IDEAS home Printed from https://ideas.repec.org/p/osf/socarx/t8muy.html
   My bibliography  Save this paper

How the Rich Are Different: Hierarchical Power as the Basis of Income Size and Class

Author

Listed:
  • Fix, Blair

    (York University)

Abstract

This paper investigates a new approach to understanding personal and functional income distribution. I propose that hierarchical power --- the command of subordinates in a hierarchy --- is what distinguishes the rich from the poor and capitalists from workers. Specifically, I hypothesize that individual income increases with hierarchical power, as does the share of individual income earned from capitalist sources. I test this idea using evidence from US CEOs, as well as a numerical model that extrapolates the CEO data. The results indicate that income tends to increase with hierarchical power, as does the capitalist composition of income. This suggests that hierarchical power may be a determinant of both personal and functional income.

Suggested Citation

  • Fix, Blair, 2019. "How the Rich Are Different: Hierarchical Power as the Basis of Income Size and Class," SocArXiv t8muy, Center for Open Science.
    • Handle: RePEc:osf:socarx:t8muy
    DOI: 10.31219/osf.io/t8muy
    as

    Download full text from publisher

    File URL: https://osf.io/download/5caf7182a3bc970018edc340/
    Download Restriction: no
    File URL: https://libkey.io/10.31219/osf.io/t8muy?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Stefania Vitali & James B Glattfelder & Stefano Battiston, 2011. "The Network of Global Corporate Control," PLOS ONE, Public Library of Science, vol. 6(10), pages 1-6, October.
    2. Avi J. Cohen, 2003. "Retrospectives: Whatever Happened to the Cambridge Capital Theory Controversies?," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 199-214, Winter.
    3. Xavier Gabaix & Jean‐Michel Lasry & Pierre‐Louis Lions & Benjamin Moll, 2016. "The Dynamics of Inequality," Econometrica, Econometric Society, vol. 84, pages 2071-2111, November.
    4. Thomas J. Dohmen & Ben Kriechel & Gerard A. Pfann, 2004. "Monkey bars and ladders: The importance of lateral and vertical job mobility in internal labor market careers," Journal of Population Economics, Springer;European Society for Population Economics, vol. 17(2), pages 193-228, June.
    5. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," NBER Chapters, in: Investment in Human Beings, pages 9-49, National Bureau of Economic Research, Inc.
    6. J. B. Glattfelder & S. Battiston, 2009. "Backbone of complex networks of corporations: The flow of control," Papers 0902.0878, arXiv.org, revised Aug 2009.
    7. Blair Fix, 2019. "Energy, hierarchy and the origin of inequality," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-32, April.
    8. Matt Hopkins & William Lazonick, 2016. "The Mismeasure of Mammon: Uses and Abuses of Executive Pay Data," Working Papers Series 49, Institute for New Economic Thinking.
    9. James T. Peach, 1987. "Distribution and Economic Progress," Journal of Economic Issues, Taylor & Francis Journals, vol. 21(4), pages 1495-1529, September.
    10. Baker, George & Gibbs, Michael & Holmstrom, Bengt, 1993. "Hierarchies and compensation: A case study," European Economic Review, Elsevier, vol. 37(2-3), pages 366-378, April.
    11. Shuhei Aoki & Makoto Nirei, 2016. "Pareto Distribution of Income in Neoclassical Growth Models," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 20, pages 25-42, April.
    12. Francisco Lima, 2000. "Internal labour markets: a case study," Nova SBE Working Paper Series wp378, Universidade Nova de Lisboa, Nova School of Business and Economics.
    13. Fix, Blair, 2018. "The trouble with human capital theory," Working Papers on Capital as Power 2018/07, Capital As Power - Toward a New Cosmology of Capitalism.
    14. Rick Audas & Tim Barmby & John Treble, 2004. "Luck, Effort, and Reward in an Organizational Hierarchy," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 379-396, April.
    15. Treble, John & van Gameren, Edwin & Bridges, Sarah & Barmby, Tim, 2001. "The internal economics of the firm: further evidence from personnel data," Labour Economics, Elsevier, vol. 8(5), pages 531-552, December.
    16. Fix, Blair, 2019. "Energy, Hierarchy and the Origin of Inequality," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 14(4, April), pages 1-32.
    17. Samuelson, Paul, 2012. "Understanding the Marxian Notion of Exploitation: A Summary of the So-CalledTransformation Problem Between Marxian Values and Competitive Prices," Ekonomicheskaya Politika / Economic Policy, Russian Presidential Academy of National Economy and Public Administration, pages 182-202, August.
    18. Nitzan, Jonathan & Bichler, Shimshon, 2009. "Capital as Power. A Study of Order and Creorder," EconStor Books, ZBW - Leibniz Information Centre for Economics, number 157973, July.
    19. Toda, Alexis Akira, 2012. "The double power law in income distribution: Explanations and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 364-381.
    20. Veblen, Thorstein, 1904. "Theory of Business Enterprise," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number veblen1904.
    21. Matthew Rognlie, 2015. "Deciphering the Fall and Rise in the Net Capital Share," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 50(1 (Spring), pages 1-69.
    22. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281-281.
    23. Fix, Blair, 2018. "Hierarchy and the Power-Law Income Distribution Tail," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue OnlineFir, pages 1-21.
    24. Fix, Blair, 2018. "The growth of US top income inequality: A hierarchical redistribution hypothesis," Working Papers on Capital as Power 2018/05, Capital As Power - Toward a New Cosmology of Capitalism.
