economics: capitalism

Last week many media outlets were busy celebrating the Dow Jones record high, suggesting that it was indicative of the United States’ recovery from the greatest economic downturn since The Great Depression.  The graph below comes from a New York Times story with the headline “As Fears Recede, Dow Industrial Hits a Milestone.”

However, another story buried in the Business section of the New York Times, titled “Recovery in U.S. Is Lifting Profits, but Not Adding Jobs,” contains a graph illustrating how the supposed economic recovery is bitter-sweet at best:

The second graph uses data from the Bureau of Economic Analysis to highlight the fact that corporate profits and stock prices are at record highs, but the share of profits workers have taken home has steadily dropped since the early 1980s.  Some of the steepest declines have come during the last few years, or during the supposed “recovery.”

These two graphs illustrate that while ”The Market” is probably considered the go-to indicator of economic well-being, stock indexes are not always indicative of the economic reality experienced by non-investors.  If businesses and corporations were increasing their stock value by investing to expand productivity, thereby creating good-paying jobs and opportunities for workers, rising markets would be a sign good of economic times for all.  But this data suggests that is not what is happening; instead, as the twin charts show, rising corporate profits are at least partly the result of wage suppression.

Jason Eastman is an Assistant Professor of Sociology at Coastal Carolina University who researches how culture and identity influence social inequalities.

Cross-posted at Jezebel.

I’d love to draw your attention to The Alpha Parent, a blogger who has collected a stunningly large number of toys for infants that socialize girls into preening.

Some of the toys are purses/handbags that include pretend lipsticks, compacts, and related-items.  My Pretty Learning Purse includes a toy lipstick and a mirror; the Gund Sesame Street Abbey Purse Playset includes a compact and powder brush; the Lilliputiens Liz Handbag includes an eye shadow compact complete with three shades and an eye shadow applicator.

In case you were wondering if this is a trend, the Alpha Parent post features TWENTY examples of purses filled with such toys.

It also includes examples of toy make-up bags. Going beyond the inclusion of beauty items in infant toys, these make beauty the sole point of the play.  Here are just two of the NINE pretend make-up bags she collected, the Oskar & Ellen Beauty Box and the Learn and Go Make-Up and Go:

Since we wouldn’t want a baby to miss the point, companies also produce and sell vanities for infants. The Alpha Parent’s post included FOUR; here’s two, the Perfectly Pink Tummy Time Vanity Mirror and the Fisher Price Laugh and Learn Magical Musical Mirror:

The Alpha Parent goes on to cover real nail polish made for infants, beauty-themed clothes for little girls, and a common category of dress up: beautician outfits.  I counted a surprising ELEVEN of these:

The latter reverses into a nurse’s uniform.

The Alpha Parent concludes:

Makeup toys prime girls for a lifetime of chasing rigid norms of physical attractiveness through the consumption of cosmetics and fashionable accessories.

They are also generally non-sex-transferable, meaning that parents are often loath to allow their boys to play with girl toys.  Gendered toys, then, increase the rate of toy purchasing, since parents of a boy and a girl have to buy special toys for each.

It’s a win-win for corporate capitalism.  Socialize the girls into beauty commodities by buying these toys now, plan on reaping the benefits with the real thing later.  Brainwash the boys in an entirely different way (the Alpha Parent notes tools and electronics), do the same with them simultaneously.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

Cross-posted at Reports from the Economic Front.

Market advocates have had their way for years now and one of the consequences has been the growing dominance of industry after industry by a select few powerful corporations.  In short, unchecked competition can and does produce its opposite: monopoly.

As John Bellamy Foster, Robert W. McChesney, and R. Jamil Jonna explain:

This [development] is anything but an academic concern. The economic defense of capitalism is premised on the ubiquity of competitive markets, providing for the rational allocation of scarce resources and justifying the existing distribution of incomes. The political defense of capitalism is that economic power is diffuse and cannot be aggregated in such a manner as to have undue influence over the democratic state. Both of these core claims for capitalism are demolished if monopoly, rather than competition, is the rule.

The chart below highlights the rise, especially since the 1980s, in both the number and percentage of U.S. manufacturing industries in which four firms account for more than 50% of sales.

Number and Percentage of U.S. Manufacturing Industries in which Largest Four Companies Accounted for at Least 50 Percent of Shipment Value in Their Industries, 1947-2007:

As the table below shows, the concentration of market power is not confined to manufacturing.

Percentage of Sales for Four Largest Firms in Selected U.S. Retail Industries:

As impressive as these concentration trends may be, they actually understate the market power exercised by leading U.S. firms because many of these firms are conglomerates and active in more than one industry.  The next chart provides some flavor for overall concentration trends by showing the growing share of total business revenue captured by the top two hundred U.S. corporations.  Notice the sharp rise since the 1990s.

