A Shrinking Universe How Corporate Power Shapes Inequality Jordan - PDF document

A Shrinking Universe How Corporate Power Shapes Inequality Jordan Brennan jordan.brennan@unifor.org http://brennanjordan.tumblr.com/ Economist, Unifor PhD Candidate, York University Toronto, Canada Paper to be delivered at the York University Lecture Series, hosted by the Forum on Capital as Power Toronto, Canada, 5 November 2013 A BSTRACT Income inequality has recently appeared on the public radar in North America, but much of the attention has been confined to its ominously high level and its socially corrosive impact. The long - term drivers of inequality, by contrast, have attracted less attention. This presentation will explore the linkages between corporate power and inequality, arguing that both the level and pattern of inequality in Canada closely shadows the differential size and performance of dominant corporations. Brennan, Jordan. 2012. A Shrinking Universe: How Concentrated Corporate Power is Shaping Income Inequality in Canada. Ottawa: Canadian Centre for Policy Alternatives. Chart Book available online at: http://brennanjordan.tumblr.com/presentations 1

Corporate Power and Income Inequality A Visual Representation Globalization of corporate ownership D IFFERENTIAL Depth Breadth A CCUMULATION The distribution of Aggregate concentration personal income Depressed democratic The profit markup engagement Capital - labour National redistribution wage bill Institutional Strength of Organized Labour Hourly earnings 2

P RESENTATION C HECK P OINTS The produce of the earth… is divided among three classes of the community… To determine the laws which reg ulate this distribution is the principal problem in Political Economy… - David Ricardo (1817) Wherever there is great property, there is great inequality. For one very rich man, there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. - Adam Smith (1776) Two Puzzles  Twentieth Century Economics and the Large Corporation o The modern corporation as a (non-state) power institution o The challenge issued to political science by Adolf Berle  Income Inequality and Social Pathology o Wilkinson and Pickett’s, The Spirit Level Capital, Power and the Conventional Dualisms of the Social Sciences  ‘Economics’ and ‘politics’  ‘Real’ and ‘nominal’  The measure and meaning of capital o The marginal productivity theory of distribution The Alien Vision of Thorstein Veblen  The immaterial equipment  ‘Business’ and ‘Industry’ Corporate Power: Stepping Stones  Gardiner Means and the administered prices thesis  Michal Kalecki’s degree of monopoly Capital as Power: Conceptual Infrastructure  Dominant capital and differential accumulation o From aggregate to disaggregate o From absolute to relative  Regimes of differential accumulation Working Assumptions  Political economy as an integrated system of wealth and power  Capital as capitalization (finance and only finance)  Distribution manifests, in part, socio-institutional power 3

Table 1 Some Categorical Schemes within Political Economy The Conventional Dualism of the Social Sciences The Alien Dualism of Thorstein Veblen ‘Economics’ ‘Politics’ ‘Business’ ‘Industry’ Private Public Immaterial Material Markets States Ownership/acquisition Workmanship/production Business Government Control and power Serviceability and need Individual gain Collective good Individual gain Communal welfare Consumers Citizens Salesmanship/vendibility Manufactureship/usability Capitalized wealth Material wealth Pursuit of wealth Pursuit of power (intangible) (tangible) Owners and managers Engineers and workman Employers vs employees Rulers vs ruled Competitive Cooperative Ruling elites Obedient masses Voluntary contracts Coercive laws Pecuniary/monetary terms Industrial/mechanistic terms Productive Parasitic Parasitic and predatory Productive and cooperative Dynamic Static Distribution Production Realm of freedom Realm of coercion Exploitation and struggle Functionality and harmony Natural law Conventional law Control of human beings Control of natural world Progressive Necessary evil Absentee ownership Technological inheritance 4

Table 2 The Real/Nominal Duality ‘Real’ ‘Nominal’ Material Immaterial Utils/Utility Prices/Pecuniary Hedonistic terms Business terms (pleasure and pain) (gain and cost) Production and consumption Finance and investment Property, plant & equipment Debt and equity Capital wealth Capital value Table 3 ‘Business’ and ‘Industry’: Sociology and Political Economy Condition of the Degree 0 Degree 1 Degree 2 possibility of… Private Proprietor Absentee Owner Inherited Knowledge (‘Culture’) Industrial Community ( Capitalist Employer ) ( Pecuniary Magnate ) Immaterial Equipment Mechanical Process Money Sphere Credit Sphere Inspired from Veblen (1904). Table 4 Nitzan & Bichler’s ‘Regimes of Differential Accumulation’ External Internal Breadth Mergers and Acquisitions Green - Field Investment Depth Stagflation Cost - Cutting Source: Nitzan and Bichler (2009: 329), Table 14.2. 5

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Table 5 Accounting Conventions, Sociological Categories and Distributional Struggle Revenue - Expenses = Profit Accounting Entry Sociological Category Distributive Struggle Owners vs. Owners Market share Revenue Owners vs. Non-Owners Sales price inflation Owners vs. Workers Wage inflation/deflation Expenses Workers vs. Workers Wage location in the industrial geography Owners vs. Owners Distributive share Profit Owners vs. Workers Distributive share Owners vs. Society Distributive share 8

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