Rising Corporate Concentration, Declining Trade Union Power, and the Growing Income Gap: American Prosperity in Historical Perspective Jordan Brennan February 2016 Rising Corporate Concentration, Declining Trade Union Power, and the Growing Income Gap: American Prosperity in Historical Perspective Jordan Brennan* March 2016 *Jordan Brennan is an economist with Unifor, Canada’s largest private sector labor union, and a research associate of the Canadian Centre for Policy Alternatives. E-mail:
[email protected]. Website: www.jordanbrennan.org. Contents Executive Summary 2 Acknowledgments 4 List of Figures 5 Part I: Corporate Concentration, Secular Stagnation, and the Growing Income Gap 6 Part II: Labor Unions, Inflation, and the Making of an Inclusive Prosperity 24 Appendix 48 References 51 1 Executive Summary The rise of income inequality amidst the deceleration of GDP growth must rank as two of the most perplexing and challenging problems in contemporary American capitalism. Comparing 1935–80 with 1980–2013—that is, the Keynesian-inspired welfare regime and, later, neoliberal globalization—the average annual rate of GDP growth was more than halved and income inequality went from a postwar low in 1976 to a postwar high in 2012. How do we account for this double-sided phenomenon? The conventional explanations of secular stagnation and elevated inequality are inadequate, largely because mainstream (“neoclassical”) economics rejects the notion that the amassment and exercise of institutional power play a role in the normal functioning of markets and business. This analytical inadequacy has left important causal elements outside the purview of researchers, policymakers, and the public at large. This two-part analysis investigates some of the causes and consequences of income inequality and secular stagnation in the United States.