From The Golden Age Illusion by Michael J. Webber and David L. Rigby, 1996, page 7:
In retrospect, internal pressures were building in the advanced capitalist countries that must have derailed long-run growth eventually; rates of economic growth in North America were beginning to falter in the late 1960s and with them rates of profit. Nevertheless, by common consensus the outstanding symbol of the break occurred on 17 October 1973, when the ten members of the Organization of Arab Petroleum Exporting Countries announced a plan to cut their collective output of oil by 5% per month for the next 20 months: Gulf crude oil prices rose from $2.70 in early October to $11.65 on 1 January 1974. A less commonly identified symbol of the break occurred on 15 August 1971, when President Richard M. Nixon announced that US dollars would no longer be convertible to gold, thus denying the world a stable reserve currency. The hike in oil prices and the end of the Bretton Woods agreement only symbolize the end of the golden age; they did not cause it. Yet they are symbols of an end that we have collectively taken a long time to recognize.
Two key points therefrom:
- rates of economic growth in North America were beginning to falter in the late 1960s
- rates of economic growth in North America were beginning to falter in the late 1960s and with them rates of profit
2 comments:
The second key point above: Rates of profit were beginning to falter in the late 1960s.
My recent graph (Compensation of Employees as a percent of Gross Domestic Income) shows significant increase from a low in 1965, to a high in 1970. Of that increase I said "1966 to 1970 may be the wage-push part of the Great Inflation." That increase in labor's share does suggest a decrease in capital's share during the second half of the 1960s.
Coincidence is not evidence, but it does tell you what to look for when you are looking at the evidence.
My argument would be that
1. The growth of finance undercut both labor's share and productive capital's share, and
2. Perhaps in the 1965-1970 period, labor got the jump on productive capital.
Anyway, that's what I look for, when looking at the evidence.
You could say I'm cherry-picking evidence to fit my theory.
Yeah and I could say vuck-yoo... But I will only point out the story told by Lionel Ruby in "How the Scientist Thinks":
Darwin and a fellow scientist were searching for fossils in the north of England. They were not aware of the glacial theory at the time. Years later Darwin revisited the area, and he was now astonished to discover how clearly marked were the glacial ridges on the rocks. He had not noticed them on his earlier visit because he was not looking for them.... Darwin was able to appreciate the glacial markings only after he became aware of the glacial theory.
And there you have it.
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