Revenue of Top 200 U.S. Corporations as Percentage of Total Business Revenue, U.S. Economy, 1950–2008:

These are general trends.  Here, thanks to Zocalo (which draws on the work of Barry Lynn), we get a picture of the market dominance of just one corporation–Procter and Gamble.  This corporation controls:

• More than 75 percent of men’s razors
• About 60 percent of laundry detergent
• Nearly 60 percent of dishwasher detergent
• More than 50 percent of feminine pads
• About 50 percent of toothbrushes
• Nearly 50 percent of batteries
• Nearly 45 percent of paper towels, just through the Bounty brand
• Nearly 40 percent of toothpaste
• Nearly 40 percent of over-the-counter heartburn medicines
• Nearly 40 percent of diapers.
• About 33 percent of shampoo, coffee, and toilet paper

A recent Huffington Post blog post, which includes the following infographic from the French blog Convergence Alimentaire, makes clear that Procter and Gamble, as big as it is, is just one member of a small but powerful group of multinationals that dominate many consumer markets.   The blog post states: “A ginormous number of brands are controlled by just 10 multinationals… Now we can see just how many products are owned by Kraft, Coca-Cola, General Mills, Kellogg’s, Mars, Unilever, Johnson & Johnson, P&G and Nestlé. ”   See here for a bigger version of the infographic.

And, it is not just the consumer goods industry that’s highly concentrated.  As the Huffington Post also noted: “Ninety percent of the media is now controlled by just six companies, down from 50 in 1983…. Likewise, 37 banks merged to become JPMorgan Chase, Bank of America, Wells Fargo and CitiGroup in a little over two decades, as seen in this 2010 graphic from Mother Jones.”

Not surprisingly, there are complex interactions and struggles between these dominant companies.  Unfortunately, most end up strengthening monopoly power at the public expense.  For example, as Zocalo reports, Wal-Mart, Target, and other major retailers have adopted a new control strategy in which:

…these retailers name a single supplier to serve as a category captain. This supplier is expected to manage all the shelving and marketing decisions for an entire family of products, such as dental care.

The retailer then requires all the other producers of this class of products — these days, usually no more than one or two other firms — to cooperate with the captain. The consciously intended result of this tight cartelization is a growing specialization of production and pricing among the few big suppliers who are still in business…

It’s not that Wal-Mart and category copycats like Target cede all control over shelving and hence production decisions to these captains. The trading firms use the process mainly to gain more insight into the operations of the manufacturers and hence more leverage over them, their suppliers, and even their other clients… Wal-Mart, for instance, has told Coca-Cola what artificial sweetener to use in a diet soda, it has told Disney what scenes to cut from a DVD, it has told Levi’s what grade of cotton to use in its jeans, and it has told lawn mower makers what grade of steel to buy.

And don’t think that such consolidation within the Wal-Mart system makes it easier for new small manufacturers and retailers to rise up and compete. The exact opposite tends to be true. . . . This [system] boils down to presenting the owners of midsized and smaller companies, like Oakley or Tom’s of Maine, with the “option” of selling their business to the monopolist in exchange for a “reasonable” sum determined by the monopolist.

This was the message delivered to many of the companies that in recent decades managed to develop big businesses seemingly outside the reach of the Procter & Gambles, Krafts, and Gillettes of the world. Consider the following:

• Ben & Jerry’s, the Vermont ice cream company that reshaped the industry, was swallowed by Unilever in 2000.
• Cascadian Farm, one of the most successful organic food companies, sold out to General Mills and was promptly transformed into what its founder calls a “PR farm.”
• Stonyfield Farm and Brown Cow, organic dairy companies from New Hampshire and California, respectively, separately sold con-trol to the French food giant Groupe Danone in February 2003 and were blended into a single operation.
• Glaceau, the company behind the brightly colored Vitamin Water and one of the last independent success stories, sold out to Coca-Cola in 2007.

The practical result is a hierarchy of power in which a few immense trading companies — in control of and to some degree in cahoots with a few dominant supply conglomerates — govern almost all the industrial activities on which we depend, and they back their efforts with what amounts to police power. This tiny confederation of private corporate governments determines who wins and who loses in this country, at least within our consumer economy.

Of course the growing concentration nationally is matched by a growing concentration of power globally, with large transnational corporations from different nations battling each other and, in many cases, uniting through mergers and acquisitions.  We cannot hope to understand and overcome our current problems and the structural pressures limiting our responses to them without first acknowledging the extent of corporate dominance over our economic lives.

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Martin Hart-Landsberg is a professor of Economics and Director of the Political Economy Program at Lewis and Clark College.  You can follow him at Reports from the Economic Front.

While the news often discusses the proportion of the population that is unemployed, sociologists also talk about the working poor (people with full time jobs, but who are paid so little that they remain below the poverty line) and the underemployed (e.g., people who have part-time jobs, but wish they were full-time).

The New York Times recently put together a graphic illustrating the rise of underemployment due to the recession. Overall, the number of people who are working part-time involuntarily has risen.  In the related article, reporter Steven Greenhouse quotes a retail consultant explaining: “Over the past two decades, many major retailers went from a quotient of 70 to 80 percent full-time to at least 70 percent part-time across the industry.”  Underemployment has risen in some economic sectors more than others, notably leisure/hospitality and wholesale/retail:

Among other employers, Greenhouse profiles a Fresh & Easy store in San Diego. Employed there are 5 full-time managers and 17 part-time workers.  Shannon Hardin, who has worked there for five years, averages 28 hours a week and earns $10.90 an hour.

