some green eye shade type
" I ignored this sort of remark when Tim made it, thinking it to be a silly Oxford Union-type debating point. But since it looks like spreading, it needs correcting. Bankers' high pay is NOT a Marxist dream at all, for at least three reasons."
smart alec
"1. Bankers' don't get the fruits of the labour only from shareholders. They get them from other workers generally, in two ways described by Andrew Haldane. One is through the implicit "too big to fail" subsidy, which has been worth (pdf) tens of billions a year to banks, even though it is not entirely an out-of-pocket cost to others. The other is through risk pollution (pdf); the risk of banking crises falls upon the general public, whilst the benefits of risk-taking accrue to bankers themselves. In these two senses, bankers exploit ordinary workers - and Marx hated exploitation.
2. Insofar as bankers' do gain at shareholders' expense, it indicates that there is a distinction between formal or apparent ownership and real ownership. Shareholders appear to own banks, but bankers, in effect, really do. This opposes Marx in two ways. For one thing, in one of his few programmtic statements (in the Communist Manifesto) he called for a state monopoly of banking. And for another, one of Marx's beefs with capitalism was that it created a big distinction between essence and appearance - for example labour contracts appear as fair exchanges but in essence are not. It's reasonable to suppose that Marx would have wanted to abolish the essence-appearance dichotomy in ownership structures as he did in labour markets.
3.One of Marx's most famous slogans is, of course, "from each according to his ability, to each according to his need*." This principle is obviously broken."
dumb alec
"* Whilst bankers' technical ability is questionable, their ability to extract rent is certainly considerable. "
limp wit
limp wit
Posted by Mark Thoma on Sunday, April 29, 2012 at 10:06 AM in Economics | Reddit, Tweet, Share on Facebook | Like on Facebook | Permalink Comments (40)
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about the views of dear karl of trier
read critique of the gotha plan to clear some of this up
but of course the analytics of hi fi top dog "compensation"
takes us into late marx on joint stock companies as
they were called in the era before they became commonplace
one point i like myelf
karl considered the holders of publically raded stock as more like corporate bond holders then "owners"
he had an easy way to figure the work compensation of an owener manager
what that job would pay if the manager wasw hired by the owner
the rest is return to capital
most big outfits compensate on performance
profits as piece work so to speak
but the rules are made by these top dogs
so .....
i like the notion of an inside capitalist
and rentier "backers" stock or bond holder
just a choice in portfolio distribution
of course equity holders that own shares in pools or funds
create a second layer of capitalist insiders
one gets boxes within boxes here
fun but not too important
unless you fail to see who calls te shots and thus who's "incentives" matter to the rest of us
Here's the deal: the above is Mark quoting Chris quoting Tim quoting Joris quoting some anonymous auditor, who, in context appears to have his tongue firmly planted in cheek. He's making a little ironic jokey. Is irony dead? Or what?
"The Modern Corporation and Private Property is a book written by Adolf Berle and Gardiner Means published in 1932. It explores the evolution of big business through a legal and economic lens, and argues that in the modern world those who legally have ownership over companies have been separated from their control. The second, revised edition was released in 1967. It serves as a foundational text in corporate governance, corporate law (company law), and institutional economics.
Berle and Means argued that the structure of corporate law in the United States in the 1930s enforced the separation of ownership and control because the corporate person formally owns a corporate entity even while shareholders own shares in the corporate entity and elect corporate directors who control the company's activities. Compared to the traditional notion of property, say over one's laptop or bicycle, the functioning of modern company law “has destroyed the unity that we commonly call property”. This occurred for a number of reasons, foremost being the dispersal of shareholding ownership in big corporations: the typical shareholder is uninterested in the day to day affairs of the company, yet thousands of people like him or her make up the majority of owners throughout the economy. The result is that those who are directly interested in day to day affairs, the management and the directors, have the ability to manage the resources of companies to their own advantage without effective shareholder scrutiny."
This is not Marx's slogan. He is quoted as saying it in a statement about how it was impractical and should not be adopted.
There is so much wrong with that sentence (grammar not the least of it; are there no editors at the Guardian?!)
And in what scenario would Marx ever have considered bankers to represent his "dream" scenario of "workers getting the fruits of their labors?" They are elites squeezing the proletariat dry (what with their subsidized business model, their desire to profit two ways on a deal, and their fees that make banking a lose-lose proposition for banking customers.)
"One of Marx's most famous slogans is, of course, "from each according to his ability, to each according to his need*." This principle is obviously broken."
When, just when, was this principle working like a charm?
Seems the Chicago Tribune's obituary for facts has come at a very timely moment in history... http://bit.ly/IiIArW
have you given a warning or a recommendation?
In very technical and narrow sense, the way banks function internally, and how profits are distributed, is pro-worker (or pro-certain kind of worker -- I'm sure the janitors and secretaries aren't getting bonuses)
The problem, though, is the function that banks have in the wider economy. They are intermediaries, finding capital for companies and from companies that do NOT have egalitarian/marxist etc means of distributing profits. So they are enablers. Their business *is* capital, not making things and providing services. In a sense, all the workers in banks are "capitalists," agents that help "real" capitalists re-invest their capital, i.e., surplus labor value.
It's a unique case. Not all corporations are alike.
Re: the separation of ownership and control (famously attributed to Berle and Means) - love the quote! I love when I see those names outside of a law school context.
Their point about public shareholders (you and I and anyone else lucky enough to have a 401k or a pension fund) identifies the perversity of the system. If we let CEOs run the show, chances are they will run away with exorbitant rents. But, if we let shareholders run the show -- they will demand actions that tend to raise stock prices. Stock buybacks, plant shutdowns, cutting benefits, etc. Which are equally bad on workers as are excessive executive salaries. In fact, many blame the current CEO largesse on mechanisms that are meant to align CEO and shareholder interests, i.e., stock options and the like. CEOs make money when shareholders do.
Eliminating the separation of ownership and control, then, just brings us back to the same old problem.
So what to do? If you have a pension fund, when was the last time you asked your fund manager how she was using the fund's considerable financial leverage to make the world (and the companies in which she invests) better for workers?
Once this brilliant insight becomes widely appreciated, there will no doubt be portraits of Karl everywhere on Wall Street.
"Where are the customers' yachts?" provides my moment of zen.
the full quote from the critique of the Gotha program is IIRC "It is not until work ceases to be a burden on life and becomes its chief aim and pleasure that we can inscribe upon our banner "From each according to his ability, to each according to his needs.". He argued that the slogan, which was not practical back then or now, was implied by the Gotha program (which said workers should have equal wages). But he was being unfair, the Lassalian's did not advocate the extreme policy described by Marx in the slogan. That would be the policy of Simon Peter as described in The Acts of the Apostles.
Peter not Karl thought it would work.