Remora

The line (part 1)

Paul Krugman's column about the compensation packages for top executives at top corporations is a brief but pointed overview of the last twenty five years. From the beginning of the eighties, the post-world war II corporation (best described by Galbraith in New Industrial State) was systematically de-structured. In its place was put the faux entrepeneurial organization of today -- one that rewards the CEO, and the top tier of management, in gross disproportion to their actual value to the company. The rewards include not only outright salary, but, of course, the notorious stock option packages, the loans at no interest, the loans, even, that don't have to be paid back -- as seems to have been the case at Adelphia. Krugman approaches this phenomenon from the standpoint of the economic theory that promoted it -- the standard theory, as taught in business school. After major corporations were loaded with debt in the 80s takeover frenzy, they had no choice but to cut. And the cuts were not made at the top, of course. The result, in the nineties, was supposedly a healthier, a more competitive corporation. The nineties seemed to vindicate the most hard hearted economic theory. Until now -- when the financial pages of major media are staging a mini-Last Judgement, with the books falling open. And what black hearts are so revealed? Well, we know the roll call by now, beginning with Enron. Krugman has a nicely pointed way of putting it:


And in the 1990's corporations put that theory into practice. The predators faded from the scene, because they were no longer needed; corporate America embraced its inner Gekko. Or as Steven Kaplan of the University of Chicago's business school put it � approvingly � in 1998: "We are all Henry Kravis now." The new tough-mindedness was enforced, above all, with executive pay packages that offered princely rewards if stock prices rose. And until just a few months ago we thought it was working.

Now, as each day seems to bring a new business scandal, we can see the theory's fatal flaw: a system
that lavishly rewards executives for success tempts those executives, who control much of the information available to outsiders, to fabricate the appearance of success. Aggressive accounting, fictitious transactions that inflate sales, whatever it takes."

It would take an economist to be surprised by all of this.

Kevin Phillips has recently written a book about the economic composition of the New Age -- the age that has chased the goal of equalizing wealth in any way from the stage of history, like the ghost in Hamlet dispersed by the crowing of a cock. But the old mole has a tendency to rumble under the stage. In a WP piece, Phillips throws around some interesting stats:

We have just witnessed, in the spectacular growth of U.S. fortunes over the past two decades, a once-in-a-century phenomenon. Puffed up by the boom in high-technology and finance, a select group of Americans has accumulated an even larger boodle in an even shorter period of time than the titans of the Gilded Age amassed 100 years ago. The numbers almost defy belief.The 30 largest U.S. family and individual fortunes in 1999 were roughly ten times as big as the 30 largest had been in 1982, an increase greater than any comparable peacetime period during the 19th century. In 1999, the single largest U.S. fortune, the $86 billion hoard of Microsoft's Bill Gates, was 1.4 million times greater than the assets of the median U.S. household; that exceeds the ratio attained by John D. Rockefeller, whose early 1900s wealth was 1.25 million times larger than the median household of that time."

Which leads, naturally, to this question:

"If the recent accumulation of wealth in the hands of the few resembles the Gilded Age, what about the politics? The economic concentrations of the Gilded Age had great political consequences in the successive assaults of populism under William Jennings Bryan and the comeuppance meted out to big-business conservatism by the progressive movement under Presidents Theodore Roosevelt and Woodrow Wilson. What we Republicans have to wonder, given today's parallel excesses, is whether combative reformers will reenact the politics of a century ago. Will modern Republicans be painted as courtiers of the new Robber Baronage? Is a great speculative bubble still popping from the gash of stock market bear claws? Can Sen. John McCain become a second Theodore Roosevelt?"

The answer to the third question is a definite no. As for the first question, one might ask a counter-question: why single out the Republicans? The two parties aren't divided by the question of the just distribution of wealth -- they are merely divided by who, among the wealthy, should be backed by the power of the state. The big drug companies? Hollywood entertainment empires? Is the senator from Merck, or is the senator from Microsoft?

LI wrote a review in the midst of the boom that (we like to think) posed the issue of wealth in terms that are consonant with Phillips, although less informed by American history. Green Magazine, where the review was posted, is no more. So we are going to flesh out this post with a reposting of the thing.

