What went wrong with capitalism? – Michael Roberts
“It’s not the ‘big state’ that is in control of investment and output decisions, it is the capitalist sector. This hints at the reason for reducing the role of the public sector. The problem for capitalism in the late 1960s and 1970s was the drastic fall in the profitability of capital in the major advanced capitalist economies. That fall had to be reversed. One policy was privatization. Another policy was the crushing of the trade unions through laws and regulations designed to make it difficult if not impossible to set up unions or take industrial action. Then there was the move of manufacturing capacity out of the ‘Global North’ to the cheap labour regions of the Global South, so-called ‘globalization’. Combined with weakening trade unions at home, the result was a sharp drop in the share of GDP going to labour along with cheap labour abroad; and a (modest) rise in profitability of capital…”