surplus

How do you like them facts?

Published by Anonymous (not verified) on Tue, 12/09/2017 - 11:00pm in

wage-inequality

Apologists for mainstream economics (such as Noah Smith) like to claim that things are OK because good empirical research is crowding out bad theory.

I have no doubt about the fact that the theory of mainstream economics has been bad. But is the empirical research any better?

Not, as I see it, in the academy, in the departments that are dominated by mainstream economics. But there is interesting empirical work going on elsewhere, including of all places in the International Monetary Fund (as I have noted before, e.g., here and here).

The latest, from Mai Dao, Mitali Das, Zsoka Koczan, and Weicheng Lian, documents two important facts: the decline in labor’s share of income—in both developed and developing economies—and the relationship between the fall in the labor share and the rise in inequality.

I demonstrate both facts for the United States in the chart above: the labor share (the red line, measured on the left) has been falling since 1970, while the share of income captured by those in the top 1 percent (the blue line, measured on the right) has been rising.

labor shares

Dao et al. make the same argument, both across countries and within countries over time: declining labor shares are associated with rising inequality.

And they’re clearly concerned about these facts, because inequality can fuel social tension and harm economic growth. It can also lead to a backlash against economic integration and outward-looking policies, which the IMF has a clear stake in defending:

the benefits of trade and financial integration to emerging market and developing economies—where they have fostered convergence, raised incomes, expanded access to goods and services, and lifted millions from poverty—are well documented.

But, of course, there are no facts without theories. What is missing from the IMF facts is a theory of how a falling labor share fuels inequality—and, in turn, has created such a reaction against capitalist globalization.

Let me see if I can help them. When the labor share of national income falls—the result of the forces Dao et al. document, such as outsourcing and new labor-saving technologies—the surplus appropriated from those workers rises. Then, when a share of that growing surplus is distributed to those at the top—for example, to those in the top 1 percent, via high salaries and returns on capital ownership—income inequality rises. Moreover, the ability of those at the top to capture the surplus means they are able to shape economic and political decisions that serve to keep workers’ share of national income on its downward slide.

The problem is mainstream economists are not particularly interested in those facts. Or, for that matter, the theory that can make sense of those facts.

Tagged: 1 percent, economics, economists, exploitation, facts, inequality, mainstream, outsourcing, surplus, technology, theory, wages, workers

Don’t f*ck with wages?!

Published by Anonymous (not verified) on Sat, 26/08/2017 - 1:04am in

www.usnews

There’s nothing that gets mainstream economists going like a proposal to raise workers’ wages.

Except the idea of raising workers’ wages in other countries.

Then you’re screwing with both wages and international trade. And mainstream thinkers just won’t allow that.

That’s why Eduardo Porter considers the AFL-CIO’s proposal that the North American Free Trade Agreement guarantee that “all workers — regardless of sector — have the right to receive wages sufficient for them to afford, in the region of the signatory country where the worker resides, a decent standard of living for the worker and her or his family” a “fairly loopy idea.”

As I see it, the only thing loopy about the proposal is the idea that the Trump administration would actually take it seriously.

Then there’s MIT’s David Autor:

Stipulating that countries must pay above-market wages when producing export goods for the U.S. feels like outrageous economic imperialism.

And finally Harvard’s Dani Rodrik, according to whom the idea of a living wage

is very difficult to define and can be harmful to employment if enforced too strictly.

So, there you have it: according to mainstream economists, attempting to raise workers’ wages, especially wages in Mexico and elsewhere, is “loopy,” an example of “economic imperialism,” and “harmful to employment” if actually enforced.

Now, to be clear, as I showed earlier this year, workers on both sides of the border have lost out, and their losses are mostly not due to NAFTA. The wage share of national income was declining in both the United States and Mexico before the free-trade agreement was implemented—and it’s continued its slide since then.

Why then are mainstream economists so opposed to raising Mexican workers’ wages—which, after all, is merely an example of leveling-up as against a race-to-the-bottom?

It’s because mainstream economists actually believe workers are paid according to their productivity. They get what they’re worth. In other words, “just deserts.”

