You have to consider that the purchasing power of labor has declined since 1978... Also the number of non-competitive sectors in the u.s has increased since then, and the solution (stop gap measure) has been to use foreign labor and foreign products to fill in the gaps and resist inflation.. or even worse deflation due to the inability of the public to afford to spend as they service their own debt load. Technology can unleash productive forces and act as a store of wealth for a business, but often what we've had are these productivity experiments- dot coms, etc where the experiment turns into a speculative adventure which is usurped by capital flight, etc... and often the productivity gains are never found because the game changes, rather it becomes about the image of looking technological in your business and it becomes a marketing ploy or stock market ploy to pump the Companies stock... even traditional Companies masquerade this way - look at GE as an example - its a technological, financial, environmental company... Most businesspeople today don't want to create a business in a traditional artisan sense or by way of a bottom up approach. They want a clearly defined edge, flip, "trade" what have you. Businesses are all now on average effectively speculation machines, and this places a tax on people in the form of increased debt loads and threatens their own job security. Without considering this aspect of financial capitalism, and why we got here, you end up with a labor based theory that doesn't have real traction, because the nature of labor and consumption in relation to debt has changed because of the maleficence of speculators who call themselves business owners. The political side of the coin is also another gross manifestation of this.
Why people don't take the limit (as in Calculus) of any statement has always baffled me. As technology creates jobs at an ever increasing rate, it will destroy jobs at an ever increasing rate. This means that peoples education will constantly be obsolete (forget about exponential demand for it in this case and its implications). The stress it will put on the ordinary human whose evolutionary time-frame is measured in the fastest estimate I have ever seen, decades, under immense duress. The only hope for the human race in this case would be to either: 1) All work becomes the agency of sentient machines 2) We evolve to become machine-human hybrids, where learning a new trade will be as simple as downloading the skill into our silicon memory banks (sort of the way it was done in The Matrix). On a final note, I have always considered an extremely dangerous situation to leave your financial security on the hands of other people (which is probably why sites like this one are so popular). The current economy is proof-in-your-face of this. Either we invent some other means of creating wealth other than money, or the end game is inevitable, imo. Imagine a world where people are as motivated to work and excel as they are in a Capitalist society, but where being homeless or starving has been solved because money is not what we crave.
That conclusion is far from being proven. The UK, Greece, Ireland, Portugal, etc... have varying degrees of socialism yet are suffering. The US is much more capitalistic than any country in Europe, and is still suffering. More so, I would submit, if it were not for having a world reserve currency we can inflate to a degree that others cannot approach. However, Germany, Sweden, Norway and Canada are extremely socialistic yet do not have the problems the US has. You can't cherry pick your facts. Something else is going on.
What is going on is obvious to anyone that can take limits. Imagine a world where every nation economy is completely capitalist. What then? Where do we go to create new markets? Where do we go to get new cheap labor? How do we grow money and keep up with inflation? Who do we export inflation to? What is the optimal (from an economic point of view) unemployment rate for a population of 25 billion people? The list of questions is endless. The problem is that people are "incrementalists" (I just invented that word I have no idea if it is one or not), and probably rightly so because innovation is non-linear. Besides, people are inherently optimists and believe that every problem has a solution. This is a gravely dangerous way to think.
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We've already been doing that for decades. I know many people that make well into the six figures. They are engineers, and they all work for defense contractors. We spend more on defense than the next ten largest countries do combined. Yet we focus on the "evils of socialism" abroad, to be found in a few small countries like Greece, whose government worker sector is no larger than the US's, and their average salaries are under 25K.