MIT just discovered Strategic Sabotage?

Ron wrote:

From CasP perspective, is it basically mainstream economists “discovering” strategic sabotage?

From Shimshon  and Jonathan:

1. In our view, the underlying framework of mainstream economists makes it difficult if not impossible for them to ‘discover’ strategic sabotage — at least not in the sense that CasP uses it.

2. All neoclassicists agree that, unfortunately, power exists; that, unfortunately, it distorts markets; and that, unfortunately, it generates imperfections. Some of them – in this case, Acemoglu & Restrepo — try to measure these power distortions (in their case, struggles over ‘rent’ that is ostensibly collected by workers) and assess their negative effects.

3. To do so, they measure power and its distortion as residuals: they (i) relate actual incomes (which are presumably distorted by power) to theoretical incomes (which would exist in perfectly competitive markets, where factors of production get remunerated proportionately to their marginal ‘real’ contributions); (ii) interpret the resulting residual (expressed as a ratio or difference) as a measure of power; and (iii) relate this residual to various phenomena to assess the effect of that power.

4. The problem is that, since perfect markets do not exist, and given that nobody can measure ‘real’ economic quantities, let alone the alleged contributions of their factors of production, the ideal income benchmark – along with its power-distorted residuals – are effectively assumed out of thin air.

5. The CasP approach is very different. Not only does it reject the measurability of ‘real’ output and the existence of individual productivity, but it also argues that relative incomes are determined by the ability of different groups to differentially sabotage the integrated process of societal reproduction. With these fundamental incongruences, it seems that the only way for neoclassicists to ‘discover’ CasP’s notion of strategic sabotage is by rejecting their own framework and adopting ours.

6. Note that the barriers imposed by one’s initial framework are not limited to neoclassicists. Critical political economists – including Marxists, neo-Marxists and institutionalists – are limited by them as well. Here is how we summarized the difficulty on Page 142 of our 2023 paper, ‘The Capital as Power Approach’:

For Kalecki, as for Veblen, accumulation is an absolute process of amassing more and more claims on real assets. In this context, power, however important, is a means to an end, not the end itself. And this assumption leads to conclusions that are opposite to ours. For instance, in his paper ‘Political Aspects of Full Employment’, Kalecki argues that under certain circumstances — such as a long boom that empowers workers — capitalists would willingly sacrifice profits to defend their hegemony.[1] A similar view is marshalled by Stephen Marglin, who claims that capitalists often forego efficient innovations to safeguard their overall power.[2] And the same perception underpins the broader Monopoly Capital notion of an underconsumption crisis, where the increased power of capitalists, revealed by their higher degree of monopoly, undermines their ultimate interest in growth-led accumulation.[3] On these matters, CasP argues instead that capitalists scarcely sacrifice their accumulation interests to regain their power. They don’t have to. Their very differential capitalization is driven by and represents their power to start with.

Notes

[1] Kalecki, Michal. 1943. [1971]. Political Aspects of Full Employment. In Selected Essays on the Dynamics of the Capitalist Economy. 1933-1970. Cambridge: Cambridge University Press, pp. 138-145.

[2] Marglin, Stephen A. 1974. What Do Bosses Do? The Origins and Functions of Hierarchy in Capitalist Production. Review of Radical Political Economics 6 (2, July): 60-112. https://scholar.harvard.edu/marglin/publications/what-do-bosses-do

[3] Bichler, Shimshon, and Jonathan Nitzan. 2014. How Capitalists Learned to Stop Worrying and Love the Crisis. Real-World Economics Review (66, January), Box 1, p. 69. http://bnarchives.yorku.ca/390/

• This reply was modified 1 month, 2 weeks ago by Jonathan Nitzan.