But that’s the problem: there’s nothing necessarily just about the prices set in markets, whether for labor power or any another commodity. Raising workers’ wages above current rates—on both sides of the border—represents a different kind of economic justice. It may not be neoclassical justice, which is the only thing Porter, Autor, Rodrik, and other mainstream economists recognize.

It’s a justice based on the idea that workers lose out when they’re paid a wage but create more value than what they receive in the form of wages. They produce a surplus, which their employers appropriate. Both their Mexican employers and their U.S. employers.

Raising workers’ wages would mean there would be somewhat less surplus available to their employers in the form of profits. And that’s a kind of economic justice mainstream economists simply won’t accept.

Tagged: economics, economists, justice, mainstream, Mexico, NAFTA, neoclassical, profits, surplus, Trump, United States, wages, workers

Broken

Published by Anonymous (not verified) on Thu, 10/08/2017 - 10:00pm in

DL

Over the years, I’ve reproduced and created many different charts representing the spectacular rise of inequality in the United States during the past four decades.

Here’s the latest—based on the work of Thomas Piketty, Emmanuel Saez, and Gabriel Zucman—which, according to David Leonhardt, “captures the rise in inequality better than any other chart or simple summary that I’ve seen.”

I agree.

The chart shows the different rates of change in income between 1980 and 2014 for every point on the distribution. The brown line illustrates the change in the distribution of income in the 34 years before 1980, when those at the bottom saw larger growth than those at the top. In contrast, in the decades leading up to 2014, only those at the very top saw high levels of income growth. Everyone else experienced very little gain.

broken

Lest we forget, however, the U.S. economy was already broken by 1980: the bottom 90 percent only took home about 65 percent of national income, while the top 1 percent managed to capture 10.6 percent of total income in the United States. There was nothing fair about that situation.

A bit like a car that looks good, when shiny and new, but is designed with cheap parts to fail as soon as the warranty expires.

Well, the warranty on the U.S. economy expired in the late 1970s. And then it really began to break down.

By 2014, that already-unequal distribution of income had become truly obscene: the share of income going to the bottom 90 percent had fallen to less than 53 percent, while the share captured by the top 1 percent had soared to over 19 percent.

Leonhardt is right: “there is nothing natural about the distribution of today’s growth — the fact that our economic bounty flows overwhelmingly to a small share of the population.”

Yes, as Leonhardt argues, different policies would produce a somewhat more equal outcome. And, it’s true, “President Trump and the Republican leaders in Congress are trying to go in the other direction.”

But a different economy—a radically different way of organizing economic and social life—would eliminate the conditions that led to unequalizing growth in the first place. Both before 1980 and in the decades since then.

The fact is, the supposed Golden Age of American capitalism was based on a set of institutions that allowed the boards of directors of large corporations to appropriate a growing surplus and to distribute it as they wished. At first, during the immediate postwar period, that meant growing incomes for those in the bottom 90 percent. But, even then, the mechanisms for distributing income remained in the hands of a very small group at the top. And they had both the interest and the means to stop the growth of wages, get even more surplus (from U.S. workers and, increasingly, workers around the globe), and distribute a greater share of that surplus to a tiny group at the very top of the distribution of income.

Those are the mechanisms that need to be challenged and changed. Otherwise, inequality will remain out of control.

Tagged: 1 percent, capitalism, chart, inequality, surplus, United States, wages, workers

Dictatorship and stolen time

Published by Anonymous (not verified) on Thu, 20/07/2017 - 10:00pm in

Commodities-The-Two-Factors-of-a-Commodity-Use-Value-and-Value-from-Karl-Marx-Capital-In-Pictures-by-Hugo-Gellert

It’s about time someone pointed out the obvious: “Bosses are dictators, and workers are their subjects.”

We generally don’t talk that way, of course. However, as Elizabeth Anderson [ht: ja] explains, contemporary workplaces are like private governments, in which employers have dictatorial powers over their workers—and workers have almost no say in how they are governed.

