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A Shrinking Universe

How Corporate Power Shapes Inequality

Jordan Brennan jordan.brennan@unifor.org

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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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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Select Bibliography

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