The Economic Pie
100 people all contribute to producing something. It costs a certain amount to produce, and is sold for a certain amount more than that, a price usually determined by a group of people (often stated as determined by "market forces"). The price - the cost is the profit.
Two questions:
(1) Should some of the 100 people get more of the total profit accumulated per year compared to others? If it's not equally distributed, who should get more -- and based on what criteria?
(2) If so, how much more? Should 60% of the pie go to this individual or group of individuals -- say 10 people? Or should it be more like 30%? What about 90%?
(3) Who decides (1) and (2)?
Two questions:
(1) Should some of the 100 people get more of the total profit accumulated per year compared to others? If it's not equally distributed, who should get more -- and based on what criteria?
(2) If so, how much more? Should 60% of the pie go to this individual or group of individuals -- say 10 people? Or should it be more like 30%? What about 90%?
(3) Who decides (1) and (2)?
Comments (161)
[The money he put up] + [Risk of loss] + [Reasonable incentive to invest]
The other 99 get a salary or wage and benefits that allow living a decent life.
Forgot to answer this. Me.
It could be equally distributed if all participants did exactly the same contribution. 100 persons, then 1 % of effort of each contributor.
So, my criteria is based on the contribution and effectiveness of the participants. If they agreed of being equal parts, it is fine. But if someone does or contributes more than the rest I think it is justified to give to such participant more proportion of the pie than the rest.
Quoting Mikie
I think it should not be more than 49,99 %. Why? Because otherwise would let the community to tear apart due to the big differences of proportions among them. If someone contributes more than 50,00 % we are not in a community at all... so they will end up dissolving themselves due to lack of effectiveness. Or the individual with huge percentage could be abusive to others, etc...
Quoting Mikie
The participants in a voting system. 3/4 of the votes could be useful to reach the distribution of proportions among the members.
Those that have the power to do so.
Bit of a flippant answer maybe, but probably one of the more honest ones.
In the world we live in it you never get to escape some already existing power relations. That is the situation you start from and then maybe you organise to negotiate a bigger share or change the rules... that is you take it by getting more power. And there it probably helps if you can appeal to some moral sentiments, yes.
But ultimately there is no non-arbitrary answer to these kinds of questions in the abstract. If you say everybody should get a share equal to his input, then you are presupposing some kind of meritocratic principle. Why, who knows? You could just as well decide to allocate shares according to needs, or maybe you just give everybody an equal share for practical reasons etc etc... Every answer presupposes some value or principle that can't be wholly justified.
That depends on the economic and political system under which this enterprise is carried out.
Who has made the investment? All 100 equally? The equipment, the capital, is owned equally by the 100?
Whose idea was the enterprise? Do all 100 have equal share on the property rights, if there were any?
Do all really contribute the same amount to the production? Nobody is let's say an accountant on the team or a cleaner while another person is a highly important specialist crucial to the whole production who would eagerly be hired by other companies.
Before making this an ethical question on the grounds that some person gets more than he or she should and others get less, such above should be taken into consideration. These issues aren't solved in a vacuum, there's the outside world out there.
The easiest answer would be that if 100 people get together to produce something, the first obvious issue is what it costs for them to be in the project. Because there's always the option for them to be doing something else. And if they make more money somewhere else, which is equally gratifying work, then they opt out. So you won't get a corporate lawyer to solve international legal issues for 1$ per hour (assuming it's not for charity). That's where you could start: how much the 100 people have to get that they are willing to contribute to the enterprise?
No.
100 people and the accumulated wisdom of 10,000 years of human civilisation and the accumulated capital of 7 billion years of evolving life all contribute to producing something. The 100 people had better go on a diet because the economic pie is way past its sell-by-date.
How much of the profits does he get?
Thats the question. There is an answer in real life, which is decided by real people. The answer to this also directly affects the decent life part.
Quoting javi2541997
Sure. No question. The question is: who decides? Whats the process in deciding? And, importantly, whats the number? How much should that person (or group) receive of the profits?
Quoting javi2541997
Quoting javi2541997
Interesting.
In real life, does it play out like this? Who decides? I'm talking of course about business, particularly big business.
Quoting javi2541997
Hmm. A voting system within a company, you mean?
Quoting ChatteringMonkey
Sure...and in our socioeconomic reality, who is that?
Quoting Vera Mont
That's true. Let's narrow it down and say the a typical Fortune 500 multinational corporation.
But that's a question of fact. There's also a question of what's just, which I'm also interested in.
Quoting ssu
Let's say only a handful of people own the property. I'm not assuming everyone is equal, I'm asking how distribution of profits is decided -- and by whom.
Quoting unenlightened
100 people all contribute to producing something.
Try again.
In that case, all the workers - menial, skilled, clerical, service, marketing, legal and executive get about 50%, not divided evenly, of course: some [s]shills[/s] skills are valued more highly than some productive work. CEO, about 10%, plus perks (which are filed under operating costs); shareholders divvy up the remaining 40%. In general you can say the returns are inversely proportional to the effort exerted.
The loans I have taken out have pre-defined interest and end dates. How are things different there?
Your question was what should it be, not what is it. You're right, what a reasonable incentive and decent life constitute is open to question. Decent life means pays for healthy food, secure housing, good education, health care, transportation, child care, and two six-packs of Bud Lite a week. Incentive is what's left over.
Yes. I misunderstood.
Is this question in my ideal world or the current world? Taking your subsequent clarification about a Fortune 500 company, I'll assume this is a US company today you are asking about.
1) Each employee should be payed their market value. By this I mean the average salary they can get for doing a similar job in a similar company other than this
2) What their market value is. This depends on the specific breakdown for the jobs, and the market conditions at the company's competitors
3)The people who put the capital in decide.
Sure. So how much should that be? There are real life examples, so we can speculate in specifics as well. You offered a rather abstract formula.
In any case, who decides? Everyone? Just the guy (or persons) who put up the money? "Me" is a joke answer, I assume.
That's defined in the statutes of the company and usually lies with the executive board members. But they are voted in by the shareholders, so any shareholder with sufficient voting rights will effectively decide on the board members, so board members are incentivised to make shareholders happy. Shareholders generally only want profit to the exclusion of all else. Legislation can curb the profit motive through legal requirements. So indirectly governments will have a say on how profit is distributed. In a globalised economy, however, the ability of governments to set requirements is limited by companies' ability to relocate abroad.
Under all this lies a legal framework that allows incorporation of for-profit entities in the first place and assumptions about the efficacy of capitalist and market organisation to the extent that it affects moral valuation. It's the economy, stupid.
Quoting PhilosophyRunner
Quoting PhilosophyRunner
So the people who put int he capital decide the market value, both theirs and their employees?
Nice position to be in, yes? "My market value is 350 times more than my average employee's value."
I don't have the information I need to do that. I'm perfectly happy to let the amount of profit be determined by the market as long as workers are paid a decent living wage.
Quoting Mikie
Sure, a joke, but also an acknowledgement that what we decide here doesn't affect how it's really done.
You're exactly right, of course. This is the reality we live in. I'm asking about both how things should be run and how they actually run, so this is an important piece.
The board of directors makes most of the decisions, along with the CEO.
So who are the shareholders? Seems like if each shareholder gets a vote, it's a somewhat democratic system.
Says who?
There's the invoking of "markets" again. But do markets really decide what the CEO or the average worker makes or what prices are?
No.
Not how I would like it to work though, but how it works.
Interestingly the power has very much been in the hands of the employer, but recently I have seen more articles talking about a change - more employees quitting and refusing to work unless they get the wage they think they deserve. I very much support that, as I support strikes.
Again, the question was "what should," not "what is."
Kind of. Minus talk about markets, anyway -- which is usually used as an abstract cover for real people making real decisions, usually for unjustified reasons.
Quoting T Clark
So the market *should* decide?
Sounds like you were claiming that markets do decide -- which, incidentally, is what most companies will claim.
I don't think markets should determine, nor do I think they in fact determine, how profits are distributed.
I agree, except for the 200 years part. More like 50 years. I attribute that assumption (regarding shareholders) mostly to Milton Friedman, incidentally. But it's clearly wrong, factually and morally.
The "market" is the total set of real people making real decisions, all whose decisions are linked to each other.
Company A run by Adam will pay $55,000 for an entry level software developer job.
