"...Tyler Cowen in his book “Average is Over” argues that inequality is driven by new developments in technology that give some workers who can capably use the technology a wage premium over those who can’t. Future innovations in technology, he argues, will contribute to hyper-meritocracy and further inequality. His argument echoes the conventional wisdom in economics that skill-biased technological change [SBTC] can explain most of the increase in inequality. The premise is that technological developments have favored college-educated workers over unskilled labor, thereby increasing inequality. Cowen envisions, according to The Economist, a future largely stripped of middling jobs and broad prosperity. An elite 10-15% of Americans will have the brains and self-discipline to master tomorrow’s technology and extract profit from it, he speculates. They will enjoy great wealth and stimulating lives. Others will endure stagnant or even falling wages, as employers measure their output with “oppressive precision.” Some will thrive as service providers to the rich. A few will claw their way into the elite (cheap online education will be a great leveler), bolstering the idea of a “hyper-meritocracy” at work: this “will make it easier to ignore those left behind.”
David Card first drew attention to potential holes in the explanation: a short period of stabilization in wage inequality in the 1990s during a technological boom and the failure to explain wage gaps between men and women as well as blacks and whites. Daron Acemoglu and David Autor noted other failures in the theory, namely that it could not explain the divergence in incomes that had occurred among skilled workers and why the real median wages could decline during a period of increasing productivity.
If inequality were inevitable, as many believe, we would expect to see inequality rising internationally. But, in truth, different societies have responded to inequality in different ways.
Lawrence Mishel, Heidi Shierholz and John Schmitt have released a new study that questions SBTC as an explanation for increasing wage inequality. Mishel et al. argue that “job polarization,” the premise that more jobs have been created in low-wage sectors and high-wage sectors, thus driving wage inequality, doesn’t actually explain the problem. On the one hand, high-wage occupations have not significantly expanded their share of the workforce since 2000. On the other, low-wage jobs have not increased as a total share of employment since 1979. They find that changes in the occupation structure do not affect the wage structure, so if technology causes a shift from manufacturing to retail, this doesn’t necessarily entail a shift in the wage structure. They find that inequality is increasing within occupations, not between occupations as the SBTC narrative would predict. The SBTC narrative relies on the idea of an “education premium,” i.e., people with higher education reap the benefits of technological progress. But Mishel et al. find that wage inequality has grown strongly since the mid-’90s while the education wage premium grew little. Wages for college graduates have flattened over the last 10 years, even among science, technology, engineering and mathematics (STEM) and business occupations.
Mishel’s State of Working America 2012 report argues that it is economic policy, not changing technology, that drives wage inequality. The decreasing value of the minimum wage, the weakness of unions and the impacts of globalization have all coalesced to keep down wages. The problem is not machines, which are doing a great deal to boost productivity; the problem is that the benefits from increased productivity no longer accrue to workers. The newly minted rich want to blame robots for declining wages at the bottom and their innate superiority for their disproportionate share of the income. But these excuses mask their theft of productivity gains that rightfully belong to the rest of us. Workers must exercise political power to change the institutions that shape their lives. Walmart doesn’t have to pay its workers starvation wages and could easily pay them more. There is no celestial law that the richest 1% can plunder our common inheritance. Just as inequality is a choice, equality is a choice. By shifting the discussion away from the policy changes that have caused inequality, we legitimate it. As Eugene Debs said, “the class which has the power to rob upon a large scale has also the power to control the government and legalize their robbery.”
The article’s author, Sean McElwee , makes the valid observation that a vigourous class struggle will reduce social inequality and that the working class can claw back some of the surplus value that is appropriated by the capitalist. However, he is over-optimistic in the expectation of a change of government policies and legislative measures will do away with inequality. After all inequality is a integral part of class society. Although, figures and statistics can be used to demonstrate that certain countries appear “fairer”, most studies will show these countries too have their rich and poor divide and it is just a matter of degree. McElwee concludes his article with a quote from Eugene Debs who was fully aware that the government is the representative of the ruling class. However, he was not simply calling for a change of government in the believe that this would end the robbery of the workers but Debs demanded the change in the economic base of society, from the profit system to socialism:
“Socialism was born of the class antagonisms of capitalist society, without which it would never have been heard of; and in the present state of its development it is a struggle of the working class to free themselves from their capitalist exploiters by wresting from them the tools with which modern work is done. This conflict for mastery of the tools is necessarily a class conflict. It can be nothing else, and only he is a Socialist who perceives clearly the nature of the struggle and takes his stand squarely and uncompromisingly with the working class in the struggle which can end only with the utter annihilation of the capitalist system and the total abolition of class rule.” ...." [SOYMB emphasis]
The real issue is not restricted to the problem of wealth distribution but centres upon control and ownership of the production of wealth.
As Debs wrote :
“We demand the machinery of production in the name of the workers and the control of society in the name of the people. We demand the abolition of capitalism and wage-slavery and the surrender of the capitalist class. We demand the complete enfranchisement of women and the equal rights of all the people regardless of race, color, creed or nationality. We demand that child labor shall cease once and forever and that all children born into the world shall have equal opportunity to grow up, to be educated, to have healthy bodies and trained minds, and to develop and freely express the best there is in them in mental, moral and physical achievement. We demand complete control of industry by the workers; we demand all the wealth they produce for their own enjoyment, and we demand the earth for all the people.”
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