Like Louis XIV’s government, the typical American workplace is kept private from those it governs. Managers often conceal decisions of vital interest to their workers. Often, they don’t even give advance notice of firm closures and layoffs. They are free to sacrifice workers’ dignity in dominating and humiliating their subordinates. Most employer harassment of workers is perfectly legal, as long as bosses mete it out on an equal-opportunity basis. (Walmart and Amazon managers are notorious for berating and belittling their workers.) And workers have virtually no power to hold their bosses accountable for such abuses: They can’t fire their bosses, and can’t sue them for mistreatment except in a very narrow range of cases, mostly having to do with discrimination.

Dictatorship in the workplace—after workers are forced to freely sell their ability to work in the labor market—seems obvious to me and many other heterodox economists. But it’s certainly not obvious to mainstream economists, who like their classical predecessors continue to celebrate the freedom and mutual benefit of wage contracts and the efficiency of firms that are ruled by the representatives of the property owners.*

What is even more interesting, at least to me, is the way Anderson mentions the issue of time and then seems to let it slide.

Here’s how she begins her essay:

Consider some facts about how American employers control their workers. Amazon prohibits employees from exchanging casual remarks while on duty, calling this “time theft.” Apple inspects the personal belongings of its retail workers, some of whom lose up to a half-hour of unpaid time every day as they wait in line to be searched. Tyson prevents its poultry workers from using the bathroom. Some have been forced to urinate on themselves while their supervisors mock them.

But then Anderson, after mentioning “time theft,” moves on to the various ways employers exercise dictatorial control over their workers and forgets about time. But isn’t time what the employer-worker relationship is all about—the reason that employers act like dictators and workers are forced to surrender almost all their rights while they are working?

What is mostly absent from Anderson’s analysis is time, especially the distinction between necessary labor-time and surplus labor-time. During part of the workday, employees—whether at Walmart, GM, or Google—work for themselves, and thus receive a wage equal to the value of their ability to work. But they continue working and during those extra hours they aren’t working for themselves, but for their employers. That’s time that’s stolen from the workers, which forms the basis of their employers’ profits.

So, the real “time theft” is not what workers do to their employers, exactly the opposite, what employers do to their workers—when, after necessary labor-time is completed, workers are forced to have the freedom to engage in surplus labor-time.

Thus, when Amazon workers exchange casual remarks while on duty, they’re cutting into the surplus labor-time due to their employers. The half-hour Apple workers wait in line to be searched, for which they are not paid, is a way of making sure that particular activity doesn’t cut into the surplus-time due to their employers. By the same token, when Tyson prevents its’ poultry workers from using the bathroom, who are then forced to urinate on themselves, less time is being spent engaged working for themselves and more for their employers.

In other words, under conditions of workplace dictatorship, time is stolen from workers to  benefit their employers.

Furthermore, because employers, and not workers, are the ones who appropriate the benefits of surplus labor-time, it puts workers in the position of continuing to be forced to have the freedom to sell their ability to work and to submit to the dictates of their employers.

Thus, “time theft” is both a condition and consequence of the private dictatorship of employers in the workplace.

A whole book could in fact be written about this idea of “time theft,” inside and outside the workplace.

For example, inside the workplace, new technologies have the effect both of allowing time to slip out of employers’ grasp—as, for example, when workers appear to be working at their desks but, in fact, are surfing the internet or catching up with friends and family members on Facebook—and allowing employers to tighten their grip—especially when it permits control over the pace of work and new forms of surveillance. Technology seems to cut both ways when it comes to “time theft” in the workplace.

But “time theft” is also important outside the workplace. Consider, for example, the standardization of time—which robs many of us of local traditions of time—as well as the fact that there is a large and growing gap in life expectancy between those at the top and bottom of the economic scale—which means time is being stolen from the poor and distributed to the rich.

I could go on. The important point is “time theft” is an ongoing problem of contemporary capitalism, both within the dictatorship of the workplace and in the seeming democracy of our lives outside of work.

It’s time someone wrote that book.

 

*In fact, Oliver Hart and Bengt Holmstrom were awarded the 2016 Nobel Prize in Economics for “proving” that capitalist firms (and not, e.g., worker-owned enterprises) represent the most efficient way to organize production.

