Re: media watch--dissing Cuba
Regardless of whether the Economist's story about the recent riot in Cuba originated in Langley, Virginia, race is an important dimension to Cuban political economy. According to friends who visited Cuba this past January, Afro-Cubans are less likely than Cubans of Spanish descent to have friends and family abroad who can send money to help them weather the current economic crisis. My friends also thought that Afro-Cubans were more likely to support Castro than Cubans of Spanish descent due to the greater relative improvement that the Revolution brought to the lives of Afro-Cubans. Is the analysis of my friends accurate? I would enjoy reading what other PEN-Lers think about this. Steven Zahniser [EMAIL PROTECTED]
marxian theory of the firm
Doug, Nice to have you back. Here are some cites: I have not yet read the posthumous collection of Stephen Hymer's essays on the firm, but his early pieces attempt an interesting marriage between Chandler and Fanon! I can't remember them well enough to recapitulate the argument. There is an interesting new book by Jairus Banaji, Beyond Multinationalism: Management Policy and Bargaining Relationships in International Companies. He focuses on a "headquarters management strategy" of insulating crucial decisions on restructuring and investment (which are internationally centralized) from collective bargaining (which continues to be fragmented). His case studies are from Bombay. A summary of his findings is in "Outline of an International Relations Theory of Industrial Conflict), Economic and Political Weekly (Delhi), 8/25/90 In my on-going research into Schumpeter, I came across FM Scherer's Schumpeter and Plausible Capitalism, Journal of Economic Literature, Vol XXX, Sept. 1992. He concludes that Schumpeter overstated the advantages of large, monopolistic corporations as engines of technological change. Scherer provides a very helpful summary of the existing bourgeois literature. To supplement Scherer, you may want to look at B Harrison's recent book Lean and Mean. I heard him give a talk and have read only a few chapters of the book. He is out to demolish the myth of the small firm and--as a positive contribution--to analyze the new subcontracting relations rendered more efficient by information technology. He then examines the new configuration of corporate power from the perspective of income distribution. Implicit in his argument, I believe, is the revival of Bernstein's argument that concentration is reduced by centralization. He looks at how smaller companies are acquired and used while leaving their plants intact. There is thus not much effect on the organic composition of capital. He does note contrary evidence to such a claim (consider the minimum costs required to start a semicondcutor fab these days). He seems to hold onto to the underconsumptionist problem of a rising rate of surplus value (enabled by new corporate structures) and deficient consuming power, exacerbated by the powerlessness of workers in especially the subcontracted firms. Now this was all implicit in the talk that I heard, and needs to be checked against his book. But see page 31 of Lean and Mean, where he keeps hope alive in the class-neutral rationality of effective demand management. By the way, rakesh bhandari (that's me) continues to use this line. p.s. I found the introduction to transactions costs interesting. Thanks to various people for insights and cites. d jones
Re: Broken vows & Coase
>Posted on 12 Sep 1994 at 11:15:13 by Uriacc Mailer (002033) > >Broken vows & Coase > >Date: Mon, 12 Sep 1994 08:14:01 -0700 >Reply-To: [EMAIL PROTECTED] >From: Doug Henwood <[EMAIL PROTECTED]> > >Well the vote was 10-0 for me to unzip my lips. I'll celebrate the >occasion by asking a question instead of issuing a pronunciamento. > >Actually I think I asked this question some time ago, but don't recall >getting much in the way of answers. Do PEN-Lers have, or know of, any >critiques of Coase's theorem of why firms exist? Relatedly, are there any >Marxian theories of the firm? Well, in Coasian terms I don't know of any. I.e. is there a Marxian theory of why a rational capitalist would not have either one big firm or a completely disintegrated one. But if we leave rational decision making aside, I think Marx's work on the concentration and centralization of capital (it's been a while since I read Das Kap, but I think old greybeard had a fair amount of stuff directly related to why new firms form too) is germaine here. Also Marglin's What do bosses do? seems apropos. > >Doug > >Doug Henwood [[EMAIL PROTECTED]] >Left Business Observer >212-874-4020 (voice) >212-874-3137 (fax) > Marsh Feldman Community Planning Phone: 401/792-2248 204 Rodman Hall FAX: 401/792-4395 University of Rhode Island Internet: [EMAIL PROTECTED] Kingston, RI 02881-0815 "Marginality confers legitimacy on one's contrariness."
