More on Markets & Inequality

Last week, I wrote about sociologist David Grusky's article in the Boston Review, in which he argues that the Occupy movement should focus more on market structures which foster inequality, particularly rent-taking.

I spent the post on what I considered to be the most important contributions of the article: 1) that the message of OWS risks being bundled into a "tax the rich" solution which is not far-reaching enough; and 2) that market failures, particularly in wage-setting, need to be examined more closely.

Sadly, these arguments seem to have gotten lost in the nether-region between economics and journalism: not sensational enough to sustain journalistic interest, not rigorous to challenge economic orthodoxies.

Make no mistake - if taken seriously, threats to the notion "that a worker's compensation...equals her [sic] contribution" would require a radical revision to neo-liberal economic theory. Tell an average person that a CEO contributes 1000 times more to the economy than the workers who work for them, and you might have an argument on your hands. The average economist, on the other hand, is required to swear that that differential is justified on a copy of "Weath of Nations" or risk being tossed out of the profession on their ear!

In fact, economists go a step further. They (by and large) insist that those who do not work at all - who make their income simply by being the possesors of great wealth - are justly rewarded for their great "contributions" to the economy.

And this is no small issue when examining the wealth of the 1%. Realize that capital income makes up the lion's share of the income of the ultra-rich!

So, the real image of the "job creator" is not the visionary entrepreneur or the dynamic CEO, but the heiress who has no occupation but self-pleasure. These are, according to economists, some of the greatest contributors to our system! And their whims must be catered to, or else...

This is the subtle brilliance of the "job creator" moniker which has risen so dramatically in the past 5 years - it actually embraces the pseudo-divine distance of possesors of great wealth from the productive process, and artfully carries the idea that "my god is a jealous god" full capricious malevolence. The way that this notion dovetails with the implied threat of mass unemployment that is such an effective weapon against job-class political independence.

This is where Grusky's criticism of rentiers should really hit home.

The rentier is the most obvious face of the reactionary nature of great wealth. Libertarianism gets its populist lift from the promise that the market eliminates rent-taking. It is the false notion that government involvement is the only protection for rentiers that is the mysteriously un-exploited weakness of most libertarian arguments. (On the contrary, all successful firms try to establish monopolies, the preferred form of rent collection; or, failing that, de facto non-competition between a few large firms).

But, as I mentioned in the earlier post, Grusky's examples of rent - "bottlenecks" in access to higher ed, and failure of market discipline in CEO pay setting - fail to realize the promise. But it is a potentially fertile ground! Hopefully, I'll have time to try to develop the idea in another post...