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Monopoly capital and management: Too many bosses and too much pay?

Journal of Economic Issues. September 3, 2020

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 The mainstream or neoclassical economics view that labor is rewarded according to its productivity has been extended to managers and management teams as justification for the levels of compensation that they receive. Additionally, the management concept of “span of management” or “span of control” has been used to explain the total number of and per employee number of managers in any organization along with the assumption that the appropriate span of management is where the marginal productivity of the last manager employed should equal his/her marginal cost, or wage. Or, at least, this is supposed to be the case in competitive industries in the short run, or in all industries in the long run. On the other hand, heterodox economists hold different views of the roles and purposes of managers within organizations and attempt to explain these through either the view of managers exploiting workers on behalf of owners or the view of managers exploiting both workers and owners in order to advance their own agendas. This article examines managerial compensation and intensity from both traditional/mainstream and alternative views (mostly using David Gordon’s theory of a “bureaucratic burden” existing in most U.S. industries).