Company B run by Brenda will pay $48,000 for an entry level software developer job.
Company C run by Colin will pay $65,000 for an entry level software developer job.
Company D run b Daisy will pay $60,000 for an entry level software developer job.
...
...
Each one of those is a case of real people making real decisions. Each one is also influenced to some degree by each other and is looking over each others shoulder.
"The Market" is simply saying the aggregate of the above instead of listing them all out one by one, nothing more nothing less. It is not some mythical magical beast, but it is not nothing either.
How effective I would be in hiring a given entry level software engineer depends, among other things, on how my pay stacks up against the above - in other words how my pay stacks up against "the market."
I don't care how much profit companies make. how much executives are paid, or how it is determined as long as workers are paid a decent living wage.
And has nothing to do with how those individual decisions are made. So the "market", back in the 50s and 60s, determined that the average CEO deserved 20 times what the average worker made. Now, lo and behold, the market determines that that number is 350 times.
It's an abstraction used to cover real decisions based on flimsy reasoning. It doesn't matter that most companies don't pay a living wage, and hence that the median income in the US is $32,000 or so. What matters is why so many companies are screwing their workers -- when in the past they haven't.
"The market" is a convenient fall guy.
That's not quite the topic. Regardless, to pursue it: workers aren't being paid a decent wage, in reality. And the reason they're not is partly determined by these OP questions -- namely, how profits are distributed and who makes the decisions. The decisions certainly aren't being made by workers.
But let's assume they are being paid a decent wage. They get enough to eat and live and have healthcare. Is that it? They deserve only that? What if they're the ones doing the lion's share of the work? Don't they deserve more than simply a "decent living wage"?
I would suggest they deserve some say in the decision making, regardless of material conditions.
Anyway I will give an example of where "the market" explicitly influenced decisions. This happened in the U.K.
A company decided to pay all of their staff the same amount - £36,000. This included software developers and clerical workers.
What happened? They struggled to hire software developers because other companies were willing to pay a lot more for this job (i.e they were paying below market value for the job - but I will only use the word in brackets for you). Equally they were inundated and overwhelmed with applications for clerical jobs because other companies were paying a lot less (i.e they were paying above market value for the job).
Ultimately they had a very disgruntled and unhappy workforce with a lot of internal conflict, and gave up and mostly likely ended up paying a similar wage to their competitors for each job (market rate for the job).
https://www.bbc.co.uk/news/business-55800730
Yes, I know some examples in real life. When you want to start up a business, you need to distribute everything in proportions. According to the law, presumably each participant owns the same part or proportion. Nonetheless, there are exceptions to the rule and it could exist the scenario where a participant holds more proportion than the rest.
But we have a dilemma here. If we let one participant to hold 51 % of the overall, he/she could do or manage whatever without the consideration of the rest of the members. To avoid this situation of abuse, the law offers some rules.
I. Acts that necessarily need 3/4 of the votes of the participants. You will need a lot of votes, doesn't matter all the proportion you hold. For example: removing an administrator due to his unfair administration.
II. Acts who need absolute wholesale. For example: Assign credits or invest in the stock market.
Thanks to the voting system and limiting the proportions among the members, we would have a democratic membership or entrepreneur.
For example:
Quoting Mikie
Exactly. They owners vote in a General Meeting
1) Different people should be payed differently based on their contribution to the companies profits, but based on two criteria:
a) A minimum wage that will allow a decent life. Even if some is performing poorly, they should still be able to earn a salary that allows them a decent life.
b)The ratio between the top and bottom wages should be within the bounds that all employees should have dignity. I can describe the qualitatively, but I would need more thought for a quantitative answer.
2) see 1) part b)
3)The limits described in a) and b) should be decided by the electorate of the country and be in the laws of the country. Within those limits, the owner of capital can decided.
Separately, there should be funding for innovation that allows for more competition. If any one of those 100 employees thinks they can create a better company, and have a reasonable idea and competence but lack the money to do so, there should be a common fund to do this taken from corporation tax.
The above point I could describe in terms of how more competition will change market value, but chose to leave out the term lest we get stuck on the terminology.
I gave criteria for determining the answers to the OP questions. You seem to think my answers aren't responsive to your questions. I don't see why.
Quoting Mikie
I think workers deserve a decent life for themselves and their families. We can have a discussion as to what is required for a decent life.
That's a fair point. My objection is a matter of emphasis. If we attribute Biden getting elected to the "electorate," that's true but it's far more abstract than it needs to be, especially if the question is something like "what reasons do people give for choosing Biden?"
There's also the question about whether you're definition of markets is accurate. I'm not sure it is. A market can also referred to a place -- or space -- where transactions occur. Where things are traded, sold, bought, etc. If I go down to the market to buy things, for example, I'm not referring to people but a general space where economic activity occurs.
So briefly, I think it's often used to avoid more concrete discussions. Not by you, necessarily, but by those in power.
Quoting PhilosophyRunner
A good example. What my focus here would be is on who decided to give everyone an equal wage and why. Seems silly to me, but I'd be interested in the thought process behind it.
So there's no mystery: what I'm advocating for, ultimately, is not having these decisions exclusively be in the hands a tiny group. I'm not in favor of plutocracy in government, and I assume no one else here is either. I'm not in favor of it in business either.
I don't recall Marx claiming that shareholders care solely about profit at the expense of everything else?
Maybe we're speaking past each other. To be clear: in my view, a shareholder cares more than simply profit above all else. In the long term, he's looking to make a profit, yes. But in the short term, he should care about the company itself, the community, the environment, potential corruption, mismanagement, the treatment of the workers. He should care about the company's longevity and quality control. Not just what the stock is doing today or tomorrow. And many shareholders do exactly this -- because they're long-term investors.
It's true that shareholders exist who want nothing but a profit in the short term, regardless of how they get it. Hedge funds are often good examples of this. Fire the workers, cut corners, bleed the company dry, then take the profit and leave. But to take this and generalize to all is a leap that isn't justified. It's like basing our view of human motivation on the behavior of a psychopath -- who make up less than 1% of the population.
You did, I just think they were too abstract and wonder if we could get into more detail about how that would potentially look in real life.
Quoting T Clark
I share that thought. I think it includes wages and other material conditions, but also decision making participation. That's basically my whole argument.
Not sure why it's strange. The question in this case is how that number is decided, and by whom.
Quoting NOS4A2
See above.
CEO makes 20 times an average worker in 1968.
CEO makes 350 times an average worker in 2022.
"The market" is an abstraction which explains nothing. The question is about real people. Prices and wages are decided upon by people.
Quoting NOS4A2
The "business at large" is meaningless. The profits go somewhere. They're reinvested in workers, equipment, R&D, etc., or they're given to shareholders in dividends. These choices are made by real people.
You try again.
In this instance it was the owner of the business, who was also the CEO, who decided. He wanted to challenge the existing traditional structure of how people were paid and hoped to foster a new ethos of equity among his staff. He also hoped to attract employees that believed in this ethos. At first this worked when the company was small and the only employees were founders.
When the company expanded, he ran into problems that were a result of what I call market forces. The average salary for a software developer in London is £66,000 (this is what I refer to as their market value). The average salary of a clerk in London is £27,000 (market value). He offered both a salary of £36,000.
The software engineers knew that this was less than they can earn elsewhere (below market value offer), so didn't apply. The clerks knew this was more than elsewhere (above market value) and overwhelmed the company with applications.
The CEO and business owner had to readjust and move the salaries to be more in line with the market values I referenced above (I don't know the exact values they now pay their staff now).
Quoting Mikie
I agree. See my previous post where I outline how I think it should work (as opposed to the above which is how I think it currently works).
My father spent the last 15 years of his 45 year career at a large chemical manufacturing company working on ways to get labor and management to work together. He always said the workers thought it was great and management did whatever they could to throw monkey wrenches in the machinery. He always saw it not as a way to help the workers, but rather as a way to improve the productivity of the whole enterprise. He thought that would help both workers and the company.
Really? What do you think his surplus value extraction was all about? Not about profit?
Im sure hes right. Theres a lot of good scholarship on the era between roughly 1945-1975, when unions were stronger and distribution more equitable. Turns out this was good for companies as well.
