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A Shrinking Universe
How Corporate Power Shapes Inequality
Jordan Brennan [email protected]
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
ABSTRACT
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
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Corporate Power and Income Inequality
A Visual Representation
DIFFERENTIAL
ACCUMULATION Breadth Depth
Globalization of
corporate ownership
Aggregate
concentration
The distribution of
personal income
Capital-labour
redistribution
Depressed democratic
engagement The profit markup
Institutional Strength
of Organized Labour Hourly
earnings
National
wage bill
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PRESENTATION CHECK POINTS
The produce of the earth… is divided among three classes of the community… To determine the laws
which regulate 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
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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
Pursuit of wealth Pursuit of power Capitalized wealth
(intangible) Material wealth
(tangible)
Employers vs employees Rulers vs ruled Owners and managers Engineers and workman 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
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Table 2
The Real/Nominal Duality ‘Real’ ‘Nominal’
Material Immaterial Utils/Utility Prices/Pecuniary
Hedonistic terms (pleasure and pain)
Business terms (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 possibility of…
Degree 0 Degree 1 Degree 2
Inherited Knowledge (‘Culture’) Industrial Community Private Proprietor
(Capitalist Employer) Absentee Owner
(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 Green-Field Investment Mergers and Acquisitions
Depth Stagflation Cost-Cutting
Source: Nitzan and Bichler (2009: 329), Table 14.2.
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7
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Table 5 Accounting Conventions, Sociological Categories and Distributional Struggle
Revenue - Expenses = Profit Accounting Entry Sociological Category Distributive Struggle
Revenue Owners vs. Owners Market share
Owners vs. Non-Owners Sales price inflation
Expenses Owners vs. Workers Wage inflation/deflation
Workers vs. Workers Wage location in the industrial geography
Profit Owners vs. Owners Distributive share Owners vs. Workers Distributive share Owners vs. Society Distributive share
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10
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Select Bibliography
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