    25. G. C. Harcourt, 2015. "On the Cambridge, England, Critique of the Marginal Productivity Theory of Distribution," Review of Radical Political Economics, Union for Radical Political Economics, vol. 47(2), pages 243-255, June.
    26. Gaffeo, Edoardo & Gallegati, Mauro & Palestrini, Antonio, 2003. "On the size distribution of firms: additional evidence from the G7 countries," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 324(1), pages 117-123.
    27. Fix, Blair, 2018. "Hierarchy and the Power-Law Income Distribution Tail," OSF Preprints u95dk, Center for Open Science.
    28. Fix, Blair, 2018. "The Growth of US Top Income Inequality: A Hierarchical Redistribution Hypothesis," SocArXiv suqnk, Center for Open Science.
    29. Joan Robinson, 1953. "The Production Function and the Theory of Capital," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 21(2), pages 81-106.
    30. Fix, Blair, 2018. "The Trouble With Human Capital Theory," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 86, pages 15-32.
    31. Bichler, Shimshon & Nitzan, Jonathan, 2020. "Growing through Sabotage: Energizing Hierarchical Power," Review of Capital as Power, Capital As Power - Toward a New Cosmology of Capitalism, vol. 1(5), pages 1-78.
    32. Jesus Felipe & Franklin M. Fisher, 2003. "Aggregation in Production Functions: What Applied Economists should Know," Metroeconomica, Wiley Blackwell, vol. 54(2‐3), pages 208-262, May.
    33. Fix, Blair, 2018. "The Trouble with Human Capital Theory," SocArXiv ax6k7, Center for Open Science.
    34. Matthew Rognlie, 2015. "Deciphering the Fall and Rise in the Net Capital Share: Accumulation or Scarcity?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 46(1 (Spring), pages 1-69.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Blair Fix, 2021. "How the rich are different: hierarchical power as the basis of income size and class," Journal of Computational Social Science, Springer, vol. 4(2), pages 403-454, November.
    2. Fix, Blair, 2021. "The Rise of Human Capital Theory," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 95, pages 29-41.
    3. Fix, Blair, 2019. "An Evolutionary Theory of Resource Distribution," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 90, pages 65-97.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Blair Fix, 2021. "How the rich are different: hierarchical power as the basis of income size and class," Journal of Computational Social Science, Springer, vol. 4(2), pages 403-454, November.
    2. Fix, Blair, 2019. "How the rich are different: Hierarchical power as the basis of income size and class," Working Papers on Capital as Power 2019/02 (v.2), Capital As Power - Toward a New Cosmology of Capitalism.
    3. Fix, Blair, 2019. "How the rich are different: Hierarchical power as the basis of income and class," Working Papers on Capital as Power 2019/02, Capital As Power - Toward a New Cosmology of Capitalism.
    4. Fix, Blair, 2018. "Capitalist income and hierarchical power: A gradient hypothesis," Working Papers on Capital as Power 2018/06, Capital As Power - Toward a New Cosmology of Capitalism.
    5. Blair Fix, 2022. "Economic development and the death of the free market," Evolutionary and Institutional Economics Review, Springer, vol. 19(1), pages 1-46, April.
    6. Fix, Blair, 2018. "Capitalist Income and Hierarchical Power," SocArXiv u8epv, Center for Open Science.
    7. Fix, Blair, 2019. "Energy, Hierarchy and the Origin of Inequality," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 14(4, April), pages 1-32.
    8. Blair Fix, 2019. "Energy, hierarchy and the origin of inequality," PLOS ONE, Public Library of Science, vol. 14(4), pages 1-32, April.
    9. Fix, Blair, 2020. "Economic Development and the Death of the Free Market," SocArXiv g86am, Center for Open Science.
    10. Fix, Blair, 2018. "The Growth of US Top Income Inequality: A Hierarchical Redistribution Hypothesis," SocArXiv suqnk, Center for Open Science.
    11. Fix, Blair, 2020. "Economic Development and the Death of the Free Market," Working Papers on Capital as Power 2020/01, Capital As Power - Toward a New Cosmology of Capitalism.
    12. Fix, Blair, 2017. "Evidence for a Power Theory of Personal Income Distribution," Working Papers on Capital as Power 2017/03, Capital As Power - Toward a New Cosmology of Capitalism.
    13. Fix, Blair, 2018. "The Trouble With Human Capital Theory," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, issue 86, pages 15-32.
    14. Fix, Blair, 2018. "The trouble with human capital theory," Working Papers on Capital as Power 2018/07, Capital As Power - Toward a New Cosmology of Capitalism.
    15. Fix, Blair, 2018. "The Trouble with Human Capital Theory," SocArXiv ax6k7, Center for Open Science.
    16. Fix, Blair, 2018. "The growth of US top income inequality: A hierarchical redistribution hypothesis," Working Papers on Capital as Power 2018/05, Capital As Power - Toward a New Cosmology of Capitalism.
    17. Fix, Blair, 2017. "Evidence for a Power Theory of Personal Income Distribution," SocArXiv qgwus, Center for Open Science.
    18. Blair Fix, 2018. "Hierarchy and the power-law income distribution tail," Journal of Computational Social Science, Springer, vol. 1(2), pages 471-491, September.
    19. Fix, Blair, 2021. "Living the good life in a non-growth world: Investigating the role of hierarchy," SocArXiv wem9p, Center for Open Science.
    20. Fix, Blair, 2021. "Living the Good Life in a Non-Growth World. Investigating the Role of Hierarchy," Working Papers on Capital as Power 2021/02, Capital As Power - Toward a New Cosmology of Capitalism.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:osf:socarx:t8muy. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: OSF (email available below). General contact details of provider: https://arabixiv.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.