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Thursday, April 15, 2021

Prince Philip & the communist ideal [feedly]

Prince Philip & the communist ideal
https://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2021/04/prince-philip-the-communist-ideal.html

One unintended and unremarked effect of the eulogies to Prince Philip is that they have reminded us of Marx's vision of communism.

What I mean is that several of his admirers describe him as a "renaissance man" on account of his wide range of interests. 

This, however, is an example of a common error – of ascribing to agency what is in fact the result of economic forces.

Prince Philip could afford to pursue so many different passions because the day he married the Queen he was freed from what Marx called "the dull compulsion of economic relations." For most of the rest of us, however, this compulsion forces us to specialize, to develop just one skill to the detriment of other interests. Capitalism rests upon the division of labour. But as Adam Smith saw, this can destroy us:

The man whose whole life is spent in performing a few simple operations, of which the effects are perhaps always the same, or very nearly the same, has no occasion to exert his understanding or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become. The torpor of his mind renders him not only incapable of relishing or bearing a part in any rational conversation, but of conceiving any generous, noble, or tender sentiment, and consequently of forming any just judgment concerning many even of the ordinary duties of private life. Of the great and extensive interests of his country he is altogether incapable of judging.

A man's mastery of one skill, said Smith is "acquired at the expense of his intellectual, social, and martial virtues." And there's plenty of evidence for this. Think of William Shockley, Bobby Fischer, James Watson, Larry Summers, Morrissey, Richard Dawkins….

In fact, the early history of capitalism was marked by workers' fierce reluctance to devote long hours to doing just the one thing. Sidney Pollard (pdf) and E.P. Thompson (pdf) have documented how capitalists strove to instil an unnatural work discipline into their employees. As Pollard put it:

Men who were nonaccumulative, non-acquisitive, accustomed to work for subsistence, not for maximization of income, had to be made obedient to the cash stimulus, and obedient in such a way as to react precisely to the stimuli provided.

Of course, working conditions and hours have improved since Smith's day and many people have internalized the capitalist work ethic. But not all of us. Research by Alex Bryson and George MacKerron has found that even people in good jobs are more miserable whilst at work than they are in any other activity bar being ill in bed. Which is why thousands of those who can afford to do so opt out of the rat race to do what Prince Philip could do – pursue a variety of interests. One reason why I'm looking forward to retiring (next year, I hope) is that I want to spend more time reading, gardening, learning music and learning Italian.

Which is where Marx comes in. His vision of communism was one in which the division of labour no longer suppressed our development as Smith thought it did. (Marx, of course, had read Smith much better than have today's admirers of him):

As soon as the distribution of labour comes into being, each man has a particular, exclusive sphere of activity, which is forced upon him and from which he cannot escape. He is a hunter, a fisherman, a herdsman, or a critical critic, and must remain so if he does not want to lose his means of livelihood; while in communist society, where nobody has one exclusive sphere of activity but each can become accomplished in any branch he wishes, society regulates the general production and thus makes it possible for me to do one thing today and another tomorrow, to hunt in the morning, fish in the afternoon, rear cattle in the evening, criticise after dinner, just as I have a mind, without ever becoming hunter, fisherman, herdsman or critic.

You might object that Marx's vision was one of a society of (surprisingly bucolic) dilettantes. That misses the point – that in communist society you will be able to pursue just one activity if you want: you'll be free to choose.

Yes, free. Marx's main beef with capitalism was not so much that it was unfair but that it generated unfreedom by alienating us from our nature. As William Clare Roberts puts it, capital "bends labour power to an alien and unnatural end." Marx, says Clare Roberts, was a theorist of freedom.

Those of us who are rich enough can step away from the alienating and repressive division of labour by retiring early – although of course not without damage. But is what's possible for a privileged few possible for all?

Only in a sufficiently developed economy. Marx thought that a particular level of affluence was necessary for communism, and that whilst capitalism could provide the potential for this affluence, it would not fully realize that potential and that there would come a time when capitalism ceased to develop productive forces but instead held them back. It would, he thought, require communism to allow that potential to be realized for everybody. Aaron Bastani's "fully automated luxury communism" is in this tradition.

Whether this is feasible is of course another matter. The answer lies in the outcome of the race between technical change and diminishing returns and rising rents, and personally I think forecasting the former is a mug's game.

For my purposes, though, this isn't the point. I merely want to point to a nice irony – that Prince Philip's eulogists have, perhaps inadvertently, made the case for Marx's vision of communism.


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Michael Hudson: America’s Neoliberal Financialization Policy vs. China’s Industrial Socialism [feedly]

Michael Hudson: America's Neoliberal Financialization Policy vs. China's Industrial Socialism
https://www.nakedcapitalism.com/2021/04/michael-hudson-americas-neoliberal-financialization-policy-vs-chinas-industrial-socialism.html

Michael Hudson: America's Neoliberal Financialization Policy vs. China's Industrial Socialism

Posted on April 15, 2021 by 

Yves here. Michael Hudson said he both enjoyed and very much appreciated the robust discussion among members of the commentariat last weekend about what to call China's economic model. He's keen to continue the discussion. To advance that end, Michael has graciously given us a lecture being subtitled in Chinese for release in a few weeks. It summarizes a series of talks and will also be included in his my book to be published later this summer, "The Destiny of Civilization: Industrial Capitalism, Finance Capitalism or Socialism." As you can see, Michael focuses on finacialization as a central point of difference between the two systems.

By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is "and forgive them their debts": Lending, Foreclosure and Redemption from Bronze Age Finance to the Jubilee Year

Nearly half a millennium ago Niccolo Machiavelli's The Princedescribed three options for how a conquering power might treat states that it defeated in war but that "have been accustomed to live under their own laws and in freedom: … the first is to ruin them, the next is to reside there in person, the third is to permit them to live under their own laws, drawing a tribute, and establishing within it an oligarchy which will keep it friendly to you."[1]

Machiavelli preferred the first option, citing Rome's destruction of Carthage. That is what the United States did to Iraq and Libya after 2001. But in today's New Cold War the mode of destruction is largely economic, via trade and financial sanctions such as the United States has imposed on China, Russia, Iran, Venezuela and other designated adversaries. The idea is to deny them key inputs, above all in essential technology and information processing, raw materials, and access to bank and financial connections, such as U.S. threats to expel Russia from the SWIFT bank-clearing system.

The second option is to occupy rivals. This is done only partially by the troops in America's 800 military bases abroad. But the usual, more efficient occupation is by U.S. corporate takeovers of their basic infrastructure, owning their most lucrative assets and remitting their revenue back to the imperial core.

President Trump said that he wanted to seize Iraq's and Syria's oil as reparations for the cost of destroying their society. His successor, Joe Biden, sought in 2021 to appoint Hillary Clinton's loyalist Neera Tanden to head the government's Office of Management and Budget (OMB). She had urged that America should make Libya turn over its vast oil reserves as reparations for the cost of destroying its society. "We have a giant deficit. They have a lot of oil. Most Americans would choose not to engage in the world because of that deficit. If we want to continue to engage in the world, gestures like having oil rich countries partially pay us back doesn't seem crazy to me."[2]

U.S. strategists have preferred Machiavelli's third option: To leave the defeated adversary nominally independent but to rule via client oligarchies. President Jimmy Carter's national-security advisor Zbigniew Brzezinski referred to them as "vassals," in the classical medieval meaning of demanding loyalty to their American patrons, with a common interest in seeing the subject economy privatized, financialized, taxed and passed on to the United States for its patronage and support, based on a mutuality of interest against local democratic assertion of nationalisticself-reliance and keeping the economic surplus at home to promote domestic prosperity instead of being sent abroad.

That policy of privatization by a client oligarchy with its own source of wealth based on the U.S. orbit is what American neoliberal diplomacy accomplished in the former Soviet economies after 1991 to secure its Cold War victory over Soviet Communism. The way in which client oligarchies were created was a grabitization that utterly disrupted the economic interconnections integrating the economies. "To put it in a terminology that harkens back to the more brutal age of ancient empires," Brzezinski explained, "the three grand imperatives of imperial geostrategy are to prevent collusion and maintain security dependence among the vassals, to keep tributaries pliant and protected and to keep the barbarians from coming together."[3]

After reducing Germany and Japan to vassalage after defeating them in World War II, U.S. diplomacy quickly reduced the Britain and its imperial sterling area to vassalage by 1946, followed in due course by the rest of Western Europe and its former colonies. The next step was to isolate Russia and China, while keeping "the barbarians from coming together." If they were to join up,warned Mr. Brzezinski, "the United States may have to determine how to cope with regional coalitions that seek to push America out of Eurasia, thereby threatening America's status as a global power."[4]

By 2016, Brzezinski saw Pax Americana unravelling from its failure to achieve these aims. He acknowledged that the United States "is no longer the globally imperial power."[5]That is what has motivated its increasing antagonism toward China and Russia, along with Iran and Venezuela.

The problem was not Russia, whose Communist nomenklaturalet their country be ruled by a Western-oriented kleptocracy, but China. The U.S.-China confrontation is not simply a national rivalry, but a conflict of economic and social systems. The reason why today's world is being plunged into an economic and near-military Cold War 2.0 is to be found in the prospect of socialist control of what Western economies since classical antiquity have treated as privately owned rent-yielding assets: money and banking (along with the rules governing debt and foreclosure), land and natural resources, and infrastructure monopolies.

This contrast in whether money and credit, land and natural monopolies will be privatized and duly concentrated in the hands of a rentieroligarchy or used to promote general prosperity and growth has basically become one of finance capitalism and socialism. Yet in its broadest terms this conflict existed already 2500 years ago. in the contrast between Near Eastern kingship and the Greek and Roman oligarchies. These oligarchies, ostensibly democratic in superficial political form and sanctimonious ideology, fought against the concept of kingship. The source of that opposition was that royal power – or that of domestic "tyrants" – might sponsor what Greek and Roman democratic reformers were advocating: cancellation of debts to save populations from being reduced to debt bondage and dependency (and ultimately to serfdom), and redistribution of lands to prevent its ownership from becoming polarized and concentrated in the hands of creditors and-landlords.

From today's U.S. vantage point, that polarization is the basic dynamic of today's U.S.-sponsored neoliberalism. China and Russia are existential threats to the global expansion of financialized rentierwealth. Today's Cold War 2.0 aims to deter China and potentially other counties from socializing their financial systems, land and natural resources, and keeping infrastructure utilities public to prevent their being monopolized in private hands to siphon off economic rents at the expense of productive investment in economic growth.

The United States hoped that China might be as gullible as the Soviet Union and adopt neoliberal policy permitting its wealth to be privatized and turned into rent-extracting privileges, to be sold off to Americans. "What the free world expected when it welcomed China into the free trade body [the World Trade Organization] in 2001," explained Clyde V. Prestowitz Jr, trade advisor in the Reagan administration, was that, "from the time of Deng Xiaoping's adoption of some market methods in 1979 and especially after the collapse of the Soviet Union in 1992 … increased trade with and investment in China would inevitably lead to the marketization of its economy, the demise of its state-owned enterprises."[6]

But instead of adopting market-based neoliberalism, Mr. Prestowitz complained, China'sgovernment supported industrial investment and kept money and debt control in its own hands. This government control was "at odds with the liberal, rules-based global system" along the neoliberal lines that had been imposed on the former Soviet economies after 1991. "More fundamentally," Prestowitz summed up:

China's economy is incompatible with the main premises of the global economic system embodied today in the World Trade Organization, the International Monetary Fund, the World Bank, and a long list of other free trade agreements. These pacts assume economies that are primarily market based with the role of the state circumscribed and micro-economic decisions largely left to private interests operating under a rule of law. This system never anticipated an economy like China's in which state-owned enterprises account for one-third of production; the fusion of the civilian economy with the strategic-military economy is a government necessity; five year economic plans guide investment to targeted sectors; an eternally dominant political party names the CEOs of a third or more of major corporations and has established party cells in every significant company; the value of the currency is managed, corporate and personal data are minutely collected by the government to be used for economic and political control; and international trade is subject to being weaponized at any moment for strategic ends.

This is jaw-dropping hypocrisy – as if the U.S. civilian economy is not fused with its own military-industrial complex, and does not manage its currency or weaponize its international trade as a means of achieving strategic ends. It is a case of the pot calling the kettle black, a fantasy depicting American industry as being independent of government. In fact, Prestowitz urged that "Biden should invoke the Defense Production Act to direct increased U.S.-based production of critical goods such as medicines, semiconductors, and solar panels."

While U.S. trade strategists juxtapose American "democracy" and the Free World to Chinese autocracy, the major conflict between the United States and China has been the role of government support for industry. American industry grew strong in the 19thcentury by government support, just as China is now providing. That was the doctrine of industrial capitalism, after all. But as the U.S. economy has become financialized, it has de-industrialized. China has shown itself to be aware of the risks in financialization, and has taken measures to attempt to contain it. That has helped it achieve what used to be the U.S. ideal of providing low-priced basic infrastructure services.

