[WS:] Neither do I but I think it played a major role. For one thing, people need concrete examples to follow, abstract ideas just won't do, and Russia & China served as such (remember African socialism?). Kchruschev's admission of Stalinist abuses of power undermined the appeal of "real socialism," subsequent labor unrests did more damage, and the dissolution of the USSR by Yeltsin put the final nail into the coffin. I personally think that the tales of abuses were greatly exaggerated by detractors - it is not that did not exist, but they were not as rampant as the detractors claim and more importantly, most of it would have occurred anyway even if Stalin did not exist (the "reign of terror" after the French Revolution attests to this). However, it is the perceptions that count. Socialism was perceived as utopia on earth and when it turned out to be just another dictatorship, many people felt betrayed.
Another reason is the effect of "real socialism" on the ruling elites in the US and its satellites. They were scared shitless and willing to make concessions to appease the masses. When the "threat of communism" disappeared, they felt it was safe to take these concessions back. It needs to be underscored time and again how much American and Western European liberals and labor owe to Stalin.
Having said this, however, I think that an equally important factor in the decline of labor movements is the changes in social structure that occurred in the 20th century. First, peasant collectivism (cf. Thomas & Znaniecki's "The Polish Peasant in Europe and America") and social solidarity that developed with it provided the "social basis" for much of left organizing. It is not that the peasant solidarity automatically turned into left organizing - it certainly did not - but that the collective was very important in everyday life of the subordinate classes. In the peasant society, extended household was the main unit of production, consumption and the provision of social safety net. In working class communities this type of "familialism" was eroded but still remembered, so to speak, and thus providing the stimulus for self-organization of mutual help groups, which in turn provided the basis for political organizing (unions, labor parties). However, with further transformation of social structure, especially in the US, brought by consumerism and suburbanization - the role of the collective was further reduced but not missed very much, since keynesian capitalism cum the welfare state were able to provide decent standards of living and social safety net. The role of the collective in social life was reduced to religion - hence the importance of churches, which for the most part put a wet blanket on labor militancy and organizing (with a few exceptions, of course.) So what we currently have is basically atomized society of solitary nomads (especially in the US) dependent on corporations for their survival and dependent on either churches or the entertainment industry for social connections. This social milieu is highly toxic for labor & left organizing.
This is why religion seems to be the main basis for most social movements outside Europe. And while we are at that, in Asian societies the opiating role of organized religion, especially Buddhism fused with the secular authority of kings, has been much stronger than in Europe and the US. Furthermore, the role of kin ties in providing social safety net, sanctioned by custom and religion, appears much stronger in Asia than in the Occidental societies. These two factors can travel a long way in explaining the low levels of labor militancy in Asia.
Re: " I'd be interested in learning from you what better explains past and present political behaviour than an individual's relationship to the means of production."
See the above. None of it could be explained by an individual's relationship to the means of production.
Wojtek