Interesting note
Forwarded message: From: D Shniad <[EMAIL PROTECTED]> Subject: Returned mail: User unknown (fwd) To: [EMAIL PROTECTED] (michael perelman) Date: Mon, 12 Sep 1994 14:45:56 -0700 (PDT) Michael, When I send something to Pen lately, I've been getting this back. Any idea what's happening? Sid Forwarded message: > From Mailer-Daemon Mon Sep 12 14:34:25 1994 > From: > Date: Mon, 12 Sep 94 14:34:10 -0700 > Subject: Returned mail: User unknown > To: shniad > Cc: Postmaster > >- Transcript of session follows - > While talking to mailhost: > >>> RCPT To: > <<< 550 ... User unknown > 550 pen-l... User unknown > >- Unsent message follows - > Received: by fraser.sfu.ca (920330.SGI/SFU-2.3C) > Subject: The case for universal health care? > To: pen-l > Date: Mon, 12 Sep 1994 14:34:10 -0700 (PDT) > X-Mailer: ELM [version 2.4 PL23] > Mime-Version: 1.0 > Content-Type: text/plain; charset=US-ASCII > Content-Transfer-Encoding: 7bit > Content-Length: 1331 > > SHOT SELF TO ABORT, MOTHER IS CHARGED > > ST. PETERSBURG, FLORIDA -- A pregnant woman too poor > to afford an abortion shot herself in the abdomen, > police said. > The baby was born three months premature and died, > and the 19-year-old woman has been charged with > murder. > Kawanta Michele Ashley was turned away from an > abortion clinic because she didn't have enough money, > the St. Petersburg Times reported yesterday. > Unemployed, she already had a three-year-old child > and lived with her grandmother. > Ms. Ashley's boyfriend, the father, initially said > he would help her, but "nothing ever happened," her > friend, Sharrona Faye Wright, told the Times. > A month later, desperate and feeling helpless, Ms. > Ashley put a .22-calibre pistol to the right side of > her abdomen and pulled the trigger, friends and court > records revealed. > Her baby, Brittany Ashley, was delivered by > emergency cesarean section in March, a bullet through > her wrist. The baby's underdeveloped kidneys began > to fail and she died on April 11. > Ms. Ashley, who first told police she had been > wounded in a drive-by shooting near her home, was > charged Wednesday with manslaughter and third-degree > murder. She is being held on $50,000 bail. > > The Globe and Mail (from the Associated Press) > September 10, 1994 > > > Sid Shniad > > -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 916-898-5321 916-898-6141 messages E-Mail [EMAIL PROTECTED]
Re: Moscow notes available...
> > In case you missed the first announcement... > > I have written anecdotes and observations about the situation in Russia > based on a study trip to Moscow during May and June. They are similar to the > notes written and distributed in 1992 and 1993. > > A copy is available to anybody who asks. The file is 38K long. > > PLEASE SEND REQUESTS TO MY MAILBOX, not to this list: > > The daily schedule we followed during the trip is attached to the notes. > > If you earlier requested a copy of the notes, you should have received them. > If not, please let me know. > > Eric Fenster > > [EMAIL PROTECTED] > Hi, Eric, I still dont think I rcd the journal of the trip--maybe lost in the learning E-mail process. We are going to be in Moscow 12-19 October probably. Will try to reach you for suggestions before then. Regards, Robert & Dorothy
re: Marxian theory of the firm
(some comments: I'm not arguing with Blair. I just thought that he would be interested in alternative views, perhaps helping with his dissertation.) On Mon, 12 Sep 1994 10:55:46 -0700 Blair Sandler said: >Simplistic Marxist theory (by this I mean that I am representing >the theory crudely): the firm maximizes rate of surplus value. The >logic of capital is to maximize surplus appropriation. Marx is pretty clear that individual participants in the system do not see value magnitudes such as the rate of surplus-value and thus can't maximize them. (I can get quote(s) if you want.) Firms would maximize profits (which is the price form of surplus-value only at the societal level), which might not maximize societal surplus-value; what's good for one company isn't necessarily good for the capitalist class as a whole. Thus, we sometimes see economic crises and the like (such as an increase in the employment