Random Thoughts on The City, Wall St & Capitalism

I read this in the New Statesman a few weeks ago. It rang a bell. Adds new meaning to the corporate treadmill.Something to ponder for now.



Those mill owners knew a thing or two
Observations
Raj Persaud
Monday 17th October 2005

Observations on work. By Raj Persaud

The Marxist view of pay strategy "down t'mill" was that bosses extracted
maximum effort from workers by keeping them desperate. Employees, in other
words, were paid just enough to keep them from starvation. It didn't make
sense to pay them so badly they couldn't get out of bed in the morning, but
equally it wasn't smart to pay more than the minimum needed to keep them
turning up at the mill gate each day ready to give their all.

A distant Victorian memory, you may think, except that an American
economist has come up with a model of modern salaried professions which
suggests that the Marxist analysis applies with renewed force in
competitive market places such as, to take one example, the City of London.
According to Alan Day Haight of Bowling Green State University, Ohio,
people in accounting, law, medicine and similar work toil on the verge of
depression or burn-out in much the same way as wage workers once lived on
the edge of starvation.

Haight points out that promotion-track workers in these professions are
motivated largely by hope of advancement to partner or vice-president, or
some other senior post. And given that they basically accept hope as a
means of payment, they are convenient targets for "surplus extraction".

In a typical office, this argument runs, senior professionals benefit from
the long hours put in by junior professionals, and because a little rivalry
makes the juniors more diligent, the partners have an incentive to hire
more than one candidate for each anticipated promotion. But how much more
than one? How much rivalry is enough, from a partner's point of view, to
extract maximum surplus effort?

The Haight answer may seem dismally familiar: there is enough rivalry only
when the junior professionals are suffering from so much promotion anxiety
that they are always on the verge of giving up or burning out.

Haight has modelled the optimum curve for the number of extra hours that
can be extracted from young professionals on the basis of their hopes of
promotion. Maximising hope, he notes, is the key art of the senior partner;
more people must believe they may be promoted than can be promoted.

He therefore concludes that "if staff burn-out did not exist, it would be
necessary to invent it". If junior staff have high morale, in other words,
you must hire more of them until promotion anxiety is sufficiently severe
to extract maximum free labour from juniors. The firm can even afford a few
psychological casualties among the staff because of the returns in
aggregate effort.

The model reminds us that although the modern owner of the means of
production might not exploit workers physically in the manner of the
Victorian mill owner, he or she may be exploiting them emotionally. And
because emotions are less visible than malnutrition or physical exhaustion,
the damage is harder to measure. In other words, the professional workers
of the world may be in chains, even if they can't see the chains to throw
them off.

Raj Persaud is Gresham Professor for Public Understanding of Psychiatry and
consultant psychiatrist at the Maudsley Hospital, London

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