On the Persistence of Labour Market Insecurity and Slow Growth in the US: Reckoning with the Waltonist Growth Regime

Abstract

In this article I systematically incorporate empirical work on rising income inequality and wage stagnation into a regulation theoretic framework for analysing macroeconomic growth. The rise of job polarisation and income inequality coincides with a long period of macroeconomic stagnation, both continuing through to the present (with the exception of a brief period of strong growth and declining inequality in the second half of the 1990s). The corporate scramble to restore profit rates after the crisis of Fordism has transformed the institutional configuration of the political economy. In particular, institutions supporting upward mobility and middle-class incomes in the economy have been eroded by the twin forces of internationalisation (leading to the re-emergence of wage-based competition) and employment externalisation (outsourcing, downsizing, antiunionism, etc). The current growth regime, which may be characterised as Waltonist, based on the Wal-Mart model of buyer-driven global supply chains focused on cutthroat wage-based competition and deunionisation, is not transitional but rather embedded in apparently long-term institutional settlements that amount to a dysfunctional regime.

Keywords:

• financialisation
• inequality
• low-wage work
• Marxist regulation theory
• slow-growth accumulation regime
• wage stagnation

Notes

For previous criticisms of functionalism in regulationist research see Hay (1995) and Ward (2003).

Post-Keynesian macroeconomists distinguish whether accumulation regimes are wage-led or profit-led. These econometric models measure the effect of a shift in the profit/wage share on investment and consumption growth. Regarding the US case, covering some or all of the period from 1960–2007, at least one study indicated that the US is a profit-led regime (Naastepad and Storm 2006–7), but the majority find evidence for a wage-led regime (Bowles and Boyer 1995; Hein and Vogel 2008; Onaran et al. 2010). Most of the authors suggest caution in interpreting these results because their models are highly sensitive to estimation procedures. Onaran and collaborators suggest that the failure to take financialisation variables into account may have generated biased findings of profit-led regimes. It would likely be fruitful to investigate further the complementarities or inconsistencies between my institutional approach and the statistical demand-regime approach, particularly in terms of long-run dynamics, but such is beyond the scope of this paper. Briefly, however, the qualified underconsumptionist component of my argument would suggest a wage-led regime. While robust findings of a profit-led demand regime would invalidate a strict underconsumptionist argument, I think the current findings are as-yet too inconsistent to make any strong claims. The central concern of these models is whether wage-led (i.e., high wage share) demand regimes are viable and, if so, under what conditions. While the empirical estimations have generally covered the whole period from 1960–2000, as Marglin and Bhaduri (1990) argued it may be that there was a general shift in the 1970s from a wage-led to a profit-led regime across the OECD, which may play a role in the inconsistent findings covering the period as if it were a single regime. This would be consistent with my core argument: Fordist growth levels were extraordinary, and while a high wage share played a critical role in effective demand under Fordism, it may not be possible within the the profit rate constraint under postfordist internationalisation. If the postfordist economy is becoming profit-led, this is precisely because of its opening up (Bowles and Boyer 1995). If, further, a wage-led regime is increasingly unlikely as the economy continues to internationalise, then a return to the golden years is even more distant.

These distinctions between types of jobs come from Herzenberg and colleagues (1998). For an elaboration of this typology, see Vidal (2011d).