One consequence of the globalization of the economy is the rise of new governing institutions to serve the interests of private transnational economic power. Another is the spread of the Third World social model, with islands of enormous privilege in a sea of misery and despair. A walk through any American city gives human form to the statistics on quality of life, distribution of wealth, poverty and employment…Increasingly, production can be shifted to high-repression, low-wage areas and directed to privileged sectors in the global economy. Large parts of the population thus become superfluous for production and perhaps even as a market, unlike the days when Henry Ford realized that he could not sell cars unless his workers were paid enough to buy cars themselves.
Noam Chomsky, "Notes on NAFTA: ‘The Masters of Mankind’" (pdf) March 29, 1993 (my emphasis)
Two recent pieces of evidence for Chomsky’s predictions:
1. The Wall Street Journal quotes Marx (!):
Lately, the U.S. recovery has been displaying some Marxian traits. Corporate profits are on a tear, and rising productivity has allowed companies to grow without doing much to reduce the vast ranks of the unemployed
2. And hey, would ya look at that:
The post-recession reality is that the customer base for businesses that appeal to the middle class is shrinking as the top tier pulls even further away.
In 2012, the top 5 percent of earners were responsible for 38 percent of domestic consumption, up from 28 percent in 1995, the researchers found.
Even more striking, the current recovery has been driven almost entirely by the upper crust, according to Mr. Fazzari and Mr. Cynamon. Since 2009, the year the recession ended, inflation-adjusted spending by this top echelon has risen 17 percent, compared with just 1 percent among the bottom 95 percent.
Businesses that primarily serve lower- and middle-income people are feeling the pinch. Wal-mart, for example, has experienced a decrease in profits due to federal cutbacks in aid for the middle class (letting a temporary cut in payroll taxes expire) and the poor (cutting food stamps—about 20% of its customers use food stamp.)
Millions of blue- and white-collar jobs have been shipped overseas for the past couple of decades. Now the middle class is shrinking as a market. The thing is, none of this was inevitable. It has mostly been the result of government policies that were designed by and cater to the interests of the 1%.
I’ll end by quoting the first paragraph of Chomsky’s Nation article (my emphasis):
Throughout history, Adam Smith observed, we find the workings of “the vile maxim of the masters of mankind:” “All for ourselves, and nothing for other People.” He had few illusions about the consequences. The invisible hand, he wrote, will destroy the possibility of a decent human existence “unless government takes pains to prevent” this outcome, as must be assured in “every improved and civilized society,” It will destroy community, the environment and human values generally and even the masters themselves…
How long, exactly, do you think the economy can grow based on the 1%’s appetite for luxury goods? How long until they destroy themselves with their own greed?