Moshe Adler: > When British economists David Ricardo and Adam Smith > examined this question 200 years ago, they concluded > that what a person earns is determined not by what the > person has produced but by that person's bargaining > power. Why? Because production is typically carried out > by teams of workers, managers and machines, and the > contribution of each member cannot be separated from > that of the rest. ...
While this theory is right, supply & demand still play a role, not as complete determinants but as constraints. First, a corporate executive is limited first by the fact that his or (rarely) her earnings can't be so high over a sustained period that it depresses the pay-out to stockholders or the investment of retained earnings. While an executive could rape a company's balance sheet and then run (to put the loot into a diversified portfolio), this isn't a general phenomenon (because there is some self-regulation by stockholders, etc.) Second, if an executive's salary is pushed significantly below that paid to similar execs in the same sector, there will be a loss of talent to the corporation -- the executive would vote with his or her feet. There are market forces at work here, but these top executives are in a labor-power market that's completely separated from the labor-power markets that the vast, vast majority of people face. (They're part of what 19th century economist John Cairnes called a "non-competing group.) There's a clear conclusion from the second point: instead of regulating the salaries (and perks!) of a small sub-set of the top executives, _all_ of their salaries should be controlled. Even better, replace these folks with committees of workers, citizens, consumers, and government representatives and put them to doing productive labor. -- Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own way and let people talk.) -- Karl, paraphrasing Dante. _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
