Exchange with Tom Walker:
TW: How are breadth & depth not related to labor power if the equation for differential accumulation depends on employment as a proxy for size? Footnote 19 states, "we use employment here to measure the ‘size’ of the corporation as a power organization, not a productive unit. Whether the employees produce plenty or little is relevant only insofar as the output bears on the corporation’s ‘elemental power.’" It's hard for me to see how an organization would increase its power by hiring people to do nothing, so there's clearly something missing from this explanation. During the 'downsizing' craze of the 1990s, stock prices went up when corporations announced layoffs (implying, I suppose, a huge jump in "internal depth" from cost cutting) but B&N argue that the net impact of cost cutting is to "meet the average rather than beat it."
JN [new] These considerations are elaborated and expanded on in “Regimes of Differential Accumulation” (2001) http://bnarchives.yorku.ca/archive/00000003/
Briefly to your point, we are decomposing differential earnings (DE) as a product of differential “size” (differential employment per firm, or DS) and differential “elemental power” (differential earnings per employee, or DEP).
DE = DS * DEP
We are not saying that the corporation would hire/take over people who “do nothing.” It is rather likely that green-field or takeover will occur only if the added employees are expected to contribute to earnings. If the owners of corporation X take over corporation Y, and if the two original organizations have the same differential “elemental power” (DEP), the merged organization will have higher differential earnings (DE), by definition.
The effect of “downsizing” on differential earnings (DE) depends on the relative magnitudes of the resulting changes in differential size (DS) and differential elemental power (DE). If differential elemental power (DEP) rises by more (less) than the reduction in differential size (DS), differential earnings (DE) will rise (fall).
In practice, “downsizing” as such may or may not increase ABSOLUTE earnings. But that is not the question we would ask. Instead, we would ask about the impact it has on DIFFERENTIAL earnings. This impact depends on the extent to which “downsizing” is an option open to all owners, rather than to dominant capital only. The evidence that we have suggests that, over the longer haul, cost cutting (through greater efficiency or lower input prices) is not a systematic engine of differential earnings (again, see “Regimes of Differential Accumulation”, 2001).
Regarding your observation that the 1990s “downsizing” was associated with a bull equity market. That observation takes the issue beyond earnings on several counts, of which I shall mention two.
(a) Capitalization is based not only on earnings, but also on interest rates, risk and hype. Since all of these have changed during the 1990s, it is hard to a priori attribute the bull market only to one aspect. (See our two-page 2002 mimeograph, “New Economy or Leveraged Hype?” http://bnarchives.yorku.ca/archive/00000101/)
(b) As noted, the issue is not capitalization as such, but differential capitalization; do we know that downsizing per se produced DIFFERENTIAL capitalization? An interesting question to explore.
Jonathan Nitzan "New Imperialism or New Capitalism?" http://bnarchives.yorku.ca/archive/00000124/
