Lars P. Syll — New study shows marginal productivity theory has a ‘negligible’ link to reality

Those damn empirics keep getting in the way of theory. 

Mainstream economics, with its technologically determined marginal productivity theory, seems to be difficult to reconcile with reality. Although card-carrying neoclassical apologetics like Greg Mankiw want to recall John Bates Clark’s (1899) argument that marginal productivity results in an ethically just distribution, that is not something – even if it were true – we could confirm empirically, since it is impossible realiter to separate out what is the marginal contribution of any factor of production. The hypothetical ceteris paribus addition of only one factor in a production process is often heard of in textbooks, but never seen in reality.

When reading mainstream economists like Mankiw who argue for the ‘just desert’ of the 0.1 %, one gets a strong feeling that they are ultimately trying to argue that a market economy is some kind of moral free zone where, if left undisturbed, people get what they ‘deserve.’ To most social scientists that probably smacks more of being an evasive action trying to explain away a very disturbing structural ‘regime shift’ that has taken place in our societies. A shift that has very little to do with ‘stochastic returns to education.’ Those were in place also 30 or 40 years ago. At that time they meant that perhaps a top corporate manager earned 10–20 times more than ‘ordinary’ people earned. Today it means that they earn 100–200 times more than ‘ordinary’ people earn. A question of education? Hardly. It is probably more a question of greed and a lost sense of a common project of building a sustainable society.

Conventional economics as apologetics for ideology.

New study shows marginal productivity theory has a ‘negligible’ link to reality
Lars P. Syll | Professor, Malmo University

CEO Compensation Still "Out Of Control?" - Who's Supposed To Be In Control, For What Public Purpose? And Why Aren't They In Control?

   (Commentary posted by Roger Erickson.)




And, most importantly, how do we the people regain control?

Bill Mitchell writes:

CEO pay still out of control

Minus reception of the appropriate feedback from the "controlling" interdependencies, any system metric is "out of control."

Which feedback channels could/would/should be exerting the needed control ... and why aren't they operating as needed?

The more I read about current political-economics, the more it reminds me of cancer biology.

Instead of discussing only the high-friction, political-economic analogs of cultural chemo-therapy, shouldn't we be educating all citizens on what practices correspond to known political-economic onco-genes and carcinogens? And the best political-economic anti-oxidants that help us practice prevention?

Contrary to what some might think, a little political-economic sunlight is the best policy anti-oxidant, not just the best policy anti-septic.

Covering up, and smearing the political-economic sunscreen sure seems to be a self-defeating policy. It's produced an electorate with a severe Vitamin-Democracy deficiency.