 

Tagged: capital, capitalism, democracy, dictatorship, employers, labor, surplus, time, work, workers, workplace

This is the end—or is it?

Published by Anonymous (not verified) on Mon, 26/06/2017 - 10:00pm in

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Mark Tansey, “Discarding the Frame” (1993″

Obviously, recent events—such as Brexit, Donald Trump’s presidency, and the rise of Bernie Sanders and Jeremy Corbyn—have surprised many experts and shaken up the existing common sense. Some have therefore begun to make the case that an era has come to an end.

The problem, of course, is while the old may be dying, it’s not all clear the new can be born. And, as Antonio Gramsci warned during the previous world-shaking crisis, “in this interregnum morbid phenomena of the most varied kind come to pass.”

For Pankaj Mishra, it is the era of neoliberalism that has come to an end.

In this new reality, the rhetoric of the conservative right echoes that of the socialistic left as it tries to acknowledge the politically explosive problem of inequality. The leaders of Britain and the United States, two countries that practically invented global capitalism, flirt with rejecting the free-trade zones (the European Union, Nafta) they helped build.

Mishra is correct in tracing British neoliberalism—at least, I hasten to add, its most recent phase—through both the Conservative and Labour Parties, from Margaret Thatcher to Tony Blair and David Cameron.* All of them, albeit in different ways, celebrated and defended individual initiative, self-regulating markets, cheap credit, privatized social services, and greater international trade—bolstered by military adventurism abroad. Similarly, in the United States, Reaganism extended through both Bush administrations as well as the presidencies of Bill Clinton and Barak Obama—and would have been continued by Hillary Clinton—with analogous promises of prosperity based on unleashing competitive market forces, together with military interventions in other countries.

Without a doubt, the combination of capitalist instability—the worst crisis of capitalism since the first Great Depression—and obscene levels of inequality—parallel to the years leading up to the crash of 1929—not to mention the interminable military conflicts that have deflected funding at home and created waves of refugees from war-torn zones, has called into question the legacy and presumptions of Thatcherism and Reaganism.

Where I think Mishra goes wrong is in arguing that “A new economic consensus is quickly replacing the neoliberal one to which Blair and Clinton, as well as Thatcher and Reagan, subscribed.” Yes, in both the United Kingdom and the United States—in the campaign rhetoric of Theresa May and Trump, and in the actual policy proposals of Corbyn and Sanders—neoliberalism has been challenged. But precisely because the existing framing of the questions has not changed, a new economic consensus—an alternative common sense—cannot be born.

To put it differently, the neoliberal frame has been discarded but the ongoing debate remains framed by the terms that gave rise to neoliberalism in the first place. What I mean by that is, while recent criticisms of neoliberalism have emphasized the myriad problems created by individualism and free markets, the current discussion forgets about or overlooks the even-deeper problems based on and associated with capitalism itself. So, once again, we’re caught in the pendulum swing between a more private, market-oriented form of capitalism and a more public, government-regulated form of capitalism. The former has failed—that era does seem to be crumbling—and so now we begin to turn (as we did during the last system-wide economic crisis) to the latter.**

However, the issue that keeps getting swept under the political rug is, how do we deal with the surplus? If the surplus is left largely in private hands, and the vast majority who produce it have no say in how it’s appropriated and distributed, it should come as no surprise that we continue to see a whole host of “morbid phenomena”—from toxic urban water and a burning tower block to a new wave of corporate concentration  and still-escalating inequality.

Questioning some dimensions of neoliberalism does not, in and of itself, constitute a new economic consensus. I’m willing to admit it is a start. But, as long as remain within the present framing of the issues, as long as we cannot show how unreasonable the existing reason is, we cannot say the existing era has actually come to an end and a new era is upon us.

For that we need a new common sense, one that identifies capitalism itself as the problem and imagines and enacts a different relationship to the surplus.

