A second look at the US economic advantage 

 

However, to find out why Europe lags behind economically it is necessary to look more deeply. We have shown that US imperialism is not only economically more productive than the EU but that its output also grew more in the 1990s.

So, for example, US GDP per head is 40 per cent higher than that of the 15 EU states. But, if one looks at the productivity per hour worked, the picture looks very different. Eurozone’s GDP per hour is 96 per cent of the US level. The picture becomes even clearer when it comes to individual nations. (see table 6)

 

Table 6: GDP per working hour as a share of the US level 2001 (13)

 

Belgium                                                107

France                                                   106

Germany*                                             96

Italy                                                       84

UK                                                         82

 

*Germany includes the less productive Eastern regions; Western Germany itself would be more productive than the USA

 

In the rate of growth of GDP per hour worked, while the US caught up to a certain degree in the 1990s, Europe still grew faster. (see table 7)

 

Table 7: Annual average Growth of labor prouctivity in the economic sector (in percent); USA and Eurozone 1973-2003 (14)

                                                     

                                                                                                              Eurozone                            USA

Productivity per hour 1973-1990                                                   2,9                                         1,2

Productivity per hour 1990-2003                                  2,0                                         1,8

 

A study by Credit Suisse First Boston showed that real annual Net Domestic Product, per hour, grew between 1992-2002 in the USA by 1.1 per cent on average but by 1.4 per cent in the Eurozone. (15)

What we can see is that European capital is clearly not behind the US in terms of efficient use of the labour time of its workers. But - and this is a very big “but”, the US bosses have succeeded in massively increasing the extensive use of labour.

 

Higher rate of exploitation in the USA

 

In short, US workers are forced to work many more hours than their EU brothers and sisters and more of the available workforce is actually employed than in Europe.

First, the number of working hours. In 2000, US workers spent 1,877 hours at work, compared to 1,480 for German workers (i.e. 22 per cent less), 1,562 for French (17 per cent less), 1,634 for Italians, and 1,708 for British. In nearly all imperialist countries, workers have been able to cut their annual hours at work over the last 25 years; but not in the USA. Between 1979 and 1999, the average US worker’s working year lengthened by 50 hours or nearly 3 per cent. In the same period, the average German working year shrank by 12 percent. As the left-wing US economist Richard B. Du Boff notes: “In fact the average worker in the US now spends more time working than he or she did in 1950.” (16)

But the individual worker in the US not only works more hours. He or she is also paid less than in the past. Between 1973 and 1999, real hourly wages for US workers - particularly thanks to the massive growth of low-wage, service sector jobs - declined by more than 15 per cent. (17)

In the manufacturing sector, real hourly wages rose between 1984 and 1999 by a meagre 8 per cent, while in Germany they grew, in the same period, by more than one-third! As Robert Brenner noted: “Even by 2000, real hourly wages for production and non-supervisory workers were still palpably below, and the poverty rate above, their 1973 bests.” (18)

Indeed, by 2001, average weekly earnings of production or non-supervisory workers on private non-farm payrolls (in 1982 constant dollars) had regressed to their 1962 level.

Added to this is the lack of a government-backed social welfare system in the USA. While most of Europe - despite all the counter-reforms of recent years - still has viable state pension provision, health care and unemployment benefit, this can hardly be said about the USA. For example, in the United States the bottom half of the labour force does not have a retirement plan. (19)

In short, the American bourgeoisie managed to enact a historic re-distribution of income from wages to profits. In the period 1947-1979, growth in family income was relatively similar for all groups of the population at between 94 and 120 per cent. However, in the period 1977-1994, and even more in the late 1990s, family income declined for the majority but grew dramatically for the richest one per cent (up 72 per cent!). Today, the richest one per cent owns 40 per cent of wealth, a share which was higher at only one other time since the first world war - 1929. (20)

Furthermore, the US bourgeoisie has succeeded in forcing workers to take whatever job they are offered and to go into retirement later. “Between 1973 and 1998, the percentage of the American population in employment rose from 41 percent to 49 percent. But in Germany and France the percentage fell, ending up at 44 and 39 percent.” (21)

To put it in Marxist terms the US bourgeoisie might not have succeeded in raising the relative surplus value more than its European counterpart but it was able to weaken the working class so much that it could raise the absolute surplus value much more.

In addition to this, every year, the United States, as the richest power in the world, succeeds in attracting millions and millions of new, often young, immigrants, unsure of their status, devoid of unions and ripe for super-exploitation. While 10.9 million immigrants entered Western Europe between 1974-1998, the figure was 16.7 million immigrants for the USA - a country with a substantially smaller population. So, while in 1970 4.8 per cent of US residents were foreign-born, this share had increased to 9.7 per cent by 1999.

In addition, one has to take into account the enormous demographic advantage of the United States. Because it is country of high immigration, it has a younger population than Europe. In the Eurozone, 16.5 per cent of its population was aged 65 or more in 2000; but the share of this age group was only 12.5 per cent in the United States. According to forecasts, the employable population of the EU will decline by 5 per cent in the next 25 years.

Finally, the class struggle is also a factor. While, between 1992-2001, US workers went on strike for fewer than 50 days per 1,000 employees, this figure was between 80 and 120 days in Denmark, Italy, Finland, Ireland and France and 271 days in Spain. On average, workers in the EU went on strike 150 per cent more than their US brothers and sisters.

Added to this is the much greater organisational strength of the European workers’ movement. Of course, in Europe, the organisational strength of the unions varies from country to country and one has to take into account that the formal numbers of union membership do not tell one everything about the fighting capacity of the workers’ movement. In Spain and France, in the 1990s, for example, union density was only 13.5 per cent and 12.2 per cent respectively but both countries possessed a very militant working class.

It is telling that, despite the decline of union membership in the last 25 years, more than 30 per cent of European workers are still members of unions while in the USA the figure is only 13.4 per cent and, in the private sector, it is only 9.4 per cent, the worst rate since 1902. (22)

In the words of a leading British pro-imperialist ideologist, the historian Niall Ferguson, the advantage for the US bourgeoisie compared to the European bosses lies in the following:

“... the real reason that the American economy has surged ahead of its European competitors in the past two decades [...] is simply that Americans work more. Europeans take longer holidays and retire earlier; and many more European workers are either unemployed or on strike.” (23)