Decreasing income inequality?

While Donald Trump rarely uses the word “inequality,” economic justice, and a growing sense that Americans are getting a smaller piece of the pie at the expense of somebody else, is clearly at the center of his campaign. Similarly, Clinton has frequently spoken about income inequality, which was an issue at the core of her contentious primary race with Democratic Socialist Bernie Sanders. Even proponents of the conservative pro-growth perspective, who suggests that income inequality is essentially good when paired with economic growth, have been getting attention, with increased attention being paid to pro-capitalist views expressed by characters like Martin Shkreli and Mark Cuban.

In the midst of this debate, and, tellingly, on the Friday before the first presidential debate, comes some very interesting messaging from the Obama administration: https://www.whitehouse.gov/sites/default/files/page/files/20160923_record_inequality_cea.pdf

And, for some perspective, a FiveThirtyEight piece analyzing the report: http://fivethirtyeight.com/features/the-income-gap-began-to-narrow-under-obama/

Essentially, the Obama administration is arguing that income inequality is beginning to drop, as a direct result of the economic policies of his presidency. While much of this administration’s policy has undoubtedly been crafted to reduce inequalities generally (such as health care reform that has expanded access to insurance), and even crafted to reduce economic inequality (such as tax increases primarily targeted at the wealthy), a close reading of Piketty demonstrates how decreasing income equality isn’t necessarily a good thing.

Piketty essentially argues that income inequality has traditionally not been the largest issue, but, rather, the issue has been wealth inequality (or, if you prefer, capital inequality). The wealthy have traditionally maintained their wealth not through wage labor, but through the dividends of invested capital, passed through generations by inheritance and marriage. Piketty illustrates this with an allusion to Balzac’s Pere Goriot, in which the shady Vautrin tries to convince his industrious friend Rastignac that hard work is a waste of a lifetime in contrast to marrying rich: “By the age of thirty, you will be a judge making 1,200 francs a year, if you haven’t yet tossed away your robes…But can you name five lawyers in Paris who earn more than 50,000 francs a year [50000 is 5% of the fortune that his perspective wealthy wife possesses] at the age of fifty?” (Piketty, 2013, pp. 239–240)⁠. One of Piketty’s major findings is that economic shocks in capitalism demonstrably reduce the return on capital (and, by extension, the viability of living off of capital), and that the economic shocks caused by the events of World War II resulted in a paradigm shift in both the US and France (but more so in the US) where the wealthy were forced to seek wage labor in order to offset the declining profitability of their wealth. This results in the formation of a “super manager” class, who are paid increasingly absurd salaries that are so high that it dramatically increases the visible income stratification. The differences between the 19th century method of inheriting wealth and the 20th century model of supplementing the declining value of wealth by directly appropriating money from corporations is marginal, but the latter method is more visible to the public and conceptually easier to think and talk about.

Piketty’s model means that we can presume that capital lost a degree of profitability in the wake of the 2008 economic crisis at the beginning of Obama’s presidency, meaning income inequality would presumably expand as executives take larger paychecks to compensate for their reduced capital gains. As the economy recovers, income inequality will presumably contract, since their capital gains will provide sufficient revenue once again. In light of Piketty’s research, it would appear that the economy is structurally configured to act in the exact ways that the Obama administration would like to take credit for.

Furthermore, Piketty’s research reveals a major flaw in the Obama administration’s perception of their struggle with income inequality: nobody really knows how bad it is. Much of the Obama administration’s efforts to fight income inequality have focused on improving the economic situation of the poor. As a strategy for fighting income inequality, this is analogous to trying to balance a see-saw with an elephant and a frog on it by fattening the frog – the difference is just too great. But, distressingly, nobody really knows how fat the elephant is. Even the most basic descriptive statistics on the ultra-wealthy, who polarize both income inequality and wealth inequality so greatly, are essentially missing. This sabotages an enormous amount of research on income inequality – if Obama wants to contribute more to the fight of the income inequality than simply being President during a time period where the “invisible hand” happens to make him look good, enabling the social sciences to perform deeper research into the extent of income and wealth inequality in the US would be a good place to start.

Research questions:

RQ1: Do measures of return on capital vary with amounts of CEO compensation?

RQ2: Does the degree of income inequality in a country vary according to how much a country values investment?

 

© Karl Marx

For academics, copyright can be a tricky issue. Much like non-academic authors, musicians, and artists, control of the copyright of their completed works is their only tangible symbol of possession of the product which they have been laboring to produce. Distressingly, publication typically results in the author losing control over the work, who must cede the publication rights to a publisher. Similarly, a graduate student or doctoral candidate might find themselves actually paying the publisher, simply to allow their work to be accessed without subscriptions to electronic journals.

