Review of "Persistent Inequalities: Wage Disparity Under Capitalist Competition"

In Howard Botwinick’s Persistent Inequalities: Wage Disparity Under Capitalist Competition, the author seeks to provide an outline of the factors going into wage labor that Marx meant to include in Das Kapital but never completed. This book is important as it is not simply a restatement of imperfect competition theories, but in it’s comparative analysis of other explanations of wage pricing. As Botwinick states in the opening, the ways in which patterns of wage disparity manifest themselves is important as an explanatory function for the ways that similar jobs in different companies get different wages as well as the persistent of wage inequality due to race and gender and for relating the potentials of national capitals within an international paradigm.

Botwinick first surveys how orthodox, Labor market segmentationists (LMS), radical and even neo-Marxian economists all use neo-classical presuppositions, such as static general equilibrium frameworks, to explanation wage rates. The negative effects of using such concept that don’t actually occur within the material interactions of capitalist firms in competition on a local and world stage has myriad effects which Botwinick then outlines.

The orthodox economists get trenchant criticism for their explanatory conceptions of human-capital, marginalist, and institutionalist theories. Botwinick deracinates these and other theories of determining wages for their ability to still be considered social science despite the constant transformation. While they may not be precise or work, they have certainly provided many an academic with the opportunity to write a paper to include a new factor in determining wages.

For the radical economists and LMS, this means that though they seek to insert the criteria of class struggle within their explanatory framework of wage pricing, their models are essentially Ptolemizations of the neo-liberal models. Dual labor markets explanations present a myriad of empirical problems, which is seen as the cause for the growing tendency away from theoretical analysis and the movement into case studies – for as the typically used Juglar cycle is extended, the monopoly disappears.

The categories of segmentation used by LMS, periphery and core, are so slippery as to be useless and that many of the so called monopoly effects are simply the result of a period wherein one capital is able to be the regulating factor of the market and Botwinick’s counter-examples of the construction and automotive industry show that it is not the result of human capital qua itself that necessitates higher wages, but by the ability for workers to organize themselves and mobilize against their employers. Additionally, they disavow how it is that labor market segmentation is primarily worker-directed in order to maintain wages rather than a plot by owners to divide and conquer workers.

Addressing the neo-Marxists, he states that the conflation of neo-classical economics concepts of capitalist competition, which is to say one of total fluidity, with the actual conditions embedded in the roughness of material life is a total misreading of Marx. Large capital investments are not barriers, but simply conditions of entry and exit into a specific industry that capitalists must take into account. Botwinick also shows that the regulated pricing adjustment as practiced by capitalists are an attempt to ride the waves of fat and lean years inherent within capitalism. As it relates to wages, however, Botwinick’s exegesis of Marx shows that it is this very varying degree of fixed capital investment across industries creates not only substantial difference between profit rates for companies but potentialities for workers to exploit and gain higher wage.
Such class conflict is always within the limits of the game. The floating, latent, stagnant sectors of the working class as well as the paupers that make up the reserve army of labor is always there, as is the very real likelihood of capitalist divestment and bankruptcy due to ongoing capitalist competition. Given the dialectics of Marx, it should thus come as no surprise that just as mechanization and deskilling counter shirking and soldiering, the reliance upon capital-intensive machinery means that striking workers are able to inflict potentially dangerous costs on owners. Despite this caveat, however, Botwinick doesn’t rely upon a market share model of industry concentration to determine wage variability, but instead uses efficiency and the cost effectiveness of firms.

In chapters six and seven, Botwinick outlines multivariable calculus formations to outline the aspects entering into pricing of products as well as wages per worker that includes the level of fixed cost investment, depreciation and relation to other capitals. His structural analysis is dynamic, not static, and thus provides the link between inter-industry profit rates and the implications for empirical research into regulating and non-regulating capitals, such as the greater importance of plant size than market concentration in determining wages. The focus here on spatial limitations illustrates how some firms are able to obtain preferable market positions due to a unique set of circumstances, and their greater relevance within political economy in general.

These trenchant criticisms and exposition of a viable and preferable alternative to the current neo-classical conceptions of competition are not without end other than to change the manner which economists understand their subject. As Botwinick states throughout, it is not enough to simply to expand the limited scope and length of time that the current conceptions of “monopoly capitalist” relies upon, but to provide a basis for analyzing the limits of workplace conflict for increased wages. From this, Botwinick provides an outline for the American labor force to organize and regain some ground from the business interests that have dominated American politics for over forty years by, among other things, refusing the resource management techniques, fighting battles for international, industry-wide wage increases so that costs can be distributed collectively. While not calling the period of the CIO halcyon explicitly, he does state that this modes of workers organizing does provide many instructive lessons for the rank-and-fail to counter with the prevailing mode of business unionism.

It is interesting to note in closing this review that one of the aspects that would increase the likelihood of the international labor movement increasing their wages would be access to these figures that determine the profitability of the company. I would indeed say, that if Botwinick were writing this book today he would include in his closing that if a website and organization existed similar to Wikileaks but instead only publishing the numbers used by businesses then they would know their enemy in a much more profound way and thus increase their likelihood of achieving their goals.