The Formerly Advanced Economies

from Dollars & Sense:


The Formerly Advanced Economies
BY ROBIN HAHNEL | January/February 2013


Just as the European settler economies in North America grew to eclipse the economic power of “old” Europe during the twentieth century, at least some of the BRICS—Brazil, Russia, India, China, and South Africa—were already on a trajectory to rise relative to both North America and Europe in economic power during the twenty-first century. However, a natural process that would have taken five decades or more may now be shortened to only a decade or two as the elites in charge of economic policy in the North Atlantic region seem hell-bent on committing economic suicide.

During the twentieth century it was common to distinguish between the “advanced” or “more-developed” economies, and the “under-” or “lesser-developed” economies. Soon it may become commonplace to refer to Europe, the United States, and Canada as the formerly advanced economies. What follows is a brief anatomy of econo-cide being committed by ruling elites in a region which long dominated the global economy but soon no longer will.

Escalating Inequality

What most distinguishes more-advanced from less-advanced economies is the size of the middle class. During the middle third of the twentieth century political victories by progressive movements raised a significant portion of the workforce to middle-class status in Europe, the United States, and Canada as productivity gains from new technologies and expansion of education were more widely shared than ever before. Unfortunately, this trend came screeching to a halt at the end of the 1970s, and ever since we have experienced the most dramatic increase in economic inequality in world history. Not only is this terribly unfair, it has also proved to be destabilizing.

When wages rise along with increases in productivity, demand for goods and services and for the labor to make them tends to keep pace with productive capabilities. But when the top 1% appropriate the lion’s share of productivity gains, as they have now for over thirty years, more and more income goes into purchasing assets rather than more production, creating two problems: Unemployment—which further aggravates the lack of demand for production—and asset bubbles—which eventually burst, destroying illusions of wealth. ...................(more)

The complete piece is at: http://www.dollarsandsense.org/archives/2013/0113hahnel.html