Friday, May 9, 2014

Scoundrel Time

Twenty years ago, the Journal of Economic Issues published a note by Warren Samuels on "'Shirking' and 'Business Sabotage'." Citing Thorstein Veblen's analysis of business sabotage, Samuels was scathing in his criticism of the ideological double standard of the mainstream efficiency wage literature:
Pejorative emphasis on shirking merely, but effectively, constitutes either taking the employer side or assuming that there is nothing further to be worked out, which in practice is typically simply inaccurate. Indeed, even talking about management's failure to solve the principal-agent problem privileges the employer position. Mainstream theory is asymmetrical.
The analyst who opposes worker shirking without criticism of industrial sabotage is taking sides, and the analyst who opposes industrial sabotage without criticism of shirking is also taking sides.
It's worth delving into just how pejorative shirk is. Oxford defines it as "to avoid meanly, to shrink selfishly from duty... Slink or sneak away, practice fraud or trickery..." Etymologically, the word is suspected of coming from the German Schurke, a scoundrel. Well, there's your value-free positive, eschewing the normative, neoclassical economics for you!

Samuels's criticism was resoundingly ignored by economists theorizing about shirking. A Google Scholar search turns up ten citations, four of them by David Spencer. By contrast there are 4575 results for a search on the canonical source by Carl Shapiro and Joseph Stiglitz, "Equilibrium Unemployment as a Worker Discipline Device."

Searching inside the search results for Shapiro and Stiglitz gives further insight into the asymmetry of mainstream theory. Using ten phrases such as "shirking workers" and "employee who shirks" and a like number of complementary phrases, "shirking employers" and "firms who shirks" returns totals of 588 and 3, respectively, after eliminating the false positives for the latter such as "…to prevent shirking, employers…"

Interestingly enough, one of the three dissident results that turns up is from a fireside chat from July 1933 by Franklin Delano Roosevelt, explaining the New Deal's Industrial Recovery Act:
The proposition is simply this: 
If all employers will act together to shorten hours and raise wages we can put people back to work. No employer will suffer, because the relative level of competitive cost will advance by the same amount for all. But if any considerable group should lag or shirk, this great opportunity will pass us by and we will go into another desperate winter. This must not happen.
It will be clear to you, as it is to me, that while the shirking employer may undersell his competitor, the saving he thus makes is made at the expense of his country’s welfare... 

No comments: