(Opinion article) Economic Recession: how did everything started

"The current crisis did not start with finance, and it won't end with finance," said Professor Richard Wolff.


This austerity age all of us have been living through has indeed an explanatory antecedence for all that is happing nowadays world widely. That same explanation takes us to the XIX century.


During 150 years between 1820 and 1970, workers were having more closer supervisors, adapted new technologies in their work place, as machines (especially computers), were having better trains and thus had to work harder and faster than ever. Obviously, over the same years real wages also rose.


The problem started when the productivity rose faster than real wages, and capitalists profits also began to rose faster than the real wages. 


This working class enjoyed 150 years of rising consumption as our capitalists enjoyed rising profits. The American Exceptionism were unique: no other capitalism had such a long history of rising consumption.


Everything changed in 1970, and never turned back of what it was before. 


Real wages stopped rising as U.S corporations moved abroad to make higher profits, more workers were replaced my machines, and U.S women and immigrants were willing to receive lower wages than men. 


The question was: "What happened to a working class that measured individual success by rising consumption when it no longer had rising wages to pay for it?"


The response was simple and concrete: wages can rise if each household does more hours of paid labor. 


And so did the American population - they started working more and more to be able to satisfy their desires of a high standard of consumption. Americans work 20% more than workers in France, Germany or Italy.


When households members started working more, new costs arrived. Women needed more clothes, a second car, drugs to all the stress, among various others. Extra costs soaked up the extra income. 


This exhausted working class then urged another step to maintain their rising consumption levels. They started borrowing money in unprecedented quantities. There it is the credit card role. 


U.S Business enterprise than grasped a double opportunity. They not only could have huge profits from the combination of flat wages and rising productivity as they also could lend a portion of those profits to a working class traumatized by stagnant individual wages  and made them pay it back with high interest rates, instead of just rising their wages.


Banks and insurance companies profited by taking greater risks and believed this new economy would only expand. Nobody was really prepared.


Then workers default on their debts, and all the financial industry was really surprised that employees, this working class exhausted of working more and more and tired of getting stagnated wages, traumatized of not being able to satisfy their consumption desire, and falling apart on stress and tiredness; could not pay back what they committed to?

Well, they couldn't.
...and that's when the crisis emerged.