Here is the U.S. policy dilemma: Its government is supporting industrial rivalry with China, but also supports financialization and privatization of the domestic economy – the very policy that it has used to control "vassal" countries and extract their economic surplus by rent-seeking.

Why U.S. finance capitalism treats China's socialist economy as an existential treat

Financialized industrial capital wants a strong state to serve itself, but not to serve labor, consumers, the environment or long-term social progress at the cost of eroding profits and rents.

U.S. attempts to globalize this neoliberal policy are driving China to resist Western financialization. Its success provides other countries with an object lesson of why to avoid financialization and rent-seeking that adds to the economy's overhead and hence its cost of living and doing business.

China also is providing an object lesson in how to protect its economy and that of its allies from foreign sanctions and related destabilization. Its most basic response has been to prevent an independent domestic or foreign-backed oligarchy from emerging. That has been one first and foremost by maintaining government control of finance and credit, property and land tenure policy in government hands with a long-term plan in mind.

Looking back over the course of history, this retention is how Bronze Age Near Eastern rulers prevented an oligarchy from emerging to threaten Near Eastern palatial economies. It is a tradition that persisted down through Byzantine times, taxing large aggregations of wealth to prevent a rivalry with the palace and its protection of a broad prosperity and distribution of self-support land.

China also is protecting its economy from U.S.-backed trade and financial sanctions and economic disruption by aiming at self-sufficiency in essentials. That involves technological independence and ability to provide enough food and energy resources to support an economy that can function in isolation from the unipolar U.S. bloc. It also involves decoupling from the U.S. dollar and from banking systems linked to it, and hence from U.S. ability to impose financial sanctions.Associated with this aim is creation of a domestic computerized alternative to the SWIFT bank-clearing system.

The dollar still accounts for 80 percent of all global transactions, but less than half of today's Sino-Russian trade, and the proportion is declining, especially as Russian firms avoid dollarized payments or accounts from being seized by U.S. sanctions.

These protective moves limit the U.S. threat to Machiavelli's first option: destroy the world if it does not submit to U.S.-sponsored financialized rent extraction. But as Vladimir Putin has framed matters: "Who would want to live in a world without Russia?"

[1]Niccolo Machiavelli, The Prince(1532), Chapter 5:"Concerning the way to govern cities or principalities which lived under their own laws before they were annexed."

[2]Neera Tanden, "Should Libya pay us back?" memo to Faiz Shakir, Peter Juul, Benjamin Armbruster and NSIP Core, October 21, 2011. Mr. Shakir, to his credit, wrote back: "If we think we can make money off an incursion, we'll do it? That's a serious policy/messaging/moral problem for our foreign policy I think." As president of the Center for American Progress, Tanden backed a 2010 proposal to cut Social Security benefits, reflecting the long-term Obama-Clinton objective of fiscal austerity at home as well as abroad.

[3]Zbigniew Brzezinski, The Grand Chessboard: American Primacy and its Geostrategic Imperatives(New York: 1997), p. 40. See the discussion by Pepe Escobar, "For Leviathan, It's So Cold in Alaska," Unz.com, March 18, 2021.

[4]Brzezinski, ibid., p. 55.

[5]Brzezinski, "Towards a Global Realignment," The American Interest(April 17, 2016) For a discussion see Mike Whitney, "The Broken Checkboard: Brzezinski Gives Up on Empire," Counterpunch, August 25, 2016.

[6]Clyde Prestowitz, "Blow Up the Global Trading System,Washington Monthly, March 24, 2021..


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Tuesday, April 13, 2021

Retail Workers Union loses in Amazon Bessemer vote count [feedly]

A solid report on Bessmer from Mark Gruenberg

Retail Workers Union loses in Amazon Bessemer vote count
https://www.peoplesworld.org/article/retail-workers-union-loses-in-amazon-bessemer-vote-count/

BESSEMER, Ala.—Amazon has beaten back a historic effort by workers to form a collective bargaining unit in a warehouse in Bessemer, Alabama, with about two-thirds of ballots cast in the union election voting against joining the Retail, Wholesale and Department Store Union, according to a tally by the National Labor Relations Board.

The final tally showed 1,798 votes against and 738 in favor, with about 55% of the 5,867 eligible workers casting a ballot. Another 76 ballots were voided and 505 were challenged. The challenged ballots were not counted or opened since they would not have changed the outcome. 