of "unproductive labor" which doesn't produce surplus-value). Of course, in volume I of CAPITAL, Marx treated capitalism as one big "societal factory" and abstracted from the differences amongst capitalists and amongst workers (dealing with abstract capital and abstract labor). He abstracted from redistributions of surplus-value amongst capitalists by assuming that goods sold at value. In this context, at this high level of abstraction, it makes some sense to see capitalists as maximizing surplus-value. The representative industrial capitalist (for Marx: in the cotton-textile industry) can be seen as maximizing surplus-value even though his goal is to maximize individual profits. But when he gets to vol. III, Marx deals with the ordinary consciousness of the participants of the system. There, capitalists don't care about surplus-value but about their own individual profits (so that the profit-rate tends to be equalized amongst sectors, etc.) Merchants and rentiers get profits even though they don't (directly) produce surplus-value, etc. Unfortunately, the old guy never finished vol. III, leaving instead a bunch of notes that seem even more scattered than vol. II. Because Marx did not see capitalists as *actually* (in the empirically world) maximizing surplus-value, there's no conflict between Marx and the Wolff/Resnick theory that Blair sketches. >Alternative theory of the firm: enterprises seek to secure access >to the conditions of existence of exploitation. (The capitalist >fundamental class process, in the language of Resnick and Wolff. >See their 1987 book _Knowledge and Class_.) Securing access to the >conditions of existence of exploitation typically though not >always requires distributing portions of already appropriated >surplus. For example, access to land requires rent; access to >credit requires interest payments, access to technology may >require royalties, access to monopolized services may require an >additional payment to induce the monopolist to sell Resnick >and Wolff call these subsumed class payments; the subsumed class >process is the distribution of surplus value for the purpose of >securing the conditions of existence of the fundamental class >process (surplus labor production: in the capitalist fundamental >class process this is always associated with exploitation). I would state this as saying that capitalists want to claim a piece of the aggregate surplus-value (in the form of individual royalties, interest, or whatever), and this does not always involve actually inducing workers to produce surplus-value. There's a redistribution to (say) rentiers of surplus-value from industrial capitalists in the form of interest income. The rentiers can use their control over (part of) finance to capture part of the aggregate surplus-value. I think it's good to distinguish between the "conditions of existence of appropriation of surplus-value" (ability to claim part of the aggregate s.v.) and the "conditions of existence of exploitation" (the ability to actually get workers to work beyond the time necessary to pay for their livelihood). I hope that this is useful. (I agreed with the rest of the stuff, as far as I could see.) in pen-l solidarity, Jim Devine [EMAIL PROTECTED] or [EMAIL PROTECTED] Econ. Dept., Loyola Marymount Univ., Los Angeles, CA 90045-2699 USA 310/338-2948 (daytime, during workweek); FAX: 310/338-1950
Broken vows & Coase
This is sort of up my alley, so I'll take a stab at Doug's two questions. (1) By itself, the transaction cost explanation for the firm is not too bad, although it has been overlaid with a particular theory of transaction costs; i.e. Oliver Williamson's view that deterring opportunism (lazy workers, deceitful middle managers, etc.) is the main raison d'etre of the firm. For more than a decade Lou Putterman has been taking pot shots at this argument; I assume Gil has all the appropriate references at hand. Personally, I would emphasize two criticisms of Coase (w/ or w/o Williamson): it ignores questions of power (which cannot be understood properly within a transaction cost framework), and it trivializes (and therefore puts out of reach of theory) the problem of entrepreneurship in the Schumpeterian