Gary Becker, an Appreciation by Michel Foucault

“this is basically the same kind of shift of point of view as that carried out with regard to human capital and work.”

A point of view that appeals to those who don’t know shift from shinola.

This is interesting but I’m not convinced that Becker contributed anything to economics that wasn’t already present in Jevons, Menger, etc. Perhaps Corey will agree.

In this they return to, or rather put to work, a defintion [from Lionel Robbins]

Return to, yes.

Foucault emphasizes how Becker and those like him succeeded in providing an economic approach to labor that allowed for the use of existing tools more usually applied to firms

I’m not convinced that Becker mattered for anything.

1) As far as I can from Becker in 2 above, Becker had only read the two lectures by Foucault at the time of that presentation, nothing else, and had barely heard of Bourdieu.

2) Foucault’s intellectual history is very well known: Marxist then abandoned, phenomenology; existential psychology; Heidegger then abandoned; and a very strong interest in Nietzsche after around 1954. Canguilhem in there somewhere. etc. I await evidence that Foucault devoured Becker’s work in the 50s and 60s, as far as I can tell , Foucault read Becker in the late 70s.

3) Assuming for the sake of argument that the 60-70s ideas of Becker and Foucault are compatible, rhyme, their complete lack of demonstrable connection and inter influence during their developmental and productive periods strikes me as extremely strong evidence for a more material, even deterministic theory of production of intellectual ideas and milieus.

4) In other news, in 1968, students didn’t inexplicably and independently decide to riot in thirty different countries.

5) Currently reading about the persistence of the family farm in the Aka River Basin, Tohoku, Japan. I read contemporary American social scientists all the time, with their studies of economies and social systems “from the ground up” They mention Foucault and other French post-structuralists. They do not mention Becker.

I’ve suspected that “human capital” is some sort of brilliantly horrible obfuscation. This is amazing. Thanks!

“Let me put it to you this way. They won’t pay it to you if you ain’t worth it. Period”
– Jack Nicholson

One wonders if an “active economic subject” is precisely a calculating robot, rather than its presumably organic opposite, since calculating robots and subjects are both definitively human inventions.

Perhaps someone could show a benefit from Becker’s theory. How does it explain any aspect of our current economic mess? Where is the homo economicus busily negotiating with McDonalds over wages?

“According to Becker, discrimination in the workplace does not exist because it is bad for business. Donald Sterling, therefore, is a figment of everybody’s imagination. Who knew?”

Not quite. Becker argued that discrimination was costly to the discriminator. And therefore would happen less often in competitive industries where that discrimination would be costlier.

Sterling seems to be a pretty vile racist. But he didn’t discriminate against black basketball players: perhaps because doing so would be excessively expensive?

@17

He discriminated against African American and Hispanic tenants in his apartment buildings. He got sued by the Justice Department and paid penalties which to him were chump change. Re basketball: he got sued by Elgin Baylor for racial and age discrimination.

Sterling is a poster boy for being flagrantly discriminatory in his businesses while incurring no economic cost, contra Becker. He got away with it for decades and made billions.

JWM: “I’m not convinced that Becker mattered for anything.”

As the OP says: he made economics “not just a topic of study, like geology or English literature, but rather an ‘approach to human behavior’.” And that mattered, for good or ill.

And closer to your home, surely the Sargent/rational expectations school of macroeconomics would not have existed without Becker.

Tabasco @ 18: I think that’s misrepresenting what Becker meant by costs. The cost isn’t that people who engage in racism will have their businesses fail horribly, the cost is that by artificially restricting their pool of tenants, it takes them slightly longer to fill vacancies and the tenants they pick are slightly less reliable that what they’d otherwise get, which means they get slightly less money.

Their are probably situations where discrimination can be actively profitable, by splitting people apart and taking advantage of the situation to exploit people. But this seems like a situation where Becker is right. The problem is that the cost Sterling payed was “chump change” so it didn’t actually prevent him from being racist.

UserGoogol 05.05.14 at 1:11 pm

” Their are probably situations where discrimination can be actively profitable, by splitting people apart and taking advantage of the situation to exploit people. But this seems like a situation where Becker is right. The problem is that the cost Sterling payed was “chump change” so it didn’t actually prevent him from being racist.”

Or, the more that somebody is a racist, the more that they are willing to pay the cost, or don’t see the cost. Becker had assumptions, and I believe that cognitive psych has not been kind to them.

Although, Tom Slee, following your link to Becker’s minimum wage blog, it contains the argument from “it is no coincidence that” , a close cousin to argument by rhetorical question.

