Losing her job would not be good for the economy but good for the rich in the economy.
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  • Losing her job would not be good for the economy but good for the rich in the economy.

One of the big economic ideas in recent years was presented in a 2013 speech by the former treasury secretary Larry Summers. The idea, called secular stagnation, concerns the impact that low population growth and consequent weak demand has had on economies in advanced capitalist societies. This stagnation, as the writers of Monthly Review already explained back in the '80s, has resulted in the flight from the real limits of the real economy, which is growing slowly, to finance, which, as Massimo Amato and Luca Fantacci explain in their book The End of Finance, opens the limitless future to the present. But here is the thing: Growth, it turns out, is not all that good for the rich (or the 1 percent). This idea is proposed by Jonathan Nitzan and Shimshon Bichler in a post on LSE's website called "Profit from Crisis: Why capitalists do not want recovery, and what that means for America." By examining job and income data over the past 100 years, they found periods of low growth and high unemployment are also periods when the rate at which wealth heads upwards increases.
Unemployment affects distribution mainly through the impact it has on relative prices and wages. If higher unemployment causes the ratio of price to unit wage cost to decline, capitalists will fall behind in the redistributional struggle, and this retreat is sure to make them eager for recovery. But if the opposite turns out to be the case – that is, if higher unemployment helps raise the price/wage cost ratio – capitalists would have good reason to love crisis and indulge in stagnation.

In principle, both scenarios are possible. But as Figure 1 shows, in America the second prevails: unemployment redistributes income systematically in favor of capitalists.

But here is the real bad news: For reasons relating to climate change and also public heath, advanced capitalist societies do not not need any more economic growth, and in fact they should be searching for ways and forming policies that decrease consumption of energy and other products with huge negative social and environmental externalities. There is at present no real future for the human world as we know it if the Global North is not thinking about living with and consuming much less. But, on the other hand, for structural reasons, it's more and more looking like low growth benefits the rich and hurts the poor. The French economist and celebrity Thomas Piketty also makes a similar argument in his book Capital in the 21st Century. This situation (real economic growth being bad for the environment and bad for the rich, but good for the rest) has yet to enter the circle of our political concerns. As a consequence, we should be deeply pessimistic about the new year and the near future.