Quoting Benkei
What does that have to do with shareholder motivation? Theyre in it to make money, yes. The motivation is not to make money at the expense of everything else that doesnt make sense from an investment point of view. Any asset manager will tell you this.
One of the mysteries of life.
My economics starts from 2 principles.
1. If you wish to make an apple pie from scratch, you must first invent the universe Carl Sagan.
2. "Property is theft!". Proudhon.
Accordingly, 100 people who contribute to producing something automatically incur a debt to the rest of the world for the value of the resources they have appropriated to themselves, and the damage they have caused to other resources, ie the environment. Thus every fenced off field owes a debt to wilderness, as does every cut down tree, every mine and quarry, and every factory. This unpaid debt is now being called in by way of climate change and environmental degradation.
@Mikie actually knows this, but somehow cannot integrate it into his economic understanding. He is alas not alone in this.
Absolutely.
Which is why the way forward is not to be found in company organisation, but rather in progressive taxation. The population and future populations deserve to be compensated for their loss to whatever degree brings them up to an acceptable standard of living. Thus the government takes, from those who have benefited, enough to pay the bill due to those who have given.
Or... from each according to their ability, to each according to their need.
Likely those people who own the property and/or basically who have gotten the 100 people together for the project make a suggestion on how the profits are going to be divided and then the rest 100 or so either accept it or say no thanks.
If somebody makes a suggestion that people aren't excited with, then time for another proposal. When there are so many people involved, then some kind of rather simple arrangement is likely done. If the enterprise is small and short timed likely it's divided by some equal basis, because nobody has the time for every 100 to haggle their share individually. And of course it can be a cooperative or then stock is issued: those who buy the stock then decide what to do with the profits. Or then the profits go to the members of the cooperative equally.
And lastly, someone will just want a fixed payment for his or her work and doesn't care if there are potential huge profits or not. This person participates in the enterprise, but isn't part of it, just someone contracted to it.
Basically the question goes to the theory of a business or company: companies are only complex agreements between people, but simply perform the same task when you buy a service from someone. After all, you can either own a company or then simply buy the work you want from other people separately.
You can instantly observe how difficult and disorganized would be you buying every day the work from either other companies and individual people the work. Hence the need for longer contracts.
(1) and (2) are decided by class, I think. It's not an individual which makes a labor market. Markets and profits and money are made possible by the modern nation state. And nations are ruled by class interests, first and foremost. Once those are satisfied then other projects can be taken on, and are taken on (usually as a way to demonstrate how one's nation is superior to another), but the ruling class will get theirs first (or the nation will collapse).
"Theirs", from my vantage, is however much they are able to get away with taking. So, in a backwards way, it's also up to the under-class as well as the over-class, because the under-class can push back and demand more (since the over-class depends on the under-class). But here "decision" and "fair" and "should" stop being efficacious, or at least honest if they are efficacious words. Seeing the labor market as a balance of power between classes changes it from a moral problem to a political one.
Every time a bird puts a twig on his nest he is incurring a debt to wilderness.
And the penalty for this bad behaviour is to be shot and eaten. :death:
Im not sure youre understanding what I consider a problem. Im not saying shareholders dont want to make money. Shareholder primacy theory is indeed fairly new, and began being adopted and implemented in the 1970s and 80s. Part of this is the assumption about a typical shareholder that you mentioned, which echoes Friedman.
[quote=Lynn Stout] Perhaps the biggest flaw in the shareholder value myth is its fundamentally mistaken idea about who shareholders really are. It assumes that all shareholders are the same and all they care about is whats happening to the companys stock price actually all they care about is whats happening to the stock tomorrow, not even 5 or 10 years from now.
Shareholders are people. They have many different interests. Theyre not all the same. One of the biggest differences is short term and long term investing. Most people who invest in the stock market are investing for retirement, or perhaps college tuition or some other long term project.[/quote]
https://youtu.be/k1jdJFrG6NY
Quoting Benkei
I dont think that. I mentioned before theres good scholarship on all of this. Maybe weve read different things. Honestly I think its just misunderstanding which is my fault, as I tried to be clear and failed. Not sure the abrupt frustration is warranted, but so be it.
Integrate what? This:
Quoting unenlightened
Well yes, no kidding. Does this really need to be stated? The 100 people produce something is a casual example to get the discussion going. To object to this part of the OP completely misses the point, which really concerns the distribution of profits. Anyone whos read a word of what Ive wrote here for years knows that I dont think production or private ownership occurs in a vacuum. Ive also written often about externalities especially environmental degradation. So I was, and still am, at a loss regarding your response.
Why not simply answer the questions?
Quoting ssu
In terms of large corporations, this seems to be the case.
But then they vote basically to give the profits to themselves! What a shocker. So roughly 90% of the net earnings go back up the shareholders in the form of dividends and buybacks. Those decisions are made by the board of directors, who are voted in by the shareholders.
If this is truly the state of things, the question becomes: is it just? Has it always been this way? Etc.
I think so too: Namely, the class of owners. The capitalists, really. Today thats mostly owners of particular property, like stocks. But I could be wrong.
In all kinds of cases.
If you start an enterprise with your friends, likely the division will be done similarly: if people will give majority of their time and labour to a project or put in their money, the majority want something on paper. And hence for example even if the business is small, they may opt for a company that issues stock. Also people may will want to have that limited liability. If the project goes south, the company will go bankrupt, not them or one of them.
It's actually quite similar to if people want to do something together even without a profit making objective, they form an association. With an association, they can buy equipment or gear for example for a hobby or for a cause and that property then belongs to the association, not someone specific. Otherwise it would be a hassle to own together stuff when people can come and go.
First and foremost, these are things about practicality. Starting from things like which thing is more easy: simply buy the services or then form a company.
Quoting Mikie
I think you are confusing two things here. The reasons why people have invented companies and then why societies have become as they are and have companies and corporations in the role they have.
You see, your example of 100 people forming an enterprise has a lot to do with the society, the business environment and all kinds of different variables than just the form of the business enterprise. "Is it just" is more of a societal question than an organizational question. A stock company is basically just: the owners have power to decide on company matters based on the amount of stock they have. And so is a cooperative basically just. There's nothing profoundly more "just" in one or the another.
Unjustness creeps in when one person or side has a large advantage in the negotiation power: it's a bit different if you start an enterprise and the 99 are well off business professionals and entrepreneurs themselves or lets say you offer 99 migrant workers a job who otherwise would face deportation.
Hence for example the historical unjustness of capitalism in the 19th Century should be understood that it came from an historical environment where feudalism still had it's roots and where the new working class came basically from landless agrarian workers.
I think possibly the counterargument being made here is that the distribution of profits doesn't have a moral component - in other words, there's no answer to "how ought the profits be distributed?"
A corporation ought be a voluntary arrangement of people and so ought to able to come up with whatever arrangements it wants regarding distribution. The problems only arise because having appropriated the means of production, those in control of the corporation can effectively mandate involvement. But then the fairer distribution of profits becomes an patch, a temporary solution to another problem. People, ought to be able to engage voluntarily in corporate ventures. The way we can do that is for those ventures to be required to provide fair compensation for the social and environmental resources they've used. the people not involved can then live freely, or get involved, as they wish, and the matter of profit distribution becomes irrelevant (if you don't like the arrangement on offer, walk away).
Obviously, getting there from here then becomes the most significant issue. We can't (outside of theory) just give everyone their acre. What we can do is demand enough tax to fully compensate for the losses and use it to fund a Universal Basic Income which would enable people to either voluntarily form corporations with whatever profit sharing arrangements they're happy with, or not.
Alternatively, a strict and generous minimum wage plus a system of environmental charges and fines for transgressions would do the same job, I think. Any distribution has to at least meet that lower standard and from then on can be whatever.
If you want to keep with current arrangements and then ask how corporations ought to distribute profits, I think that seems like the old moral paradox about how one ought to murder gently (assuming you know that one). You're really asking "given that corporations unjustly create conditions where people are forced into joint ventures with them, then how ought they justly distribute profits" which sounds like an odd question.
This is rather curious. I am not making a judgment here, and I am not taking sides. I am merely noticing that throughout this thread you
1. Advocate the reversal of global warming by suppressing those activities that contribute to global warming.
2. Advocate that the workers be paid more than what's enough to eat, pay for healthcare and live. (Live?). This means that workers should have a bigger carbon footprint. Which accelerates global warming.
