DIVIDENDS ARE NOT ROYALTIES
by Michael Parenti
It has been frequently noted that I.Q. examinations, while professing to
measure innate intelligence, are riddled with racial, gender, and class
biases. Thus a low-income, inner-city youth, confronting a seemingly innocuous
phrase like "behind the sofa" on an I.Q. test, may find it unfathomable,
not realizing that it is just a middle-class way of saying "in back
of the couch."
Along with I.Q. exams, the Scholastic Aptitude Test (SAT) has come under
fire. Going through my file, I came across a story, clipped years ago from
the Washington Post (April 28, 1989), noting that the Center for Women Policy
Studies found that the SAT was biased against women. The center reported
that about one out of every seven questions favored males over females,
specifically questions about sports, science, war, and business. A more
recent story in the New York Times (May 26, 1993) reiterates the charge
of gender bias.
One claim made for the SAT is that it is designed to predict a student's
college performance. Not true. Men consistently outscore women on the SAT,
yet women earn higher grades both in high school and college. But, because
of the gap in SAT scores, women are less likely to win scholarships or gain
entry to certain schools and programs.
While agreeing that there is gender bias in the SAT, we might also wonder
about the test's unexamined politico-economic bias. What caught my eye was
an example offered in the Post article of the questions that favored males.
Males are more likely to answer correctly the comparison: "Dividends
is to stock as royalties is to writer." According to the SAT, the correct
answer is "true." Presumably, both dividends and royalties are
seen as income, while stock and writer are the respective income producers.
Wait a minute, I thought. What is so correct about that parallel? It is
just such thinking that leads some people to accuse me of being a "capitalist"
because I earn royalties on my books. But income accrued from stock ownership
is something apart from salary or wages or royalties earned from hard work.
("Royalties" are analogous to dividends only when they refer to
profits on land, oil, and mineral rights that go to the landowners-something
quite different from the royalties that go to writers.)
Dividends from stock represent profits from capital investment, money you
make without having to work. The author of a book does not make profits
on his or her book. She or he earns an income from the labor of writing
it, proportionately much less than the sum going to those who own the publishing
house and who do none of the writing. Likewise, those who do the other necessary
labor of editing, proofing, printing, and marketing the book do not receive
profits. They are paid a portion of the money that the book will make, and
like the writer, that portion will be less than the value added by their
labor.
The sum going to the owners is profits, the dividends on the stock they
own in the publishing house. It is a portion of the value added to the commodity
by the labor power of others. It is what federal tax forms used to call
"unearned income" and with good reason. Again-it cannot be said
too often-profits are what you make when not working. This explains why,
in most instances, the secret to getting rich is not to work hard but to
get others to work hard for you.
While corporations are often called "producers," the truth is
they produce nothing. They are organizational devices for the expropriation
of labor and for the accumulation of capital. The real producers are those
who apply their brains, brawn, and talents to the creation of goods and
services. Capitalists like to say that they are "putting their money
to work," but money as such cannot create more wealth. Of itself, not
all the money in the world can build a house or harvest a crop. Even what
is called "productive capital"-machines and other mechanisms and
technologies-cannot of themselves produce anything. They need human labor
to become productive and are themselves the products of previous human labor.
What capitalists really mean when they talk about "putting their money
to work" is that they are putting human labor to work, paying workers
less in wages and salaries than they produce in value, thereby siphoning
off the surplus for themselves. "Surplus value" is not only a
Marxist concept but a reality of life-so much so that the capitalists themselves
talk about "value added," meaning more or less the same thing
as surplus value: the value that the workers add to the product over and
above the wages they are paid and other costs of production.
This expropriation of the value created by labor is the biggest rip-off
that working people (including writers) endure. While it is easy for all
of us to see the money taken from us by the government in the form of taxes
deducted from our paychecks, it is less easy to see the far greater wealth
taken from us in the form of the value created by our efforts and pocketed
by those who do not work.
