II. Global Offensive of the Capitalists against the Working Class



Note of the Editorial Board: The following Chapter contains several figures. For technical reasons these can only be viewed in the pdf version of the book which can be downloaded here.





In order to halt this tendency of the profit rate to fall, the capitalists are accelerating their attacks on the working class. This is true for the old imperialist countries, for the new Great Powers China and Russia, as well as for semi-colonial countries. This is reflected, among others, in the decline of the labor share of income in most countries – in the North as well as in the South. [1]


Loukas Karabarbounis and Brent Neiman, two economists who have published well-researched studies on this subject, have arrived to the conclusion that the global labor share has declined from roughly 64% in 1975 to about 59% in 2012. (See Figure 6)



Figure 6. Declining Global Labor Share [2]






We see the same picture in another figure which gives the labor shares for all Great Powers as well as other G20 countries. (See Figure 7) According to this statistic, the adjusted labor shares declined between 1991-2011 from about 63% to 58%.






Figure 7. The Adjusted and Unadjusted Labor Shares in selected G20 Countries, 1991-2011 [3]








Even the International Monetary Fund (IMF) – not known as a labor-friendly institution – has to admit this fact. In a major study, the IMF found out:


In a sample of 35 advanced economies, between 1991 and 2014, the labor share declined in 19, which accounted for 78 percent of 2014 advanced economy GDP, and rose or remained relatively stable in the remainder. The overall cross-country dispersion of labor shares is considerably larger in emerging market and developing economies than in advanced economies. In a sample of 54 emerging market and developing economies (for which, on average, the decline in the labor share over the sample period is concentrated in the early 1990s), the labor share declined in 32 economies, which accounted for about 70 percent of 2014 emerging market GDP[4]


In Figure 8 we see the IMF figures for the development of the adjusted labor share in the years 1980-2014 for the old imperialist countries (“Advanced Economies”) as well as for the other countries.




Figure 8. Evolution of the Adjusted Labor Share of Income (Percent) [5]






In the figures 9 and 10 we see a breakdown of the development of the labor share for a number of important countries – the U.S., Japan, Germany, China, India, Mexico and Columbia. Again, with the exception of the last country, the dynamic is the same declining one. [6]




Figure 9. Declining Labor Shares in Largest Economies [7]






Figure 10. Declining Labor Share for Developing Economies [8]





The brunt of these capitalist attacks has been borne, as the authors of the IMF study elaborate in another research paper, by the mass of the working class – the low- and middle-skilled labor. Only the upper stratum, often part of the privileged labor aristocracy, has been able to increase their share of income. (See Figure 11)


The decline in the global labor share has been borne by low- and middle-skilled labor. During 1995-2009 their combined labor income share was reduced by more than 7 percentage points, while the global high-skilled labor share increased by more than 5 percentage points.[9]




Figure 11. Labor Share Evolutions and Labor Force Composition by Skill Level (Percent) [10]






Figure 12 shows the development of the wage share on income in the years 1995-2009 in China as well as seven other important advanced semi-colonial countries. As we can see, in all countries, except Brazil, did the labor share decline. In these countries, the income share of the lower and middle strata of the working class is declining while the share of the upper strata increases.




Figure 12. Wage Share by Skill group as defined by Workers’ Education, 1995- 2009 (Brazil, China, India, Indonesia, Mexico, South Korea, Turkey) [11]








The reverse development of such decline of workers’ wages has been the massive increase of the capitalists’ profits. We content ourselves with reproducing one figure from the recently published and highly informative World Inequality Report 2018 which demonstrates the evolution of the Top 1% income shares in the world’s regions between 1980 and 2016. (See Figure 13)




Figure 13. Top 1% Income Shares across the World, 1980–2016 [12]






We have elaborated in more detail about the global character of the attacks on the working class for several reasons. First, we want to demonstrate the validity of the Marxist law that the capitalist class, faced with the decline of its mode of production, attempts to increase the surplus value by systematically reducing the wage share.


Secondly, the profound character of the deterioration of the working people’s living standard increases the desire of the imperialist bourgeoisie to confuse and manipulate the working class via chauvinism and jingoist warmongering in order to divert their hatred away from the true culprit and against their class brothers and sisters.


Thirdly, it is important to take note of the severe attacks on the mass of the proletariat (the low and middle-skilled majority) in the imperialist countries as it objectively undermines the material basis of loyalty of this working class to the imperialist state and, hence, to “their” bourgeoisie. This, in turn, creates the preconditions for a fertile ground for revolutionary defeatism, i.e. the class struggle against the imperialist masters.


Finally, it is crucial to recognize the diverging trends in labor income between the upper strata of the proletariat and the lower and middle strata. The relative positive development of the formers income share constitutes an objective, material basis for aristocratic and pro-imperialist, i.e. social-imperialist tendencies among this privileged sector of the working class.


[1] For our general assessment of the composition of the world working class and the changes in the past decades we refer, among others, Michael Pröbsting: Marxism and the United Front Tactic Today. The Struggle for Proletarian Hegemony in the Liberation Movement in Semi-Colonial and Imperialist Countries in the present Period, RCIT Books, Vienna 2016, Chapter III, https://www.thecommunists.net/theory/book-united-front/

[2] Loukas Karabarbounis and Brent Neiman: The Global Decline Of The Labor Share, NBER Working Paper 19136, June 2013, p. 35

[3] The Labour Share in G20 Economies, Report from the International Labour Organization and the Organisation for Economic Co-operation and Development with contributions from the International Monetary Fund and the World Bank Group, Report prepared for the G20 Employment Working Group, Antalya, Turkey, 26-27 February 2015, p. 5

[4] IMF: World Economic Outlook: Gaining Momentum? Washington, April 2017, p. 126

[5] IMF: World Economic Outlook: Gaining Momentum? Washington, April 2017, p. 133

[6] As a side-note, we draw attention to the massive decline of the wage share in China. It is a severe blow to the myth spread by the Stalinist and semi-Stalinist eulogists of China’s “communist” capitalism. While they advocate China’s model as “socialism” or at least a “deformed workers state”, the reality is that a growing share of income enters the pockets of the capitalists while the worker’s share declines. (See on this also the Figure 9, 10, 12 and 23.)

[7] Loukas Karabarbounis and Brent Neiman: The Global Decline of the Labor Share (And Follow-up Thoughts), University of Chicago, March 2014, p. 11

[8] Loukas Karabarbounis and Brent Neiman: The Global Decline of the Labor Share, Quarterly Journal of Economics (2014), Presented by Sergio Feijoo, March 29, 2017, p. 6

[9] Mai Chi Dao, Mitali Das, Zsoka Koczan, Weicheng Lian: Why is Labor Receiving a Smaller Share of Global Income? Theory and Empirical Evidence. IMF Working Paper, July 2017, pp. 14-15

[10] IMF: World Economic Outlook: Gaining Momentum? Washington, April 2017, p. 128

[11] Alexander Guschanski and Özlem Onaran: Why is the wage share falling in emerging economies? Industry level evidence, University of Greenwich, 2017, p. 18

[12] Facundo Alvaredo, Lucas Chancel, Thomas Piketty, Emmanuel Saez, Gabriel Zucman: World Inequality Report 2018, p. 44