Haeven’t read all the comments yet

But the human as commodity ..chattel ..and other bondages
This is objectification and force all at once
Versus
The human as seller of her own marketable commodity her labor power
And the human as her own marketable “capital ”

That strikes me as the great divide

Viewing oneself as commodity or capital
Relies on the distinction between the fully commodify labor power
And the skill set enhanced heterogenious labor power
that retains for its possesor
some rent producing market power
Perhaps from a guild or a union alone
Or perhaps thru vervain rare talent of scarce skill set

Marx liked to cut right to the essential commodity state

Historically ” the final , or steady state wage of a certain quality of labor power
Ie
The production price of a certain quality of laboring power
Where the – owner- “rents” are zero

The reduction of labor service to a commodity does not entail exploitation

The formal subsumption of a lawyers services for example by on staffing her
By itself does not entail subjection to exploitation
So long as the independent provision of that service on the market exists as an alternative

The radical transformation of a service into it’s capitalist form
Involves the substitution of co operating capitalist hired labor powers
That individually can no longer produce a marketable service

Marketable here meaning sustainably salable at the market price

Gary Becker, economics Nobel Laureate, dies at 83 Japan Times. I know it is not polite to be disrespectful of the recently deceased, but when I saw Becker speak at the Milken conference in 2008, it was the first time I saw toads hop out of someone’s mouth.

I am not an economist (though I did take a course in Economics in the sixties that used Samuelson as the textbook printed for us third worlders courtesy of US Aid), and had never, till now, heard of Becker or his work, but from reading this post and the comments he sounds like a guy who was too pleased with his analytical skills and applied it to every thing in sight.

As an engineer I understand the feeling.

@hazy

Excellent obit

Paine.

It is too
much work

to extract the meaning of your comments from the frippery.

Plus, it’s infectious. That’s not
a good thing.

@35:

That was from Yves Smith. The link didn’t survive the cut-n-paste. But it’s today’s news. Obviously, I’ve never attended a Milken Institute event. I’m just a red carpet fan, held safely behind the ropes and fences.

Paine @ 34

Indeed.

“Human Capital”: shoelaces for concrete boots, part of the neoliberal fashion in swimming costumes

As an explanator, it’s a new version of atomistic personal virtue working its way in a just world. In addition, to starring under its own name, it makes many appearances, credited as, “skills” or “skills and education”.

I’m not sure I’ve quite grasped Foucault’s insight, or, perhaps, I’m not sure Foucault grasped the nature of Becker’s. Whether from the point of view of the magistrate or scofflaw, the notion that crimes are simply the acts liable to penalty, the code of law remains intact as the defining system, no? Law remains in the foreground, eclipsing moral method or critique. That’s not what Becker accomplished: by changing point of view, he eliminated the political structure of political economy, from consideration as explanator — it just fades away into the deep background, to remain unnoticed, as a narrative of personal virtue spins out. (In terms of academic imperialism, maybe that’s not the critical thing?)

In this narrative of personal virtue operating in a just world, there’s no worry that valuable investments might go unrewarded. It’s not like a law that sanctions feebly or randomly; it’s simply not there.

The hierarchy of power, which is the enterprise bureaucracy — the means of dominance and extraction as well as production and distribution, defining class by its ranks and authority — fades away, as individual income is explained by education and “skills”. Long-term trend: Skill-biased technology change explains increasing income inequality.

And, if education as a capital investment explains increases in personal income, then, as a matter of public policy, we should promote better and more education. That sounds pious and virtuous. But, we should also charge for it. It’s OK to ask students to finance their “human capital” investment with debt, because they will have increased income from that income, and that income should be transferred to capitalists willing to bear the risk, except they shouldn’t actually bear any risk, the government can guarantee the loans, and prevent the discharge in bankruptcy, but . . . I digress.

I’m not sure I’ve quite grasped Foucault’s insight…as a narrative of personal virtue spins out.

Not personal virtue, maybe personal agency.

BW: eliminated the political structure of political economy, from consideration as explanator

F: ensure that the worker is not present in the economic analysis as an object—the object of supply and demand in the form of labor power—but as an active economic subject.

The subject and subjectivity, who is not an object to herself, requires a lot of effort to understand and perhaps can’t be understood from outside as an object to us. Foucault, who has more of a background in existential psychology than Marxism, I think was playing serious with Becker, who wouldn’t have a clue.

I could say “the worker creates Capital” but that’s is too objective. I, no we, create Capital, but only as revolutionaries in collective proletarian consciousness.

Does that sound mystical? It is the categories and sciences of liberal bourgeois political economics that is the fetishism and mystification.

