Are CEOs workers, and should we care?

December 2nd, 2011  |  Published in Political Economy  |  7 Comments

It's been pretty dead around here, I know---I've been pulled away by other obligations, including the new issue of [*Jacobin*](, which will feature not one but *two* of my contributions. Look for that, coming soon!

Just a quick (or, well, now I guess it's not so quick) note in the meantime on today's topic of discussion in the part of the lefty Internet where I hang out: Matt Yglesias's [post]( arguing that it doesn't make sense to talk about a conflict between corporate fat-cats and workers, since CEOs are in some sense "workers" too. [Seth]( and [Doug]( obviously think that this is a kind of obtuse way of putting things, politically and morally. And I agree---but I don't think they quite get at the real problem with the argument.

Doug says that "the point isn't how hard you work, it's what you take home", and he goes on to note that the average big company CEO makes about $3,800 dollars an hour. But he implicitly concedes Yglesias's point that this is all about inequalities among workers, one group of whom happen to be obscenely well-compensated. That gives Yglesias the opening to [zing back](!/mattyglesias/status/142681917068812290): "I'm the one insisting on an orthodox Marxist account of exploitation." That, in turn, touched off some Twitter banter about what share of top-1% income comes from wages versus investments, and so on.

This seems a bit irrelevant to me. I'd counter that the point isn't just "what you take home", nor is it even how your income is classified for accounting purposes; rather, it's *where you're positioned in the system of capital accumulation*. In the circuit of M-C-M', most workers are just another commodity: the labor-power that is bought as part of the "C" step, the production and sale of commodities. CEOs, on the other hand, are actually in a position to control the entire process of production, and their income is best thought of as a share of the resulting profit, whether or not that share is officially coded as salary or as stock options.

It would be possible to set things up so that the CEO was paid more like a normal worker, and all the profit went to the shareholders, but that's pretty clearly not what's going on now. (Though you're welcome to go see [Tyler Cowen]( if you'd like some silly arguments to that effect.) In practice, managers at American corporations are able to behave as though they are the owners of the enterprise rather than the shareholders, and thus are entitled to appropriate profits themselves---there is a large [literature]( on this, showing how executives manipulate boards and compensation committees. This may not make them identical to the traditional conception of a capitalist who is the juridical owner of the firm, and it may put their interests in conflict with those of shareholders, but it certainly makes them quite different from ordinary wage laborers. (See [here]( for a similar rendition of this argument.)

So that's one criticism of what Yglesias wrote: it's not just that he underplays the significance of income inequality, he also fails to really reckon with the role top management plays in actually existing capitalism. The fact that European and Japanese CEOs make so much less than their American counterparts, which Yglesias mentioned in a tweet, actually gives the game away---this is an indication that these non-American executives have been less successful at grabbing a share of profits for themselves.

However, there's an important kernel of truth to what he's saying. It *is* possible, at least in principle, to have a society that is just as capitalist as ours, but where everyone is really a "worker" in a meaningful sense. I [wrote about that]( in the spring, in a post that I know Yglesias has read, because he linked to it. Probably he views the argument differently than I do---I meant to show that it's not enough to just get rid of the capitalist class if you want to challenge the deep structure of capital, whereas Yglesias might think that "capitalism without capitalists" is a state of affairs we should aspire to. And when he says that "the concept of a class struggle between workers and capitalists was at the time it was created grounded in a specific contrast between workers and owners", he seems to imply that we've *already* reached a fully depersonalized capitalism, which I think is wrong. But even if it were right, that wouldn't mean the current state of affairs was somehow OK.

So to reiterate what I said in my earlier post: the opposition between *capital and labor* is not the same as the opposition between *capitalists and workers*, and you can't always cleanly align the two relations on top of each other.


