 Now, the real wage is constrained and it actually even falls just a little bit. So for the first time in U.S. history, again because of the changes that we talked about, the real wage is not rising. It's actually at best constant and it actually falls a little bit for the American worker. So we have a wage depression for almost 40 years in the United States. Not to mention, no one really talks about it. It's a remarkable fact that this decline in the real wage of workers compared to the rising real wage prior to the 1980s, prior to President Reagan, is a remarkable change in the United States which draws not too much analysis. At the same time, this continues to fall in part because of these cheap Chinese wage goods but also the continual rise in the productivity of labor. Hence, the S over V kind of takes off in the United States this time around because of the decline in the real wage added to this decline in the unit value of wage goods. So this is a dramatic increase in the rate of exploitation in the United States which in a sense you can see from the rising gap between the black and the red lines. What this says is this is this rising S over V. Because of the historical importance of rising consumption to the workers because that becomes part of the American dream and the American exceptionalism, the workers over this period do not cut their consumption. What happens is two dramatic things. You would say, well, they've got to cut their consumption, no. What happens is that consumption more or less continues like this. Consumption continues to rise. This is consumption. Despite the fact that the real wages they receive doesn't warrant this. And the reason why consumption rises for workers are two. Number one, everybody in the family goes to work. So mommy, daddy, grandpa, grandma, and so forth. Everybody in the family starts to sell their labor power. And what becomes more and more important in the United States is the family wage. Even though the individual wage of mommy and daddy falling as mommy goes into the labor force, she's too receiving a lower real wage because of what I mentioned to you before. It changes the labor market. The family wage rises because everybody's working, and that helps to maintain this consumption standard, which is so important to the American families. Number one. Number two, debt. The second one is that everybody seems to go into debt to help finance the higher consumption. So as you can see from this, that everybody working and going into debt helps to maintain this so that the blue line is above the red line, the red line again is the real wages. So the real wages are constrained if not falling. Productivity continues to rise. And the consumption of the workers are financed increasingly by debt. And of course, as I said, everybody working. So that's one way to capture what has gone on. The consequences of this, I'm going to come back and I'm going to end on the consequences of what one of which of course is the debt per capita takes off in the United States and that's going to produce a disaster after 2008. The United States economy becomes increasingly fragile, sensitive to this rising debt and a sensitive to everybody in the family working, as we shall see. Just staying with this for a moment, there's another interesting thing to say about this thing which is opening here, which is, okay, let's see. If the surplus is just exploding in the United States because now the value of labor power is falling because of the fall in the unit value and the fall of the real wage, that means that capitalists have more to distribute. Don't forget our equation. So the workers take their labor power, they go out and buy consumer goods. The surplus value received by the capitalist, which is exploding, enables the capitalist to make all kinds of distributions to whom? Well, to all occupants of subsumed class positions. Who might they be? Well, those are people who get cuts of the surplus. That's their subsumed class revenue. Who are these people? These are the managers, the owners, the landlords, the merchants, bankers, I say bankers. These people are increasingly getting higher cuts of this exploding surplus to supply their conditions of existence. So if I take the ratio of this to the workers value of labor power plus their former subsumed class revenues that they got from their unionized position, if I take just this ratio and talk about it in terms of this period after the 1980s, what do we have? Well, look, we have this one going to zero. That's the attack on unions, the reduction in the price of labor power, and so forth. We have now a diminished V. So the denominator in this fraction is falling. At the same time, the numerator is rising, why? Because the reduction in the value of labor power now allows more surplus, relative surplus value allows more surplus, which can then be distributed to whom? To the top managers of the corporation, to the owners of the stock, to the bankers, to the owners of Walmart, and so forth. And so you have a rising ratio of the incomes in the numerator to the occupants of subsumed class positions and a falling income to the workers. And all of a sudden, Americans begin to recognize a radically changed income distribution. So this is reflected in the changed income distribution that everyone wants to talk about, or a lot of people want to talk about in the United States. The U.S. income distribution tends to become more and more unequal. More and more of the total income is going to people in the numerator. A smaller portion of the American income is going to people in the denominator. So the income distribution in the States becomes more uneven over time, during this period of time, and it begins to resemble what it was prior to the 1920s. It's about as unequal now as it may have been in 1917 or whatever. And this has dramatic consequences in the United States. For