How Major League Talent Got Major League Pay

Once upon a time (the 1950s to be exact) CEOs of major corporations saved up to go on vacation, supermodels worked by the hour, and baseball players were happy just to eat steak dinners every night of the season. In a 1959 Ladies Home Journal interview a major executive had this to say: “I’m president of one of the larger companies in the U.S., yet chances are I will never become a millionaire.”

Then things changed. At first the shift was gradual, but by the 1980s, people with in-demand skills began to command previously undreamed of incomes. How and why highly talented professionals gained earnings power is the focus of Malcolm Gladwell’s latest article in the New Yorker. Gladwell focuses on the role played by individuals such as Marvin Miller — a veteran of organized labor who transformed the major league baseball players association from a powerless extension of the team owners into a hard-nosed, collective bargaining group ready to strike. By essentially calling the bluff of the team owners during salary negotiations, Miller proved to the players that they were worth far more than the owners had led them to believe. This kind of transformation would soon play out across many different industries — lawyers in top firms, publishing houses, and among Hollywood filmmakers.

Gladwell’s argument, borrowed from cultural anthropologists, is that economic relations between different parties can follow different kinds of models. Market pricing — essentially the laissez faire capitalist model — encourages buyers (capitalists) and sellers (talented individuals) to engage in self-interested, profit maximizing behavior. But in some industries, “authority ranking”, where one group acts paternalistically as the guardian of the other group, has been the historical norm.  This is why baseball owners in the “good old days” dictated the terms of their players’ contracts, and the players in turn looked up to the owners as protectors.

Like most things Malcolm Gladwell writes, this article is insightful, stupendously fun to read, full of great quotes, and has logical gaps large enough to drive a truck through. One obvious problem with the argument is its historical contingency — plenty of things happen by chance, but the transformation of the industries he describes coincides with a period in which corporations were becoming leaner and more multinational. These processes in tandem with political shifts (see Charlotte’s blog post from last Friday), more than the influence of Marvin Miller type figures, helps to explain the increasing power of top talent in business and industry. Another problem with the argument is that it constructs the “talented”, as opposed to Capital, rather selectively. Anyone who knows highly talented freelancers in fields such as editing or art knows that the consolidation of power among talented individuals has not been broadly shared.

Still, there is much to like about this argument. Even if he does not nail the distinction, it is a very worthwhile project to view the earnings prospects of different types of powerful people as being disjointed or even conflictual processes. This is a distinction that often gets lost in contemporary political economy which emphasizes outcomes (i.e. earnings and wealth) and not social relations. But (perhaps inadvertently) Gladwell is reminding us of an older tradition in political economy, going back to figures such as David Ricardo and Karl Marx, that pays close attention to how powerful groups exert control over the means of production. In this day and age, we could all use a little Karl Marx.

About Brendan Saloner

I am a postdoctoral fellow at the University of Pennsylvania in the Robert Wood Johnson Health and Society Scholars Program. I completed a PhD in health policy at Harvard in 2012. My current research focuses on children's health, public programs, racial/ethnic disparities, and mental health. I am also interested in justice and health care.
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One Response to How Major League Talent Got Major League Pay

  1. Paul says:

    For those wanting to take up Brendan’s recommendation that we learn from the history of economic thinking about power differentials, and learn something about recent U.S. economic policy along the way, you can’t do better than this: http://amzn.to/cT5Ef8

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