Economic Growth as a Power Process Blair Fix CHARTBOOK To accompany a presentation by Blair Fix in the Second Speaker Series on Capital as Power Organized by the Forum on Capital as Power Sponsored by the York Department of Political Science and Graduate Program in Social and Political Thought York University October 27, 2015 ABSTRACT: Is economic growth a miracle of the free market? According to mainstream theory, growth is best ensured through conditions of ‘perfect competition’. However, eco- nomic growth is tightly correlated with the concentration of power in the hands of large corporations. Why? The capital as power framework provides potential answers that turn mainstream theory on its head: growth seems to be intimately related to the formation of hierarchy. Presentation URL: http://bnarchives.yorku.ca/460/ The Bichler & Nitzan Archives : www.bnarchives.net Blair Fix, blairfix@gmail.com
50 Price Change of 10 Selected CPI Commodities Apples United States 1935 - 2013 40 Physician 30 Services Price Index Gasoline 20 Meats Prescription Drugs Rent 10 New Car Electricity 1935 = 1 TV Computers 0 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 Figure 1: Divergent price change as a changing meter stick Source: BLS Consumer Price Index, All Urban Consumers. Commodities added after 1935 are indexed to the unweighted average price for the year in which they are introduced 10 9 Real GDP 8.0 8 United States Official 7 6.8 6 1995 Base Year* 5 4 Shadowstats 3.2 3 2014 Q2 2 1 1948 = 1 Blair Fix 0 1940 1950 1960 1970 1980 1990 2000 2010 2020 Figure 2: Conflicting measures of economic growth Source: Official real GDP from BEA Table 1.1.6. ‘Shadowstats’ GDP from John Williams’ Shadow Govern- ment Statistics (shadowstats.com). ‘Vintage’ 1995 base year GDP from Federal Reserve Bank of Philadelphia (ROUTPUT95Q1). *Note that this data ends in 1995, but I have projected it forward (for comparison purposes) using official growth rates. 2
100 International Cambodia 2008 Morocco 50 Equador (% of Total Employment) Self Employment Chile Poland 20 South Africa Iceland Australia 10 Norway Luxembourg R 2 = 0.66 Blair Fix 5 10 2 10 3 10 4 10 5 Energy Use per Capita (Kg Oil Equivalent) Figure 3: International self-employment vs. energy use Sources: All data is from the World Bank: National energy use per capita (EG.USE.PCAP.KG.OE), self- employment fraction (SL.EMP.SELF.ZS). 400 Reverse 6 Energy Use per Capita Scale (Right) 8 350 % of Total Employment 10 Self-Employment GJ per Person (% of Total, Left) 300 12 14 250 United States 16 18 200 R 2 = 0.86 Blair Fix 20 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 Figure 4: United States self-employment vs. energy use Sources: US Self-Employment data is from Burea of Economic Analysis tables 6.7A–D. Total employment from BEA Persons Engaged in Production, tables 6.8A–D. US energy consumption from 1950 onwards is from Energy Information Agency, Table 1.3 (Primary Energy Consumption by Source). Energy data from 1941-1949 is from Benjamin Warr’s REXS database (Table 1.F.a, Exergy Inputs by Type – spliced to EIA data in 1950). US population is from Angus Maddison Statistics on World Population, GDP and Per Capita GDP, 1-2008 AD . 3
International 10 2 2008 Croatia 10 1 Netherlands Percentage of Domestic Labor Force Hong Kong Canada Belgium Kuwait Top 10 Corporations Portugal 10 0 Russia Mexico Sri Lanka 10 -1 Brazil Philippines Thailand Vietnam Bangladesh 10 -2 2 Blair Fix R = 0.62 10 -3 100 1000 10000 Energy Use per Capita (kg oil equivalent) Figure 5: International corporate employment concentration vs. energy use Sources: National energy use per capita and total labor force data is from the World Bank (indicator codes EG.USE.PCAP.KG.OE. and SL.TLF.TOTL.IN, respectively). Employment of top 10 corporations (ranked by number of employees) is from COMPUSTAT Global Fundamentals (series EMP). 24 United States 550 22 500 20 % of Employment 18 MJ/Hr 450 16 Top 200 Corporations National Energy 400 Percent of Total Employment Consumption (Left) 14 per Labor Hour (Right) 350 12 R 2 = 0.85 Blair Fix 1940 1950 1960 1970 1980 1990 2000 2010 2020 Figure 6: United States corporate employment concentration vs. energy use Sources: Total US employment from BEA Tables 6.5 B-D (Full-Time Equivalent Employees by Industry). Employment of top 200 corporations (ranked by number of employees) from COMPUSTAT (series DATA29). Total energy consumption from EIA Table 1.3 (Primary Energy Consumption by Source). Total labor hours from BEA Tables 6.9 B-D (Hours Worked by Full-Time and Part-Time Employees by Industry). 4