sense. Socialists in particular should be wary of any theory of the firm that fails to tackle entrepreneurship, since (a) we need to be able to critique entrepreneurship-based apologies for capitalist power, and (b) we need to incorporate a bit of entrepreneurship in socialism if it is to thrive. (2) The Marxist theory of the firm centers on the extraction of labor from labor power, which cannot be performed simply on the basis of free exchange in the marketplace. Workers are assembled under a single authority, where they can be monitored and manipulated. But the monitors and manipulators also need to be monitored and manipulated, etc., giving rise to complex hierarchies. I would take the radical principal-agent literature, to which our own Gil has so ably contributed, as the modern extension of this paradigm. This is very summary (and very lazy about references). Others can expand, or point out gaping holes. Peter Dorman
Re: Broken vows & Coase
> Actually I think I asked this question some time ago, but don't recall > getting much in the way of answers. Do PEN-Lers have, or know of, any > critiques of Coase's theorem of why firms exist? Relatedly, are there any > Marxian theories of the firm? > Coase argued that firms arise because of the costs associated with participating in markets--in particular, costs associated with search and contracting. Firms replace "horizontal" market relationships with "vertical" authority relationships which "economize" on such transactions. Oliver Williamson later spelled out the nature and impact of such transaction costs in detail. Note the asserted parallel, in both Coase's and Williamson's work, between institutional innovations and technical innovations: in both cases "entrepreneurs" are understood to be motivated primarily if not solely by the goal of reducing costs--transaction costs in the former case, production costs in the latter. Thus a sort of New Institutionalist welfare theorem lurks behind this work: private ownership economies generate optimal second-best mixes of market and non-market transactions. The asserted parallel is suspect because it ignores (in classic neoclassical fashion) the strategic and other relational consequences that flow uniquely from transaction costs. The nature and incidence of such costs determine the structure of relationships and individual roles and abilities within them. As a result, questions of *power* and *equity* as well as efficiency unavoidably arise in the presence of transaction costs. Most of the critiques of Coase in particular and the New Institutionalist economics in general flow from this insight. Others tackle the related issue that Coase et. al take for granted the overarching structure under which such costs are generated. Some sources: Greg Dow, "The Function of Authority in Transaction Cost Economics", Journal of Economic Behavior and Organization Vol 8 (1987), pp 13-38. Greg takes issue in particular with the implicit assumption that the "authority" in the authority relation never acts "opportunistically", although employees do. I've written three articles that illustrate how the "authority" might act opportunistically in unpleasant ways, for redistributional purposes: RRPE Vol 20 Nos 2-3 (1988)pp 177-183, RRPE Vol 23 Nos 1-2 (1991)pp 12- 21 and a Chapter in _Markets and Democracy_ edited by Gustafsson, Bowles and Gintis (1993). I also have an unpublished paper, "Exit, Voice, and (Dis-)Loyalty: The Two Faces of Organizational Innovation", available on request, which speaks directly to the power vs. efficiency question referred to above. Speaking of Bowles and Gintis, all of Sam and Herb's stuff on contexted exchange is a more or less explicit critique of approaches which ignore the implications of transaction costs for the incidence of power. See for example their opening chapter in the _Markets and Democracy_ book. Geoff Hodgson also has an interesting critique of the Coasian approach in his _Economics and Institutions_, chapters 8-9. Finally, you might check out William Dugger, "The Transaction Cost Analysis of Oliver Williamson: A New Synthesis?", Journal of Economic Issues, Vol 17 (March 1983), pp 95-114. Enough for one post. Next post: Marxian theories of the firm?