Typically, in an eight-hour workday, the value of the products that workers
create in the first two hours of labor will equal their wages. For the remaining
six hours, they are performing surplus labor time, creating surplus value
that is taken in by the shareholders, bondholders and others who do not
work. It is from this surplus value (or " value added" as management
would say) that the corporate capitalists make their profits, after paying
off overhead costs, interest on loans, advertising fees, and what little
taxes they sometimes pay.
Don't take my word for it; consider the U.S. Census Bureau's Census of Manufacturers,
1987, which reported that workers in twenty manufacturing industries, produced
an average $95,519 worth of product per worker a year, or $1,837 a week.
Yet the wage paid averaged to only $394 a week. So the $64 subsequently
taken from the worker's paycheck in taxes was far less than the $1,443 in
surplus value stolen by the owners. This constant and massive transfer of
wealth from those who produce it to those who pocket it explains why the
net assets of the four hundred richest Americans is $300 billion, while
the net assets of the one hundred fifty million poorest Americans is zero.
This process of expropriation of value explains why the owners of big commercial
publishers of books, newspapers, and other publications enjoy such immense
wealth while most of their writers live at the subsistence level. In 1975,
when I published an Op-Ed in the New York Times, I was paid $150. Eight
years later I published another in the Times and despite all the intervening
inflation, I again was paid only $150. Today, almost two decades since I
first appeared in that illustrious publication, the fee is still $150. I
got the same munificent sum for an Op-Ed I published in the Los Angeles
Times. Furthermore, neither of these newspapers-nor most other major publications-pay
permission fees or reprint fees to authors. That means the piece might get
picked up by various other newspapers who then pay a fee to the Times-but
the author sees not a penny of it. Some of the major magazines, known as
the "big slicks," not only have frozen their fees but have reduced
them over the years. Forget about trying to keep up with inflation; freelance
writers are not even keeping up with the nominal earnings of the 1970s-even
without accounting for inflation.
To get an idea of how poorly paid writers are, consider the following. At
a meeting of the Washington DC chapter of the National Writers Union, the
chair asked for a show of hands of those who had earned over $5,000 from
their writing in the previous year. Of about thirty persons, I was the only
one who raised his hand-and that's only because I had a textbook that had
enjoyed some adoptions.
Writers will tell you about their many grievances, about publishers who
lie about sales figures and withhold royalties, about manuscripts accepted
then never published, about book publication dates that are postponed for
as much as three or four years, about books that are published only to have
their distribution deliberately and completely aborted-"privished"
it is called-usually because the publisher decides the book is politically
unacceptable. Writers will tell you about payments and kill fees never collected,
about articles completely rewritten and distorted by clunky-styled editors,
about having no say regarding framing, titling, headlining, and rewrite.
And they will tell you about major magazines and big publishing houses that
have grown rich off their labor.
So a correct analogy would be: "Dividends is to stock as profits is
to publisher." Leave the writer out of it unless you want to say: "Wages
is to workers as royalties is to writers." Unlike the publisher, writers
make nothing from the capital investment on their books because they don't
have any capital invested. Like the proofreaders, editors, printers, and
sales representatives, writers create value through the direct application
of their mental and physical labor. A portion of the value they create goes
to them. The rest goes to the investors.
What the Washington Post article and the study it reported on both missed
was the political and class bias in that particular SAT question. What was
taken as the correct answer happens to be incorrect or at least loaded with
capitalist ideological presumptions that treat the pocketing of value by
investors as identical to the creation of value by writers. Both investor
and writer supposedly are "working" in partnership to create "earnings."
Tell it to Forbes, not to us underpaid scribes.
The Post quotes a New York state judge: "After a careful review of
the evidence, this court concludes that SAT scores capture a student's academic
achievement no more than a student's yearbook photograph captures the full
range of her experience in high school." Well said. All I would like
to add is that at least one of the SAT questions captures the ideological
biases and disinformation of a capitalist system all too well-biases that
are so thoroughly ingrained as to go undetected and unchallenged in the
very investigations that purport to expose bias.
Michael Parenti is the author of Land of Idols: Political Mythology in America
(St. Martin's Press); Against Empire (City Lights Books); and Dirty Truths
(City Lights Books).
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