My Capitalist "Dream"

Economists use the prosaic terminology of payment for the use of “factors” of production. Land demands rent. Capital seeks the payment for its application in the form of interest or appreciation – the only “factor” that seems capable of reproducing more of itself. And finally, for the remaining 99.99 percent of the laboring world that does not own excess land or capital, the return comes in the form of wages, salaries, “emoluments”, and so on.

In a somewhat simplified Marxian view of classic capitalism, labor got to keep only enough of its earnings to reproduce itself, ready for toiling again the next morning. Surplus value was siphoned off (blood-sucked away, if you want to rabble-rouse the angry masses) by capitalists and that is how capital accumulated and grew.

We have known for decades that the world as it works is more complex and different than this simplified view of the exploited and the exploiter. Especially in the affluent regions of the world, before globalization and outsourcing run amuck, the laboring folks – the so-called “labor aristocracy” – were able to snatch sizable chunks of the surplus in the form of good wages and accompanying benefits.

Globalization and outsourcing allow the slicing and dicing of work processes in increasingly creative ways and the transfer of work segments to various global locations based on cost, quality, and other managerial considerations. I have reflected on these issues elsewhere (http://electronicglobalization.blogspot.com/), and that is not the focus of this writing.

The focus here is on the work of the very top managers, especially in U.S. multinational corporations. Their earnings – in the form of salaries and other items, earnings that are apart from their capital-ownership related incomes – have zoomed to astronomical levels at the start of the 21^st century. Grants of stock by their employers, of course, have to be counted in this if such grants are made as a way to compensate for work done.

The questions of interest are these: For what work are these top managers compensated? What principles govern these stratospheric managerial earnings?

Copious academic writing as well as the common sense on Wall Street indicates that there is no clear relationship between top management compensation and things such as stock prices, corporate earnings, sales levels, profits, product quality, market share, or customer satisfaction. The pay is not for these things – at least not in terms of observable results.

So what do top managers get paid for? What is the “work” for which they receive sky-high compensations?

The labor these super-compensated CEOs and other top managers seem to be doing is that of “managing the corporate boards and big investors (such as pension funds and mutual funds) in ways that allow the hefty-rising pay packets to continue”. Their labor, it seems, is that “delinking reward from (mundane, measurable, observable) performance”. There is the mystical labor of “linking reward to some mythical quality of corporate leadership”.

In the broader global scheme of things, is seems the labor of top USA managers and their political allies is the labor of “intensifying the politics and economics of capitalism”. It is in fact labor in the service of keeping the “global inequality engine running and pumping at an ever higher rate”, including the labor of “political support to parties/politicians who will help this engine run faster”. Of course, the United States is no exception – these processes occur in all the rich and wanting-to-be-rich countries. It is just that the United States is far ahead of the rest of the world in this. It is even able to borrow from the rising currency coffers of the world, to create huge mountains of debt, to keep this intensive process going. It is able to borrow from its own future generations by gradually degrading and fraying the various social safety nets.

We are familiar with the TV commercial where the slick car salesman comes in front of the TV camera and shouts: “Bad Credit? No Credit? No Problem. Let us put You in Your Dream Car! Nothing Down, and 48 easy monthly payments!!” In my dream… er nightmare… the salesman is the smiling Big Brother Politburo in Beijing and the customer is the grinning Uncle Sam in Washington, DC.

Nik Dholakia

Rhode Island, USA