Peter Frase

It's been pretty dead around here, I know---I've been pulled away by other obligations, including the new issue of [*Jacobin*](http://jacobinmag.com/), 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](http://www.slate.com/blogs/moneybox/2011/12/01/ceo_pay_drives_inequality.html) 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](http://jacobinmag.com/blog/2011/12/everything-old-is-new-again/) and [Doug](http://lbo-news.com/2011/12/02/the-ceo-as-humble-worker/) 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](https://twitter.com/#!/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](http://marginalrevolution.com/marginalrevolution/2011/11/are-ceos-paid-their-value-added.html) 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](http://www.amazon.com/Pay-without-Performance-Unfulfilled-Compensation) 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](http://mattbruenig.com/2011/12/01/corporate-executives-are-not-just-highly-paid-workers/) 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](http://www.peterfrase.com/2011/03/capitalism-without-capitalists/) 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.