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Sunday, April 29, 2012

"A Marxist Dream?"

Before saying goodbye to my parents and hitting the road again for the final leg to LA, here's something from Chris Dillow:

A Marxist dream?, by Chris Dillow: Tim approvingly points us to this in the Guardian:

In a way bankers are Marx's dream, it's the workers getting the fruits of their labours. It's funny that the left is usually angry at shareholders, for taking money out of companies and thereby bringing down workers' salaries. Yet with the banks they want shareholders to press the banks to do exactly that, and curb pay.

I ignored this sort of remark when Tim made it, thinking it to be a silly Oxford Union-type debating point. But since it looks like spreading, it needs correcting. Bankers' high pay is NOT a Marxist dream at all, for at least three reasons.

1. Bankers' don't get the fruits of the labour only from shareholders. They get them from other workers generally, in two ways described by Andrew Haldane. One is through the implicit "too big to fail" subsidy, which has been worth (pdf) tens of billions a year to banks, even though it is not entirely an out-of-pocket cost to others. The other is through risk pollution (pdf); the risk of banking crises falls upon the general public, whilst the benefits of risk-taking accrue to bankers themselves. In these two senses, bankers exploit ordinary workers - and Marx hated exploitation.

2. Insofar as bankers' do gain at shareholders' expense, it indicates that there is a distinction between formal or apparent ownership and real ownership. Shareholders appear to own banks, but bankers, in effect, really do. This opposes Marx in two ways. For one thing, in one of his few programmtic statements (in the Communist Manifesto) he called for a state monopoly of banking. And for another, one of Marx's beefs with capitalism was that it created a big distinction between essence and appearance - for example labour contracts appear as fair exchanges but in essence are not. It's reasonable to suppose that Marx would have wanted to abolish the essence-appearance dichotomy in ownership structures as he did in labour markets.

3.One of Marx's most famous slogans is, of course, "from each according to his ability, to each according to his need*." This principle is obviously broken.

* Whilst bankers' technical ability is questionable, their ability to extract rent is certainly considerable. 

And, returning to a recent them on the "mal-distribution" of income in recent decades and its contribution to inequality, that does not exhaust the reasons why the executives might gain at workers expense.

    Posted by on Sunday, April 29, 2012 at 10:06 AM in Economics | Permalink  Comments (43)


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