Interesting exchange between Dr. Dean and Esther on Kant and capitalism. Esther makes reference to a report by the US Dept. of Agriculture that in the US 38 million people often do not have enough food, and the incidence of hunger in America is on the rise even among people holding full-time jobs. She calls that the "price of capitalism" which enforces property rights at the expense of human rights. Esther points out that the one-sided worship of the free market economy results in a distortion of Kant’s insistance on the primacy of human dignity:
Wenn wir alle Lebensbereiche schrankenlos auf Marktprinzipien ausrichten, hat das letztlich die Verkehrung der Kantischen Formel zur Folge, so dass Kapitalverwertung eine Würde hat und Menschen (auf dem Arbeitsmarkt, Partnermarkt, etc.) einen Preis haben.
(transl. If all areas of life are unrelentingly subjected to the marketplace, the result is an inversion of Kantian equation: the utilization of capital attains dignity and human beings (in the labor market, etc.) have a price tag.)
Dr. Dean points out that the unrestricted marketplace results in a distortion between performance and income. Nowhere is this distortion more apparent that in the pay packages of American CEOs. The New York Times has an excellent series of articles on how executive pay has reached obscene levels relative to the salaries of the rank and file worker: (From Off to the Races)
"The average pay for a chief executive increased 27 percent last year, to $11.3 million, according to a survey of 200 large companies by Pearl Meyer & Partners, the compensation practice of Clark Consulting. The median chief executive’s pay was somewhat lower, at $8.4 million, for an increase of 10.3 percent over 2004. By contrast, the average wage-earner took home $43,480 in 2004, according to Commerce Department data. And recent wage data from the Labor Department suggest that workers’ weekly pay, up 2.9 percent in 2005, failed to keep pace with inflation of 3.3 percent."
"The average top executive’s salary at a big company was more than 170 times the average worker’s earnings in 2004, up from a multiple of 68 in 1940, according to a study last year by Carola Frydman, a doctoral candidate at Harvard, and Raven E. Saks, an economist at the Federal Reserve. "
"But starting in the 1980’s, executive compensation began to accelerate. In 1980, the average chief executive made about $1.6 million in today’s dollars. By 1990, the figure had risen to $2.7 million; by 2004, it was about $7.6 million, after peaking at almost twice that amount in 2000. In other words, executive pay rose an average of 6.8 percent a year.
At the same time, the growth rate slowed for the average worker’s pay. That figure rose to about $43,000 in 2004 from about $36,000 in 1980, an increase of 0.8 percent a year in inflation-adjusted terms."
Have the top executives of these companies created such enormous value for the shareholders that their pay is somehow justified in the marketplace for managerial talent? In almost every case, the answer is no:
Chief executives "aren’t creating any exceptional value, so you would think that the average compensation of the C.E.O. would grow at the rate of the average worker," Mr. Bogle said. "When you look at it in that way, it is a real problem."
In today’s instalment in the pay series, the NY Times reports that Lee R. Raymond , the CEO of Exxon, was paid more than $686 million from 1993 to 2005 – that is, $144,573 each day. Now, at a time when most Americans are struggling to put gasoline in their cars and heat their homes and corporations are reneging on their pension commitments to employees, Mr. Raymond is taking home a retirement package of $400 million.
I very much doubt this outcome of the free marketplace was envisioned by its most ardent philosopher: Friedrich August von Hayek
Neoliberalism Neoliberalismus Kant Friedrich Hayek