Real World URPE
I still don't see how the "crude empiricist inductive logic type of method" "appeal" applies to people who think about real problems. The fact that Clinton doesn't have a good jobs program is a real problem, just as important as the work you do. I have to agree with Devine's comment that we must have more of that "dirty" dialectic.Care to dance? In friendly pursuit of truth at much later in the day, H. Grob --Reply -- I guess the comments below was intended for pen-l but by mistake came to me on private line. My only comment is that what is the point in getting up at 8 am to discuss Clinton's job program when he does not have one? Cheers, Ajit Sinha Original message How in the world is calling for a link between theory and real events a necessary appeal to follow a "crude empiricist inductive logic type of method" as Ajit Sinha claims? Isn't he just slinging more mud? Why label those who want to make a difference in public policy as "crude empiricists"? What is the use of calling oneself a political economist if one cannot link his/her theories to the world as we perceive it? I think we have a real division between those who would like to get up at 8 am to discuss the transformation problem and those who would much rather discuss Clinton's jobs program. Isn't there some way to link theory with policy? Frustrated with pen-l "solidarity", Heather Grob
re: Marxian theory of the firm
Simplistic Marxist theory (by this I mean that I am representing the theory crudely): the firm maximizes rate of surplus value. The logic of capital is to maximize surplus appropriation. Alternative theory of the firm: enterprises seek to secure access to the conditions of existence of exploitation. (The capitalist fundamental class process, in the language of Resnick and Wolff. See their 1987 book _Knowledge and Class_.) Securing access to the conditions of existence of exploitation typically though not always requires distributing portions of already appropriated surplus. For example, access to land requires rent; access to credit requires interest payments, access to technology may require royalties, access to monopolized services may require an additional payment to induce the monopolist to sell Resnick and Wolff call these subsumed class payments; the subsumed class process is the distribution of surplus value for the purpose of securing the conditions of existence of the fundamental class process (surplus labor production: in the capitalist fundamental class process this is always associated with exploitation). (Of course, there is always the possibility of a Rrevolutionary ruptureS in which the enterprise ceases to earn fundamental class revenues, seeking instead to secure a substantially different set of conditions of existence of different goals, say subsumed class or non-class revenues. (e.g. if the enterprise liquidates its productive capital and goes entirely into finance. For a while back there, I believe, GM lost money on auto production but earned positive net income on its finance division.) As natural and social conditions change, so do the distributions of surplus the enterprise must make to secure its conditions of existence. For instance, in the past water was free, but now requires distributions of surplus to acquire it and/or clean it before release back into the environment. Thus, the "firm" is essentially a set of strategies for securing access to the conditions of existence of surplus appropriation. The stock of capital goods; ownership of patents and licenses; relationships with creditors (bondholders, stockowners, banks, etc.), employees, customers, suppliers, government officials and the like; all that we usually think of as the "firm," are nothing but the manifestation of past chosen strategies. In part, of course, this determines present strategies open or closed to the firm, thus shaping future possibilities. This is how a firm can have historical existence through changes of ownership, management, physical location, complete turnover of employees and capital stock, even corporate name and more. Returning to the second paragraph, above, if the logic of capital is profit maximization, then social movements "constrain" capital, or seek to do so. But if the logic of capital is (say aggregated over all enterprises) a particular set of strategies enterprises adopt to secure the conditions of existence of surplus appropriation, then social movements alter the logic of capital. (The above is basically from my dissertation in progress, although the focus of the thesis is not on the theory of the firm.) Blair [EMAIL PROTECTED]
Re: Broken vows & Coase
Doug's question was a central part of my book: Information, Social Relations, and the Economics of High Technology. -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 916-898-5321 916-898-6141 messages E-Mail [EMAIL PROTECTED]
More on competitiveness