 

*I add that caveat because, as I argued a year ago,

Neoliberal ideas about self-governing individuals and a self-organizing economic system have been articulated since the beginning of capitalism. . .capitalism has been governed by many different (incomplete and contested) projects over the past three centuries or so. Sometimes, it has been more private and oriented around free markets (as it has been with neoliberalism); at other times, more public or state oriented and focused on regulated markets (as it was under the Depression-era New Deals and during the immediate postwar period).

**And even then it’s only a beginning—since, we need to remember, both Sanders and Corbyn did lose in their respective electoral contests. And, at least in the United States, the terms of neoliberalism are still being invoked—for example, by Ron Johnson, Republican senator from Wisconsin—in the current healthcare debate

Tagged: Bill Clinton, capitalism, David Cameron, Democrats, free markets, Great Depression, Hillary Clinton, individualism, inequality, instability, Labour, neoliberalism, Reagan, surplus, Thatcher, Theresa May, Tony Blair, Trump, United Kingdom, United States, war

The internet of things appears, at first sight, a very trivial thing, and easily understood

Published by Anonymous (not verified) on Wed, 07/06/2017 - 10:00pm in

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Finally, after years of near-orgiastic celebrations of the internet of things—including, of course, Jeremy Rifkin’s extravagant claim that it would move us beyond capitalism and usher in the “democratization of economic life”—commentators are beginning to question some of its key assumptions and effects. What they have discovered is that the internet of things is, “in reality, a very queer thing, abounding in metaphysical subtleties and theological niceties.”

Nathan Heller, for example, finds that, while the gig economy can make life easier and more financially rewarding for many “creative, affluent professionals,” it often has negative effects on those who do the actual work:

A service like Uber benefits the rider, who’s saving on the taxi fare she might otherwise pay, but makes drivers’ earnings less stable. Airbnb has made travel more affordable for people who wince at the bill of a decent hotel, yet it also means that tourism spending doesn’t make its way directly to the usual armies of full-time employees: housekeepers, bellhops, cooks.

On top of that, the fact that the so-called sharing economy has become a liberal beacon (including, as Heller makes clear, among many Democratic activists and strategists) has meant the displacing of “commonweal projects that used to be the pride of progressivism” by acts of individual internet-based exchange.

Perhaps even more important (or at least more unexpected and therefore more interesting), Adam Greenfield focuses on the problematic philosophical assumptions embedded in the ideology of the internet of things.

The strongest and most explicit articulation of this ideology in the definition of a smart city has been offered by the house journal of the engineering company Siemens: “Several decades from now, cities will have countless autonomous, intelligently functioning IT systems that will have perfect knowledge of users’ habits and energy consumption, and provide optimum service … The goal of such a city is to optimally regulate and control resources by means of autonomous IT systems.”

There is a clear philosophical position, even a worldview, behind all of this: that the world is in principle perfectly knowable, its contents enumerable and their relations capable of being meaningfully encoded in a technical system, without bias or distortion. As applied to the affairs of cities, this is effectively an argument that there is one and only one correct solution to each identified need; that this solution can be arrived at algorithmically, via the operations of a technical system furnished with the proper inputs; and that this solution is something that can be encoded in public policy, without distortion. (Left unstated, but strongly implicit, is the presumption that whatever policies are arrived at in this way will be applied transparently, dispassionately and in a manner free from politics.)

As Greenfield explains, “Every aspect of this argument is questionable,” starting with the idea that everything—from users’ habits to energy consumption— is perfectly knowable.

Because that’s the promise of the internet of things (including the gig economy): that what individuals want and do and how the system itself operates can be correctly monitored and measured—and the resulting information utilized to “provide optimum service.” The presumption is there are no inherent biases in the monitoring and measuring, and no need for collective deliberation about how to solve individual and social problems.

The ideology of the internet of things is shorn of everything we’ve learned about both epistemology (that knowledges are constructed, and different standpoints participate in constructing those knowledges differently) and economic and social life (that the different ways the surplus is produced and distributed affect not only the economy but also the larger social order).

It seems the conventional ways of thinking about the internet of things are merely an extension of mainstream economists’ ways of theorizing the world of commodity exchange, allowing a definite social relation to assume the fantastic form of a relation between things.

