|WAGES AS PROPORTION OF GDP FROM 1955-2008|
This graph, based on one printed in Stewart Lansley's excellent book "The Cost of Inequality: Three Decades of the Super-Rich and the Economy" (Gibson Square 2011), tells you almost everything you need to know about the roots of our current crisis.
It depicts the percentage of UK GDP paid out as wages from 1955 to 2008. It starts around the ~59% level that prevailed almost from the end of WWII until the 1973 oil crisis, then shows the sharp spike up above 65% during the union militancy of the mid-70s (whose impact on prices and profits drove the country into the arms of Thatcher). In effect it's a graph of the British class struggle over that crucial half century.
A steady downward trend following 1979 as labour lost out more and more has taken it below 54%, a level at which demand in the economy is severely curtailed. The answer is not more QE to put cash into the banks, but to put cash in people's pockets, restore this measure to around 59% and restart the economy.
[Subscribers can read my review of Lansley's book in the next issue of The Political Quarterly, Volume 83, Issue 4 (not yet online), and my PQ reviews over two years old of other books are readable on my blog here]