The Profit Paradox: How Thriving Firms Threaten the Future of Work
by Jan Eeckhout
In The Profit Paradox Jan Eeckhout, an economist at Pompeu Fabra University in Barcelona, sets out to explore one of the challenges for our society and capitalism today: why, while many companies thrive, wages of a lot of the people working for them have stagnated. “There is a clear chain of events originating with dominant firms grabbing extreme market power,” he writes. “This has profound implications for work, the source of income for the majority of people. Market power leads to wage stagnation and extreme wage inequality, and it stymies social mobility and economic dynamism.” In short, the capitalism we have at the moment is not so much pro-market as pro-business. “To safeguard democracy and a just division of what society produces, we need regulation and institutions that foster pro-competitive capitalism,” he argues. “We need that now, before it’s too late!”
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“He’s showing the impact of all this and how it leads to inequality…He talks about the fall in job mobility. These big monopolies don’t necessarily all want to grow, they just want to keep their profits where they are. People used to switch jobs a lot more than they do today. He sees that as part of the lower dynamic business mobility because business companies don’t go come and go anymore. They don’t die as much.” Read more...
The best books on Market Concentration
Jan Loeys, Economist
“I think this is an extremely important piece of research and very influential. It’s made everyone sit up and think about what’s going on. And it’s really shaken the economics profession because we had never before realized how widespread the rise of market power has been.” Read more...
Howard Smith, Economist
