A Labor Day Lesson on How Corporations Use Profits

I am not sure whether I would draw exactly the same conclusion about the validity of Picketty’s. However, this article summarises an important analysis of what big corporations, in particular, do with the surplus created by workers (after their wages have been paid).
If one looks at what is happening with corporate investment in Australia you have to wonder what the research would show up here. My hunch is, much the same.
Does anyone know of this sort of analysis being done for Australian corporations?

Talking Union

by Harold Meyerson

meyersonharold2 

In corporations, it’s owner-take-all

Labor Day — that mocking reminder that this nation once honored workers — is upon us again, posing the nagging question of why the economy ceased to reward work. Was globalization the culprit? Technological change? Anyone seeking a more fundamental answer should pick up the September issue of the Harvard Business Review and check out William Lazonick’s seminal essay on U.S. corporations, “Profits Without Prosperity.”

Like Thomas Piketty, Lazonick, a professor at the University of Massachusetts at Lowell, is that rare economist who actually performs empirical research. What he has uncovered is a shift in corporate conduct that transformed the U.S. economy — for the worse. From the end of World War II through the late 1970s, he writes, major U.S. corporations retained most of their earnings and reinvested them in business expansions, new or improved technologies, worker training and pay increases…

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I am a retired left wing and labour movement activist. Before that I worked for a long time in the Australian union movement in union education, Australian and international solidarity and organising. I am also active in Cuban solidarity, the SEARCH FOUNDATION, and promoting discussion, debate and action about green socialism based on workers control and social ownership.

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3 comments on “A Labor Day Lesson on How Corporations Use Profits
  1. paulgarver says:

    Hello, Don.

    Thanks for reposting this article from Talking Union. As a retired global labor organizer, I am always interested in developments in workers movements in other countries, not excluding Australia, where my wife’s brother and sister now live. So give me a heads up when you think something is important (paul.garver@verizon.net).

    Does Australia have some active group of progressive economists? Several campuses in Massachusetts have one or more leftist economists doing interesting research; like Lazonick at Univ. of Mass. at Lowell. There might be some equivalent in Australian regional universities.

    • Gidday again Paul, I just drafted a reply and thought I sent it. But, I am not sure that I sent it correctly. Let me know and I will re-draft. I am pleased to connect with you.

    • Gidday Paul,
      I have followed some of your work from afar for some years now and so I am pleased to get your note and the chance to connect.
      Australia’s progressive economists are spread across many universities. You may like to take a look at the Journal of Australian Political Economy and its associated blog. This journal flows out of the Political Economy Department at the University of Sydney. The co-founder of the department Frank Stilwell is retired nowadays (well, sort of) and checking his work would be a really good insight. This coming weekend the group Historical Materialism Australasia is running a international conference (keynote speaker Leo Panitch) in Sydney and several of Australia’s left and progressive political economists are speaking at that. Also, you should check the work of Patricia Ranald who is Australia’s most important worker and society oriented political economist on trade policy and what it means for workers. She works at the ACTU but is also the primary driver of the Australian Fair Trade and Investment Network. A lot of her work can be found at their web site. Look out for the work of the ACTU’s somewhat Keynesian economist Matt Cowgill, who as well as his official work for the ACTU (eg Shrinking the Pie) also writes a very good blog – “We are all Dead”. I would also recommend Australian Options – the quality is uneven there but it seems to be getting its act together again in recent material. If you google any one of these references I am sure you will get the information you are interested in.
      I work for the metalworkers part of the Australian Manufacturing Workers Union as, in effect, a national organiser: my current “obsessions” are with organising strategy in a hostile IR framework, political strategy in general (especially that which revitalises the left) and research and writing of a booklet, “Economics for twenty first century workers”. I also help out with our union’s work with SIGTUR.
      With best wishes,
      Don

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