@44

Is this not splitting hairs? They also say that the people who will end up without wage are the low skilled (i.e. those on the minimum wage). An example from here:

Several decades of studies using aggregate time-series data from a variety of countries have found that minimum wage laws reduce employment. At current U.S. wage levels, estimates of job losses suggest that a 10 percent in crease in the minimum wage would decrease employment of low-skilled workers by 1 or 2 percent. The job losses for black U.S. teenagers have been found to be even greater, presumably because, on average, they have fewer skills.

There is also this quote from the same source:

In addition to making jobs hard to find, minimum wage laws may also harm workers by changing how they are compensated.

This is pretty close to what was said @30.

huh. i thought foucault’s micro power thing would have the most to say when a simplified agency model’s rubber meets the road. he characterizes becker’s world view fine, but from what little i read, didn’t focus on how that vision deviates from actual workings.

the whole point of a labor/capital distinction is to make it clear that labor has some power deficit vs capital and it’s the latter that dictates production decisions. to erase the distinction is certainly ‘interesting’ but shouldn’t someone like foucault say more about what becker’s vision doesn’t capture.

bob mcmanus @ 44

Now I know for sure I didn’t understand Foucault. Thanks.

Anon. @ 43: . . . this is the reason student loans are affordable.

Except, they are not “affordable”, they are a highway to debt peonage.

There’s an older form and tradition of economic analysis — before Becker — that would explain personal labor income in terms of political power and economic rents — unions, professional licensing, bureaucratic hierarchy — and in that framework, the expectation is that the specific benefits of investing in education would tend to diffuse away from the individual into the whole society. If increments to income from education ended up lodging anywhere in particular, it would tend to be in land rents, as the educated crowded into cities, where the productive activities that used education concentrated educated people. In that framework, one could recognize that investment in educating a large portion of the population had a huge social payoff, without imagining that any individual would be able to capture and monetize the incremental benefit long enough to pay off a mortgage on it.

Tim Worstall @ 45

No one does actually say that [a higher minimum wage is bound to hurt the minimum wage worker]. Rather, that a higher minimum wage will hurt those who end up without a wage.

I am not misrepresenting Becker’s argument. Becker’s argument is a misrepresentation, of the motives of the person making the argument, of wage-setting and of the likely effects of a minimum wage policy. Pointing that out is perfectly fair.

Becker’s argument re-locates the source of labor’s productivity from the system and organization of the production process, and assigns it as a personal possession, “human capital”, attached to the individual’s character. The worker’s marginal product — and the wage that person is capable of earning — is, in Becker’s accounting, a personal quality. Some workers, having very little “human capital” are only capable of earning $6.00 / hr, so a minimum wage of $8.00 / hr hurts them, by preventing them from working and earning what they can earn.

Common sense intuits, I think, that minimum wage workers have no bargaining power with employers, and their wages tend to be set too low as a result. Economics, honestly done, can rationalize this intuition, by acknowledging the apparent power of employers (e.g. in a monopsony model or a take-or-leave-it-offer in a game), and calculating on the likely effects of too low a wage. All that economic theory can say with assurance is that the effects of a minimum wage will vary with the relative level of the minimum wage. If the effect is to raise the wages of low-wage workers from an inefficiently low level, low-wage workers may or may not work more, but even if they do work fewer hours are likely to earn higher incomes. Ultimately, the effects of a particular rate for the minimum wage is an empirical question, but theory suggests that the minimum wage would have to be quite high before most affected workers actually saw their incomes decrease, as a result of an increase in the minimum rate.

Getting to an outcome where some significant number of particular individuals were actually excluded from the labor market — as opposed to enjoying a certainly higher income, and possibly fewer hours — by a minimum wage really requires that a worker characteristic — like Becker’s “human capital” — completely dominate political and organizational factors, in determining wages and productivity. Becker’s explanation requires a near total eclipse of a “labor market” as a setting for political negotiation of a wage, as well as firm management and organization of the production process, as a context for realizing factor productivity.

That’s quite a remarkable performance, but it is, essentially, a deception — hiding the more conventional and appropriate apparatus of economic analysis behind a curtain, while playing on false (and often ugly) intuitions and prejudices concerning why the low-wage worker earns a distressingly low wage. To the extent that Becker is addressing the social class (and political interest group) of employers, who think they benefit from cheating low-wage workers, I’m sure his arguments seem to have strong attractions and merit, but the only relation of merit to truth-value will be an inverse one.

I’ve always had a soft spot for Michel (not least because he was actually… funny. Lots of his writings have some quite good digs and kicks and jokes). He was more insightful than his critics allowed and smarter than his admirers deserved. Which, even though on the surface of it is about Gary rather than Michel, is sort of the point of Kieran’s post, whether intended or not. And Michel might have appreciated the fact that most of the commentators here completely miss the point in exactly the way he says they’d miss the point.