Labour v capital in the post-lockdown economy

“AGOOD COMPROMISEGDP ”, the saying goes, “is when both parties are dissatisfied.” Dissatisfaction rages in the post-lockdown economy. Households say that price-gouging companies are jacking up prices, contributing to an inflation rate across the rich world of 6.6% year on year. Companies bat such accusations aside, believing that they are the truly wronged party. They complain that staff have become work-shy ingrates who demand ever-higher wages. Earlier this month Andrew Bailey, the governor of the Bank of England, courted controversy by suggesting that workers should moderate their wage demands—even as he failed to tell companies not to raise their prices.A “battle of the markups”, between higher wages and higher shop prices, is under way. And there can only be one winner, all else being equal. Broadly speaking, economic output must flow either to owners of capital, in the form of profits, dividends and rents, or to labour, as wages, salaries and perks. Economists refer to this as the “capital” or “labour” share of . Which of the two has the upper hand in the post-lockdown economy?