International 100 1995 - 1998 Norway (% of Domestic Labor Force) Government Employment Estonia Finland Hungary Canada Czech R. Mexico Botswana 10 Albania Cyprus Brazil Singapore Philippines South Korea Russia Moldova Senegal R 2 = 0.23 Blair Fix 1 100 1000 10000 Energy Use per Capita (kg oil equivalent) Figure 7: International government employment concentration vs energy use Sources: National energy use per capita and total labor force data is from the World Bank (indicator codes EG.USE.PCAP.KG.OE. and SL.TLF.TOTL.IN, respectively). Government employment is from Hammouya, Statistics on Public Sector Employment: Methodology, Structures and Trends (1999). I use total employment of the general government sector. Government employment data points vary between the years 1995-98 and are matched with energy and labor force data for the appropriate year. 30 700 650 United States WWII 25 600 National Energy Consumption 550 per Labor Hour % of Total Employment 20 (Right) 500 MJ/Hr 450 15 Government (All Levels) 400 Percentage of Total Employment (Left) 350 10 300 R 2 = 0.60 (Excluding WWII) Blair Fix 5 250 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 Figure 8: United States government employment concentration vs energy use Sources: US government and total employment data from BEA Tables 6.5 B-D, Full-Time Equivalent Employ- ees by Industry. Total labor hours for 1948-2012 from BEA Tables 6.9 B-D. Data for 1929-1947 is from Burea of Economic Analysis, Long Term Economic Growth, 1860-1970 (1973), Series A-68 (via Warr’s REXS database). US energy consumption from EIA Table 1.3, Primary Energy Consumption by Source. Energy data for 1929-48 from REXS database Table 1.F.a, Exergy Inputs by Type. Exergy is converted to energy (heat content) using constants from Tables A.1-A.6 in Ayres and Warr (2005), Accounting for growth: the role of physical work, in Structural Change and Economic Dynamics, 16(2), 181–209. 5
16 14 Horse Power of John Deere's Largest Tractor 12 10 US Wheat Output per 8 Labor Hour (bushels) 6 4 2 1919 =1 Blair Fix 0 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Figure 9: Technomass Productivity Wheat labor productivity is from Historical Statistics of the United States , Table Da1148. John Deere tractor data from http://www.tractordata.com/farm-tractors/tractor-brands/johndeere/ johndeere-tractors.html . United States Compustat Top 200 10 10 (Ranked by Employment) 10 9 Market Capitalization 10 8 10 7 1950 R 2 = 0.53 Blair Fix 10 6 10 3 10 4 10 5 10 6 Employment Figure 10: Breadth regressions in 1950 6
United States Compustat Top 200 10 12 (Ranked by Employment) 10 11 Market Capitalization 10 10 10 9 2013 R 2 = 0.16 Blair Fix 10 8 10 4 10 5 10 6 10 7 Employment Figure 11: Breadth regressions in 2013 0.6 6 Compustat 200 United States 0.5 5 Employment Growth Rate 0.4 4 (LOESS* estimate, right) 2 % 0.3 3 R 0.2 2 Correlation of Capitalization vs. Employment 0.1 1 (Left) 0 0 1940 1950 1960 1970 1980 1990 2000 2010 2020 Figure 12: Breadth regressions vs Compustat 200 employment growth LOESS stands for locally weighted scatter plot smoothing. Sources for Figure 10-12: all data from Compustat North America: Number of Employees (DATA29); market capitalization calculated by multiplying stock price (fiscal year close, DATA24) by common shares outstanding (DATA25) . 7
United States 50 1929 - 2011 1945 2006 45 Employment as % of Population 1984 1951 40 1965 35 30 1933 R 2 = 0.43 Blair Fix 25 6 8 10 12 14 16 18 20 Capitalist Share of National Income Interest & Profit (%) Figure 13: Relative employment vs capitalist income Sources: Total employment is from BEA Persons Engaged in Production, tables 6.8A–D. Population is from Angus Maddison Statistics on World Population, GDP and Per Capita GDP, 1-2008 AD . Capitalist portion of national income (corporate profits before tax + net interest) is from BEA table Table 1.12. National Income by Type of Income. United States 20 Actual 18 % of Employment 16 Model 14 12 Top 200 Corporations Percent of Total Employment 10 Blair Fix 1940 1950 1960 1970 1980 1990 2000 2010 2020 Figure 14: A model of employment concentration Model data: population from Angus Maddison Statistics on World Population, GDP and Per Capita GDP, 1- 2008 AD . Capitalist income share (corporate profits before tax + net interest) is from BEA table Table 1.12. National Income by Type of Income. Note that the model uses the linear trend of capitalist income share (rather than raw data). For R 2 data (capitalization vs. employment of Compustat Top 200), see Fig. 12. Model parameters are: α = 2 . 68 , λ = 0 . 116 . 8
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