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Soaring Profits, Sinking Wages, and the Neoliberal Nightmare

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Numbers don’t lie, and these numbers aren’t nice. “Corporate profits are at their highest level in at least 85 years,” reports the New York Times recently. “Employee compensation is at the lowest level in 65 years.” While corporations earned a whopping $2.1 trillion last year, according to the Commerce Department, total wages and salaries amounted to 42.5 percent of the U.S. economy—a percentage which was not only down from the previous year but “was lower than in any year previously measured.”

If you take non-wage benefits like health insurance and Social Security into consideration, though, employee compensation was only at the lowest level it had ever been since 1948. So, that’s good.

But why, if profits are growing and the stock market is returning to health, are workers not sharing in the windfall? Floyd Norris at the Times cites Federal Reserve research in its suggestions that “the effects of globalization that have shifted some jobs to lower-paid overseas workers” and “the declining bargaining power of unions” just might be to blame, along with shrinking corporate tax rates.

It’s a bitter pill to swallow, this news. Especially for proponents of neoliberal ideology, those deregulation- and free-trade-cheerleaders. How will they square their beliefs with these harsh realities? Well, if the past is any predictor of the future, they probably won’t, argues Baffler senior editor Chris Lehmann in our current issue. Here’s an excerpt of his salvo, “Neoliberalism, the Revolution in Reverse”:

In the face of all this catastrophism, the placid certainties of neoliberal ideology rattle on as though nothing has happened. Remarkably, our governing elites have decided to greet a moment of existential reckoning for most of their guiding dogmas by incanting with redoubled force the basic catechism of the neoliberal faith: reduced government spending, full privatization of social goods formerly administered by the public sphere, and a socialization of risk for the upper class. When the jobs economy ground to a functional halt, our leadership class first adopted an anemic stimulus plan, and then embarked on a death spiral of austerity-minded bids to decommission government spending at the very moment it was most urgently required—measures seemingly designed to undo whatever prospective gains the stimulus might have yielded. It’s a bit as though the board of directors of the Fukushima nuclear facility in the tsunami-ravaged Japanese interior decided to go on a reactor-building spree on a floodplain, or on the lip of an active volcano.

So now, five years into a crippling economic downturn without even the conceptual framework for a genuine, broad-based, jobs-driven recovery shored up by boosts in federal spending and public services, the public legacy of these times appears to be a long series of metaphoric euphemisms for brain-locked policy inertia: the debt ceiling, the fiscal cliff, the sequestration, the shutdown, the grand bargain. Laid side by side, all these coinages bring to mind the claustrophobic imagery of a kidnapping montage from a noir gangster film—and it is, indeed, no great exaggeration to say that the imaginative heart of our public life is now hostage to a grinding, miniaturizing agenda of neoliberal market idolatry. As our pundit class has tirelessly flogged the non-dramas surrounding the official government’s non-confrontations over the degree and depth of the inevitable brokered deal to bring yet more austerity to the flailing American economy, we civilian observers can be forgiven for suspecting that there is, in fact, no “there” there. For all their sound and fury, these set-tos proceed from the same basic premises on both sides, and produce the same outcome: studied retreat from any sense of official economic accountability for, well, anything.

Lehmann goes on to explore the historical roots of neoliberalism, and its early apostles: like Walter Lippmann, Louis Rougier, F. A. Hayek, George Stigler, and Milton Friedman. He brings readers all the way up to the present day, when “neoliberal orthodoxy has leached so deeply into the intellectual groundwater of the nation’s political class that it’s no longer a meaningful descriptor of ideological difference.”

Read the entire essay, “”Neoliberalism, the Revolution in Reverse,” online now.