dead children are in Iraq and Afghanistan? Why do we have more empty houses than we do homeless people?

No social system is a magical cure.

> And see for yourself the kind of miserable conditions communist policies have bought upon those people.

You will not see me apologize for Stalin, for example, but what I will say is that Russia went from an agrarian nation to putting a man in space and becoming the #2 world superpower in what, 75 years? That's pretty damn impressive. The soviet experiment failed for good reasons, though.

> Just in case you didn't know in India there is a terrorist groups based on principles of communism called 'maoists', which is by far considered biggest threat to internal security of our country.

I am actually aware, it is quite interesting.

India never explicitly stated its a communist country. But most of its policies were communist based for a large part of its post independent history. State controlled industries, tightly regimented license system for anything private, unions etc.

And it's utopia to think that gifted individuals are always nice people, which reality proved many times.

> The idea of masses act as single unity without influence of only few gifted individuals does not stand.

This is not true.

> And it's utopia to think that gifted individuals are always nice people, which reality proved many times.

Marxism does not make ethical assertions about people and their actions. Marx takes great pains in Capital to divorce his theories from ethics, though occasionally he uses some metaphors that imply a personal ethics.

So, although workers of today are more productive - per dollar paid per hour/month/year, is it possible that people haven't actually been working harder but rather machines have been doing more work? Is it possible that these productivity gains represent value provided by giving every office an IT department rather than people working better (or harder or smarter)?

I think it is possible, but I don't think it is a satisfactory explanation. It could simply be the effects of supply and demand on the marketplace. Beyond a certain point, money doesn't buy happiness so I see no reason why the upper end of salaries would increase other than pure greed (which is consistent with lots and lots of increases in executive pay) and unskilled labour provides minimal value so why would machines making one interchangeable labourer able to do the work of two or three interchangeable labourers lead to an increase in the pay of interchangeable labourers?

Capitalism is nothing more than a system for allocating finite resources. If, for all practical intents and purposes, nothing is finite anymore then there's no reason to keep around a finite resources system.

its an interesting book about this very topic.

Total compensation (including non-wage benefits): http://research.stlouisfed.org/fred2/series/RCPHBS

Cost index (attempts to control for composition changes): http://research.stlouisfed.org/fred2/series/ECICOM

Employers have shifted compensation from wages to benefits.

In answer to your question of what to do about it, very simple - eliminate the tax advantages of assorted non-wage benefits (e.g., treat employer-provided health insurance, 401k matchin, etc as income).

yummyfajitas, that may shift compensation more towards wage/salary rather than benefits. What is it going to do about the unemployed youth?

But yummyfajitas helpfully pointed out that the median worker continues to see compensation gains, just tilted toward ones that take a tax-advantaged form.

You can get such a divergence if you have fewer qualified people than less qualified people. Wrong conclusion like the one mentioned in the blog post can be reached when using a representative agent approach, while the actual population follows an (at least) bimodal distribution.

In the end, there still is a divergence, but it doesn't have to be resolved - people either have to learn more and become more qualified and productive, accept their reducing wage, or move to another country (Mundell conclusion in the HO model IIRC)

There is no reason why someone should commend a higher salary than someone else, just for having won the birth lottery ie being born in a reach country. If someone from say India is more productive than me, I see no reason why I should get more money than them.

It sure sounds sustainable.

I am not an economist. Is this view in any way valid?

But you're quoting an economist.

Am I seeing the right things?… What are the other causes? What can we do?

I don't know if you remember the standard US economist's story for rising wage inequality in the late 90's and early 00's. It was "skill-biased technological change" or "perhaps trade". (I translate that as "No f___ing clue.")

If any economists have figured out why wage:GDP ratios are dropping, I haven't heard that explanation.

(Actually I have heard one but haven't thoroughly looked into it: declining union membership rates roughly anti correlate with the http://i.imgur.com/u6aU2.gif.)

It is sustainable up until the point where the guillotines are sharpened and the pitchforks come out. So probably about 10-15 more years on our current course.

I'm not criticising hedge funds per se, but the trend they created in financial instutions at large.

It makes sense that wages would reflect this, too. People agree to work for a wage that will let them afford the quality of life they are comfortable with. If you can live as comfortably as you could 50 years ago at roughly the same wages, then there's no reason they would need to rise.

The final point is that the labor pool has roughly doubled since 1950 because women entered the work force. It's now more common to have two incomes per home than one, and it's only natural that wages would decrease accordingly. Again, it's because workers set a bar for themselves in terms of quality of life, and they simply want to reach that bar. If it can be done with two salaries buying cheap goods and services, then wages don't need to rise.

thats a post facto explanation, which i don't believe can be used to make predictions. I mean, will wages rise if suddenly, due to post peak oil, that cost of living suddenly became high?

I think the real reason wages didn't rise is because it didn't have to (from the point of view of the employer) - there are people willing to keep the same wage. In other words, people are becoming more and more worthless, especially unskilled workers (automation and robotics etc). Its a sad fact, but its true, and its a problem that needs fixing. Probably only fixable by better gov't policies on education.

Has the Consumer Price Index gone down?