Abstract Human capital theory is the dominant approach for understanding personal income distribution. According to this theory, individual income is the result of ‘human capital’. The idea is that human capital makes people more productive, which leads to higher income. But is this really the case? This paper takes a critical look at human capital […]
Abstract This paper offers a new approach to the study of capitalist income. Building on the ‘capital as power’ framework, I propose that capitalists earn their income not from any productive asset, but from the legal right to command a corporate hierarchy. In short, I hypothesize that capitalist income stems from hierarchical power. Based on […]
Abstract What is the unit of analysis in economics? The prevailing orthodoxy in mainstream economic theory is that the individual is the ‘ultimate’ unit of analysis. The implicit goal of mainstream economics is to root macro-level social structure in the micro-level actions of individuals. But there is a simple problem with this approach: our knowledge […]
Abstract What is the unit of analysis in economics? The prevailing orthodoxy in mainstream economic theory is that the individual is the ‘ultimate’ unit of analysis. The implicit goal of mainstream economics is to root macro-level social structure in the micro-level actions of individuals. But there is a simple problem with this approach: our knowledge […]
Abstract What accounts for the growth of US top income inequality? This paper proposes a hierarchical redistribution hypothesis. The idea is that US firms have systematically redistributed income to the top of the corporate hierarchy. I test this hypothesis using a large scale hierarchy model of the US private sector. My method is to vary […]
Abstract What explains the power-law distribution of top incomes? This paper tests the hypothesis that it is firm hierarchy that creates the power-law income distribution tail. Using the available case-study evidence on firm hierarchy, I create the first large-scale simulation of the hierarchical structure of the US private sector. Although not tuned to do so, […]
Abstract This article discusses the aggregation problem and its implications for ecological economics. The aggregation problem consists of a simple dilemma: when adding heterogeneous phenomena together, the observer must choose the unit of analysis. The dilemma is that this choice affects the resulting measurement. This means that aggregate measurements are dependent on one’s goals, and […]
Abstract Based on worldly experience, most people would agree that firms are hierarchically organized, and that pay tends to increase as one moves up the hierarchy. But how this hierarchical structure affects income distribution has not been widely studied. To remedy this situation, this paper presents a new model of income distribution that explores the […]
James McMahon Blair Fix, whose publications are available on this site, was interviewed by Post-Scarcity Anarchism. The interview covers his research on energy use and the relationship between hierarchy and personal income. Worth the listen!
Due in no small part to the work of Thomas Piketty, the empirical study of income inequality has flourished in the last decade. But this plethora of new data has not led to a corresponding theoretical revolution. Why? The problem, I believe, is an unwillingness to question and test the basic assumptions on which current […]
Abstract This paper proposes a new ‘power theory’ of personal income distribution. Contrary to the standard assumption that income is proportional to productivity, I hypothesize that income is most strongly determined by social power, as indicated by one’s position within an institutional hierarchy. While many theorists have proposed a connection between personal income and power, […]
Abstract Why do institutions grow? Despite nearly a century of scientific effort, there remains little consensus on this topic. This paper offers a new approach that focuses on energy consumption. A systematic relation exists between institution size and energy consumption per capita: as energy consumption increases, institutions become larger. I hypothesize that this relation results […]
Abstract Why do institutions grow? Despite nearly a century of scientific effort, there remains little consensus on this topic. This paper offers a new approach that focuses on energy consumption. A systematic relation exists between institution size and energy consumption per capita: as energy consumption increases, institutions become larger. I hypothesize that this relation results […]
Is economic growth a miracle of the free market? According to mainstream theory, growth is best ensured through conditions of ‘perfect competition’. However, economic growth is tightly correlated with the concentration of power in the hands of large corporations. Why? The capital as power framework provides potential answers that turn mainstream theory on its head: […]
Abstract Neoclassical growth theory assumes that economic growth is an atomistic process in which changes in distribution play no role. Unfortunately, when this assumption is tested against real-world evidence, it is systematically violated. This paper argues that a reality-based growth theory must reject neoclassical principles in favour of a power-centered approach. Building on Nitzan and […]
Abstract Neoclassical growth theory assumes that economic growth is an atomistic process in which changes in distribution play no role. Unfortunately, when this assumption is tested against real-world evidence, it is systematically violated. This paper argues that a reality-based growth theory must reject neoclassical principles in favour of a power-centered approach. Building on Nitzan and […]
Abstract Neoclassical growth theory is the dominant perspective for explaining economic growth. At its core are four implicit assumptions: 1) economic output can become decoupled from energy consumption; 2) economic distribution is unrelated to growth; 3) large institutions are not important for growth; and 4) labor force structure is not important for growth. Drawing on […]
Abstract Using a combination of heterodox economics and biophysical analysis, this paper investigates the relationship between economic distribution and the growth of material throughput. Empirical results show that the growth of “useful work” correlates with redistribution towards profit. Furthermore, increases in energy consumption are correlated with increases in the largest corporations’ share of total employment. […]
Abstract There is no consensus, in political economy, about the exact relationship between the biophysical and the pecuniary spheres. This paper enters into the debate by asking the following question: how can a biophysical approach to political economy be used to gain insight into the complex interrelationship between the biophysical sphere of economic activity and […]
Originally published at sbhager.com Sandy Brian Hager Reading in the latest FT Weekend about NovoNordisk’s recent moves to corner the market for weight loss drugs, I was reminded of an eye-opening article from Rana Foroohar late last year. In that piece, the always-sharp Foroohar discusses the emergence of new blockbuster drugs known as semaglutides. These […]