That’s where metaphysics and theology leave off and the critique of political economy begins.

Tagged: class, commodity, commodity fetishism, critique, epistemology, gig, internet, markets, Marx, sharing, surplus

Pulling away

Published by Anonymous (not verified) on Tue, 06/06/2017 - 10:00pm in

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Apparently, Richard Reeves is worried that the top echelons of the U.S. middle class—those earning over $120,000—are separating from the rest of the country, and pulling up the drawbridge behind them.

“The upper middle class families have become greenhouses for the cultivation of human capital. Children raised in them are on a different track to ordinary Americans, right from the very beginning,” he writes.

The upper middle class are “opportunity hoarding” – making it harder for others less economically privileged to rise to the top; a situation that Reeves says places stress on the efficiency of the US economic system and creates dynastic wealth and privilege of the kind the nation’s fathers sought to avoid.

That makes sense. The fact is, class mobility has been declining in the United States. The lack of movement up and down the economic ladder, which itself is a product of growing inequality, serves to magnify the obscene levels of inequality in the United States.

The two longstanding myths about U.S. economic and social structures—that classes don’t exist and, even if they do, there is plenty of movement between them—have been shattered in recent years.

But Reeves needs to take another look at what’s going on. First, it’s not an either-or issue—the top 1 percent or the top 20 percent. Both groups are pulling away from the bottom 90 percent.

top10

The share of income going to the top 10 percent (since I don’t have data on the top 20 percent) has soared over the course of the past four decades from 34 percent to 47 percent. Meanwhile, the share going to the bottom 90 percent has fallen precipitously, from 66 percent to 53 percent.

Top1

The members of the top 1 percent have also pulled away from those at the bottom, since their share of income has grown during the same period from 11 percent to 20 percent.

Both groups—the top 10 percent and the top 1 percent—are pulling away from and leaving everyone else behind.

But there’s also a difference between them, which Reeve also misses. Whereas those at the very top are responsible—via their membership in boards of directors of large corporations as well as their role in sole proprietorships, partnerships, LLCs, and other business forms—for appropriating the surplus, the rest of the top group tend to get a cut of the surplus. In other words, the remaining members of the top 10 (or, for Reeves, 20) percent share in the booty that is extracted from everyone else.

The fact that those at the top are pulling away from everyone else is not just a matter of “legacy” students gaining admittance to top universities or well-placed internships. It’s also about the surplus they manage to capture, both directly and indirectly. That’s what distinguishes them from the 90 percent, who produce but do not share in the surplus—or, for that matter, have any say in what happens to the surplus.

Reeves’s major concern is to celebrate and restore the idea of meritocracy. I get that. The question he doesn’t pose, however, is: where’s the merit in excluding those in the bottom 90 percent from having a say in how much surplus there will be and what to do with it once it’s produced?

The fact is, the organization of U.S. economic and social institutions means that those at the top, whoever they are and however much they might change, are in a position to capture and do what they want with the surplus everyone else creates.

That’s why the current system is “rigged” and those at the top are pulling away from the vast majority at the bottom.

Tagged: 1 percent, chart, inequality, surplus, United States

Hiding the surplus

Published by Anonymous (not verified) on Mon, 05/06/2017 - 11:00pm in

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Most of us pay the taxes we’re required to pay. That’s because there aren’t many ways to avoid them. Sales, property, payroll, or income—the tax is paid at the time of the purchase, the amount is deducted from our paychecks, or the records go directly to the government. There’s no real way around them. And we pay those taxes out of wages and salaries more or less willingly, since that’s how government services are financed.

Not so for those who are able to capture the surplus. Large corporations and wealthy individuals pay far less than their fair share of taxes. Their ability to evade taxes is only matched by their insistent demand that their tax rates be lowered even more.

