Thought Shrapnel

Cory Doctorow is such an amazing writer and speaker. He explains reasonably complex things so concisely and straightforwardly. This is one such explainer, where he discusses how issues which are usually described as being to do with the ‘economy’ are actually to do with power.

This kind of reframing is really useful, especially for people who, like the proverbial fish swimming in water, haven’t really thought about what it means to live within capitalism.

The cost and price of a good or service is the tangible expression of power. It is a matter of politics, not economics. If consumer protection agencies demand that companies provide safe, well-manufactured goods, if there are prohibitions on price-fixing and profiteering, then value shifts from the corporation to its customers.

But if labor and consumer groups act in solidarity, then they can operate as a bloc and bosses and investors have to eat shit. Back in 2017, the pilots' union for American Airlines forced their bosses into a raise. Wall Street freaked out and tanked AA’s stock. Analysts for big banks were outraged. Citi’s Kevin Crissey summed up the situation perfectly, in a fuming memo: “This is frustrating. Labor is being paid first again. Shareholders get leftovers”:

Limiting the wealth of the investor class also limits their power, because money translates pretty directly into political power. This sets up a virtuous cycle: the less money the investor class has to spend on political projects, the more space there is for consumer- and labor-protection laws to be enacted and enforced. As labor and consumer law gets more stringent, the share of the national income going to people who make things, and people who use the things they make, goes up – and the share going to people who own things goes down.

Seen this way, it’s obvious that prices and wages are a political matter, not an “economic” one. Orthodox economists maintain the pretense that they practice a kind of physics of money, discovering the “natural,” “empirical” way that prices and wages move. They dress this up with mumbo-jumbo like the “efficient market hypothesis,” “price discovery,” “public choice,” and that old favorite, “trickle-down theory.” Strip away the doublespeak and it boils down to this: “Actually, your boss is right. He does deserve more of the value than you do”:

Even if you’ve been suckered by the lie that bosses have a legal “fiduciary duty” to maximize shareholder returns (this is a myth, by the way – no such law exists), it doesn’t follow that customers or workers share that fiduciary duty. As a customer, you are not legally obliged to arrange your affairs to maximize the dividends paid by to investors in your corporate landlord or by the merchants you patronize. As a worker, you are under no legal obligation to consider shareholders' interests when you bargain for wages, benefits and working conditions.

The “fiduciary duty” lie is another instance of politics masquerading as economics: even if bosses bargain for as big a slice of the pie as they can get, the size of that slice is determined by the relative power of bosses, customers and workers.

Source: Pluralistic

Image: Angèle Kamp