You couldn’t make it up. In a recent report on ‘executive pay’, the Economist (hardly a champion of equality) has been obliged to admit the (for them) embarrassing absurdity of ever ballooning capitalist pay-cheques in the midst of attacks on working class living standards. Indeed, they cannot avoid stating that “this year the economic downturn is adding extra emotion to the season’s familiar fury. Unions are, for example, outraged at the $21m [!!!] paid to Sam Palmisano, IBM’s boss, not least because his firm laid off 10,000 workers in America last year.” Of course, we are all by now familiar with these horror stories, and there is no need for this article to lengthily recount tales of obscenities generated by the class divide. But the report does contain two items of particular interest – the uncovering of the deception of some ‘ethical’ CEOs who have ‘voluntarily’ give up their bonus to appear on the same level as their workers, and the apparent impossibility even for these all-powerful ‘masters of the universe’ to limit their own pay.
The Economist tells us that the phenomenon of ballooning executive pay is down to the existence of something called the ‘executive compensation industry’. We are not invited to ask whence this industry came, and why. That it is merely an inevitable expression of the capitalist system and its market logic is of course something the bourgeois press will not readily admit.
So irrepressible is the market’s logic (i.e. extreme concentration of wealth) that we are told even those noble capitalists turning down their bonuses have been ‘compensated’ anyway! “Jeff Immelt, the boss of General Electric, declined to take the cash bonus he was due for the second year in a row…although his total compensation [compensation? Whoever said Americans lacked a sense of irony had obviously never met its capitalist class!] for 2009 was still a healthy [!] $10m, 6.5% more than in 2008. Howard Schultz, the boss of Starbucks, opted out of the executive bonus scheme last year and asked for his basic salary to be cut from over $1m to almost nothing. But he ended up receiving $12m, after the board awarded him a discretionary bonus.” It goes on “there is even now a fad nicknamed the “pity bonus”, [!!!] paid to bosses who failed to qualify for a big enough payout under the established bonus scheme due to the unforgiving economy [it would appear that this economy is more forgiving to some than others!].”
You have to feel sorry for these CEOs – despite all their efforts to look humble, their damned board go and blow their cover by ‘compensating’ them anyway. Still, at least we finally an answer to the age-old philisophical riddle ‘can an all-powerful capitalist god stop himself receiving a pay cheque too big even for himself to consume?’ According to the Economist, the answer is no!
But the report is quite instructive in delivering a decisive blow against the utopian theory that is as follows: management advised by a consultancy firm independent of shareholders will not act in the interests of the greediest, largest shareholders and CEOs, but will act equally in the interests of the company’s workers as well as its owners. This is of course wrong because the capitalist system dictates a company’s behaviour.
The report says “that the consultants tend to recommend generous pay cheques for bosses in order to curry favour with management and thus keep the other work rolling in…pay tends to rise when the board hires its own pay consultant…consultants provide generous directors with ‘cover and comfort’.” A cosy arrangement – we pay you loads of money to tell us to pay ourselves loads of money. But what underpins this arrangement (something the report does not question)? That huge monopolies have loads and loads of money that they cannot profitably reinvest! This is the logic of capitalism.
Paradoxically, the greatest global recession in history has not stopped this process, since these companies are laying off workers because there is no demand. Rather than paying 10,000 workers a wage, they are laying these workers off and paying 10,000 wages to themselves. This is not just immoral, it is a criminal waste.
Currently the press in Britain is raising a hue and cry over local government chief’s huge salaries and payouts (something we would not defend). But their solution is to sack tens of thousands of low paid local authority workers. The private monopolies CEOs’ compensation vastly dwarves that of the even the top government officials. So the only real solution to this crisis is to expropriate both their ‘compensation’ and the monopolies as a whole, and put the unemployed to work.
This article first appeared on Socialist Appeal.
Categorised in: Article
This post was written by Dan Morley