Sept. 12, 1994 Dear Pen Readers, "The Nation" (April 27, 1992) had an article by Andrew L. Shapiro, title: We're Number One! (Really?) He said: We're Number One in managers. We're Last in growth of industrial productivity. We're Number One in executive salaries. We're Number One in inequality of pay. Then he provided the following interesting tables. TABLE 1: Percentage of economically active population who are managers or administrative workers, 1989; and percentage average annual growth of labor productivity, in output per employee, 1979-90: COUNTRY MANAGERS(%) PRODUCTIVITY GROWTH(%) United States 12.10.7 Australia 11.90.9 Canada 11.91.2 Austria 4.71.9 Japan3.73.0 Netherlands 3.31.5 Denmark 3.02.1 Finland 3.03.6 TABLE 2: Average renumeration of chief executive officers (CEOs), and CEO remuneration as a multiple of average manufacturing employee remuneration, 1991: COUNTRY CEO SALARIES(US$) RATIO: CEO TO WORKER United States $747,50025 France 448,50016 Switzerland 424,10011 Italy421,30014 Canada 407,60012 United Kingdom 399,60016 Belgium 397,30013 Japan371,80011 Germany 364,50010 Sweden 335,60010 Netherlands 297,90010 Austria 271,30014 TABLE 3: We're Last in paid vacation days. Paid vacation days per year, 1991: COUNTRY VACATION DAYS COUNTRY VACATION DAYS Netherlands 31.9Norway 31.4 Germany 29.9Finland 28.6 Sweden 27.8France 27.0 Austria 26.8Denmark 25.0 Belgium 24.6Italy 24.6 United Kingdom 24.5Japan 24.0 Switzerland 23.4Australia 22.4 Canada 14.7United States 10.8 Cheers! Fikret Ceyhun Dept. of Econ, Univ. of North Dakota University Station, box 8369 Grand Forks, ND 58202 (701)777-3348 voice;(701)777-5099 fax [EMAIL PROTECTED] e-mail
Re: Broken vows & Coase
RE: Doug's query on why firms exist Marglin's "What Do Bosses Do" RRPE Summer 1974 may be relevant. Brian Eggleston
subscribe
please subscribe [EMAIL PROTECTED]
Re: Broken vows & Coase
Doug he asked: > Do PEN-Lers have, or know of, any >critiques of Coase's theorem of why firms exist? Relatedly, are there any >Marxian theories of the firm? One relevant item that comes to mind is an interesting piece by Axel Leijonhufvud, which commends both Smith and Marx for having a lot more to say about the existence of firms than do modern neoclassicals. I can't remember the title offhand, but it's in a volume edited by Langlois, entitled "Economics as a Process." === Allin Cottrell Department of Economics Wake Forest University Winston-Salem, NC 27109 (910) 759-5762 [EMAIL PROTECTED] ===
Broken vows & Coase
Well the vote was 10-0 for me to unzip my lips. I'll celebrate the occasion by asking a question instead of issuing a pronunciamento. Actually I think I asked this question some time ago, but don't recall getting much in the way of answers. Do PEN-Lers have, or know of, any critiques of Coase's theorem of why firms exist? Relatedly, are there any Marxian theories of the firm? Doug Doug Henwood [[EMAIL PROTECTED]] Left Business Observer 212-874-4020 (voice) 212-874-3137 (fax)
Re: NZ and Competion indices
is it true that NZ has a high level of per capita consumption of tranquilizers? even compared to the US? in pen-l solidarity, Jim Devine [EMAIL PROTECTED] or [EMAIL PROTECTED] Econ. Dept., Loyola Marymount Univ., Los Angeles, CA 90045-2699 USA 310/338-2948 (daytime, during workweek); FAX: 310/338-1950
Re: Organic Composition of Capital
Some of you interested in empirical material might wish to check out some work done andpublished in the early 1980s by Chris Freeman and Luc Soete. This sought to measure things like the rising productivity of capital etc since the 1940s or 1930s within a Schumpeterian (rather than Marxist) perspective. dir Freeman and Soete were seeking to examine the role of technological change over the different stages of the long cycle, the changing patternsof capital and labour productivity etc. I suspect it might be useful for those with an interest in empirical aspects of the long-run crisis cycles. - Paschal Preston Dublin City Univ PS I think the Freeman and Soete work was published by Pinter. I do nto have the reference to hand
The "bill" for financial deregulation in OZ
Australia was a little less enthusiastic on the waggon of deregulation and privatisation which inflicted many of the western nations in the 1980s. The US, England and the good neighbour New Zealand all went much further along the laissez faire road but one of the few areas where Australia did attempt to level the playing field was in the area of financial deregulation. The early 1980s saw a radical opening up of the financial sector in Australia which enabled a whole cluster of "corporate cowboys" to create vast financial empires by shuffling debt and "creative" accounting. The incest between a bunch of second rate real estate salesmen and journos with a gaggle of bankers hardly out of puberty, dominated all sectors of the Australian economy and daily life. [How was the America's cup won?? and on what media channel was it shown??]. The financial crash when it came drove a stake close to the nation's economic heart - with the cost estimated in the order of A$28 billion. Not bad for a bit of market failure - eh? An analysis of the mess has just been published by an Australian financial journo and makes interesting reading. Anyone interested can get a ref off-the-list from me. Nevertheless, maybe as a function of not going anyfurther down the deregulation etc road, Australia appears to have the strongest economy in the OECD. Wonder what could be the picture if the government of the day had held the line against the "rationalists"? The destruction accross the Tasman has been quite plain to see!! Cheers Andrew ++ + Andrew K. Dragun + + LaTrobe University + + Melbourne + + Australia + + email: [EMAIL PROTECTED] + ++