I disagree.
It's not the owners who decide, in this more general sense. It's the property relationships themselves which form an environment that motivates the collective to behave in a particular pattern. So, seeing as there's an over and an under class -- as Marx said, "The history of all hitherto existing society is the history of class struggles" -- the "decision" is made between two competing factions which, depending on how well they are organized, will set the price-point in a labor market.
Whether a particular shareholder cares more about profit is irrelevant to the effects that the state-enforced property relation which creates an environment which we creatures operate within with enough predictability to say "yeah, that company pretty much just wants to make money, and the laborers they employ pretty much just want as many benefits for as little as possible".
And why wouldn't you want more for less, after all? Doesn't that sound like a rational, self-interested desire?
Basically, I'd say that the structure of property over-rides any commitment a shareholder may have. They may look like they have power, but I'd say it's ephemeral.
No not the parts I quoted.
Millions of businesses are not incorporated and dont issue shares. Im not sure where the confusion lies here but my statement isnt controversial. If you think it is, youre misunderstanding.
Quoting ssu
Im talking about multinational corporations and how they allocate profits. Im not sure what youre talking about now.
Why? Its like arguing theres no answer to how we cut a pie. It depends on many things, and theres not one ultimate answer that applies in all cases, but there are answers to be had.
Ill be clearer: I dont think distributing 90% of profits to shareholders is fair, and I dont think the undemocratic decision making process that leads to that distribution is fair either.
So youre placing most of the responsibility on the state, yes?
I havent advocated for either on this thread.
In a particular case sometimes we can figure out, through political analysis, who is the most likely person to be able to influence a particular decision.
Responsibility is with all of us, in the sense that this is how we live with one another.
Well choose a better word then. If the blame cannot be placed on the board of directors of multinational corporations, because our governments structure how business is conducted, then the state is ultimately the culprit.
I dont completely agree with this picture, but if this isnt what youre saying I really dont see what your point is.
Were all responsible isnt saying much, however true that may be. Cant we say that about any problem whatsoever? The war in Iraq we all share blame. The Challenger explosion? We all share some responsibility. Etc. Fine but lets narrow it down a bit.
Quoting god must be atheist
Quoting Mikie
Oh, c'mon.
Then what is this:
Quoting Mikie
I didn't say there was no answer, I said there was no moral weight to it. There's no way it ought to be done. There are, of course, multiple ways it can be done.
Quoting Mikie
So why not?
We've established that some people might contribute more than others, right? So we'd not expect an equal distribution. But we can't determine a fair distribution objectively either because it relies on the value of scarcity and risk, and those evaluations are subjective. The rewards for those things depend on how much we want them. So any cooperative scheme which distributes its profits according to the values the members have for scarcity and risk is going to have to arrive at a mutual agreement among the members, there isn't an objective one.
The problem we have these days is not the fact that arrangements are worked out without an objectively judged framework, it's that people are not freely taking part, they don't have a fair say in those arrangements, they're coerced into accepting terms they wouldn't otherwise.
Now, we could fix that by enforcing an arrangement they would be happy with, if they were more free to set terms, but why do that when we can instead remove the coercion and allow them to decide for themselves what terms they're happy with?
I think I'd prefer something like a causal nexus to highlight that there's more than one entity contributing to the overall pattern that we observe, and that the patterns of history aren't dependent upon something singular. To ignore the state would be silly, given how central it is to politics, but the patterns of capitalism aren't singularly dependent upon a state, either, because the state just sets up an environment.
So it's not a board of directors or stakeholders which are making decisions as much as there are a multitude of businesses which make many decisions, a lot of them fail, and through a simplified notion of natural selection we can see what kinds of patterns tend to survive the environmental set up. The organisms which survive and thrive in capitalism are the organisms which put profits first (which, due to the labor market being what it is, will mean sometimes having to pay more for labor than you want to, but labor is always a necessary expense in this set up).
But notice how it's not a fault of the board, then. It's just what it takes to have a business win the game.
And which ones happen to win at a given time is largely dependent upon things no one has any control over, so "winning" isn't even an attribute of acumen or skill. Rather, there are things one must do to survive, and then dependent upon what happens some of the organisms survive and some don't, and whatever does survive are the results of both making the right decisions and chance.
The causal nexus for this, now though, is an international economic organization. It's not just one state. It's a large international order.
So can you see why I might be hesitant to want to say "yes, it's the state for certain" ?
Quoting Mikie
I don't think we all share responsibility for any event, so no. I mean, I suppose one could say that but that's not the sort of culpability I was meaning-- I'm trying to highlight how there's a difference between capitalism and these particulars. Capitalism is the more general structure and environment within which actors -- be they corporations, states, individuals, or groups -- act. In the case of capitalism we're talking about something so giant it's not quite right to say that the state is the cause of capitalism. After all, there are states which are not capitalist, and there are lands without states which behave in accord with the giant world system that is capitalism, and socialist states do interact with capitalist states too.
It's really more like no one is in charge, and the beast just lives a life of its own, and we're along for the ride: strapped to a bull or a bear, ready to be thrown off and eaten at any moment.
What has changed governments -- and especially so-called democratic governments -- has been the power of the masses to organize and force it to change because of the dependency relationship I mentioned earlier. The uppers depend upon the lowers. So the lowers, if they are able to organize themselves, can demand what they want up to and including the bakery.
Rather than the liberal lie that democratic participation and dialogue and changing hearts or minds are the paths to change, the Marxist way is militant, organized action which forces concessions.
Unions, for instance, were most powerful when they had more members and acted militantly. It's only as they became bureaucratized, making them a rational apparatus of the state, that they slowly lost power -- because a worker's power is not in treatises and laws and legislatures. It's at the point of production.
So, rather than the importance of democratic participation, I'd say I'd emphasize the importance of class power and organization.
That I might have slaved for hours digging rocks from the ground and you slaved for hours building homes doesn't mean we are both entitled to the same wage, as it's likely no one wants your rocks.
So, in this commodity based system, if a worker wants a higher percentage of the profits (i.e. a higher salary), and he doesn't want to be the owner of the commodity, but wishes to work in the production line for someone else, he shouldn't expect more money because he works harder or even just that his work is critical. He should expect more money if his type of labor is in short supply and in high demand. That's why it pays to stay in school.
If you want a higher percentage of the farmer's profits, you'll probably succeed if you're the chicken house engineer, the chicken house veterinarian, or the marketer of all things chicken. If you pluck chickens, you probably won't do as well.
The other idea is that we can collectivize the farms so that all the food belongs to society so that we can all share in the profits, but instead we all starve. I think that's how the great new communist society worked out, only much much worse.
American farms are pretty heavily subsidized, and we haven't starved. It actually doesn't make sense to pay CEO's the bizarre reimbursements they get.
That will change in the next big economic adjustment. We always lurch toward the left when the whole system starts breaking down, as during the Great Depression.
Sure, and if the chicken owners organize, and refuse to sell chicken but for a fixed price, the price of chicken will rise too. So many ways to interfere with the free market there are.
But, when there are plenty of chicken owners who refuse to participate in the price fixing, and maybe even laws that interfere with that, you don't have that problem.
By the same token, when there are plenty of workers who refuse to unite, you can always find a chicken slaughterer. Until the revolution, I will dine on the cheap chicken, killed at the hands of the underpaid chicken house worker
As notes -- them chicken owners are plenty organized with how much state funding they get.
The subsidization of farming is to protect a dysfunctional industry that society isn't willing to allow to adjust to true economic forces. The net result of ending subsidies would be the loss of many unprofitable farms, but that wouldn't result in a lack of food.
In any event, subsidies bear no resemblance to the forced collectivization of farming, which did in fact lead to starvation of 10s of millions of people.
Quoting frank
I know. The revolution is at hand.
Of course there is regulation. Such does not implicate Marxism though. Marxism becomes implicated when you speak of the great worker revolt and the reorganization of labor where the workers unite and control.
That the government pays milk farmers not to produce milk so as to reduce supply and increase price to increase profits means the government is trying to protect the industry, which includes workers, owners, and the economies of rural regions.
That's not Marxism. That's just democracy in action without concern for protecting a pure form a capitalism, and not something I find terribly offensive, and maybe a good idea for a while, although at some point the government won't continue to prop it up..