  1. Pauljmey says:

    December 2nd, 2011 at 8:07 pm (#)

    The Yglesias piece is just dumb. The assumption is that markets set wages/compensation/returns to capital. It is the allocation of market power, rent-seeking opportunities, information asymmetries etc., that determine compensation (the i.a.’s being a primary reason owners have been loosing ground to managers over the medium to long term). Capitalism, and especially finance, is about innovating the rules, which is usually on an asymptotic collision course with corruption.
    In other words, the way the pie is served up is the result of a social and political process, not as the result of some virtuous and spontaneous Smithian incentive structure. This is all true even without discussing the shrinking job base which will mean that in the future who even gets to have an income at all will increasingly be determined by an intensifying (in the optimistic scenario) political conflict.

  2. Matt Yglesias says:

    December 3rd, 2011 at 12:24 pm (#)

    So by your analysis do European and Japanese CEOs count as exploited workers?

  3. Peter Frase says:

    December 3rd, 2011 at 12:31 pm (#)

    Haha. No, I’d say the differences are of kind not of degree, from what I know of executives in other countries you’re still talking about people who are in the position of quasi-capitalists.

    But could a CEO be an exploited worker? Sure, if we’re using the term in the technical Marxist sense. The moral connotations and vernacular usage of “exploitation” tend to confuse the issues here, I think.

  4. Joe Clement says:

    December 5th, 2011 at 3:04 pm (#)

    Maybe you’ve seen some of the Twitter banter THIS article and the earlier one on Capitalism W/O Capitalists has engendered, and so I’d like to point out that you seem to contradict yourself when in the earlier post you say

    “But while there are people who take on the task of the capitalist–the employees of the sovereign wealth funds–they don’t make up a capitalist class, because they aren’t investing for their own personal profit”

    But then in this one, and I think more correctly, you say:

    “I’d counter that the point isn’t just ‘what you take home’, nor is it even how your income is classified for accounting purposes; rather, it’s where you’re positioned in the system of capital accumulation.”

    I don’t think it really ruins your analysis, but it causes some confusion — as the Twitter screech fest I endured after posting both articles demonstrates. I’m familiar with Postone too. I consider him the single most helpful relatively recent marxist theorist I think I ever read in college. However, what I gather from him and my own sense of the dynamics you’re picking apart in both articles, the capitalist class persists insofar as there are those who tend to the reproduction of capital for its own sake. The capitalist class doesn’t seem to go away, it just becomes modified, more integrated you might say. You even seem to actually suggest this when arguing how everyone in “capitalism without capitalists” becomes a capitalist and worker simultaneously. I don’t think this really makes sense, and others are right to point it out, since there is still a group of people “whose task remains the same as capitalists–the employees of the sovereign wealth fund” that you seem to single out. I get what you’re saying about “collective self-exploitation”, but if we want to use Postone it’s the form of capitalist labor in which that exploitation endures, and it’s an appeal to this aspect of his arguments that’s necessary to explain how “capitalism without capitalists isn’t really any better than capitalism with capitalists”.

    I have long thought, since I was an early teen, that this is the limit of what the Democratic Party EVER aspired to create: a capitalist engine for creating/accumulating wealth and a State apparatus for harnessing it for social welfare and otherwise social ends. It never impressed me as answering what always seemed so deeply wrong with the world. For this reason, I want to see these arguments become more clear, because I think they get at more than just “some socialist and marxist critiques of capitalism” but also to the heart of a popular liberal vision of how to reform capitalism.

  5. Mmmyyyuuu says:

    December 6th, 2011 at 8:31 pm (#)

    Blah Blah Blah. Dumb.

  6. john donohue says:

    December 7th, 2011 at 9:03 pm (#)

    Yglesias must be dating a CEO or something. She’s getting it in the backwards.

  7. Fighting over Salaries | Temporary Placeholder says:

    January 14th, 2012 at 3:17 pm (#)

    […] one that salaried bourgeois should care a lot about. Peter Frase had a good response to the Yglesias piece, where he said “the point isn’t just ‘what you take […]

Leave a Response