[PEN-L:11247] Re: More On CEO & Administrative Pay

[Wojtek Sokolowski <sokol@xxxxxxxxxxxxxxxxxx>]

Responding to Jim Craven's critique of my posting:

1. I am not particularly committed to the neo-classical paradigm, au
contraire, I think of it a bastard product of fornication between
philosophical positivism and philosophical idealism.  But whatever we choose
to call it, it does not change the basic fact that the discourse on
political, social and economic issues in this country (and to a large extent
in Europe) is framed in its terms -- just like most moral, social, legal,
and political questions in the Middle Ages were framed in the language of
Christian theology.

As an old Sufi proverb goes, "a fool tries to convince me with his
arguments, a sage with my own."  To intelligently criticise the dominant
paradigm we must do it on its own terms, using its own arguments and its own
language (in the same vein, the most effective critique of papacy did not
came from "heathens" but from christian 'insiders' like Martin Luther).
Speaking the language of your enemy does not, of course, imply subscribing
to your enemy's points of view; it only means being able to attack your
opponent with his own weapon.

It was my impression that high executive salaries could be a hot potato for
most neo classical types: as "organic intellectuals" of the ruling oligarchy
they would bend backwards to justify whatever execs manage to rake in, but
by so doing they are shooting themselves in their own theoretical foot (or
rahter could they stand on) by admitting that markets just do not work in
the very core of capitalism.  That sounds almost like capitalism sowing the
seeds of its own destruction (aplogies to you know whom), would not you
think so?

IMHO, neoclascial theory is nothing but a few common sense platitutes
wrapped in an incomprehensible jargon.  To refute it, it does not take much
more than the common sense, provided you can cut through the jargon.  Being
a mere sociologist of organisations I do not feel sufficiently proficient in
the neoclassical jargon -- hence I posted the question to the list.

2. As far as the TCE/social networks arguments are concerned, I think you
are dismissing them too hastily.  The whole notion of social ties and
networks "lubricating" business transactions and thus reducing transaction
costs had been discussed by serious social scientists long before hacks like
Fukuyama decided to plagiarise them in their own apologia of corporate
capitalism.  But even if Fukuyama is a high-brow Rush Limbaugh for the
academe and his own work has little to do with empirical science, that fact
does not yet invalidate the concept of social networks as facilitators of
interaction among individuals.  To my knowledge, this stuff first came from
the empirical research on partcipation in social movements, then was picked
up by feminists (hardly a neo-con crowd) arguing how capitalists exploit
gender relations , and then was used to crticize Williamson and his
explanation why "hierarchies" are more efficient than "markets."  In that
sense, the  debate between the TCE and social networks people brought back
the social context to the discussion of efficiency (or lack of it) of large
formal organisations -- a favourable alternative to the neo-classical types
chasing their own tails and fabricating anecdotes to support their
speculations.  This, BTW, is precisely what Marx did some 150 years ago --
bringing the social reality to abstract speculations of bourgeois political
economists of his time (mind that Marx did not reject the classical approach
either but used it to critique a political-economic system that claimed the
classical economic theory as its own.)

3. Going back to the rent issue: Would you agree on the following
plain-English translation (on the concept of translation from excessive
jargon see C. Wright Mills, _Sociological Imagination_) of the neoclassical
view on rent: "if the circumstances compel a buyer to buy services from a
particular vendor, that vendor is in a position to get a higher price for
his service than under condition when the buyer is in a position to shop
around for a better deal or not to buy the service at all;  the difference
between what the vendor gets under such circumstances and what he would have
gotten had the buyer been free to choose is called 'rent?'

While I agree that the neo-classical theory views these 'compelling
circumstances' as given rather than investigating the possibility that a
rational vendor has an obvious incentive to create such circumstances --
that failure still does not change the fact that rent is a sign of
competitive markets not working properly, that is, rent is a sign of
inefficiency resulting from bypassing the markets.  An that ineffciency
exists right in the core of corporate capitalism.

If that interptretation is correct, the corporate bosses can be attacked
with their very own ideological weapon -- free market -- an intriguing idea,
would not you agree?

regards,

wojtek sokolowski
institute for policy studies
johns hopkins university
baltimore, md 21218
sokol@xxxxxxxxxxxxxxxxxx
voice: (410) 516-4056
fax:   (410) 516-8233