Re: (OPE-L) Re: tendencies for equalization

From: Ian Wright (iwright@GMAIL.COM)
Date: Tue Oct 19 2004 - 00:45:29 EDT

Hi Jerry

I'm happy to talk about the income distribution in China, but I bowed
out of this thread because I did not think you were engaging with what
I had written. You had been arguing against a straw man largely of
your own invention:

> On the contrary, we would expect -- given existing inequalities --
> that if there were such a tendency than it would manifest itself
> empirically in a long-term _decline_ in wage disparities rather than
> relative stability in wage disparities.

But I do not expect that, and did not state that. In fact I gave a
maximum entropy explanation as to why we should expect wage
disparities to be invariant in a market economy, one that avoids the
fallacy of description, in which re-descriptions of kinds of empirical
events is offered as a theoretical explanation. Recall that I proposed
(tentatively) that a tendency to equalise  manifests as a narrower
dispersion that would otherwise be the case (counterfactual, and
therefore difficult to operationalise), and via the unimodality of the
lower-end of the income distribution, all 90-95% of it. There is
nothing here about a long-term trend to narrow the wage dispersion, or
stability of wage disparities. In fact, the wage dispersion will wax
and wane. I introduced the analogy of a swarm or flock: wages are
moving together, although sometimes they may move apart or closer.

> > I mentioned in a previous post that the exponential distribution is a
> > reasonable fit for 90-95% for the income of all groups in
> > industrialised countries over a period of several decades.
> One has to then ask whether:
> a) given the time period, do the statistics reflect some phenomena
> for a _conjuncture_ rather than for capitalism as such?  In
> other words, how do we know that this statistical relation is
> valid across capitalist history rather than an empirical
> characteristic associated with a Neo-Liberalism (or whatever
> other term you want to use to describe the last several decades)?

Yes it could be. But there are studies of data from 19th and 20th
centuries that give the usual functional forms, particularly so for
the top-end, the Pareto law of wealth.

> b) given the fact that the distribution is claimed to represent a
> reasonable fit for industrialized nations (which means that the
> data only refer to a sub-set of the capitalist economy), doesn't
> one have to examine what is happening in the rest of the
> capitalist social formations in the world to determine whether
> there is a different  statistical distribution when one examines the
> issue globally?

Yes we should. But recall that I have been talking about the income
distribution within a single labour market, i.e. a nation-state.

> Without addressing these questions, then we can not infer
> _any_ meaning for those statistics for capitalism as such. All
> that we could say, without doing so, is that *during some
> specific time period and for some nations* inequality among
> workers has been relatively stable.

I am a bit flummoxed by this scepticism. We can infer a great deal of
meaning, by surveying all the empirical studies and making reasonable
inferences. It is ok to think that most swans are white.

But note: I did not state that inequality has been stable, so I do not
know why you would wish to infer that. I stated that the functional
form of the income distribution has been stable. Measures of
inequality are changing all the time (e.g. Gini coefficient), but the
income distribution seems to always be characterised by a lower regime
consistent with an exponential (or gamma or log-normal) and a higher
Pareto regime. This empirical data is worth a thousand words, whereas
I am sceptical of anecdotes about the labour market.

> > I provided a theoretical explanation for this fact, that it is a
> > maximum entropy distribution under a money conservation constraint.
> > This kind of explanation is probabilistic, and so it can take a little
> > getting used to. The important point, however, is that this
> > explanation is intended to include many if not all of the concrete
> > determinations that have been mentioned as causal factors that affect
> > wages.
> It doesn't -- and can't -- include some of the most important
> determinations that I mentioned (such as the income of guest
> workers, undocumented workers, documented workers who
> are employed in the underground economy).  For many of the
> nations that you are referring to (the 'industrialised countries')
> these workers and their income represent a *very* significant
> percentage of the total amount of workers and wages. This
> is very germane to the question under consideration.

We need to distinguish between (i) workers who are not counted in
empirical studies, and are therefore missing from the data, and (ii)
whether the proposed explanation can explain their wages if they did
appear in the data.

What does "very significant percentage" mean? 5%, 10%, 50%?


This archive was generated by hypermail 2.1.5 : Wed Oct 20 2004 - 00:00:01 EDT