I think it's that rich farmers know how to lobby. I don't think the average American knows how much they're actually getting. In some cases they're being paid to withhold planting. It's state sponsored price fixing.
All of that started as an attempt to help small farmers, but the wealthy quickly turned it to their own advantage. That's happened over and over, which is one reason to let the poor starve: if the state tries to help them, it just ends up making the rich more powerful.
Quoting Hanover
It will happen eventually.
Whether the government programs work to help anyone in need of help, I don't know. I don't equate any and every government regulation upon the economy with communism, and I'm in favor of plenty of regulation as I think the government can do good. This is just to say I'm not an anarchist and I do believe in democratic rule. That the workers haven't been given more power over the owners isn't all the result of powerful owners subjugating workers. That's Marxist talk. The reason owners get to be owners and maintain a higher percentage of profits is because it works better that way and people want it that way.
Quoting frank
So last Great Depression it didn't happen here, but it did happen in Russian and millions died. So, sure, this time it will happen in the right way, or whatever Marxist thought says.
This is just an imaginary of an imaginary.
We done killed our millions. Racking up bodies won't decide what's the better way to live, though it makes for good propaganda.
Either way -- the free market ain't real.
And you, too, just like the people that employ you, can manipulate it.
So, as I said, it comes down to how organized your class is. How much power you have, in your given class. Who butters your bread.
It is very effective and efficient. It's also volatile and occasionally crashes, so a little of both sides of the spectrum is a good thing.
Quoting Hanover
I don't know if the next economic crash will take out the US government. I hope not. I just meant we'll probably renew socialist measures that were enacted during the Depression (and dispensed with starting with Reagan), and probably do further steps to the left.
Are they unprofitable or are they forced to price their goods lower than they would because of competition from counties that don't have all sorts of EHS and labour standards and you want to ensure a critical industry continues to exist in your county?
Maybe read Marx instead of relying on the caricature US society has made of him?
Instead of the costumers paying higher prices for food in countries where the farming industry is subsidized, the cost of production plus profit is paid from where? From taxes. And who pays taxes? People and corporations. And where do the corporations get their income? From people and taxes.
You can't get away from profit and low prices. Somebody pays, and it always boils down to the customer.
So instead of allowing farms to make their money the proper way, we, yes, we, the fucking people, pay the government to regulate the prices of farm products, and then we, the fucking people, pay the government taxes to pay the missing money to the farmers.
It's a system. It's not a bad system. In the end everyone is at where they should be: Farms get their proper income, people pay the price for farm produce the same amount as they should, except in two different venues: they pay a little to the farmer, and they pay a little to the taxman, who transfers these monies to the farms.
It's not a directly-involving system, but the end result is precisely the same as without and as when people paid proper prices for locally produced farm products.
Without the revolution, guns and slogans, we live in a Marxist society if you hold the truth that workers unite and control.
Who controls societies' decisions? The Parliament. Who elects the parliament? The people. What percentage of the People of voting age are workers in the United States of America? About 94%.
So America, unwittingly, by force of having a national body of electors of whom nearly all work, is a Marxist state.
Can you clarify those parameters?
Since the US can't understand him and I suspect you'll say the same of Stalin, which county do I look to to see how his views are properly understood? You can see why I might thing think his views have been completely defeated based upon how its been applied, but we seem to always have this same "if it were applied correctly" or "if it were just better understand" argument that tries to rehabilitate it.
I doubt that's a primary driver, but I'll look at whatever data there is. What you probably see on American farms is a large migrant labor force that receives low pay.
I don't doubt labor costs probably aren't higher here, but I don't know if that is the primary reason for subsidies.
But you won't hear idealist condemnations either.
Yes, millions died under socialism due to socialist policies. Millions more will die tomorrow.
The only thing I'm noting is -- it's not that different under capitalism. And rather than look to the famines of the past as a reason to dismiss Marxist analysis, I'm just applying Marxist analysis to the question at hand.
So, not democratic participation in the sense of being a part of a liberal party within a capitalist state -- but rather as being a member of an organization dedicated to worker's power.
And so it converts what looked like a moral question into a political question.
Principles cost money; if we only pursue economic effectivity we will end up morally bankrupt with injustice the norm.
I remember during Occupy well-meaning (and well to do) liberals lecturing us about how they agreed with our goals, but not our methods. And if we were only more proper then we'd have more support from the likes of them.
For me "democratic participation" just sounds a lot like that, when successful political action, in the sense of obtaining concrete goals for a group, is the exact opposite of these recommendations, and where they come from has less to do about what is efficacious and more to do with what well to do people feel comfortable with.
I'm not going to claim that this is universal or something, but it's that hesitancy to act which I think I'm pushing against. A lot of the time people believe "democratic participation" amounts to nothing more than reading the news, thinking about issues, and going to the voting booth. That's the civic religion, after all. And I think that does fit the term. I'm trying to point out -- it takes more, if you happen to fall into a particular class of people at least.
Well, you said that, and I was inclined to actually look that up, to see what the total deaths (both domestic and foreign) at the hands of the US government versus those of the Soviet Union and Russia. I would have to think that it wouldn't be close, considering the brutality of Stalin. That analysis would also assume a moral equivalence, suggesting that the deaths at the hands of the US were as unjustified as those of the Soviet Union.
I do understand that Marxism does not equal Stalinism, but I'm not sure what Marxism does equal in reality. I can accept that injustices exist in either system, but I don't think it's a sustainable argument that capitalism and communism are equally bad but just for different reasons. The US built a wall to keep people from coming in, where the communists built a wall to keep people from leaving, which I think at its height was thousands of East Germans fleeing daily. That does speak loudly to the question of which condition is preferable.
I do think things are very different under capitalism. They aren't comparable really. This isn't me waving an American flag offended by the suggestion that the US isn't perfect, but there is not a moral equivalence here.
The most ideologically consistent nations would probably be theocracies, which means the cost of adhering to principle isn't just measurable in dollars and cents, but in loss of human rights.
I'm just pointing out that your attempt to create a moral society isn't something that probably anyone disagrees with, but it will ultimately center on the dispute on what is moral. That is, if the US believes communism is evil, it has cast a moral judgment on it, and it is as much for that reason it is rejected as it is as you suggest, which is that it will cost too much money.
There are those, believe it or not, who think the current capitalistic system is just. It's not as if they all know deep down there are unjustifiable inequities, but they pretend there are not for pragmatic reasons.
For the purposes of historical tabulation, though, I include Stalin. Like I said, no idealist defenses. As a USian with a passing interest in Marxism I've been bombarded with the litany of socialist sins most of my life, so it's unlikely you'll find a shocking fact that will move me. Socialists done some evil shit.
Just like us.
And at the end of the day, it doesn't even matter to me -- the analysis makes sense of the patterns between the classes in the United States, and my advice to become organized remains the same. After all, the owners are organized.
You say this, but then you say:
Quoting Moliere
You can't say "just like us" unless you're willing to engage in the analysis you just said you wouldn't do. You can't refuse to consider the evidence and then answer the question.
Quoting Moliere
The past has to matter to you if you're trying to come to a solution for the future to at least know what you're fighting for and to be sure you're not recreating something we know doesn't work.
To the extent you want to organize labor to fight for more rights, that seems appropriate, but that is a far way from communism. That's just being an advocate of labor unions.
I'm saying I've considered the evidence, and my conclusion is that both nations are prone to doing all kinds of evil things to the extent that, after looking at it, it's not really a worthy goal to say which somehow eeks out a slightly better score.
Historians been at this game for awhile. There's books by historians that are pro- and anti- Marxist. I've read a handful of them, and there's more I could read. There's even more that could be written, too.
From what I hear, it sounds like you'd get along with Robert Service's description of communism.
Quoting Hanover
I agree that Marxism and labor unionism are not the same. If anything, my critique of labor unions is that they aren't militant enough.
I wouldn't say I'm fighting here, though, either. Just to note. I'm still doing philosophy -- this is just a conversation between thems of us who like to think about this stuff, rather than some political activity.
And, duh, the past matters. If anything I'm over-historical in my approach to things. I'm just noting how the Soviet Union's various failures don't have much to do with American workers who should organize militantly if they want the good things in life.
