Whatever happened to the 'Goodwin pattern'? Profit Squeeze Dynamics in the Modern American Labour market

Mark Setterfield

No 2101, Working Papers from New School for Social Research, Department of Economics

Abstract: The 'Goodwin pattern' -- an anti-clockwise rotation in real activity x wage share space recurring at intervals that correspond roughly to the duration of business cycles -- is an enduring feature of high-frequency dynamics in capitalist economies. It is well known that the centre or focus of this rotation shifts over time. More recently, however, the Goodwin pattern seems to have broken down, the wage share no longer increasing as the real economy improves over the course of short-term booms. In this paper, the breakdown of the Goodwin pattern is associated with the consolidation of an 'incomes policy based on fear' that is part-and-parcel of neoliberalism. As a result of this incomes policy based on fear, the institutional structure of the labour market disciplines labour at any rate of unemployment. This decouples wage-share dynamics from the state of the real economy, with the result that as recently witnessed, the wage share is rendered invariant to tightening of the labour market in the course of short-term cyclical booms.

Keywords: Goodwin pattern; distributional con ict; worker insecurity; incomes policy based on fear (search for similar items in EconPapers)
JEL-codes: E11 E12 E25 E64 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2021-01, Revised 2021-04
New Economics Papers: this item is included in nep-hme, nep-mac and nep-pke
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Journal Article: Whatever Happened to the ‘Goodwin Pattern’? Profit Squeeze Dynamics in the Modern American Labour Market (2023)
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