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human
CMV: Talking about CEO compensation as a socialist is an incoherent and harmful distraction

People on the left, including those who call themselves socialists, often complain about the pay gap between CEOs and low wage employees. The reason some employees are paid too little, the story goes, is because the CEO is paid too much. This is a harmful distraction from the true nature of the situation under a socialist world view, which is that employees (labor) are paid too little because the *owners* (capital) are paid too much.

I will start this by assuming that every socialist who complains about CEO compensation being too high actually knows what a CEO, or chief executive officer, is. I don’t necessarily think this is a reasonable assumption, but in the interest of making the complaints seem as coherent as possible, I think we have to start with a baseline assumption that everyone is operating in reality. A CEO is an employee who is hired to make the management decisions of a company. That’s it. The CEO is not the owner. The CEO is not the founder. The CEO is not capital in general. The CEO, unlike the owner, does not take distribution in the form of excess rent leftover once labor is paid. The CEO earns a salary for his or her labor. The CEO is on payroll like any other employee. Bottom line: the CEO is simply a highly paid employee.

It is important for socialists to draw a distinction between capital and labor. Labor are those who make money from mental and/or physical and/or emotional acts of work, and the term “labor” most explicitly refers to those employed by an employer. Capital are those who make money from their ownership of the means of production. This distinction between people who earn money through working and people who earn money through ownership underlies all of socialist thought. And it is important in a practical matter because the inequality and other negative aspects of capitalism do not result from people who work too much and add too much value through their labor. Those negative aspects result from people who own too much and extract too much rent through their ownership.

Socialists should view CEOs as a member of the labor class. Under a socialist world view, the “working class” is not so much an income level as it is a way to make money. If you make money from working, you’re working class (or at least you’re a member of labor rather than capital). Terms like “middle class” and “upper middle class” only seek to divide the people who earn money through their labor. If I could articulate the socialist world view with two examples, it would be this: a landlord who owns one rental property and makes $12,000 a year from it is a capitalist. A surgeon employed by a hospital who earns a salary of $500,000 is a laborer. To say this is not to villainize one and lionize the other. It is simply to acknowledge the coherent world view that earning money strictly through ownership is different from earning money through labor.

Now you may think that “CEO” is simply a stand-in for capital in general. And I admit that “the owner” is a hard concept to pin down. For most large companies, it’s the shareholders, and there are plenty of large companies where the CEO is in fact the sole owner. But the way people talk about it suggests that they know the CEO is an employee, and legislative definitions make it very clear that what people are talking about is highly paid employees. The Tax Excessive CEO Pay Act, for example, defines the pay gap as the gap between the highest compensated employee and the lowest compensated employee. In placing a limit on this value, the Act would place upper limits on the amount a highly-paid employee could receive but no limit on any distribution to the owners.

This type of messaging is harmful because it sends the message that any labor fight is between employees who are paid too much and employees who are paid too little. It never even acknowledges the rent extracted by the owners of the company. That distribution is taken for granted. The owners will get their share, and then the employees can fight over the rest. If a janitor is not making enough money, it’s because the CEO or their manager took too much.

It also works to divide the labor class the other way. If you go into any hospital and ask any doctor “who do you have more in common with? The cleaning crew of the hospital or the CEO” the doctor is going to say the CEO. That’s true for plenty of “middle class” laborers. They relate more to the highly paid managers of the company than they do to the low-wage employees. So if some regional manager of a department store thinks he or she isn’t making enough, they’re going to blame the low wage employees. They’re going to see any complaints against the CEO and other highly paid employees as attempts to take their own money. And this perception wouldn’t even be that unreasonable in many cases. In fact, in the hospital example, the CEO may not even be the highest paid employee. In other words, it’s likely that the Tax Excessive CEO Pay Act, if implemented, would limit a doctor’s salary.

I want a world with class solidarity. That means the *entire* labor class, no matter how well compensated. From the janitor to the doctor to the regional manager to the CEO—anyone who earns their money through labor, whether they went to business school or not. I’m not sure how to do that, but a good start would be to acknowledge the concept of economic rents and stop using the CEO as some boogeyman who is hogging the entire payroll. That is not what socialism is about. It is not a fight between employees who are paid too much and employees who are paid too little. There’s more money to go around than focusing entirely on employees would have you believe. And there’s nothing the owners love more than watching the employees bicker with each other over who is getting paid too much.
gpt
>which is that employees (labor) are paid too little because the owners (capital) are paid too much.

In most cases, the owners are shareholders.

>The CEO is not the owner.

The CEO almost always is a shareholder and is, therefore, an owner. You even concede the CEO is sometimes the "sole owner." Can you even given an example of a CEO who has no ownership of a company? How exactly can you separate the CEO from ownership if not? The CEO makes decisions about compensation. They decide how little to pay everyone else to boost the value of their ownership.