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October 02, 2006


angry economist

hmm maybe the wages are rising due to a shortage in good bosses, rather than there being a demand for more bosses?

or maybe, as I suspect, the expectations of the difference a good, well paid boss can make to an organisation are vastly inflated, and are not rational?

The answer might be in labour market economics. the prob is that NCL or austrian schools can be elegant theoretically but have trouble explaining a helluva lot of stuff, or even can't deal with the peculiarities of human capital, labour market transactions, and the intrinsic nature of labour itself.


Maybe an investment in increasing the chief executive's pay is the cheapest and most effectve way for an organisation to keep its junior employees motivated to be upwardly mobile, hence increasing effort and productivity ?


Maybe it's because bosses are judges in their own cause?


"The function of bosses is not (merely) to co-ordinate activity and to discover new processes and products. It's to screw workers"

This is good /operaismo/ - the Autonomists started from the idea that rebellion was the engine of productivity (you shave five minutes off the shift to get yourself a fag break, the boss finds out and cuts five minutes' worth of pay). Their solution was more rebellion, incidentally.


Great article. The other thing about it is of course it diminishes the control that shareholders have over the company- as it gets bigger shareholders have less control because there are more decisions to take and less that they can see. There is a wonderful bit in Road to Serfdom where Hayek deals with this in government but it also works in corporations- you don't represent who you should in the end when you get too big.

Barry Marshall

What if it can't be theorised? Maybe it's because they're greedy, and without anyone to tell them otherwise, they can get away with it?

Chris Williams

"costs of transacting through hierarchy are in fact falling relative to those of transacting through the market"

Now there's a thought.

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