Edward Lambert: Is it Debt Deleveraging or the Fall in Labor Share?

Edward Lambert argues against Adair Turner: Is it Debt Deleveraging or the Fall in Labor Share?.

I look at another cause for economic sluggishness… the fall in labor share. It is not a concept so easy to accept. If you pay labor less, business should be able to grow faster right? You have lowered business costs. You have made it easier for firms to project higher profits, right?

Yet, I see the fall in labor share as a fall in effective demand, which has lowered economic potential and the social benefits in the economy. The drying up so to speak of labor share of income has caused firms to seek out profits in other channels where money is circulating. Firms are able to survive, but labor continues to suffer.

We can say that deleveraging debt and the fall in labor share both contribute to the economic sluggishness. But since Adair Turner did not talk about the fall in labor share, I will.

Emphasis Mine

This is classic Marxism: Capitalist crises are caused by over-production and under-consumption. The proletariat can only purchase with what they earn (current and/or future earnings).