Paul writes:>Marglin points out ... that Corporate Management has a higher propensity to invest profits than Corporate Ownership (shareholders) who more favor distributing profits as dividends (hence "Capitalist Consumption" as a simplification).<
I don't know if Managers have a greater propensity to invest over-all. They definitely have a greater propensity to invest in their own enterprises, while Owners are more likely to invest in other enterprises. On the other hand, Managers tend to "invest" in themselves a lot, giving us these outrageous CEO rewards. Part of that -- stock options -- weakens the gap between Management and Ownership. In any event, both are parts of the capitalist class. >And I think we would all agree that with the rise of neo-liberalism the Corporate Management-Corporate Ownership balance of power has tilted towards Ownership. Hence, logically a shift in *propensity* towards distributing profits to shareholders rather than retaining them for investment.< I guess the rise of "Jensenism" or the stockholder power movement (see Michael Perelman's post) is part of the neoliberal policy revolution. >My supposition comes when I say that the relative rise in Ownership over Management is linked to the fact that the workers are weaker. One part of Management's role (dealing with the workers) is less critical; also, ownership can afford to have crises with its management without the fear that they will lose their shirt to workers; also, there have been political changes giving greater incentives (literally) to receiving dividends; also the social/political climate will no longer foster problems in the face of big dividend payments; etc, etc. Big personal payments to Management has also made it easier to wean them off of a desire to invest profits (carrot and stick). So I think this part is true (and I see it assumed in some research), but I would like to see more research on the point.< Managers do much more than just dominate workers. >This leaves one offsetting and muddy point. Early in this process, Management turned to other sources of finance: bonds, banks, etc. Was this linked to the rise in Ownership power? (i.e. Management's effort to retain a strong middleman role by bringing in other players? Use of Investment Bankers as power brokers?) No doubt there were also lots of other reasons to bring in these other players (favorable taxation for debt, etc), so this needs to be sorted out and the resulting financial fragility needs to be spelled out.< I don't know. >So in short: there *may* be TWO "undertows" - declining worker income and a reduced corporate propensity to invest. And they may be both the result of the decline in worker power. Of course these face two offsetting trends that are also the result of the decline in worker power: the rise in capitalist consumption and the rise in profitability from the decline in wages (i.e. a move along the *new* propensity to invest curve).< The late 1990s boom was based on an investment boom (backed by a consumption boom, with both being debt-financed), one that lead to over-investment. I think I can tell a story of how a consumption boom can exist despite an underconsumption undertow, but I don't see one for an investment boom despite an underinvestment undertow. >All of this is consistent with the *type* of analysis that Marglin had. But he presented (IMHO) his particular (and maybe atypical) era as a universal under capitalism.< Also, "What Do Bosses Do? (part I)" was a micro-analysis. Looking at the insides of corporations and other capitalist management structures is useful, but we have to look at intercorporate relationships, the changing structure of industries, etc. JD