We’ve known for a long time that large corporations use a variety of mechanisms—from claiming tax deductions and using loopholes to stashing profits in tax havens abroad—to lower their effective tax burden.

corp-taxes

source

Thus, for example, according to Oxfam America (pdf), between 2008 to 2014, the top 50 companies in the United States paid an effective tax rate (to the federal government as well as to states, localities, and foreign governments) of just 26.5 percent overall, 8.5 percent points lower than the statutory rate of 35 percent and just under the average of 27.7 percent paid by other developed countries. And then they use their tax savings to lobby for even more tax advantages.

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One of the results of corporate tax evasion is, I’ve argued before, the tax burden has been shifted from corporations to individuals.

tax evasion

But not to wealthy individuals. As new research by Annette Alstadsaeter, Niels Johannsen, and Gabriel Zucman has shown (pdf), the top 0.01 percent of the wealth distribution—a group that includes households with more than $40 million in net wealth—evades about 30 percent of its personal income and wealth taxes. This is an order of magnitude more than the average evasion rate of about 3 percent.

The main reason those at the very top of the wealth distribution are able to evade a large portion of their tax burden is because they’ve managed to use their cut of the surplus to accumulate personal wealth—and then to hide that wealth offshore.

Ownership of wealth is, of course, extremely concentrated. Offshore wealth even more so. According to Alstadsaeter et al., the top 0.01 percent of the distribution owns about 50 percent of offshore wealth, which means the top 0.01 percent manage to hide about one quarter of their true wealth.

We now have an economy in which more and more surplus is captured by a small number of large corporations and wealth individuals, who in turn manage to evade a larger and larger portion of their fair share of taxes by hiding the surplus.

Oxfam’s view is that

Rather than engaging in a mutually destructive race to the bottom, the US should stake out a leadership role in addressing structural problems in the global tax system. The US should push for a truly inclusive process where all governments are able to build mutually beneficial tax rules that improve information sharing, transparency and accountability globally.

Until that happens, the rest of us—who are not members of the boards of directors of large corporations or wealthy individuals—will continue to be forced to shoulder the burden of paying taxes to finance government services. And the distribution of income and wealth will become, year by year, increasingly unequal.

Tagged: corporations, income, rich, surplus, taxes, United States, wealth

Platform capitalism?

Published by Anonymous (not verified) on Tue, 23/05/2017 - 11:00pm in

I don’t have strong views about the idea of “platform capitalism,” the concept presented and elaborated in a recent book by Nick Srnicek to make sense of the business model of such companies as Google, Amazon, and Uber. I don’t feel I have a dog in that hunt.

What I do like is Srnicek’s critique of other designations—such as tech companies, sharing, and the gig economy—and his focus on the idea that these are, after all, capitalist firms operating in a capitalist economy. Their raison d’être is to make a profit by centralizing and monopolizing access to data and selling data (or services based on those data) to other firms.

In fact, the notion of “platform capitalism” might be extended to other kinds of enterprises. I’m thinking, for example, of sports franchises and universities. They also operate as platforms inasmuch as they generate profits across a range of activities. Nominally, they produce and sell a commodity (e.g., a football match and higher education)—but that only serves as a pretext for generating profits in other activities: in the case of sports franchises, television revenues, shirts and other memorabilia, food and drink concessions, and so on; similarly, in the case of higher education, on-line courses, research-based fees and patents, food and lodging for students and visitors, branded clothing, and of course collegiate sports spectacles. In both cases, sports franchises and universities operate as diverse, profit-making platforms.

So, in my view, the idea of “platform capitalism” might be a useful way of thinking about at least some forms of capitalism that exist today.

What I find odd, though, is some of the commentary on Srnicek’s work. Consider, for example, Daniel Little’s posing of the questions generated by the emergence of “platform capitalism”:

what after all is the source of value and wealth? And who has a valid claim on a share? What principles of justice should govern the distribution of the wealth of society? The labor theory of value had an answer to the question, but it is an answer that didn’t have a lot of validity in 1850 and has none today.