example, this uneven distribution of income as a result of what we have described is also reflected in a bifurcation of consumption in the United States. What that means is that the consumption of the workers in the denominator becomes constrained other than debt and everybody in the family working. So people in the denominator are struggling to maintain their consumption, buying their Chevrolet, going to buy their shirts at Walmart and so forth, whilst at the same time people in the numerator are expanding their consumption, perhaps the level is not seen since the 1880s and 1890s. So you have what you have in the numerator are people who are buying these in monster homes in the United States with three or four of these expensive cars and so forth. So you have this bifurcation, as I said, of consumption in the United States. The consumption of the workers gets constrained, whereas the consumption of the richer elements in society kind of takes off, reflecting the change, distribution of income, reflecting in turn this remarkable change in the rate of exploitation in the United States. So what we're trying to do again is to connect this changed income distribution, changed consumption pattern in the United States to the changed class structure. Final two points and we're going to end on this. There are two other major consequences of what has occurred during this period of time and I'd like to bring them to your attention, although we're not going to analyze them in any detail, but they're interesting, they're affecting everybody's lives in the United States, they're very current and so hence I want to end 305 on that note. There's a crisis in the state. If I just take to the state for a moment, I'm just talking about not the federal government and if we look at their revenues and their expenditures, we have the subsumed class revenues which are from corporate taxes. Then we have the state collecting non-class revenues on everybody else. So this is the corporate tax, this is the personal tax. So the corporate tax would be the tax on surplus value, okay, so once again to review what we've done, the capitalists have to take a cut of their surplus and they have to pay a tax to the state and the state in turn supplies the capitalists, the exploiting capitalists with key conditions of existence, money supply, defense, private property and so forth. But then the state also taxes everybody else. That's not a subsumed class revenue because everybody else are not appropriated as a surplus and hence they don't have any surplus to distribute to the state. So these would be for example mostly the wage workers but all kinds of, remember now, unproductive labor as well. It's not just that the productive labor gets taxed but unproductive labor gets taxed. By definition the productive and unproductive labor are not appropriated as a surplus. That was a couple of lectures that we presented. So only the productive capitalists are producing the productive capitalists have to surplus produced by these productive laborers. The expenditures on the right hand side, so this is the revenues from the state, the expenditures on the right hand side would be all the expenditures that the state makes to help support the private capitalists plus the expenditures that the state makes to help support all these non-class revenues that the personal taxes that people pay. Defense expenditures, suing pools and education for the public, welfare, welfare for the workers, welfare for the industrial capitalists, the farm subsidy for example and all kinds of other subsidies given to capitalists. What happens starting in the 1980s again to go back where we started, the corporate taxes get cut dramatically. Personal taxes get cut dramatically. So starting with President Reagan there's a tax reduction which occurs which is supposed to stimulate capitalism in the way that we describe it and it does, there's no question that it does that. So you get a cut in the left hand side, revenues fall. At the same time, expenditures rise, that is, defense expenditures rise and you have then a inequality emerging that is deficits emerging because you're reducing the left hand side at the same time you're increasing this and then people begin to, and no one's going to cut the defense budget. Clinton does cut, President Clinton does cut it a bit but it quickly resumes its normal rise over time and those are, once again, those are tanks and airplanes and so forth that the capitalists produce and sell to the federal government and so a struggle emerges over these why goods and to just make this much more simple than what it is, the Republicans argue you've got to cut this, the Democrats argue you can't cut, you've got to maintain this if not increase. So you have emerging, a struggle in Congress right up into the present which is the two parties argue about this and they ignore the rest because they both accept this cut in taxes to finance a rising expenditures and so you have deficits, it's not surprising, deficits emerge from this kind of configuration of revenues and expenditures and the deficits that emerge, what does that mean? The federal government increasingly issues bonds to finance this deficit so the state gets out of control. There is a crisis in the state which emerges which continues in a variety of different ways right up to the present. The crisis gets to be not as severe under President Clinton because he, Bush won and then President Clinton, they begin to raise taxes and they begin to cut this defense expenditures but that's the first time this occurs over this 40-year period and hence that surplus that the government started to rise which helped to reduce the deficit that's eliminated by Bush II's tax cuts and then the continued increase in expenditures so these deficits as I said continue, the state is out of control. So I don't want to lose the big picture now.