5. The most popular "radical-Marxian" explanation of these profit rate trends has been the "reserve army profit squeeze" theory - that low unemployment rates in the late 1960s and early 1970s increased workers power, and enable them to gain substantial wage increases and to squeeze profits. This theory then explains the increase in the rate of profit on the higher rates of unemployment and the loss of workers' power in recent decades. This seems to be Doug's explanation of these trends.
However, this profit squeeze theory does not provide a very good explanation of the only-partial recovery of the rate of profit, and especially the share of profit, in recent decades. One would think that, if greater worker power leading to wage increases in the 1960s and 70s caused the profit share to decline, then surely the last three decades of wage-cuts, speed-up on the job, and the general attack on workers and unions should have fully restored the profit share by now.
Why fully restored? The 1950s and 1960s were a Golden Age with few if any historical precedents that followed the worst depression in history. The corporate sector had net losses in 1932 and 1933, something it's never come close to replicating since. But the corporate profit share of GDP rose from the low of 5.2% in 1982 to 8.7% in 1997, a 67% increase. Sure it's below the 10-11% levels of the mid-1960s, but it's a major recovery. And though I haven't gotten a chance to analyze the latest benchmark revision of the NIPAs, they show a very substantial rise in profits in 2001 and 2002 - an amazing performance in a recession and weak recovery.
The 1982-97 and 2001-2002 profit recoveries happened despite an increase in what you call "unproductive" labor. Why?
Doug
