How the rich are different: Hierarchical power as the basis of income and class
No 2019/02, Working Papers on Capital as Power from Capital As Power - Toward a New Cosmology of Capitalism
What makes the rich different? Are they more productive, as mainstream economists claim? I offer another explanation. What makes the rich different, I propose, is hierarchical power. The rich command hierarchies. The poor do not. It is this greater control over subordinates, I hypothesize, that explains the income and class of the very rich. I test this idea using evidence from US CEOs. I find that the relative income of CEOs increases with their hierarchical power, as does the capitalist portion of their income. This suggests that among CEOs, both income size and income class relate to hierarchical power. I then use a numerical model to test if the CEO evidence extends to the US general public. The model suggest that this is plausible. Using this model, I infer the relation between income size, income class, and hierarchical power among the US public. The results suggests that behind the income and class of the very rich lies immense hierarchical power.
Keywords: hierarchy; power; functional income distribution; personal income distribution; inequality; capital as power; class (search for similar items in EconPapers)
JEL-codes: D31 D33 B5 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cmp, nep-hme, nep-ore and nep-pke
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:capwps:201902
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