A central forecast of Marx’s was that capitalism would produce technological innovations that would displace human labor, gradually immiserating those who have only their labor power to sell. Marx thought this would happen much sooner than it actually has, but it has started to happen. We discussed this in Chapter IV of our Marx, including, at pp. 136-139, the relevant neoclassical labor economics literature which documents this. Now comes this to the pages of the NYT from an economics professor in the Booth School of Business at my university:

Workers are earning a smaller and smaller share of the economy’s income. Their cut — referred to by economists as “the labor share” — has been falling for decades. And it’s getting worse. During the past few years, it declined at a rapid clip and is now at its lowest level on record — about 53 percent of income, down from about 65 percent after World War II….

[I]t’s not rising market power [of corporation giants], but new technology — A.I. being the latest example — that is probably the most important force reducing the labor share. Breaking up big companies won’t help restore labor’s share and may not help workers at all. Designing policies for a change this significant requires understanding the real cause.

A little over a decade ago, Loukas Karabarbounis and I documented a global decline in the labor share. Labor shares stood well below their historical values in the United States and in most places we looked. That included advanced economies such as Germany and Japan where labor laws or unions were strong, and developing countries where they were not, such as China and India. Since the decline was generally largest where the price of computing and communications equipment fell most, we concluded that replacing workers with machines in production — substituting capital for labor — was bringing the labor share down.

At the time, our findings were controversial. Standard [neoclassical] textbooks and economic models treated a stable labor share as a law of nature. Earlier in the 20th century, the labor share was indeed surprisingly steady — the great economist John Maynard Keynes called this stability “a bit of a miracle”….

While we can debate about what macroeconomic forces landed the most blows to the labor share over the past five decades, when it comes to the last five quarters, technological change has to be a leading contender in explaining its rapid decline.

As we note in Chapter 5, one of Marx’s core cases of “ideology” is to “represent social and economic phenomena that are, in fact, contingent and local as being necessary and universal” (p. 160). The fact that neoclassical economics textbooks have treated “stable labor share [of income] as a law of nature” is an excellent example of the ideological character of much neoclassical economics. Perhaps the intervention of Professor Neiman and others (whom we discuss at pp. 136-139) will help unsettle this ideological illusion. Alas, if Marx is correct, the policy tinkering that Professor Neiman proposes in the rest of his piece will not be adequate to a problem that is inherent to the way capitalism operates.