Why is the middle squeezed?

Hopi points to the paradox that whilst some of the left is talking more stridently, actual trades union militancy, as measured by strikes, is very low. A new paper highlights this disjunct between the political and industrial spheres.

Martina Bisello shows that there has in recent years been a job polarization; employment has grown in both well-paid and badly-paid jobs at the expense of middling occupations. She attributes this to the IT revolution which, along with other technical changes, has had three effects:

- it has displaced routine white-collar clerical workers.

- it has increased demand top-level employees who analyze and manage data.

- in permitting direct control of many manual workers, it has reduced the efficiency wages these receive, and this relative wage fall has helped sustain demand for such employees.

I recommend the work of Peter Skott and Frederick Guy on power-biased technical change in this context.

Granted, this process hasn't all been bad for middle-income earners, as many, like Joan Harris a generation earlier, have moved up the occupational ladder. Nevertheless, it suggests that the squeeze on middle incomes has a basis not just in the macroeconomics of stubborn inflation, but in changes in the technical-industrial base.

This fact, however, is scrupulously ignored by the Labour leadership, which thinks of the "squeezed middle" as a purely political rather than industrial problem. To paraphrase Marx, Labour inhabits the "very Eden of the innate rights of man" that is the sphere of commodity exchange, and never troubles itself to consider the "hidden abode of production". The industrial and the political realms are thus separated.This surely represents a triumph of the Thatcherism which asserted "management's right to manage".

And herein lies my concern. Marx was surely correct to point out that a strategy that never inquires into the hidden abode of production is unlikely to succeed intellectually. So can it succeed politically?

Comments

[Luis Enrique]

Sam Bowles' textbook Microeconomics has some very good chapters on the technology of worker control and its implications.

[Andrew]

Sam Bowles' textbook looks like a total abandonment of classical microeconomics, which has to be a good thing. Is this a fair impression?

[FromArseToElbow]

Labour's treatment of the "squeezed middle" as a political rather than an industrial issue is the correlate of the lack of union militancy.

To shift the debate from the spectral form of rhetoric to the concrete realm of real jobs would risk either inflaming militancy and/or alienating some of the self-identifying squeezed middle.

Labour's problem isn't a conceptual failure to situate the middle, but a cynical attempt to construct a media trope.

[Greg vP]

Why is the middle squeezed? Most of the discussion about this issue ignores the role of demand. (Richard Florida is a rare exception with his recent piece in the Chronicle of Higher Education.)

Over the last several decades the demand for leisure and hospitality services and for healthcare, particularly low-paid healthcare such as care in the home, has increased steadily. The demand for manufactured goods has decreased in relative terms.

Given the increase in demand for low-productivity services and the corresponding decline in demand for high-productivity manufactured goods, it's hardly surprising that both productivity and wages are stagnating.

To be sure, employers in other industries are exploiting their market power. But the root of the problem is this change in demand. I recommend reading Florida's piece: http://chronicle.com/article/Robots-Arent-the-Problem-/138007/

[Luis Enrique]

Andrew,

yes and no. In chapter 1, available here

http://press.princeton.edu/chapters/p7610.pdf

he discusses where his approach departs from what he calls the Walrasian paradigm, but also says he "retains many of [its] fundamental tenets"

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