The RWDSU immediately vowed to challenge the results of the election, claiming that "Amazon illegally interfered in the union vote" by intimidating workers and coercing them to vote against the union.

There is no sign that labor and its allies are giving up. The union says it is challenging the rampant labor law breaking of the company and nationally the AFL-CIO is stepping up its campaign for major labor law reform embodied in the ProAct and has secured the backing of President Biden for that effort.

Alabama AFL-CIO President Bren Riley declared this morning that "this goes to show what happens when our woefully outdated labor laws allow corporations to get away with blatantly illegal union-busting activity, knowing the worst they'll receive is a slap on the wrist. Hell, for Jeff Bezos, a few thousand dollars charged by the National Labor Relations Board is what he makes in a matter of seconds.

"Our nation's labor movement is long overdue, Riley said, "for serious labor law reform. The Amazon union campaign deeply underscores the need to pass the Protecting the Right to Organize (PRO) Act, legislation currently awaiting a vote in the US Senate. If passed into law, it will be the largest law reform since the Great Depression."

The vote at Bessemer, just outside Birmingham, is important for the nation's unions but particularly important for workers of color. The Bessemer workers are 85% Black, and many, if not most, earn the federal minimum wage, $7.25 an hour, or slightly more.

If RWDSU won, it would have been a major breakthrough not only at anti-union Amazon but in notoriously now anti-union Alabama. The pro-union campaign became a civil rights cause, too, gaining support from, among others, actor Danny Glover and the Poor People's Campaign, and a strong endorsement video from Democratic President Joe Biden.

Wages were only one issue in RWDSU's organizing drive at Bessemer, which began when workers approached the union last year. Bezos's wealth and Amazon's huge profits, swollen by revenue from online shoppers during the coronavirus pandemic, was another.

Topping those factors were working conditions at the four-story plant, which is the size of several football fields end-to-end. One condition: Multiple elevators for goods but only one for people.

Amazon also docks workers—leading to suspensions or firings—for being too many minutes away from their posts, monitored by computers. That includes walking time to the few bathrooms to wash their hands to protect against the virus.

Workers also cannot sanitize and there's a lack of physical distancing. And Amazon had doled out "hazard pay" bonuses to workers during the first three months of the pandemic last year, then yanked them. There were also constant speed-up quotas.

All this prompted the organizing drive, which began with a group of workers contacting RWDSU, a sector of the United Food and Commercial Workers.

Amazon responded with an intense and, RWDSU President Stuart Applebaum said, often illegal, union-busting drive. Amazon featured anti-union harangues at captive audience meetings and even posted anti-union materials in the plant's bathrooms.

Amazon also got Bessemer officials to change traffic light sequences outside the plant's main gate, so pro-union workers would have less time to approach others in their cars.

"Our system is broken," Applebaum said. "Amazon took full advantage of that, and we will be calling on the Labor Board to hold Amazon accountable for its illegal and egregious behavior during the campaign. But make no mistake about it: This still represents an important moment for working people and their voices will be heard," he said.

A vote banner hangs on the side of the Amazon warehouse in Bessemer. | Jay Reeves/AP

They've certainly been heard by other Amazon workers around the nation, whom union leaders say have been paying close attention to the outcome in Bessemer.

Meanwhile, NLRB regional officials elsewhere ruled, in the days before the vote, that Amazon broke labor law by firing two workers who "engaged in protected concerted activity," to use the law's language, over lack of coronavirus protection and other issues.

Amazon workers on Chicago's South Side are also upset. Some 20-30 workers at its DIL3 warehouse in Gage Park became the latest group of the monster firm's employees forced to strike over working conditions, for a day on April 7. Many of the Amazon Gage Park workers are Spanish speakers.

More than a year ago, before the virus hit, Amazon settled a prior forced walkout in the Twin Cities over its refusal to allow Muslim workers time off for holy days.

At Gage Park, Amazon forces workers to toil on a "Megacycle" graveyard shift from 1:20 a.m. to 11:50 a.m. It's also imposing the Megacycle on workers and drivers in Florida, Indiana, Pennsylvania, Massachusetts, and South Carolina, the Amazons United Chicagoland told The Intercept. They're also circulating an online petition demanding reasonable working hours.

"Stand with Chicagoland Amazon workers. Amazon workers here in Chicago and around the country are being moved to an inhumane 'Megacycle' (1 a.m.-12 p.m.) shift," the petition says. They demand accommodations for workers who cannot work at night, such as those with young children.

