According to this view, the New Deal social accord locked corporations into wage commitments that continued to rise despite a decline in the rate of productivity increase. There was thus a wage squeeze on profits. Some of the social and political consequences of Reaganism. Brenner argues, against both conservatives and some leftists, that neither wage pressure nor the increasing costs of government regulation can explain the long downturn. In an era of globalization, he claims that capital can always outflank national governments and labor movements.
Capital can transfer investment in new plants to places where labor is weak.
Governments cannot afford to alienate capital, since this will cause economic misery and a fall in government revenues. Brenner insists that the growth of global competition was responsible for the economic downturn. US manufacturers had large fixed investments in factories from whose output they hoped to profit for years. Their new competitors had to build new factories, which enabled them to take better advantage of cost-cutting innovations. With limited options for moving out of competitively saturated areas into newer ones with higher profit margins, most firms elected to stay in place, pursue cost-cutting strategies, and accept a lower rate of profit.