Competing narratives surround the introduction of copyright into society, but it is certainly an invention of modernity, introduced approximately a century before Marx’s lifetime. To the best of my knowledge, Marx didn’t specifically write on intellectual property (though volumes have probably been written on it in the Marxist tradition since his lifetime), but the establishment of copyright laws does offer compelling examples of the essential elements of Marx’s arguments about the nature of capitalism. The introduction of copyright allows for the commodification of an essential element of human life, artistic and scholarly expression, and this commodification services a structural necessity for the propagation of an economic system that can only exist in states of expansion or crisis. After purchasing the publishing rights from the author, the capitalist replicates and sells the product through various, largely worthless mediums, such as bound paper, plastic discs or the transmission of data packets over the Internet, beautifully illustrating the differences between use-value and exchange-value. Consider the example of the modern textbook – why, other than the value of the information in the textbook to a particular individual, would an individual pay $200 for an object that costs less than $5 to produce? Minus the $5 of production costs and a 10% royalty ($20), the publishers (who are increasingly trying to sell to students directly) walks away with $175, or 87.5% of the profit. The value of the book, which is access to the ideas within it, is entirely supplied by the author, but when the capitalist reconstitutes these ideas in combination with near-worthless commodities, the capitalist is able to lay claim to almost nine times more profit than the author, which illustrates the surplus value of labor and exploitation of labor.

Even more shocking than the exploitation inherent in this system is the legitimacy that we provide it, with thoughts such as “publication is an inherently risky business, therefore it makes sense that publishers should assume more of the profits because they assume more of the risks.” Similarly, copyright enforcers such as the RIAA and MPAA produce narratives in which people who are not authorized to receive a commodified artistic/intellectual expression are guilty of theft, as if passing by an individual playing Rihanna on a cell phone in a public space without the express and written consent of Rihanna’s label is enough to make that individual into some type of anti-social deviant. Online, the present refrain goes something like “if we don’t pay content-producers to produce content, content-producers will stop producing content because they won’t be able to support themselves,” as if the very act of installing an ad-blocking plugin in your browser or opting not to drop your personal debit card numbers into a paywall will somehow lead to no new movies, news articles or paintings ever being produced again, and the destruction of a tradition of the free exchange of ideas that stretches back millennia before the capitalist paradigm even emerged. In short, catering to these types of capitalist ideologies, explicitly constructed to suppress free and creative production, is a defining characteristic of living in a state of false consciousness.

http://www.nytimes.com/2014/05/01/arts/claiming-a-copyright-on-marx-how-uncomradely.html

This article, which is admittedly a couple of years old at this point, focuses on a conflict over the publication rights of a translation of Marx’s writings (Marx’s copyright is expired, and his work is in the public domain, but the translation is a distinct work that belongs to the translators). My point in bringing this cultural artifact into the discussion isn’t to mediate a specific conflict between radical publishing houses using Marxist thought (after all, both belligerents in this conflict are probably a lot more experienced in this school of thought than I, and this is presumably old enough that the conflict is probably over), but rather to illustrate the immense difficulty of transitioning from a state of false consciousness to the state that Marx termed as class consciousness. Institutional pressures demand some form of revenue in order for the institution to survive in a capitalist system, even from charities, nonprofits, and radical publishing houses – the very institutions that are devoted to the overthrow of capitalism are structurally required to actively participate in it, if such institutions want to last. Knowledge isn’t enough – one cannot enter into a state of class consciousness by simply reading the Communist Manifesto, by obsessing over it and memorizing the text verbatim, or even devoting one’s life to Marxism. Only when an entire class begins to understand the nature of capitalism does it begin to achieve the power to not participate in it – cooperation and solidarity are prerequisite needs to the dismantlement of this system.

A couple of research questions that emerge from these examples:

RQ1: What are the different ways in which societies have typically viewed the concept of authorship?

RQ2: Do individuals purchasing online access to intellectual property perceive themselves as purchasing a commodity – or, in other words, do individuals view the purchase of social, immaterial objects as analogous to the purchase of physical commodities?

 

Marx and the Military Industrial Complex

http://www.thenation.com/article/181601/whos-paying-pro-war-pundits

http://www.thedailybeast.com/articles/2014/09/13/contractors-ready-to-cash-in-on-isis-war.html

In the first article above, author Lee Fang discusses what is often termed the military industrial complex, and calls out so-called pundits that have financial stakes in the conflict with ISIS. Additionally, Fang criticizes the Pentagon’s funding requests for including requests for more F-35 planes, that are not yet considered ready to fly. I’ve also included an article by Eli Lake about how military contractors who served in the Iraqi and Afghan conflicts are hoping to be hired again in the conflict with ISIS.

Marx would consider all of this to be in line with his writings, although I am not sure even he could have predicted the extent to which this would occur. According to Marx, one of the ultimate effects of capitalism is the tendency for capitalists to co-opt governments, in order to produce policies that favor the capitalists’ ability to make profit. For example, by making the government pass laws that allow capitalists to elongate the workday, capitalists can increase labor and therefore profit (absolute surplus labor). By getting the government to allow unsafe processes or environmentally dangerous techniques in manufacturing, capitalists can reduce the amount of necessary labor and make more profit as well (relative surplus labor via industrialization).

