The essence of capitalism is not strictly capital. In the modern sense, the word capital has taken on other meanings, often where money is given as a substitute for it. When speaking about things like ‘hot money’, for instance, you wouldn’t normally correct someone referencing it in terms of ‘capital flows.’ Someone that ‘commits capital’ to a project is missing some words, for in the proper sense they are ‘committing funds to capital.’
Just as the focus has been removed from actual capital, and thus a distortion of capitalism, one of the effects has been to devalue the other component that actually makes it all work. Rising living standards were never the fruit of capital alone, as the real strength was in the combination of it with labor. Over the last few decades, the real capital flow has been with eurodollar finance to the offshoring of productive capacity.
By simple mathematics, businesses are no longer willing to afford labor. Before getting to that math, however, we need to be mindful that the ‘experts’ are almost uniformly suggesting the opposite is true. Instead, we hear constantly of a labor shortage, often serious, whether due to Baby Boomers retiring, lazy Americans addicted to heroin, or the politics of immigration. The problem with all of these is wages, meaning that if there was a shortage, wages would be rising and rising rapidly.
The New York Times on Sunday published yet another of this type of account (they are becoming more frequent), blatantly headlining the piece, Lack of Workers, Not Work, Weighs on the Nation’s Economy. Focusing on anecdotes from Utah, you get all the familiar but unbacked tropes about the travails of employers who have things to do but can’t do them because they can’t find anyone.
This post was published at Wall Street Examiner on May 26, 2017.