Some capitalist economic pundits and the big-business media are hailing what they describe as "the new economy." For instance, Business Week featured on its cover at the end of January a wrench made out of a circuit board under the main headline: "The New Economy--It Works in America. Will It Go Global?"

"It seems almost too good to be true," the article started out. Citing a nearly 4 percent growth rate, low inflation, and declining unemployment, the magazine says the "spectacular boom was not built on smoke and mirrors. Rather, it reflects a willingness to undertake massive risky investments in innovative information technology, combined with a decade of retooling U.S. financial markets, governments, and corporations to cut costs and increase flexibility and efficiency."

The article calls this the "U.S. model of free-market capitalism." Many articles along these lines claim the increased rate of productivity has been stoked by faster computers, the Internet, and new high-speed communications.

Despite the "spectacular numbers" of the "new Internet economy" hailed in the Tribune and other capitalist dailies, however, a layer of big-business figures have voiced concerns over exaggerated expectations of the "productivity miracle."

An article in the New York Times, for example, quotes several bourgeois economists who downplay the impact of computers. One, Robert Gordon from Northwestern University, explained, "When the economy is growing above normal, the output of a worker also jumps. That is because companies, faced with a growing demand for their products and services, find ways to squeeze more output from their employees."

That the long expansion and corporate profits are actually based on this "squeeze" on workers is something that Gordon does not admit, but the grinding effects of the intensification of labor is something millions of industrial workers face on a daily basis. While the bosses pocket the profits realized by increased productivity and lower per-unit costs, workers are paying for it in damage to their bodies and with their lives. One indication of how far the bosses have pushed along these lines is the increased number of strikes by workers demanding dignity on the job and relief from brutal working conditions.

According to Labor Department figures, workforce productivity rose 3 percent in 1999. In the fourth quarter it shot up at a 5 percent annual rate. This is the biggest rise for both figures since 1992. Productivity is measured in the amount of output for each hour worked. Reflecting a double boon for big business, the department also stated that unit labor costs dropped 2.5 percent in the fourth quarter of 1999. The last time productivity rose by more than 2 percent for four consecutive years was 1961–66.

An increase in productivity in the manufacturing sector of the economy is a significant part of the overall total, where it rose at an annual rate of 6.4 percent in 1999, and 10.7 percent in the fourth quarter. Half of this came in the manufacture of computers and other electronic gear.

These numbers are "a veritable textbook version of how an economy should perform," crowed David Orr, chief economist at First Union Corp. Bruce Steinberg, chief economist at Merrill Lynch, ascribed the rise in productivity to "the new technologies." "We are seeing things in this [business] cycle that are unprecedented," he declared.

"The 1990's entered the books as the decade that produced the greatest improvement in productivity since the golden 1960's," wrote Louis Uchitelle in a February 9 New York Times article. He asserted that "almost all of the improvement came in the last four years, when computers became much faster and the Internet expanded rapidly."  
 

'Productivity overstated'

Roach's article focused on office workers and professionals. While "many experts attribute the rise in productivity to the breakthroughs of new information technologies and the explosion in doing business online," said Roach, "the dirty little secret of the information age is that an increasingly large slice of work goes on outside the official work hours the government recognizes."

Roach noted that e-commerce was a "puny" factor in the $9 trillion U.S. economy, accounting for an estimated $150 billion in 1999, or about 1.6 percent. Industries such as mining, manufacturing, and construction, however, accounted for some 23 percent of the U.S. gross domestic product in 1997. There, the bosses bolstered productivity by lengthening the workweek, cranking up the speed of production lines, setting aside safety measures, doing away with work rules won through labor struggles, combining jobs, and other measures that make people work harder.

"There can be little doubt about the option that corporate America has chosen in the 1990s: downsizing has triumphed over rebuilding," Roach wrote in 1996. "Downsizing means making do with less--realizing efficiencies by pruning both labor and capital."

As productivity increases have hit record levels and unemployment has sunk to lows not seen in decades, workers pay has also lagged. Fewer than 10 percent of all workers found their incomes rising faster in 1999 than in 1998. Only those earning above $65,000 found their incomes growing faster last year after adjusting for inflation. The only spike in wage increases for working people came in 1996 and 1997 when the federal minimum wage was increased.

"Caught off guard, economists are reaching for explanations," wrote Loius Uchitelle in a Times column. While these economists would be less off guard if they had visited any mine, mill, or factory over the last decade where the bosses have been carrying out their antilabor drive, Uchitelle does note that workers face "job insecurity." He states, " Despite rising public confidence in the economy, many workers still remember the layoffs and downsizings of the early 1990s."

Meanwhile, as the nation's economy chugged along, the decade of the 1990s ended with a rash of eight bank failures. This has provoked nervousness among some big business economists such as Federal Reserve governor Laurence Meyer, who told a hearing of the House Banking Committee, "When the economy weakens--as it ultimately will--we can expect bank losses."

A "troubling trend" exists among bankers who operate as if "current robust conditions will continue indefinitely," Greenspan remarked to a gathering of bankers in San Antonio, Texas. "Competitive pressures have intensified" between lending institutions, he added.

Many banking institutions have in fact tightened their lending standards. More business loans are being paid late, the Wall Street Journal reported in early February. A quarterly Federal Reserve survey of senior loan officials at banks across the country found that nearly 60 percent of domestic banks and 90 percent of foreign banks reported an increase in their delinquency rates.  
 
 
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