Inevitably, capital fought back. Through the 1970s, owners moved jobs to Sun Belt right-to-work states. They automated, outsourced and worked to diminish the power of unions. When Ronald Reagan crushed the air traffic controllers’ union in 1981, it was a clear signal: labor had finally been forced to capitulate entirely.

But around this time, a dangerous new adversary to capital emerged: talent. Talent, in contrast to the more generic labor, is highly skilled and portable. And in the 1970s, talent began to flex its muscles. In Hollywood, artists demanded “percentage deals” rather than straight compensation (see George Lucas’s profit share on the “Star Wars” films). On Wall Street, investment managers demanded 20 percent of the upside on top of the traditional 2 percent of assets under management. In executive suites, C.E.O.’s accrued stock-based compensation so that they could share the upside with the capitalists. And, in 1975, baseball players won free agency, which led to the explosion of athlete salaries across professional sports.

Generally, capital was not amused. Yet capital capitulated because this was a different kind of labor, with unique, specialized skills that consumers want and need. Replacement air traffic controllers were O.K.; but not replacement N.F.L. players, or a replacement Harrison Ford.

The war between capital and labor became a three-way battle, with talent wedging its way onto the proverbial playing field. The biggest loser has been labor. Capital has given so much to talent — because it has no choice — that capital is even less inclined to give any quarter to labor. Capital is outraged because it is being beaten up by talent — whether C.E.O.’s, investment bankers, consultants, movie stars, players — and it takes out its anger on the easiest target: labor.

This is why income inequality is increasing. There are two kinds of inequality: the gap between the 99th percentile and the 50th percentile, and the gap between the 1st percentile and the 50th percentile. America’s increase is primarily the former — hence the “99 percent” movement. Talent is extracting more of the pie and getting richer. The gulf grows between talent — the high-earning, differentiated workers — and labor, those widget makers who support them. No surprise that owners have attempted to dissemble on this front, creating definitions of labor and talent that work to owners’ advantage.