They also demand $2 per hour additional megacycle shift pay, free Lyft rides to and from work—CTA's buses don't run at 1 am in Gage Park, and commutes take hours—and respect for workers' 20-minute paid breaks.

"Amazon could make accommodations to peoples' schedules who need it. They just don't want to," Amazonians United organizer Christian Zamarrón told the news site.

This article was updated at 12:45 p.m. Central Time.


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The US Productivity Slowdown After 2005 [feedly]

The US Productivity Slowdown After 2005
https://conversableeconomist.blogspot.com/2021/04/the-us-productivity-slowdown-after-2005.html

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In the long run, a rising standard of living is all about productivity growth. When the average person in a country produces more per hour worked, then it becomes possible for the average person to consume more per hour worked. Yes, there is a meaningful and necessary role for redistribution to the needy. But the main reason why societies get rich is by redistributing more: rather, societies are able to redistribute more because rising productivity expands the size of the overall pie. 

In the latest issue of the Monthly Labor Review from the US Bureau of Labor Statistics, Shawn Sprague provides an overview in "The U.S. productivity slowdown: an economy-wide and industry-level analysis" (April 2021). In particular, he is focused on the slowdown in US productivity growth since 2005, after a resurgence of productivity growth in the previous decade. Here's a figure showing the longer-run patterns, which have birthed roughly a jillion research papers. 
Notice that total productivity growth is robust in the decades after World War II, from 1948 to 1973. Then there is a productivity slowdown, especially severe in the stagflationary 1970s, but continuing through the 1980s and into the 1990s. There's a productivity surge from 1997 to 2005, commonly attributed to acceleration in the power and deployment of computing and information technology. But just when it seemed as if the economy might be moving back to a higher sustained rate of productivity growth, then starting around 2005, productivity sagged back to the levels of the slowdown in the 1970s and 1980s. 

The figure also shows how economists break down sources of economic growth. First look at how much the quality of the labor force has improved, as measured by education and experience. Then look at how much capital the average worker is using on the job. After calculating how much productivity growth can be explained by those two factors, what is left over is called "multifactor productivity growth." This is often interpreted as changes in technology--broadly understood to include not just new inventions but all the ways that production can be improved. But as the economist Moses Abramowitz said years ago, measuring multifactor productivity growth as what is left over, after accounting for other factors, means that productivity growth is "the measure of our ignorance."

As Sprague points out, variations in multifactor productivity growth are the biggest part of changes in productivity over time. 
The deceleration in MFP growth—the largest contributor to the slowdown—explains 65 percent of the slowdown relative to the speedup period; it also explains 79 percent of the sluggishness relative to the long-term historical average rate. The massive deceleration in MFP growth is also emblematic of a broader phenomenon shown in figure 2. We can see that throughout the historical period since WWII, the majority of the variation in labor productivity growth from one period to the next was from underlying variation in MFP growth, rather than from the other two components.
However, the most recent slowdown in productivity also seems to have something to do with capital investment. Sprague again: 
At the same time, in addition to the notable variation in MFP growth during the recent periods, something unprecedented about these recent periods was the additional contribution from variation in the contribution of capital intensity. The contribution of capital intensity had previously remained within a relatively small range (0.7 percent to 1.0 percent) during the first five decades of post-WWII periods, but then in the 1997–2005 period, the measure nearly doubled, from 0.7 percent up to 1.3 percent, followed by nearly halving to 0.7 percent in the 2005–18 period. ... The contribution of capital intensity accounts for 34 percent of the labor productivity slowdown relative to the speedup period and explains 25 percent of the sluggishness relative to the long-term historical average rate.
What are some possible explanations for the growth slowdown? As Sprague writes: [N]not only has the productivity slowdown been one of the most consequential economic phenomena of the last two decades, but it also represents the most profound economic mystery during this time ..." Sprague does a detailed breakdown of economy-wide factors that may have contributed to the productivity slowdown as well as industry-specific factors. Here, I'll just mention some of the main themes. 

A first set of explanations focus on the Great Recession, and the sluggish recovery afterwards. One can argue, for example, that when the financial sector is in turmoil and an economy is growing slowly, firms have less ability and less incentive to raise capital for productivity gains. This seems plausible, and surely has some truth in it, but it also has some weak spots. For example, the productivity slowdown in the data pretty clearly starts a few years before the Great Recession. Also, one might argue that in difficult times, firms might have more incentive to seek out productivity gains. Finally, it feels like a circular argument to ask "why aren't additional inputs producing output gains as large as before?" and then to answer "because the output gains were not as large as before." 

