Persistent Inequalities

Wage Disparity under Capitalist Competition

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Economists generally assume that wage differentials among similar workers will only endure when competition in the capital and/or labor market is restricted. In contrast, Howard Botwinick uses a classical Marxist analysis of real capitalist competition to show that substantial patterns of wage disparity can persist despite high levels of competition. Indeed, the author provocatively argues that competition and technical change often militate against wage equalization. In addition to providing the basis for a more unified analysis of race and gender inequality within labor markets, Botwinick’s work has important implications for contemporary union strategies. Going against mainstream proponents of labor-management cooperation, the author calls for militant union organization that can once again take wages and working conditions out of capitalist competition.

This revised edition was originally published under the same title in 1993 by Princeton University Press.

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Biographical Note

Howard Botwinick, Ph.D. (1985) New School for Social Research, is Associate Professor of Economics at SUNY Cortland. He has been active in several unions and was a founding member of the U.S. Labor Party in the 1990s.

Review Quotes

Reviews of the original published in 1993 by Princeton Unversity Press:

Persistent Inequalities makes a major contribution to economic theory, bringing together a number of existing analytical elements and forging them into a coherent, logical analysis. Further, it includes important innovations. The analytical strength of the book lies in its use of competition as the explanatory mechanism for wage differential […] It offers an exciting and stimulating explanation of a real-world phenomenon and its social implications.”
John Weeks, University of London, Center for Development Studies, School of Oriental and African Studies

“Today employers cite ‘competitiveness’ as the reason for cutting wages and benefits and imposing new forms of speed-up. Good jobs are replaced by technology, on the one hand, and subcontracted, substandard jobs, on the other, as capital rushes to cut labor costs. The result is both a general decline in U.S. real wages, now below their 1973 level, and greater inequalities among workers. Persistent Inequalities gives us a contemporary Marxist analysis of wage and income differentials in the labor force – one that is based on the actual dynamics of capitalist competition. Because of this, economist Howard Botwinick, particularly in his conception of the ‘regulating capital,’ has given us a prism through which to craft strategies to end the very decline and inequality he explains.”
Kim Moody, author of An Injury to All: The Decline of American Unionism and US Labor in Trouble and Transition

“Botwinick’s scholarship is first-rate. His main objective is to reconstruct the explanation for interindustry and intraindustry wage differentials on the basis of the perspective of classical political economy and classical Marxism, rather than orthodox (neoclassical) economics. An important thrust of the book is the argument that the orthodox perspective, particularly in its human capital variant, fails to explain not only differences in earnings across occupations but also differences between persons who may differ ascriptively by race or by gender. The failure is due to the orthodox theory’s invalid characterization of competition. The author demonstrates that the classical perspective can be utilized to provide a much richer and persuasive theory of wage differences […] This work is certainly a significant contribution both to the theory of income distribution and to the theory of industrial organization in economics. In addition, the author explains difficult technical issues in an accessible fashion.”
William, Darity, Jr, University of North Carolina

“Labor organizer turned economist, Howard Botwinick, has written a seminal book in labor economics. Drawing upon the theoretical work of his teacher, Anwar Shaikh of the New School for Social Research, Botwinick in Persistent Inequalities has built what has eluded radical economists, namely, a fully determinate model of labor markets […] The beauty of Botwinick’s analysis is that, while class struggle enters into wage determination, wage rates are not completely indeterminate. There are concrete limits to wage increases […] Botwinick’s work has important implications for the labor movement. At any given time, there will be excellent organizing opportunities. Many of our service industries today are likely to be regulating capitals, and, therefore, good targets for unionization […] So are low-wage workers in highly capitalized industries […]”
Michael Yates, author of Why Unions Matter, in Monthly Review, February 1996

Table of contents

New Preface (2017 Edition)
Preface and Acknowledgements (1993 Edition)
List of Figures
List of Tables