It's not slight. It just seems like a simple acknowledgment that Stalin has secured a place in history far worse than any US leader would be a simple thing to do, with the understanding that that doesn't mean the US hasn't done bad things as well.
If you want to salvage Marx from this by describing his writing as academic and simply fodder for debate without regard to the real world consequences of how his views were used, that's fine, but it seems pretty uncontroversial to recognize the particular evil of Stalin without trying to draw a moral equivalence to the US.
I agree. So would the average historian. Westerners don't have any frame of reference for understanding what happened in the USSR.
The part you're not liking is when I say the United States has done enough evil shit that it's a sad and stupid game to pick a side on. The only way you'll make the point is to add up the numbers, and how you add the numbers is how you choose which side you're on. That's why there are historians which are both pro and anti. But it has more to do with the historian than the events, when they tabulate, and it's a dry affair that doesn't really capture human suffering. And at the end of the day I suspect you'd disagree with the things which the United States does, so why is it we're talking about a now defunct state?
Marxism is a living, breathing philosophy and tradition of both thought and action. Marx doesn't need to be salvaged -- the concrete conditions of our life are what makes Marx relevant. His critique of political economy fits even if Stalin is a worse leader than any US leader.
The 20th Century events in the USSR and China are unique in human history. It was mass insanity, not evil. No other country can compare, including the US.
So...
Quoting frank
Is of no use to anyone since you're a 'Westerner' and so "don't have any frame of reference for understanding what happened in the USSR".
Or are you the special one?
No, that would be Geoffrey Hoskings, who spent time in Russia examining records from the Soviet era.
Aren't you banned yet?
There is some great insight in what you wrote.
It is easier to seize wealth than to produce it. So long as the State makes the seizure and distribution of wealth a matter of legalized privilege, so long will the squabble for that privilege go on.
Whether its workers or owners who benefit from the State, it matters little; all weve done is shifted from one beneficiary of state power to another, from one exploited class to another, and so on. Class power and organization spent in the pursuit of State power and the privilege to seize and distribute wealth might be in that respect a lost cause, when it might be better spent regaining the opposite of state power, social power, so that each class and organization will have the opportunity to determine the path of their own lives. Until then, achieving the means of exploitation appears to be the only solution on offer.
That's not actually what I said. I'll acknowledge the US has done things it shouldn't have. My point is that there is a way to compare the two, and it does boil in part down to the murder of citizens, but it's also things like gulags, purges of people from the party as a form of ostracism, starvation, and a whole host of other horrible events. These things are not ancient history. It's like saying we can't condemn Nazi Germany (which is closely wrapped up in all of this) as Americans because Americans are also bad. Of course we can.
Quoting Moliere
A few reasons we care. The first is that it does serve as an example of what Marxist thought can cause, and that should offer pause when using Marxism as a philosophical basis for social change. The fact that it's not just a theoretical danger but an actually realized one matters. The other is that it's hardly a defunct state, with an actual war taking place right now between a former Soviet state and Russia in an effort to re-establish its former perceived greatness.Quoting Moliere
It's largely an intellectual movement that holds sway among those who wish to view politics as an academic subject without concern for the fact that had the world never heard of Marx the world would have been a better place. Scientific theories begin with a theoretically valid hypothesis, but their final proof rests with the empirical evidence. That Marxism offers you great insight into the inequities of capitalist society means just that, but it doesn't mean anyone ought try again to implement those policies. We don't need another lesson in failure in that regard.
There's a similar list for the United States. Right? Genocide and chattel slavery aren't ancient history, either.
Something about an afternoon comparing gulags to genocides seems like a sad game, at least. And then -- do you really feel like you know more about which system is better or worse?
I don't.
I'm aware of the evils of socialism. I don't think of these things lightly, for that matter. I'd rather not have gulags or the Khmer Rouge.
I don't think those evils are necessary features of socialism, though, as much as necessary features of nation-states. And I've heard the numbers crunched before and seen the United States come out on top.
Didn't do much for me, though, other than leave me thinking -- this whole thing is fucked up, really. (EDIT: I'll also note I've seen the numbers tabulated the other way -- hence my thought that it just depends on what side you want to win. You'll choose a theory of counting based upon which side gets to win)
Quoting Hanover
The USSR can serve as an example of what Marxist thought can cause, sure.
But you're going to have to draw the connections between a Marxist analysis of the workplace and, say, Stalinism.
Stalin, while a very famous Marxist -- and I'm not interested in trying to get the hard cases out of the category, as I hope is apparent by now -- is not the only Marxist. There are many Marxists, and not all of them are Stalin. For instance, Salvadore Allende was a Marxist (which the United States helped to overthrow in a coup of his country -- something the United States has a habit of helping and doing in South and Latin America).
And for me, at least, I'm fairly heterodox on the question of history. I don't think it's necessary at all -- rather, it's open. So one of the things I tend to say is "Well, what if we just didn't do that?" -- i.e., just because we're organized militantly for power doesn't mean we'll use that power to create gulags.
So I agree with you that it's important to know history. I think we can learn from it.
But I disagree with the inference that Marxism is a failure. I think history is far more open on that question, and it really depends on who you are within your particular social system. It's a lot easier to sing the praises of capitalism when it's treating you well, just as it's easier to sing the praises of socialism when it's treating you well.
So theres multiple ways to do things, but we cant say ought or should?
Sorry, but I see a very clear moral component between democracy and totalitarianism.
Quoting Isaac
Because Im not in favor of unjustified power, in this case corporate tyranny.
Quoting Isaac
Whos we? We dont decide anything and thats the point. If everyone concerned had input into how profits were distributed, Id have little problem with whatever was decided. Invoking subjectivity and objectivity is irrelevant and a diversion.
But this simply isnt true. I may have failed to emphasize this, but while this transfer of profits to shareholders which has increased these last 40 years hasnt been good for workers, it hasnt been good for businesses either.
Quoting Moliere
Sure. But a particular kind of capitalism one that is currently choosing to distribute 90% of profits to shareholders. This is the background on which people in states and, more relevant to this thread, corporations operate. Its a system of beliefs and values.
Shareholder primacy theory is a major justification for these actions in my view.
I share your thought about capitalism, but I dont think its sufficient to answer the OP questions.
I wouldnt get hung up on the 100 number. What Im driving at is how profits are distributed and who decides. In our current reality, 90% goes back to shareholders and the people making that decision is the board of directors, who themselves are voted in by Major shareholders.
I dont think the distribution is fair but if had been decided by the entire workforce, say in a democratic way, Id have less of an issue with it. The problem is that workers of all stripes are shut out of decisions and in fact have zero input whatsoever on how the profits which they helped generate are divided up.
If we all contributed to baking a pie, to varying degrees, we should all get some day in how its divided. If I only contributed a small amount, perhaps I or others would reasonably argue that I deserve a smaller slice compared to the person who cut all the apples and made the dough. Theres all kinds of issues that arise, no doubt.
But compare to a system where most of the work is done by 95 people, yet only 5 decide how to divide the pie up and, not surprisingly, they decide to give themselves 9 out of 10 slices.
Well then that's to do, not with the distribution, but the power of the participants to freely negotiate.
Coming up with a 'right' way to distribute profits just moves that power from a political authority to a moral one. It doesn't put that power back in the hands of the people who benefit from the deal thereby struck.
I'm arguing that there is no 'right' way to distribute the profits of a co-operative enterprise, but there is a right amount of freedom to negotiate. That freedom is brought about by removing the coercion, removing the imbalance in power between employer and employee. It's not brought about by deciding how profits ought to be distributed.
Quoting Mikie
It's not corporate tyranny if everyone freely agreed that to be the appropriate deal in that case. Your target is off. It's not the outcome that's at fault, it's the conditions of coercion which lead to such outcomes.
Quoting Mikie
Right. That's precisely what I've been saying. There's no profit distribution that's automatically right or wrong, it's about the degree of coercion, the power imbalance in those negotiations. If we removed that, a 90% split to investors could still be right, if that's what everyone freely agreed.
The only answer to the question...
Quoting Mikie
... is "whatever arrangement the participants freely arrive at".
Economic/political ideas how to replace capitalism, which have been tried again and again, were not and have not been historially so good.
Critique is one thing, what is given as the solution is another.
