A concrete "experiment" in relation to this question is the executive salaries in the British utility privatizations. In all cases, CEO salaries rose substantially after privatization. This is interesting because the neoclassical maximum competitive market value of these individuals had been determined in the market prior to privatization. Also the substantially lower salaries of Japanese CEOs would seem to set a limit on the MP related compensation of CEOs with the rest having to be ascribed to cultural and institutional rather than market considerations. The neoclassical defense of CEO salaries is clearly untenable. Why do they do it? Some of it is ideological hegemony. Some of it is a personal identification with other "professionals". The major reason is, I think, to assert the universal existence of efficient markets, even in the face of all evidence to the contrary. Why not just admit that CEO salaries are outrageous and prescribe the elimination of market imperfections? Terry McDonough
