The United States is six and a half years into the current “recovery” but little has been recovering except corporate profits and incomes for the 1 percent.
That’s because spending—both consumer spending and business investment—have basically stopped growing. And, within capitalism, when spending slows down, the economy as a whole stops growing and threatens, once again, to falter.
Consumer spending isn’t growing because, face it, most people’s incomes (whether measured in terms of real wages or median incomes) are stagnant. Whatever spending they are doing (e.g., on cars and higher education) is fueled by taking on more and more debt.
What about investment? While profits (especially from domestic sources) continue to grow, corporations are using those profits not for investment, but for other uses, including stock buybacks, mergers and acquisitions, and CEO salaries.
To put it in other words, the surplus is growing but the handful of large corporations that manage to appropriate most of the surplus are using it to reward themselves and their accomplices.
And, for the economy as a whole, that’s a real problem. It may make a lot of sense for each corporation to keep wages low, profits high, and investment spending down—but it makes no sense for the economy as a whole, including their own long-run profitability.
That, as it turns out, is a contradiction that is central to capitalism.