On Human Behavior, Human Fulfillment, and the Nature of the Workplace

Many notable heterodox economists have viewed workplace democracy as essential for the realization of the Enlightenment ideals of liberty, equality, and community. Yet the economics profession has never given their ideal more than a passing and dismissive glance. The reasons for this have been well-covered in the literature. But one reason that has been all but ignored is that the theory of human behavior that is credited to Adam Smith's Wealth of Nations and that has dominated economic thinking ever since is not supportive of workplace democracy. However, Smith developed a far richer theory of human behavior in his Theory of Moral Sentiments. His fuller theory depicted humans as fully social beings, in need of community. This article outlines the “social approbation” theory of human behavior that Smith developed in his Theory of Moral Sentiments and demonstrates how it is in accord with the findings of contemporary evolutionary psychology. It then examines the manner in which this theory suggests workplace democracy as the appropriate organizational form of control for society's sphere of production.Adam Smith, Self-interest, Altruism, Approbation, Cooperation, Workplace democracy

Inequality, Social Respectability, Political Power and Environmental Devastation

Although healthy societies may require a degree of material inequality, higher levels of inequality have been linked to negative social consequences ranging from poorer health to lessened democracy. However, the greatest contemporary threat of excessive inequality might be its contribution to increased environmental degradation. Indeed, avoiding devastation of our habitat may be the greatest challenge ever faced by humanity. This article explores the manner in which inequality encourages consumption, by drawing upon Thorstein Veblen’s theory of consumer behavior, whereby in societies in which fluid social mobility is believed possible, inequality encourages households to seek social certification and social status through consumption. Rising inequality strengthens the intensity with which households struggle to maintain social respectability through increased consumption. The ideology, institutions, and behavior generated by this focus on consumption reduce the potential for people to achieve certification of value through more environmentally friendly domains such as work and community. This article also addresses the manner in which inequality impedes responses aimed at reducing environmental damage by augmenting the political power of those whose interests would be harmed by environmental measures. Indeed, the wealthy benefit threefold from pollution: Their disproportionate consumption is made less expensive, their assets yield higher profits, and they are better able to shield themselves from the negative consequences of environmental destruction.Conspicuous consumption, political power, ideology, work quality, community

Rising Inequality and the Financial Crises of 1929 and 2008

Inequality increased dramatically in the decades leading up to the financial crises of both 1929 and 2008. Yet students of both crises have largely ignored any role that rising inequality might have played in rendering the financial sector more vulnerable to systemic dysfunction. This study draws upon the work of Thorstein Veblen, Michal Kalecki, and Karl Marx to clarify the manner in which growing inequality prior to both crises made U.S. financial markets more prone to systemic dysfunction. Greater inequality generated three dynamics that heightened conditions in which these financial crises might occur. The first is that greater inequality meant that individuals were forced to struggle harder to find ways to consume more to maintain their relative social status, thereby reducing their savings and increasing their indebtedness. The second is that holding ever greater income and wealth, the elite flooded financial markets with credit, helping keep interest rates low and encouraging the creation of new credit instruments. The third dynamic is that, as the rich took larger shares of income and wealth, they gained more command over ideology and hence politics. Reducing the size of government, tax cuts for the rich, deregulating the economy, and failing to regulate newly evolving credit instruments flowed out of this ideology.

Increasing Inequality, Status Insecurity, Ideology, and the Financial Crisis of 2008

The current financial crisis has been blamed on inadequate regulation stemming from laissez-faire ideology, combined with low interest rates. But beneath these widely-acknowledged causal factors lies a deeper underlying determining cause that has received less notice: the dramatic increase in inequality in the U.S. over the preceding 35 years. This rise in inequality generated three phenomena that heightened conditions in which this crisis could occur. The first is that greater inequality meant that individuals were forced to struggle harder to find ways to consume more to maintain their relative social status. The consequence was that over the preceding three decades household saving rates plummeted, workers worked longer hours, and households took on ever-greater debt. The second phenomenon is that, flush with ever greater income and wealth, the elite were able to flood financial markets with credit, helping keep interest rates low and encouraging the creation of new credit instruments. The third phenomenon is that, as the rich took larger shares of income and wealth, they gained relatively more command over everything, including ideology. Reducing the size of government, deregulating the economy, and failing to regulate newly evolving credit instruments flowed out of this ideology.deregulation, real estate boom, credit, conspicuous consumption, social respectability