The amount the workers are paid is no more determined by fairness than is the amount the owners are paid nor is a fairness standard used to determine the cost of the good or service.
It's all supply and demand. The pie maker gets paid what he can get paid based upon the supply of other pie makers and the demand for pie makers. The only way to increase that value beyond market forces is to unionize, which is the equivalent of collaborative price fixing on the part of owners, which would be a similar way for owners to increase their profits.
This is to say it's not a decision making process that relies upon fairness that determines the price of goods, the price workers will make, and the profits the owners will take, but it's a business decision that will determine the viability of the business and whether it will be able to survive based upon the way all earnings are distributed.
The person you want making that decision is the most qualified, not some democratic process where everyone gets to weigh in on what they think, regardless of their business knowledge, what to charge for goods and what to pay labor. A pie baker should not be asked to review a market study to determine how salaries are going to be paid. He can, of course, use whatever knowledge he has of the market to negotiate a better salary though.
The penalty for not properly paying workers is a labor shortage, high turnover, and poorly performing and underqualified workers. If a business can pay a very low wage and create a high quality product and be profitable, that means the workers are getting paid reasonably based upon market forces. The same holds true for the business owner who makes very low profits. He is getting paid reasonably for whatever efforts he's putting in, and the market is responding by offering him little reward.
A business owner who finds that his labor offers little profit would need to change his market plan, as would a worker who earns a low salary would need to respond by pursuing other career paths. That is, people do have a choice as to what they can earn, and if they truly do not because of limitations beyond their control, the solution is to provide them assistance, not to restructure the entire system just so the underperforming can have a higher salary paid by the employer.
The US came into existence in 1776. It was on the back end of both of those crimes.
If you check your source again, I think you'll find that he or she was assigning blame to Europe, not the US.
The distribution is a direct result of the lack of free negotiations as you know. If the process was more democratic, the distribution would look far different.
Quoting Isaac
When have I argued theres a right number or distribution? I have no clue what that would be. The 90% number seems rather unfair on the surface, but if that was arrived at through free negotiation I wouldnt have much to say about it.
I no longer know exactly where the disagreement is.
Quoting Isaac
Fine. I dont recall focusing exclusively on the distributional outcomes, but in any case question (3) in the OP was my primary interest.
Quoting Isaac
Okay then. So why did you ignore my third question?
Regardless its my OP and so Im too blame for lack of clarity. Perhaps I should have made my point more clear. Question 1 and 2 are ambiguous and rhetorical.
Fair point.
Maybe not good for the business as an organization, but if there's a class which controls said organization and they don't particularly care about the health of the business, but rather how much they can extract from it, then that'd explain why those in charge make decisions which are bad for business, even in the Back to the Basics Economics sense.
But this is just a thought at this point, not an argument. It's just where my mind went.
Quoting Mikie
What?! My very generic Marxist view didn't provide enough details?! :D
Cool. I don't think I have another answer, though.
I never said fairness was the standard or should be the standard.
Ill suggest you reread what you quoted. The problem in my view is that the process is undemocratic with workers completely shut out of decision making.
Quoting Hanover
Thats like saying its all market forces. A useful cop out for the people who give themselves 90% of the profits. Sorry its just supply and demand.
Completely unconvincing, but certainly pervasive.
Quoting Hanover
Its a business decision made by a board of directors acting in the interests of the people who vote them in: major shareholders. Those shareholders end up getting more and more. It has nothing to do with markets or supply and demand. These are decisions made by people. These decisions have also been very different in the past.
Stock buybacks are a product of market forces, of supply and demand? Or a result of a rule passed by the SEC in 1982? Its the latter.
We have a choice between democracy at work or the current arrangement of the business experts making all the decisions, and transferring trillions of dollars from the bottom 90% to the top 1% over the last 40 years of free markets. I think its an easy one.
Well you still nailed the broad view! :grin:
Ultimately youre right we cant have this savage form of capitalism if we dont have capitalism.
That were intended to make a profit.
What's so bad about that? Profit is someone's salary, and at least workers were justified to get a salary.
Hey, did you know the COP is going to be chaired by an OIL executive? Because that makes total sense.
It is based on partnerships because most of the states, thus "public administrations" are not effective enough or they hold so much debts that it is impossible to maintain an order in the markets. The state's presence is not necessary for everything. Despite the fact our governments can approve laws to intervene them, the results didn't end up well, for example: Venezuela with a high rate of inflation and zero control in currencies or Argentina, 96 % of inflation and a structure where middle class doesn't even exists.
We can be agree with the fact that we should not concentrate all the resources in private companies, but this is something about competency not state intervention.
As @ssu expressed: an important part of the profits from companies go to salaries of the workers who feed their families. The owner or stakeholder doesn't hold "everything". In the other hand, if the state public funds go into bankruptcy, there will be a lot of workers without being paid, like ot happens in Sri Lanka or Pakistan. The public servants of these countries cannot be paid because their countries have been accumulated so much international debt.
I have no idea what this has to do with what I'm saying. I'm not arguing for governments to do more than to abolish laws allowing incorporation of for-profit entities. (well, as a first step).
And what about then government owned companies? At least their owner is perpetual (or acts like it) and there is even less liability.
Well, if I am correct, who should invest in those public goods? Just the state with public tenders?
Because you are only speaking about profitable entities with limited liability, but what about those who are in bankruptcy?
I didn't have any disagreement with that.
Quoting Mikie
Ah, I understand. Then it seems we don't really have a point of disagreement after all. Workers are not currently free to negotiate equally which is what leads to such clearly unfair distribution arrangements and the situation is clearly getting worse.
So, out of the solutions available, which do you favour? Minimum wage (effectively a legal lower threshold on the distribution arrangement), or Universal Basic Income (removes much of the coercion so that each party is more equal). Or do you have a third option you prefer?
Actually, this is a very interesting thought. But what should be noticed that this isn't about the basic principles of a corporation or company being, but basically also the economic surrounding (biosphere?) and the complex system that modern economies have grown into.
Yet a widely held view is that the current debt based monetary system with central banks cannot be called a free market as basically any market mechanism correcting excesses like speculative bubbles (which would mean a severe market correction, asset deflation, severely higher interest rates) simply isn't allowed by a system controlled by central banks and in the end governments (and those who control governments). That the price of money, interest, isn't decided by markets is one problem. And the perpetual asset inflation (or hope of) simply works in favor for the traded corporations.
Simply put it, calling it free market when you have socialization of losses and only profits being privatized isn't free market. A system which needs more and more debt in the long run cannot work. But life can be shorter for the individual perhaps, so why worry.
Of course, there is the problem of the corporate elite coming to be a class of it's own, especially when mutual funds and other institutional investors play such a dominant role. The Bill Gates or Elon Musk is the oddity, which you can find likely only in an new industry, where the original pioneers still have a role to play. When corporations can own corporations, all power can be (and usually is) with those who officially would just only have basically a similar role as any other worker.
Yes well said.
Quoting Isaac
Im in favor of those.
I think there co-op model is a good one. I also like the idea of requiring workers on the board of directors. I think Germany has something to this effect.
Then theres the obvious case of stronger labor unions. Repealing stock buybacks and increasing corporate taxes are also low hanging fruit.
All moves that would help. So now the more interesting question of what you think is in the way of getting (or, in some cases, keeping) all that? Much of it we've had before and lost, some of it hasn't a hope in hell's chance of becoming law.
So what's in way do you think?
Quoting Benkei
Do you even consider UBI to be in the list of "knobs and switches"? If so, what level of structural re-organisation did you have in mind?
1. Top up the decent salary of all employees (bonuses, B). How much is decided by the lowest wage and the bonus is a fixed amount.
2. Earmark a percentage of P - B for growth (R&D, call this R)
3. What's left, P - (B + R), can be divided unequally as per each person's contribution (C)
As is relevant, C = P - (B + R)
Hence you are not taking into account the demand side, the buyer or consumer) or competition. Hence too many ceteris paribus assumptions.
P - R - B = C (Yes) is not the same as P - B - R (No) = C! :chin:
[quote=Ms. Marple]Most interesting.[/quote]
Danke for the feedback. I'm zero in economics.
I dont see co ops as fidgeting with knobs and switches at all.