What Little seems not to understand is that the profits of the enterprises operating under the rubric of “platform capitalism” are still based on the surplus labor of workers who produce the commodities that are being sold. Uber, for example, manages to generate its profits by capturing the surplus of its drivers. It doesn’t own the vehicles and doesn’t directly employ the drivers (with all the associated costs savings) but, since it owns the platform that connects drivers to passengers, it secures a “right” to the surplus created by the drivers and paid for by the passengers. The other kinds of platforms analyzed by Srnicek have different ways of generating profits: by selling advertising based on information collected about users (e.g., Facebook and Google), by renting servers used to process data (e.g., Amazon), and so on. But in all these cases, workers are doing the job of writing and modifying software, collecting and processing data, building and maintaining servers, and supplying the ultimate services to other enterprises or final consumers who purchase the commodities. And the members of the boards of directors of platform capitalist enterprises are the ones who ultimately appropriate the surplus.

Capitalism has, of course, changed since the mid-nineteenth century. The technologies, the modes of employment of workers, the ways commodities are marketed and the role users play, the measuring and processing of data—all of those features of the capitalist mode of production have changed radically since industrial capitalism first emerged. But the basic logic—of capitalists and workers, of creating, appropriating, and distributing surplus labor in the form of surplus-value—is the same for capitalist enterprises today just as it was in 1850.

That’s why the Marxian critique of political economy, modified and updated for the twenty-first century, continues to be able to explain the “source of value and wealth”—including and perhaps especially “the soaring inequalities of income and wealth that capitalism has produced” in recent decades.

Tagged: capitalism, capitalists, exploitation, platform capitalism, surplus, surplus-value, workers

Conspicuous productivity

Published by Anonymous (not verified) on Wed, 26/04/2017 - 11:00pm in

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First, it was conspicuous consumption. Then, it was conspicuous philanthropy. Now, apparently, it’s conspicuous productivity.

According to Ben Tarnoff,

the acquisition of insanely expensive commodities isn’t the only way that modern elites project power. More recently, another form of status display has emerged. In the new Gilded Age, identifying oneself as a member of the ruling class doesn’t just require conspicuous consumption. It requires conspicuous production.

If conspicuous consumption involves the worship of luxury, conspicuous production involves the worship of labor. It isn’t about how much you spend. It’s about how hard you work.

And that makes a lot of sense, for at least two reasons. First, CEO salaries in the United States continue to be much higher than average workers’ pay—276 times as much in 2015. CEOs need to publicize the long hours they work in order to attempt to justify the large gap between what they take home and what they pay their workers. As Tarnoff explains, “In an era of extreme inequality, elites need to demonstrate to themselves and others that they deserve to own orders of magnitude more wealth than everyone else.”

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The problem, of course, is many American workers are working long hours these days. According to the Bureau of Labor Statistics, in 2015, employed persons ages 25 to 54, who lived in households with children under 18, spent an average of 8.8 hours working or in work-related activities and the rest sleeping (7.8 hours), doing leisure and sports activities (2.6 hours), and caring for others, including children (1.2 hours ).

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And, on a weekly basis (taking into account public holidays, annual leaves, and so on), U.S. workers put in almost 25 percent more hours—or about an hour more per workday—than Europeans.

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The other reason why conspicuous productivity matters is because, in comparison to the First Gilded Age (when Thorstein Veblen first invented the term conspicuous consumption), a larger share of the surplus captured by the top 1 percent takes the form of labor income during the Second Gilded Age. They get—and deserve—that large and growing share because they work long hours.

The problem, of course, as I showed the other day, that composition of income has changed since 2000. Since then, the capital share of their income has bounced back. Thus, the “working rich” of the late-twentieth century are increasingly living off their capital income, or are in the process of being replaced by their offspring who are living off their inheritances.

This was my conclusion:

It looks then as if those at the top have either turned into or been replaced by rentiers, thus joining the existing owners of capital at the very top—thereby mirroring, after a short interruption, the structure of inequality last seen during the first Gilded Age.

That’s perhaps why conspicuous productivity was invented. Increasingly, those at the top are able to capture a large share of the surplus not because they do, but because they own. But if they can hide that by boasting about the long hours they work, they can attempt to defend their class power.

Or so they hope. . .

Tagged: 1 percent, capital, conspicuous consumption, doing, labor, owning, philanthropy, productivity, surplus, work

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