Service Sector Growth and Systemic Cycles of Accumulation

• In Event: 552 - Section on Political Economy of the World-Systems Refereed Roundtable Session and Business Meeting
  In Refereed Roundtable 60min: Table 01. Capitalism and Wealth in the World-System

Abstract

The rise of the service economy has involved a substantial growth of employment in consumer services, and this sector accounts for the largest part of overall service sector employment growth. The most prominent sociological accounts attribute this change to growing societal affluence, an argument that is at odds with the slow GDP growth, income polarization, and persistent unemployment that have characterized rich countries over the last four decades. Building on Arrighi’s (1994) systemic cycles of accumulation, I present an account of post-Golden Age service sector growth in which such growth is a symptom of, rather than cause of, stagnation and distributional inequalities. Critical to this account is the observation that services are a low-capital-intensity, low-productivity sector. Post-Golden Age, instability and slow growth promoted investment in low-capital intensity activities such as consumer services, while persistently elevated unemployment lowered reservation wages, thereby providing a pool of low-wage workers necessary for prices to decrease and effective demand to increase.

Author

• Daniel Thompson, Johns Hopkins University