Educating, organizing. Collective action. As always. I think strike-ready unions are one way, funding and voting for progressive political candidates is another.
All of it will take people coming together and acting together. The numbers are on the side of the people, if only they overcome the propaganda and division theyre surrounded by.
Absolutely. But...and you can see where I'm going with this... None of those ideas we new. Some have been around since I was a young man, others since the 60s. Some since the 1860s.
They haven't worked. Either they haven't taken hold, or their opposition has been stronger, or they've just not proven popular.
So when I ask about methods, I'm really asking if you have any ideas to fix that problem.
We can unionise, sure. But not enough people want to join unions, they keep getting stiffled by conservative politicians who people keep voting for. Even when they're powerful, they often go through a subsequent period where their power is lost and they loose much of their previous gains.
We could take collective action, but that requires people to collect with, and there aren't enough. Most can't be bothered and, again people keep voting for governments like mine here in the UK who have just passed a law making collective action much more difficult.
We could educate people about their bad voting habits, their lacklustre political involvement. But out of all of them, that's the one I'd put in the 'been around since 1860' camp, and things haven't got better. They've got worse. So if education is the answer, at the very least we're doing it wrong.
So is there a fix?
Its a tale as old as time. No doubt.
Quoting Isaac
Well that depends. You said yourself things were better in some eras. I think thats true. I also think organizing has been successful social movements are a good example. Civil rights, womens rights, etc.
I think weve regressed in the economic sphere.
I dont see an alternative. Theres revolution, of course but those are hit or miss as well.
Anyway I dont pretend to have all the answers. Maybe theres something Im overlooking. Im all ears.
Quoting Isaac
Thats changing as we speak. At least in the states.
Quoting Isaac
Theres plenty of people. The task is to get them together. Easier said than done, of course. There are parallels with other social interactions: becoming friends with people not always easy; just try to get them all together to do something (even something fun) a very difficult task, at least for me. People have jobs, kids, pets, health issues, appointments, lack of money, other plans, or else theyre too exhausted from all of it to make the effort. Im in that position myself often enough.
If something like meeting people, making friends, and gathering with them is this difficult, then getting people to unionize or canvas or protest or boycott or strike or even hold a meeting about any of it is extremely hard.
But thats the task, and I dont see another way forward.
I will say that local government involvement is extremely important and worth doing. Mostly the various town or city committees are run by volunteering retirees and almost no one pays any attention or attends any of the meetings. But its an easy way to start doing something. Everyone lives in a town or city.
Likewise everyone who isnt unemployed or running a business themselves works for a company. Theres a chance to change that companys practices from within. Working for a smaller non-profit, Ive had the opportunity to talk directly with the president just from an email sent to the Human Resources department, and it contributed in changing various policies (not just me it was other input and factors as well). Discussing unionizing with coworkers has also (slowly) gauged interest in having a vote.
This is all anecdotal and small, but I bring it up because 99% of the time, this is it. This is the work. Just talking to people. Showing up. Speaking up. Learning how to communicate. Learning about how government and business functions, thinking about power and how institutions are structured, educating oneself about the socioeconomic system ones currently living in, etc.
Point is, theres nothing too small. I dont know of any other way to bring people together or to affect changes.
https://apple.news/AabXb9PPQSoC0Ne-qu75mVQ
"Somehow"?
It just so happened to turn out that the policies of the most compromised governments we've ever had, enriched the exact industries which spend most on lobbying them. What a coincidence!
How lucky the rich and powerful are, things just keep happening by chance to turn out in their favor.
Yeah, thats sarcastic. She goes on to talk about it in more detail. Its not an accident.
No she doesn't. She goes on to provide the specific route the wealth redistribution took. It's like describing how transport networks work and having that stand in for an explanation for human trafficking.
Whether the government transferred wealth via "rising costs", or "stimulus packages", or "low interest rates" is irrelevant. They could have used any one of a dozen mechanisms at their disposal. The explanation is missing the context which allowed them to do it. The self-gagged left wing who just stood by and did fuck all to stop it. The complicit media who are always more than happy to vomit up whatever narrative is most convenient to wealth accumulation.
These things don't happen in a vacuum. People (and opposition parties) don't just watch their welfare get taken from them and let it happen because they didn't notice the government's super cunning scheme. There needs to be a crisis, an ideology, an enemy (anyone but the rich). All supplied and propagated dutifully by the very organisations who should have been holding the government to account.
An now, unsurprisingly, we're seeing exactly the same playbook with Ukraine. The most powerful lobbying industries just so happen to be getting richer but it's all just a coincidence because arming Ukraine is the right thing to do, anyone questioning it is a dangerous extremist, and the real enemy is somewhere else. Trust your government, don't ask questions, the rich just got lucky. Again.
Sure. Im not going to reread the entire article but I came away as though she understood this context. I dont think shes arguing that the rich got lucky or that it was accidental.
Swimming in cash, Chevron plans a $75 billion slap in the face to drivers
Buybacks should be banned immediately.
More evidence of capitalism gone off the rails. Thanks, Reagan.
It's an example of the obsessive short term view of focusing on the next quarter.
Buybacks are a stupid way to use money: all it takes is a recession or a big market scare and all that is lost when the stock value plummets along with every other stock when investors have to sell when they get margin calls.
Basically a company or corporation shouldn't have to worry about stock prices. It's the IPO's and share offerings that they basically get the money. But when you give stock options to compensate corporate leaders, there's a huge personal interest for these people to jack up the price of the stock whatever it takes. And to do that, stock buybacks are a perfect way.
Exactly, and when compensation consists mostly of stocks, its no wonder this influences the decision of CEOs.
Im trying to find more information on the history of CEO compensation and changes in performance metrics. I think the shift started around 1990 or so.
I think there are several reasons just why the corporate manager level transformed from high paid employees to a class of their own in the US. First is that because of institutional investors (mutual funds, pension funds, etc) in ownership, hence corporations owning each other, and the emergence of an trained leadership which aren't entrepreneur-owners, but have started their career through an academic training in business managerial skills. Hence there has become this class of executives that have the real power in the corporation. In the 19th Century and still in young industries you the Bill Gates / Elon Musk types, individuals that have started their own companies and created them to be giants. These are typically replace professional career managers, who usually haven't been entrepreneurs or done their own startups.
The second reason is that the labour movement in the US simply seems to have been crushed. It hasn't helped that labour unions were related to organized crime and their political power has been related only to work with one political party, but not much with the dominating party.
That the laws have been made to favor the corporate elites is a consequence of getting power, but that has happened thanks to the above reasons.
ESG could've made some difference there but we've already seen it's just a bunch of greenwashing in most cases. And at the same time I think this will just be a new market that can be monetized. I'm not sure that's a good thing - it's an attempt at quantifying moral behaviour. How about just not fucking up the planet and being fair to employees as a basic human trait instead of having to financially incentivize that?
Yes indeed. And no one reviews exactly how much of the profit is being distributed back to shareholders in dividends (or buybacks). But it's this part, in my view, that accounts for why, in (A) an age of soaring profits, (B) real wages continue to stagnate, jobs are cut, benefits are reduced, the gig economy of precarious work grows, poverty grows, debt grows, etc.
How can (A) and (B) be simultaneously true? Where's all the damn money going? That's the question I tried to highlight in the Economic Pie thread.
Quoting ssu
I tend to think this is one of the biggest reasons for the corporate takeover of government. They destroyed what was once a labor party -- the democrats. That's why destroying the unions was so high on Reagan's priorites. With the unions demonized and decimated, and the labor party out of the way, here begins the era of the Washington consensus. Both parties now take on this ideology (Clinton, e.g.), just as the New Deal-type ideology of "regimented capitalism" was adopted by both parties in the post-war era (Eisenhower, Nixon).
Some recent favorites on these topics:
Partly. But Reagan was the real deal. He read Hayek's Road to Serfdom, and Hayek was one of his favorite thinkers. I don't think you can really understand what Reagan did and said without knowing that he really believed this shit.
This wouldn't be a problem assuming the focus would be in the long run, but of course the classic corporate raider tactics shows that this can be quite harmful (basically when the raider first gets a huge debt to buy the company, thus making a usually low debt company drowning in debt and then starts selling parts of the company away to bolster the dividends/winnings and pay the debt ruining the corporation in the long run.