Economic Growth as a Power Process Blair Fix CHARTBOOK To - - PDF document

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

10 20 30 40 50 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 Apples Physician Services Gasoline Meats Prescription Drugs Rent New Car Electricity Computers TV

Price Index 1935 = 1

Price Change of 10 Selected CPI Commodities United States 1935 - 2013 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

1 2 3 4 5 6 7 8 9 10 1940 1950 1960 1970 1980 1990 2000 2010 2020 1948 = 1 3.2 8.0 Official Shadowstats Blair Fix 1995 Base Year* 6.8 2014 Q2

Real GDP United States

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.

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10 100 102 103 104 105

R2 = 0.66

Blair Fix

Energy Use per Capita

(Kg Oil Equivalent)

Self Employment

(% of Total Employment)

Luxembourg Iceland Australia Cambodia Morocco Chile Poland Equador South Africa Norway

50 20 5

International 2008

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).

20 18 16 14 12 10 8 6 200 250 300 350 400 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

R2 = 0.86

Reverse Scale

% of Total Employment GJ per Person

Energy Use per Capita

(Right)

Self-Employment

(% of Total, Left)

United States

Blair Fix

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.

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10-3 10-2 10-1 100 101 102 Energy Use per Capita (kg oil equivalent) 100 1000 10000 Blair Fix

Kuwait Croatia Bangladesh Sri Lanka Netherlands Brazil Russia Mexico Thailand Belgium Portugal Philippines

R = 0.62

2 Hong Kong Vietnam

Top 10 Corporations Percentage of Domestic Labor Force

Canada

International 2008 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).

12 14 16 18 20 22 24 350 400 450 500 550 1940 1950 1960 1970 1980 1990 2000 2010 2020 R2 = 0.85

United States

National Energy Consumption per Labor Hour (Right) Top 200 Corporations Percent of Total Employment (Left)

MJ/Hr

Blair Fix

% of Employment

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).

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1 10 100 100 1000 10000 R2 = 0.23 Government Employment (% of Domestic Labor Force)

International 1995 - 1998

Singapore Russia South Korea Moldova Blair Fix Senegal Albania Philippines Brazil Botswana Mexico Canada Finland Norway Estonia Czech R. Cyprus Hungary

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.

5 10 15 20 25 30 250 300 350 400 450 500 550 600 650 700 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

WWII

MJ/Hr % of Total Employment R2 = 0.60 (Excluding WWII)

National Energy Consumption per Labor Hour (Right) Government (All Levels) Percentage of Total Employment (Left) Blair Fix

United States

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.

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2 4 6 8 10 12 14 16 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 Horse Power of John Deere's Largest Tractor US Wheat Output per Labor Hour (bushels)

Blair Fix

1919 =1

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.

106 107 108 109 1010 103 104 105 106

R2 = 0.53

Employment Market Capitalization

United States Compustat Top 200

Blair Fix (Ranked by Employment)

1950

Figure 10: Breadth regressions in 1950 6

108 109 1010 1011 1012 104 105 106 107

R2 = 0.16

United States Compustat Top 200

(Ranked by Employment)

Employment Market Capitalization

Blair Fix

2013

Figure 11: Breadth regressions in 2013

0.1 0.2 0.3 0.4 0.5 0.6 1 2 3 4 5 6 1940 1950 1960 1970 1980 1990 2000 2010 2020

Employment Growth Rate

(LOESS* estimate, right)

Correlation of Capitalization vs. Employment

(Left)

% R

2

Compustat 200 United States

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) .

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25 30 35 40 45 50 Capitalist Share of National Income Interest & Profit (%) 6 8 10 12 14 16 18 20 R2 = 0.43

1933 2006 1965 1945 1951

Employment as % of Population

United States 1929 - 2011

Blair Fix

1984

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.

10 12 14 16 18 20 1940 1950 1960 1970 1980 1990 2000 2010 2020

United States

Top 200 Corporations Percent of Total Employment

Blair Fix

% of Employment

Model Actual

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 R2 data (capitalization vs. employment of Compustat Top 200), see Fig. 12. Model parameters are: α = 2.68, λ = 0.116.

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