Posts Tagged ‘profits’


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Apparently, physicians are not going gently into that good night.

Doctors are being increasingly treated like assembly-line workers—forced to see more patients, in order to boost nonprofit hospitals’ profits, or replaced by contractor doctors or outsourced as “hospitalists,” who are employed by multistate management companies.

As recently as the mid-1990s, there was no one called a hospitalist. Most doctors would simply scramble from their offices to the hospital when they had to tend to patients there. But the discipline grew rapidly thereafter — to roughly 50,000 hospitalists nationwide in 2015 from about 11,000 in 2003, according to industry estimates. . .

Hospitalists could also increase hospital profits. They were on hand to discharge people throughout the day, emptying beds that could generate revenue again. And while paying the doctors was a new cost, hospitals at first found the efficiencies so advantageous that hospitalists were afforded the rare privilege of spending more time with patients. The doctors spent the time diagnosing and treating what were often highly complicated conditions — chronic health problems stacked on top of one another, or multiple organ failures.

This reprieve from the economic forces bearing down on the medical profession didn’t last long, however. “A consequence of how much the health care market has changed is that everybody has to be more efficient,” said Adam Higman, who specializes in hospital operations at Soyring Consulting in St. Petersburg, Fla. He noted that the increasing focus on metrics like readmission rates and hospital-acquired infections had created more work for hospitalists, who are responsible for a lot of documentation. “In some sense that comes to the detriment of the patient, there’s not as much quality time,” he said. “In some sense, that’s to their benefit — there’s a system to manage them.”

But now, some of the doctors are fighting back, by forming unions and then affiliating with larger union confederations, which in some cases already represent the nurses at those hospitals.

That’s a start—but probably not enough.

We’ve spent a lot of time in recent years debating health insurance. Clearly, it’s time to take up the debate about how healthcare itself is provided, and how nurses, doctors, and other healthcare providers participate in making the decisions about how their patients are cared for.

And we need to do this while we can still see with blinding sight.


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Look for Office Friendly and Go the Other Way

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What are U.S. corporations doing with all the surplus they’re managing to rake in? Well, they’re not investing it. Instead, they’re paying it out to shareholders and upper-management, buying back their stock and expanding their portfolios of financial assets, and hoarding the rest in cash. The net effect is to dampen the rate of economic growth and the creation of new jobs.

And that’s worrying mainstream economists and others who celebrate capitalists, since they appear to be failing in their “historical mission” to accumulate capital.

According to a recent paper by Joseph W. Gruber and Steven B. Kamin (pdf), of the Board of Governors of the Federal Reserve System, in the years since the Great Financial Crash, investment spending by non-financial corporations (the red line in the chart above) has been much lower than their “savings” (undistributed profits, the blue line), which has placed them in the position of being net lenders (the black bars at the bottom of the chart).

Their conclusion?

we find that the counterpart of declines in resources devoted to investment has been rises in payouts to investors in the form of dividends and equity buybacks (often to a greater extent than predicted by models estimated through earlier periods), and, to a lesser extent, heightened net accumulation of financial assets. The strength of investor payouts suggests that increased risk aversion and a precautionary demand for financial buffers has not been the primary reason firms have cut back investment. Rather, our results are consistent with views that, for any number of reasons, there has been a decline in what firms perceive to be the availability of profitable investment opportunities.

In other words, corporations have been distributing their profits for many uses other than real investment, a process that started before the crash and has quickened in the years since.

As it turns out, I’ve been teaching about Marx’s theory of the accumulation of capital this week, using the following equation:

ΔK = Δc + Δv = βDI = s – [(1-β)DI + DO + DM + DR]

The idea is that the accumulation of capital (ΔK = Δc + Δv) represents a distribution of the surplus to internal managers (βDI), which is equal to the difference between the total surplus (s) and all other distributions of the surplus—to internal managers other than for the purpose of accumulation ([1-β]DI), to owners (DO), to merchants (DM), and all others (DR ). Obviously, if the distributions of the surplus in the form of CEOs salaries, dividends, merchants, and all others (e.g., taxes to the state, rent to landowners, interest payments, and so on), plus cash holdings, increase, then less accumulation of capital—that is, investment—will take take place.

And that’s exactly what’s been going in recent years—thus undermining the legitimacy of both capitalists and of capitalism.

As Marx wrote (in chapter 24 of volume 1 of Capital), in one of the most quoted and yet misinterpreted passages:

Accumulate, accumulate! That is Moses and the prophets! “Industry furnishes the material which saving accumulates.” Therefore, save, save, i.e., reconvert the greatest possible portion of surplus-value, or surplus-product into capital! Accumulation for accumulation’s sake, production for production’s sake: by this formula classical economy expressed the historical mission of the bourgeoisie, and did not for a single instant deceive itself over the birth-throes of wealth. But what avails lamentation in the face of historical necessity? If to classical economy, the proletarian is but a machine for the production of surplus-value; on the other hand, the capitalist is in its eyes only a machine for the conversion of this surplus-value into additional capital. Political Economy takes the historical function of the capitalist in bitter earnest.

Bitter earnest, indeed—on the part of classical economists then and mainstream (neoclassical and Keynesian) economists today.

Thanks to Bruce Norton, we know that that passage is not Marx’s assertion that capitalists are driven to accumulate capital. Instead, it’s what mainstream economists (then as now) claim is the role capitalists can and should play. It’s one side, if you will, of our pact with the devil: the capitalists are the ones who get and decide on the distribution of the surplus, and then they’re supposed to use the surplus for investment, thereby creating economic growth and jobs.

When they fail to to fulfill that historical mission, and use the surplus to line their own pockets and to share it with their friends, they break the pact and lose their legitimacy in having sole control over the surplus.

Mainstream economists want to do everything possible to encourage the capitalists to accumulate capital. The rest of us recognize that the time has come to replace the capitalists and use the surplus to benefit the mass of people who, until now, created but have had no say in deciding what should be done with the surplus.