The Working Life: The Promise and Betrayal of Modern Work by Joanne B. Ciulla Times Books $25.00
Reviewed by Roger Gathman

The Arnhem Land aborigines studied by the anthropologistMarshall Sahlins forage for their food for about four or five hours a day. Therest of the day they spend in various amusements, among which resting andsleeping definitely hold first place. Sahlins, rather irked at these non-go-getters, suggested that maybe there are other things in life than resting and sleeping - building a culture, for instance. But one of the bushman set him straight: "Why should we plant when there are so many mongomongonuts in the world?"

Hegel himself couldn�t have phrased the great question ofcivilization more succinctly. As JoanneCiulla, a philosophy professor at the University of Richmond, shows in this book, work was never considered such ahot idea until the coming of modernity. Not that the ancients or the medievals valued sloth - but they certainly thought that work was best done by otherpeople, slaves or serfs. The good life of the happy few could be spent in civicpursuits, or philosophical contemplation, or pillaging the infidels, dependingupon the era. Anything but a nine to five job. That concept, in fact isunintelligible in a clockless society. "Clock discipline," as Ciullacalls it, was instilled into the general populace in the 18th century, and wasa pre-requisite for the industrial age.

Although Ciulla doesn�t spend very much time upon popular culture, the wound which the Industrial Revolution dealt to thousands of yearsof conventional wisdom is still visible in our western "dreamtime," saturated as it is with movies and TV. The screen rarely shows labor, unless it involves an emergency room, acourtroom, or an arrest. Our social instinct is to distinguish work, which is "boring," from entertainment, which is fun.

Ciulla�s book moves the historical story along briskly. Sheis really trying to fill in the context, here, so we can have a deeperunderstanding of our current situation. Her analysis of work, and how we feel about it, rests upon two social facts: alienation and inequality.

Ciulla has the wide reading and the mental astuteness that can successfully juggle Aristotle and Tom Peters. She is particularly good at tracing the career of alienation as a sociological theme from Marx to David Riesman, author of The Lonely Crowd. Ciulla employs the thinking of Riesman, William Whyte (author of The Organization Man), and C. Wright Mills (Author of White Collar), to comment onthe various faddish management theories which have arisen and subsided in the eighties and nineties. She draws attention to the contradiction between the public ideology of corporate spokesman, who inexhaustibly advocate free market solutions (based on the profit motive) for all public policy problems, and the inter-mural, therapeutic culture which is visited, by management, upon their employees. She quotes a study which polled managers about the most efficient incentives for building employee commitment: "The researchers found that most senior managers believed that celebrations and ceremonies and non-cash recognition were the best incentives for non-managers... But for senior managers, they responded that the best incentive was cash rewards tied to quality performance."

Circuses, not bread, for the working class, and both for the managerial meta-level. Is this a big surprise? This gets us to the second force shaping work for the majority of Americans right now: the increasingly skewed distribution of mongomongo nuts. Bill Gates has, by some estimates, maybe 70 billion nuts. To pile up a comparable stash, the average temp custodian who cleans the Microsoft offices would have to work some 70,000 years - and that�s without eating. Throwin some steaks and we are talking about a couple of thousand years extra.

This gives us a rather interstellar distance between high and low in our society not so very different between slave and master in the Roman Empire, or peasant and lord in the ancien regime. The Gini co-efficient, which measures income distribution, has gotten better in the last two years, but not by much. It is no wonder that, scratching the surface of Total Quality Management, one so often meets a corrosive cynicism among the plebes, even if they are more than willing, when the boss is around, to mouth the requisite platitudes.

Ciulla�s virtues, which are her eclecticism and stock of references, are also her flaws. This is a woman who sometimes seems to feel as though no passage is complete until she has cleaned out all her index cards, making for collages of quotes from the experts. This sometimes gives the book the creaky feel of an edifying PBS documentary. Still, this is a minor complaint to make about Ciulla's book, which, with its willingness to take broad views and its nterdisciplinary reach makes not only a righteous impression, but keeps the reader from falling asleep over its virtuous intentions - which is a very rare thing, indeed.