...not least the inherent instability of markets. One perennial cause for such drops, however, is the fear of inflation, of higher interest rates and tighter credit. Which, in our shareholder-uber-alles form of capitalism, translates into a phobia of rising wages.
By any measure, it's hard to find very much that could have triggered this fear. In January, wages were reported to be 2.9 percent higher than they were the previous January, which, however, was the highest such increase in several years. As my colleague Justin Miller has noted, much of that increase was the result of January 1 statutory hikes in the minimum wage in roughly a dozen states. More generally, however, wages have been piddling along for the past 40 years, while capital income has ballooned.
As America has never bred many Marxists, the belief that capital and labor are inherently in conflict has never gotten much purchase here. During the three decades after World War II, the power of unions and of New Deal institutions yielded a broadly shared prosperity. That was supplanted during the past four decades, however, by a return to what looks—grimly—like a more normal capitalist order, in which capital and labor are indeed counter-posed, with capital coming out on top. I doubt you'll find many Marxists among the institutional investors, much less the algorithms, that have tanked the market in recent days, but they sure seem to subscribe to the capital vs. labor formulations: If wages rise, their rate of capital return may slow to just three or four times the rate of wage increases. Pity.
