[PEN-L:11209] on CEO Pay

["James Michael Craven" <CRAVJM@xxxxxxxxxxxxx>]

Yes, addenDUMB: I got so hung up with the idea of execs being paid a
scarcity rent that I lost sight of what they get paid when they don't
receive a scarcity rent, i.e., when they're paid their "Marginal physical
product."

Since corporate execs are, strictly speaking, unproductive workers -- i.e.,
not producing surplus-value directly -- the "marginal product" of an exec's
"labor" is problematic. To a neoclassical, it's no problem: hey, divide the
extra production that results from the exec's exertions by the amount of
those efforts and you've got the MPP. But to a Marxian economist, that's
obfuscating. The "MPP" of the exec would be the rise in the amount that
productive workers produce (extorted by the exec's minions under the
supervision of the exec) divided by the amount of the exec's efforts.

Most execs wouldn't have their salaries determined by that "MPP," by the
way, since much of what they do is pure financial paper-shuffling. Much of
that is quite profitable to the owners of the corporation, thank you very
much, even it doesn't add to the aggregate surplus-value at all.

mea culpa: I've broken two resolutions in one day.


in pen-l solidarity,

Jim Devine   jdevine@xxxxxxxxxxxxxxx
jim_devine@xxxxxxxxxxxxxx
Econ. Dept., Loyola Marymount Univ.
7900 Loyola Blvd., Los Angeles, CA 90045-8410 USA
310/338-2948 (daytime, during workweek); FAX: 310/338-1950
"Segui il tuo corso, e lascia dir le genti." (Go your own way
and let people talk.) -- K. Marx, paraphrasing Dante A.

Response:

Yes and still there is the problem of the usual post hoc ergo propter
hoc and correlation = causation fallacies, the time lagging and
multiple independent variable problems (various factors and various
times/places shape overall productivity and relative productivities)
and the fact that many of the variables shaping supposed marginal
productivities are beyond the control of even a group of these CEO
types in attempting to discuss/measure so-called CEO MPPs and MR
contributions.

With real-world integrated production functions and path dependency
and other non-linear effects, I believe that talking about real-world
marginal productivities or even marginal revenues attributed to a
particular isolated individual worker, CEO, "unit" of capital or
"acre" of land is simply nonsense designed to ratify and suggest real-
world applicability of a fundamentally bankrupt tautology-riddled
paradigm designed to rationalize/promote the gross inequalities and
brutal effects of capitalism and the core structures, imperatives,
relations and institutions of capitalism that promote and widen them.

It is clear that capitalism cannot survive and expand without the
constant degradation of those who work--in order to diminish real
wages (costs) and coerce higher levels of productivity and profits.
The grotesque levels of pay of some of these CEO's are more about
promoting the "hero" culture, ultra-individualism and the notion of
"capital" as the "sole" or "real" creator of wealth than about some
purported CEO "marginal productivity" or MRP. Often, behind the slick
suits, executive penthouses and the trappings of executive power, one
finds individuals who might best be described as fluff n' puff,
predatory, machiavellian, superficial, sycophantic, calculating,
narrow, myopic, cliche-based, corporate creatures whose real MRPs, if
they could be really calculated, would be closer to that of a pimp or
a counter person at Mc Donalds. Just watch some of these business
programs and when these imperial creatures deign to give an interview-
-highly structured and mostly softball questions--many
unintentionally reveal themselves to be quite empty and devoid of
substance.


                                Jim Craven

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