A second explanation is that productivity gains at the frontier have not actually slowed down: instead, what has slowed down is the rate at which these gains are diffusing to the rest of the economy. From this point of view, the real news is a wider dispersion in productivity growth within industries, as productivity laggards fall farther behind leaders (for discussion, see here and here). At a more detailed level, "not many of the firms that have been innovating have not similarly been able to scale up and hire more employees commensurate with their improved productivity." It could also be that there are certain characteristics of productivity growth leaders--like an ability to apply leading-edge information technology to business processes throughout the company--that are especially hard for productivity laggards to follow. This lack of reallocation in the economy toward high-productivity firms may be related to other prominent issues like a decrease in levels of competition in certain industries or rising inequality. 

A third explanation is that the productivity surge from 1997-2005 should be be viewed as a one-time anomalous event, and what's happening here is a long-term slowdown in the rate of productivity growth. Sprague writes: 
One underlying rationale for this potential story is provided by Joseph A. Tainter. This author offers that, in general, as complexity in a society increases following initial waves of innovation, further innovations become increasingly costly because of diminishing returns. As a result, productivity growth eventually succumbs and recedes below its once torrid pace: "As easier questions are resolved, science moves inevitably to more complex research areas and to larger, costlier organizations," clarifying that "exponential growth in the size and costliness of science, in fact, is necessary simply to maintain a constant rate of progress." Nicholas Bloom, Charles I. Jones, John Van Reenen, and Michael Webb offer supporting evidence for this view regarding the United States, asserting that given that the number of researchers has risen exponentially over the last century—increasing by 23 times since 1930—it is apparent that producing innovations has become substantially more costly during this period.
Again, this explanation has some plausibility. But it also feels as if the modern economy does have a substantial number of innovations,  and the puzzle is why they aren't showing up in the productivity statistics.

A fourth set of explanations digs down into which industries showed the biggest falls in productivity after 1995 and which ones showed the biggest rises. Here's an illustrative figure. The industries with the biggest losses are computers/electronics products, along with retail and wholesale trade. 
This selection of industries may feel counterintuitive, but remember that this is a comparison between two time periods. Thus, the figure isn't saying that productivity outright declined in these sectors--only that the gain after 2005 was slower than the gain in the pre-2005 decade. In computers, for example, rate of decline in  prices of microprocessors began to slow down in the mid-2000s. Similarly, retail and wholesale businesses underwent a huge change in the late 1990s and early 2000s that increased their productivity, but then the changes after that time were more modest.  In short, this is the detailed version industry-level version of the argument that the productivity rise from 1997-2005 was a one-time blip.

A final explanation, not really discussed by Sprague, is worth considering as well: Perhaps we are entering an economy where certain kinds of gains in output are not well-reflected in measured GDP gains. For example, imagine that the development of COVID-19 vaccines halts the virus. The social welfare gains from such vaccines are much larger than just the measured gains to GDP. Or imagine that a set of innovations makes it possible to reduce carbon emissions in a way that reduces the risk of climate change. From a social welfare perspective, this avoided risk would be a huge benefit, but it wouldn't necessarily show up in the form of a more rapidly expanding GDP. 

Or consider the range of online activities now available: entertainment, social, health, education, retail, working-away-from-the-office. Add in the services that are available at no direct financial cost, like email, software, shared websites, cloud storage, and so on. It seems plausible to me that the social benefits from this expanding set of options are much greater than how they are measured in GDP terms--for example, by how much I pay for my home internet service or how much ad revenue is taken in by companies like Google and Facebook. 

Again, this thesis has some plausibility. One never wants to fall into the trap of thinking that output as measured by GDP is also a measure of social welfare. It's well-known that GDP measures money spent on health care and money spent on environmental protection, but will have troubles measuring gains in actual health or the environment. GDP will often have a hard time measuring gains in variety and flexibility as well.  

But this set of explanations also raises issues of its own. It suggests that people may be experiencing gains in their standard of living that are not reflected in their paychecks. In contrast, when productivity gains in terms of output per worker slow down, we are talking about output as measured by what is bought and sold in the economy. In short, gains in measured productivity are what can help to produce pay raises. But if these other kinds of gains are meaningful, they can't be used to pay your rent or your taxes.