Creative Destruction, Economic Insecurity, Stress and Epidemic Obesity

The percentage of Americans who are obese has doubled since 1980. Most attempts to explain this "obesity epidemic" have been found inadequate, including the "Big Two" (the increased availability of inexpensive food and the decline of physical exertion). This article explores the possibility that the obesity epidemic is substantially due to growing insecurity, stress, and a sense of powerlessness in modern society where high-sugar and high-fat foods are increasingly omnipresent. Those suffering these conditions may suffer less control over other domains of their lives. Insecurity and stress have been found to increase the desire for high-fat and high sugar foods. After exploring the evidence of a link between stress and obesity, the increasing pace of capitalism's creative destruction and its generation of greater insecurity and stress are addressed. The article ends with reflections on how epidemic obesity is symptomatic of a social mistake –- the seeking of maximum efficiency and economic growth even in societies where the fundamental problem of material security has been solved.Social gradient obesity, endogenous preferences, cortisol, inequality, thrifty genes, rational choice model

Rising Inequality and the Financial Crises of 1929 and 2008

The most widely embraced explanations of the financial crisis of 2008 have centered upon inadequate regulation stemming from laissez-faire ideology, combined with low interest rates. Although these widely-acknowledged causal factors are true, beneath them lies a deeper determining force that has received less notice: the dramatic increase in inequality in the U.S. over the preceding 35 years. Heightened inequality generated three dynamics that made the economy vulnerable to systemic dysfunction. The first is that inequality constrained consumption, reducing profitable investment potential in the real economy, and thereby encouraging an every wealthier elite to flood financial markets with credit, helping keep interest rates low, encouraging the creation of new credit instruments, and fueling speculation. The second dynamic is that greater inequality meant that individuals were forced to struggle harder to find ways to consume more to maintain their relative social status. The consequence was that over the preceding three decades household saving rates plummeted, households took on evergreater debt, and workers worked longer hours. The third dynamic is that, as the rich took larger shares of income and wealth, they gained more command over ideology and hence politics. Reducing the size of government, cutting taxes on the rich and reducing welfare for the poor, deregulating the economy, and failing to regulate newly evolving credit instruments flowed out of this ideology.Underconsumption, deregulation, speculation, real estate boom, credit, conspicuous consumption, social respectability

While soaring inequality set the stage for the 2008 financial crash, mainstream economists remained clueless

The restricted focus of mainstream economists has meant that not much attention has been given to the economic and social consequences of changing income and wealth inequality. Jon D. Wisman critiques their restricted scope and contends that it impeded them from seeing how 30 years of wage stagnation and soaring inequality were generating excessive speculation, indebtedness, and political changes that set the underlying conditions for the financial crisis of 2008

Legitimating Inequality: Fooling Most of the People All of the Time

Over the three decades leading up to the crisis of 2008, inequality dramatically increased in the United States and Great Britain. What stands out, but is seldom noted, is that this occurred within democracies where the relative losers -- the overwhelming majority -- could in principle have used the political system to block or reverse rising inequality. Why did they not do so? A glance at history reveals that peoples have only very infrequently contested inequality because they were led to believe that their inferior status in terms of income, wealth, and privilege was just, that it was not really so bad, or that it was necessary for their future wellbeing. Ideological systems legitimated a status quo of inequality, or in more modern times even increasing inequality. This article surveys the manner in which inequality has been historically legitimated, first predominantly by religion, then predominately by economic thought. Attention is then focused on the manner in which contemporary economic science and its popular interpretations in the media have served to legitimate inequality in the U.S. since the mid-1970s. The paper concludes with a reflection on the unique conditions that enable the legitimation of inequality to be delegitimated.Ideology, class power, utility of poverty, trickle down, vertical social mobility

Should the Rich be Taxed More? The Fiscal Inequality Coefficient

This paper holistically addresses the effective (relative) income tax contribution of a given income (or, wealth) group. The widely acclaimed standard in public policy is the absolute benefaction of a given income group in filling up the fiscal coffers. Instead, we focus on the ratio of the average income tax rate of an income group divided by the percentage of national income (or wealth) appropriated by the same income group. In turn, we develop the Fiscal Inequality Coefficient which compares the effective percentage income tax payments of pairs of income (or wealth) groups. Using data for the US, we concentrate on pairs such as the Bottom 90% versus Top 10%, Bottom 99% versus Top 1%, and Bottom 99.9% versus Top 0.1%. We conclude that policy makers with a strong social conscience should re-evaluate the progressivity of the income tax system and make the richest echelons of the income and wealth distributions pay a fairer and higher tax