Homoploutia

Discussion

The 'Managerial Revolution' was overblown, instead <this> happened:

Branko Milanovic:

"That capitalism changed in the twentieth century with the advent of what many called a new “managerial” class. The rise of managers –-people who neither own the means of production not are simple laborers, but manage the means of production for capitalists lazily playing golf in Florida—was announced by James Burnham classic in 1941, and then further developed by Joseph Schumpeter, Raymond Aron, John Kenneth Galbraith and Daniel Bell, among others, in the 1960s and 1970s; continuing in the same vein, there is also a recent book Managerial Capitalism: Ownership, Management and the Coming New Mode of Production, by Gérard Duménil and Dominique Lévy. For its critical discussion see, Nicole Aschoff in Jacobin.

The perception of capitalism as a three-class society, with managers rising to be the new ruling class, drew on the contrast that Marx saw, but never fully resolved, between two functions played by the capitalist: the provider of the means of production and the organizer of their use (or put differently in Walrasian language, capitalist and entrepreneur). Logically, the two functions could be separated, and in fact they did become separate. That separation—it was argued by the authors I mentioned—created a new, third, class: that of managers. A very nice recent paper by Alexandre Chirat discusses the phenomenon from the Marxist point of view.

But the managerial revolution was overblown. It never happened and it is not happening. Managers as such never succeeded in creating a third class. What happened instead, as I argued in my 2019 book and several new papers confirm, is the rise of a homoploutic elite in the United States, in particular, and also in other rich capitalist economies. What is homoploutia? As often when faced with a new phenomenon, we resort to coining a new term by using Greek words: “same wealth”, or wealthy both in terms of the so-called “human capital” and thus labor income, and in terms of productive and financial capital and thus income from ownership. Homoploutic elite is composed of people who are simultaneously among the richest capitalists and richest (best paid) workers. They may be financial sector CEOs, engineers, doctors, software developers (and hence receiving high salaries) and at the same time having large financial wealth that generates sufficiently high capital income to place them at the top of capital income distribution. They might have inherited that money, or they might have saved over their lifetime out of their high salaries enough to transform themselves into the richest capitalists. We do not know the relative importance of the two channels, because the area of research is new, and nobody has yet used longitudinal data that should, in principle, allow us to answer that question."

(https://branko2f7.substack.com/p/new-capitalism-in-america)