“While mainstream economists, think tanks, and journalists obsess over every tenth of a percentage point of inflation and unemployment,” writes Eli Cook at The American Prospect, “profit analyses remain something you find only in shareholder reports, IRS filings, or Bloomberg consoles.”
As with warning employees not to compare pay packages, the ownership class is very touchy about discussing its profits. That tradition in this country goes back over a century and a half, Cook explains:
We live in a capitalist economy driven by the profit motive. Yet, ironically, the study of profits remains a shockingly neglected subset of the economic discipline. No Nobel Prize in Economics has ever been given to the study of profits. Economists classify their publications into countless categories (the Journal of Economic Literature’s J3 code stands for “wages, compensation and labor costs”), yet there is no category for profits. The American Economic Review last published an article with the word profits in the title in 2014. It was about the Japanese textile industry at the turn of the 20th century. As for metrics, while Carroll Wright’s Bureau of Labor Statistics is still going strong, there is no Bureau of Capital Statistics.
Ignoring profits is not just an intellectual problem, but a political and social one. Never has it been more glaring. As anyone not living in a cave has heard, consumer prices have risen in the past year. (We know this thanks to the consumer price index, or CPI, invented by Wright.) Yet far less known to most Americans is that around the same time as this consumer price increase, there was a staggering jump in corporate profits.
Matt Stoller readers knew that. But the topic seems taboo among mainstream economists.
Current inflation is not caused by corporations gouging customers, no. Never. Conventional, capital-driven wisdom is that “the government’s expansionist fiscal and monetary policies, which made workers too powerful, raised wages too high, and led to higher consumer prices, as demand outran supply.” The answer, profiteers assure us, is too cool, the economy “by weakening workers’ purchasing power by cutting spending, raising interest rates, or lowering wages.”
Motivated reasoning? Meet motivated economic reporting.
If economics were a more diverse discipline, Americans would be hearing a very different story, one in which the starting baseline for modeling the economy is not the assumption of perfectly competitive markets but rather corporate concentration and asymmetrical market power. According to this approach, large corporations are often not “price takers” but “price makers,” and increasing profits by raising prices is not a theoretical impossibility but an empirical fact familiar to most anyone who has ever run a large business.
You think white people are threatened by demographics shifting political power away from them? Watch how the ownership class reacts to workers increasing theirs.
I worked the summer after high school in a cotton warehouse rebailing waste from test bundles. During a break, one of my co-workers joked on the dock about starting a union. After break time, he was called into the office and told he’d best stop talking that shit.
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