1 Introduction
Breaking the Impasse
Toward a Theoretical Alternative
Implications for the Analysis of Discrimination
On Heterogeneous Labour
Comparing Our Results to Orthodox and Radical Economics
Solving Some Anomalies
Outline of the Argument

2 Continuing Attempts to Square the Circle (Or, Competitive Theory Confronts Differential Wage Rates)
Early Neoclassical Wage Theory
The Theory of Perfect Competition: Abstraction as Idealisation
The Inevitable Schism between Theory and Practice
The Theory of Imperfect Competition – Godsend or Albatross?
Postwar Institutionalists: An Initial Attempt at Alternative Theory
The Ascent of Human Capital Theory
The Real World Strikes Back
The New Institutionalists: The Dual Economy and Dual Labour Markets
Labour Market Segmentation and Monopoly Capital
The Initial Response to Segmentation Theory
The Second Wave of Segmentation Arguments
The Continuing Search for a Radical Alternative
Efficiency Wage Theory: The Latest Attempt to Square the Circle

3 Capitalist Accumulation and the Aggregate Labour Market
Marx versus Neoclassical Economics
The Special Commodity Labour Power
Primitive Accumulation and the ‘Doubly Free’ Labourer
The Unique Logic of Labour Supply
Capitalist Accumulation and the Reserve Army of Labour
Marx’s Reserve Army within the Modern Period
On the Necessity of Worker Resistance
Capitalist Accumulation and the Limits to Rising Wage Rates
Empirical Evidence for Limits to Rising Wage Rates

4 Wage Differentials and the Aggregate Labour Market
Capitalism’s Active and Reserve Armies: Differentiation and ‘Segmentation’ in Their Most Basic Forms
The Role of Workers in the Segmentation Process
A Dynamic Analysis of Labour Mobility and Wage Differentiation Under Conditions of Permanent Underemployment
Uneven Technical Change, Competition, and the Reserve Army: A Brief Glimpse of Marx’s Theory of Wage Differentials
On the Incompleteness of Marx’s Work

5 Capitalist Competition and Differential Profit Rates
Competition within Industries
Competition between Industries
Marx’s Concept of Regulating Capitals
Empirical Evidence of Monopoly
Chapter Summary
Appendix to Chapter 5

6 Capitalist Competition and Differential Wage Rates (I): The Analysis of Regulating Capitals
Overview of the Dynamic Adjustment to Changing Wage Rates
Deriving Determinate Limits to Rising Wage Rates
Limit One: The Immediate Profitability of Regulating Capitals
Limit Two: The Unit Costs of Subdominant Capitals
Further Implications for Inter- and Intraindustry Wage Patterns
Limit Three: The Differential Costs of Obstructing Wage Increases
Analysing the Effects of Uneven Worker Organisation
A Final Note on Workers’ Power and the Costs of Obstruction
The General Laws of Capitalist Accumulation

7 Capitalist Competition and Differential Wage Rates (II): Non-regulating Capitals and Differential Profit Rates
The Case of Less Efficient Capitals
Short-Term Effects of Rising Wage Rates
The Case of More Efficient Capitals
Implications of the Dynamic Equalisation of Profit Rates

Conclusion
Capitalist Competition and Differential Wage Rates: Abundant Possibilities for Sustained Inequality
Capitalist Accumulation and the Aggregate Labour Market: Further Sources of Wage Variation
Comparing Our Results to Neoclassical Economics
Comparing Our Results to Radical Economics
Implications for Empirical Research
Implications for the Contemporary Labour Movement

Afterword: The Past 20 Years Have Not Been Pretty
Where Do We Go from Here? Lessons from the 1930s
But Hasn’t Accelerated Globalisation Made the Old CIO Strategies Obsolete?
Given the Dismal State of the Left, How Can We Get There from Here? A Final Lesson from the 1930s

References
Index

Readership

Labor activists, undergraduate and grad students interested in labor economics, wage theory, Marxist political economy, labor management relations, and theories of discrimination and wage inequality. Academic libraries, Labor Institutes.

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