The Death of the Liberal Bargain

12:59 pm in Economy by masaccio

The labor violence that escalated from the late 1800s to the late 1930s was eventually defused by the grand liberal bargain, enshrined in the Wagner Act. Unions were strengthened and given the tools to protect their members from the assault of capital. As productivity grew, the income of the workers grew. It was a fair bargain: it led to a rational sharing of the rewards from the economy. Sean Wilentz tells us that the Wagner Act was the culmination of decades of work by liberals. Senator Wagner himself was motivated by the Triangle Shirt Waist fire.

This chart from Larry Mishel at the Economic Policy Institute says all you need to know about the death of that bargain:

Compiled by Larry Mishel at the Economic Policy Institute

Mishel’s Note: “Hourly compensation is of production/nonsupervisory workers in the private sector and productivity is for the total economy. The chart tells us that in the mid-70s the bargain began to unravel. The initial break was related to the OPEC oil embargo and the inflation that resulted. Wages didn’t grow quickly, but after the initial shock, there was some recovery. Then we got another bout of inflation, and then the shock of the Reagan era, with its relentless effort to destroy unions. There is no longer any link between productivity and wages. Instead, all the gains go to the rich.

But even level wages aren’t enough. Corporations want their employees to work for less. Caterpillar workers have been on strike at the Joliet plant for nearly four months. The company is wildly profitable, but it demanded that its 800 workers accept a six year freeze on wages and pensions. With inflation, that amounts to gradually decreasing real wages. The workers had no real choice but to strike.

Their parent union, to which they have been paying part of their dues, refuses to provide any real support. The workers get only $150 a week, and are dependent on gifts from supporters like the SEIU and even Governor Pat Quinn of Illinois.

That’s not all. Caterpillar wants someone else to pay for injuries on the job. The CEO of Caterpillar “…has pushed for workers’ compensation reform and told Quinn that state legislators were making it harder for Caterpillar to remain in Illinois” according to the Chicago Tribune. The Guardian reminds us of the history of this bunch of management thugs:

When car-workers resisted company plans to impose a two-tier wage system in 1992, Caterpillar crushed two strikes before they surrendered unconditionally. When workers at a London, Ontario locomotive factory refused a 50% wage cut last year, the company locked them out and then shut down the plant. “Few companies are as willing to take on unions, and uproot entire communities, as Caterpillar,” says author Stephen Franklin, who covered the strikes for the Chicago Tribune.

That’s consistent with the history of corporations. Illinois is typical: it’s the home of the Pullman Strike, crushed by a corrupt alliance the U.S. army and armed federal marshals among others. That violence was and is everywhere.

The shocking decline in the wealth and income of average Americans is part and parcel of the normal violence of capitalism. A steady drumbeat of assaults on the weak while blaming them for their weakness is standard operating procedure. Setting one group against another to distract from the damage done to all by what the rich call “just business” is standard operating procedure.

Wilentz seems to think that liberals in the ruling elite are a countervailing force against the normal violence of capitalism. I repeat this challenge: where are the liberal members of the power elite? Where are their fabulous liberal plans for reform that will do something for someone besides themselves and their rich friends? When was the last time one of them did something about the class war besides cheer on the winners?