Workers like Hardin often get very short shifts (designed to increase the number of employees in the store only during rush times), irregular schedules (making it difficult to arrange childcare), and last minute requests to work.  Being inflexible can get an employee fired.

This is why employers like part-timers; from the company’s perspective, they’re cheap and flexible:

From the employee’s perspective, of course, it means a meager existence, an uncertain future, and a life led at the whims of a company’s bottom line.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

Cross-posted at Reports from the Economic Front.

The good economic news, which got plenty of attention, is that the U.S. economy added over 170,000 new jobs in October.  The largely unreported negative news is that average real hourly wages in the private sector declined that month, and have been in decline for most of the past year.

It is hard to remember that the economy has been in expansion since June 2009.

Jeffrey Sparshott, in a Wall Street Journal blog post, offered the following chart of the trend in hourly earnings in private industry, with each point showing the change from a year earlier.

Citing a Labor Department report, Sparshott noted that:

…hours worked were flat [in October] for the fourth straight month. Meanwhile, average hourly earnings for all employees on private payrolls fell by 1 cent to $23.58 in October. Over the past 12 months, earnings have risen a scant 1.6%. That’s not enough to keep up with inflation. The consumer price index was up 2% in September from a year earlier.

It’s even worse for blue-collar workers. Average hourly earnings of private-sector production and nonsupervisory employees edged down by 1 cent to $19.79, only a 1.1% increase over the past year.

The blog post quoted the HSBC’s chief U.S. economist who said:

This is the smallest increase in wages on record for the data going back to 1964. The persistently high level of unemployment over the past few years is clearly restraining wage gains and suppressing any inflationary pressures that might have possibly emanated from the labor market.

It also quoted the chief U.S. economist at J.P. Morgan Chase who said:

This pace of labor income growth may be quite acceptable for corporate profits, but it does pose headwinds for consumer spending growth.

Consumer spending did rise last quarter, helping to boost third quarter U.S. GDP, but this was largely because of a decline in the personal savings rate, which fell from 4.0% in the second quarter to 3.7% in the third.

We clearly don’t have a foundation for a sustained economic recovery, certainly not one that brings benefits to the majority of workers.  Instead of talk about austerity we need a real debate about the best way to strength worker bargaining power.

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Martin Hart-Landsberg is a professor of Economics and Director of the Political Economy Program at Lewis and Clark College.  You can follow him at Reports from the Economic Front.

Last Halloween my students (at a private liberal arts school) told me that it was considered embarrassing to wear the same costume to two separate parties. Many of them, then, had purchased two or more costumes for the week preceding the holiday.  I remarked about how convenient that was for the economy, creating a need to spend money that helped our economic engine keep churning.

I thought of their stories when I came across this vintage ad for Halloween candy.  It tells the viewer that a really cool house will offer trick-or-treaters more than one type of candy and allow them to take one of each.  How excellent for the candy companies if offering only one piece of one kind of candy is considered below the bar.

Via Vintage Ads.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

Well, first, they’re not baby carrots.  The two-inch carrots marketed as juveniles are actually pieces of regular sized carrots that are cut off and shaved into a “baby carrot” shape.  So, there’s no reason to expect the babies to be fresher, more tender, or sweeter. (Sorry, baby carrot lovers.)

But revealing how baby carrots are made is only Part I of the answer to the question of where they come from.  Who had the idea to make “baby carrots” and for what reason?

It turns out the idea came from a grower named Mike Yurosek.  According to Douglas McGray at Fast Company, it was grocery stores that pushed Yurosek to invent the baby carrot.  McGray writes:

…Yurosek had become frustrated with all the waste in the carrot business. Supermarkets expected carrots to be a particular size, shape, and color. Anything else had to be sold for juice or processing or animal feed, or just thrown away. Yurosek wondered what would happen if he peeled the skin off the gnarly carrots, cut them into pieces, and sold them in bags.

He whipped up two prototypes: the baby carrot with which we’re all familiar and “bunny balls,” 1-inch round carrot bites.  Somehow the latter didn’t catch on.  The rest is history.

Thanks to Annie C. for sending in the link!

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.

Skipping through a set of images of North Korea by photographers David Guttenfelder and Vincent Yu, and another set from a 2010 LIFE slide show, I was reminded that the city is almost entirely devoid of advertising.  There is political propaganda everywhere, of course, but there is an overwhelming absence of the marketing for products characteristic of capitalist societies.  All of the print and electronic media is under state control, and the state administers and controls the economy as well.  Accordingly… there is almost no advertising.  The images in the slide show give us a peak into this world without ads.

Lisa Wade, PhD is an Associate Professor at Tulane University. She is the author of American Hookup, a book about college sexual culture; a textbook about gender; and a forthcoming introductory text: Terrible Magnificent Sociology. You can follow her on Twitter and Instagram.