Postwar austerity deliberately collapsed the wage share to crush egalitarian expectations.

Evidence

Th e study of class shares (i.e., wage share versus profi t share) provides a clear sense of the losers and winners of austerity, and in turn its political implications. Class shares measure the portion of GDP that goes to labor and to capital— the most immediate indicator of the balance of forces between a society’s two main classes. Th e reassertion of capital order, i.e., the primacy of capital over labor, is foundational to promoting capitalist investment: capital does better when workers are subordinated, wages are low, and regulation is minimal. Following World War I, austerity’s knack for collapsing the wage share was vital in a moment when the wage share had reached an unprecedented high, stirring among workers great expectations of a breakaway from capitalist exploitation. Th us the political utility of austerity becomes obvious. A rescue of the hierarchical laborcapital split meant an escape from the capitalist crisis (and the egalitarian impulses that came with it) triggered by the Great War. — Clara E. Mattei, The Capital Order, 1471

Categorization

• DEFINE: Defines class shares (wage vs. profit share of GDP) as the indicator of class balance of forces.
• XREF: The wage-share collapse mechanism anticipates the post-2008 wage stagnation literature and Piketty’s capital-income divergence. — connects to: Post-Soviet Russian transition preceded austerity that collapsed the wage share of GDP — Clara E. Mattei, The Capital Order: How Economists…, 1739; Monetary austerity deliberately manufactures unemployment to compress wages. — Clara E. Mattei, Escape from Capitalism: An Intervention, 284; Businesses cancelled the postwar compact to reduce the wage share. — Anton Jäger, Hyperpolitics: Extreme Politicization…, 137 (+4 more)

Broader Connections

• Monetary austerity deliberately induced recession to discipline workers. #expands (0.85) — Clara E. Mattei, Escape from Capitalism, 154
• Monetary austerity deliberately manufactures unemployment to compress wages. #expands (0.82) — Clara E. Mattei, Escape from Capitalism, 284
• Post-Soviet Russian transition preceded austerity that collapsed the wage share of GDP #corroborates (0.80) — Clara E. Mattei, The Capital Order, 1739
• Austerity’s three policy forms work in unison to depress wages and shift wealth upward #expands (0.80) — Clara E. Mattei, The Capital Order, 45
• Businesses cancelled the postwar compact to reduce the wage share. #corroborates (0.70) — Anton Jäger, Hyperpolitics, 137
• Fascist austerity dismantled postwar gains and re-separated economics from politics #expands (0.70) — Clara E. Mattei, Escape from Capitalism, 193