Marx’s writings are best applied to the manufacturing industry, which was presumably a dominant economic sector during his lifetime, but I think he would have had just as much to say about the modern military industrial complex. In this industry, the consumer is the government – so the capitalist’s influence in government directly impacts the amount of profit the capitalist can conceivably make. In other words, the capitalists create government demand and then bleed that demand until they’ve made as much money as they can. Marx accurately predicted that capitalists would use government like this – and while the trends in privatization probably would not have surprised Marx, I think the practice of private firms being used to fight wars would be pretty shocking to his 19th century viewpoint.

 

Marx and organizational theory

I’m a political science major with a sociology minor, and one of the courses I have to complete for my political science concentration is Public Administration. I spent the majority of the day preparing for a group presentation in that class — specifically, my partner and I had to present about a chapter devoted to the organizational theories of bureaucracies.  Although this topic has little to do with Marx on the surface, the similarities between what my Public Administration textbook was discussing and what we have been discussing in Sociological Theory seemed so apparent to me that I kept accidentally slipping Marxian terms and concepts into my discussion with my project partner all day.

http://en.wikipedia.org/wiki/Scientific_management

http://en.wikipedia.org/wiki/Hawthorne_effect

Briefly, scientific management (or Taylorism) was a concept that started gaining speed towards the end of Marx’s life. The premise is simple. Quoting from my textbook, “while Weber came to protest the transformation of employees into ‘cogs,’  Taylor embraced this transformation as a prerequisite for scientifically finding the most efficient way of accomplishing any given task” (p. 146). There are certainly a lot of elements of Marx’s alienation present in this example and in bureaucracies in general, but I’d like to go a different direction here and suggest that this is actually an attempt to accomplish what Marx would term industrialization. Capitalists use industrialization to increase surplus production, and therefore profit. In the example of Taylorism, Taylor is literally trying to apply the same rational thought process that is used by capitalists to find new methods of industrialization, except instead of applying it to processes and machines Taylor is trying to apply it to people. He is not simply trying to make people work harder, but he is trying to tinker with their arrangement, their actions, and even their motivations. In Taylorism, workers aren’t people but instead cogs in a clockwork factory — it is the goal of the manager to use the scientific process to determine how those cogs would most efficiently interact.

It wasn’t until after World War I that a paradigm shift occurred. While one of those managers was performing one of Taylor’s recommended empirical studies to determine what motivated his workers, he found something that surprised him: the workers he was studying seemed a whole lot more motivated than the ones that he wasn’t studying. Apparently, the observation that people could have reactions to other people that effected them and their behavior was a surprising revelation in organizational theory. This phenomenon had its own name, the Hawthorne Effect, and inspired an entire rethinking of organizational theory that gave birth to the Human Relations Approach. Of course, whether managers treat their employees like machines or like people has no impact on their ultimate goal in a capitalist society, but I think these examples still help illustrate a degree of validity in Marx’s writings.  The extent to which capitalism has warped our thought processes to ignore a human activity as simple as basic interaction is stunning (and was also, apparently, a major obstacle to integrating common sense into organizational theory).

Rosenbloom, D. H., Kravchuk, R. S., & Clerkin, R. M. (2009). Public Administration: Understanding                      Management, Politics, and Law in the Public Sector (7th ed.). New York, NY: McGraw-Hill .

 

Marx’s Fourth Type of Alienation

http://nymag.com/daily/intelligencer/2014/08/chelsea-clinton-leaving-her-fake-job-at-nbc.html

In the article above, journalist Joe Coscarelli is writing an opinion piece about Chelsea Clinton’s recent departure from NBC. Clinton made about $600,000 annually for just a few contributions, prompting the fairly condescending tone of the article. Clinton is arguably a journalist in name only, so Coscarelli’s criticism may be justified to the extent that he is criticizing the media, or making a political statement, but it cannot be ignored that these two figures work in the same industry. This is good example of Marx’s fourth type of alienation. Presumably, Coscarelli had to go through a similarly difficult process as any other journalist while building his career, while Clinton was offered her correspondent gig largely due to her celebrity. It is difficult to imagine a situation where Clinton’s employment with NBC could truly damage Coscarelli’s well-being, yet his sense of resentment is understandable through Marx’s alienation theory. Marx would assert that before capitalism labor was a collective effort, but in a capitalist system workers compete with one another on their own, trying to further their own private gain. This experience alienates the workers from one another. In this sense, Clinton’s celebrity offers her an advantage over Coscarelli that he may never be able to overcome. To many of us, it may seem unreasonable to resent someone you’ve never met, but it is the competitive nature of capitalism that breeds this sort-of alienation.

 
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