It Could Happen Here - Monopsony, or How You Get Underpaid

Episode Date: May 20, 2026

Mia tells Molly about monopsony and how economists conspired to bury the theories that explain your wages. Sources: https://archive.org/details/bnarchives_0333 https://strangematters.coop/frederic-s-lee-profile-part-one/ https://www.jstor.org/stable/29769757?if_data=e30%3D&seq=1 https://www.npr.org/sections/planet-money/2026/04/14/g-s1-117075/the-labor-economics-of-alien-and-its-lessons-for-inequality-on-earth https://www.npr.org/sections/planet-money/2026/04/21/g-s1-118071/the-hidden-power-keeping-wages-lowSee omnystudio.com/listener for privacy information.

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And I'm Nick. And guess what? We created our own podcast called, Hey Jonas. Nice. We invented a podcast? Well, we didn't invent it. We just contributed to it. We get to ask other people to do podcasts.

We get to ask other people questions because we're sick and tired of being asked questions. Well, sick and tired is a strong way to put it. But, you know, tired and sick. Listen to Hey Jonas on the IHeart Radio app, Apple Podcasts, or wherever you get your podcast. Just listen. We don't care where you hear it. Another podcast from some SNL, late-night comedy guy, not quite. Unhumor me with Robert Smygel and friends. Me and hilarious guests from Jim Gaffigan to Bob Odenkirk, to David Letterman,

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One erection. Listen to humor me with Robert Smigel and Friends on the I-Heart Radio app, Apple Podcasts, or wherever you get your. podcast. You, me. I need some jokes to make me seem funny. Your 20s can be so exciting, but they can also be really overwhelming, confusing, and honestly, just kind of lonely.

May is Mental Health Awareness Month, and the psychology of your 20s is breaking down the science behind the biggest roadblocks we face. I was six years into my career, the 80-hour weeks, and just the first one in, the last one out, and I ended up burning out. There was a large chunk of my 20s that I like was just so wanting to like be out of that phase out of my skin. And I just like really regret not living in the present more. You don't need to have everything figured out right now. You just need to understand yourself a little bit better.

Listen to the psychology of your 20s on the IHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Also Media. Welcome to Icadapid here, a podcast where I try to explain economics to you and Molly. I'm your host, Biaw. and thank you, Molly, for agreeing to do this, especially on extremely short notice. So I appreciate it. I am so excited to struggle to learn. So, okay, there's good news and bad news.

The good news is that the central thing that this episode is about nominally is a concept called monopsony, and it's actually really easy. No, see, you said that in the word chat earlier. You said monopsity, and I was like, oh, man, she's so tired. That's not even a word. Well, okay. This actually gets into the thing because this is a word

that was made up specifically for this concept. Unfortunately, I do also have to do the bad news, which is that to actually understand the history of this, we do have to explain stuff that's legitimately very complicated.

So... I'm locked in. Yay. But, okay, okay, modopsony, the hook of this. This is part of the reason why you get paid like shit

is because of monopsony. So I first was interested in writing about this specifically for this show because weirdly NPR's Planet Money like discovered the concept of monopsony and did it a couple of pretty interesting pieces on the history of the concept and the place that they go with it is they start talking about one of my favorite economists, Joanne Robinson, who is really good and we're going to spend most of this episode talking about her. But one of the stories that they tell, this is a very famous story in the circles of economists that I'm around, I guess, is about her sitting down

with like a British classicist and inventing the term monopsony. So, okay, what is, what is monopsony? It's one something, mono. You know what a monopoly is. So monopoly is when one seller, right? So, okay, it's like, yeah, you have, I don't know, you have like Google, which is a monopoly on like search engines, right? And, you know, monopoly doesn't necessarily, and what we'll be getting into this more in a second, it doesn't necessarily have to mean that there's literally only one. Right. But, you know, like the U.S., like every market you are dealing with in the United States is some kind of monopoly where, you know, sometimes there's like a big three or sometimes there's like two or sometimes there's maybe five. Or sometimes it's quite literal. Like we only have one

power company in Virginia. Yeah. Yeah. You know, and sometimes monopolies, are deliberately set up by the state, right? Where sometimes, you know, a state would just be like, yeah, fuck it. There's only one power company here. Oh, no, it's a private company. It's a private company. Yeah, right. You know, but sometimes private companies will be handed monopolies like this.

Right. Utility companies are a thing where it does kind of make sense because having two companies setting up rival electrical grids is like a nightmare. Well, that's why the state should do it, Mia. Yeah, well, it's like, yeah, this is the issue, though, right? And this is why monopoly in theory is like a thing. thing that economists are not supposed to like because monopoly screws up the sort of like perfect competition between all of these one million different companies that's supposed to like make

your life good because they're all forced to sell everything at like the lowest possible price because they have to outcompete everyone else and there's like all of this stuff but then if you have if you have one monopoly they can charge you whatever the fuck price they want because there's only one of them and the alternatives are to eat shit or like am like amazon choking out was it was one 800 diapers right was a diaper company that offered like affordable mail order diapers. And they undercut them really hard for like a concentrated period of time. So they went out of business and then they jacked the prices on diapers.

Yep. Yep. This is basically just what the modern tech economy is, is that some company will come in with like $100 billion worth of tech money. For example, there were a bunch of ride share wars in India over this where like all these ride share companies were basically giving people for like really, really low cost right? I mean, they were obviously so screwing the drivers, but like... Oh, yeah, naturally.

Yeah. Yeah. And so they were just trying to like edge everyone outside of the market so that they could take control of it and raise the prices and stuff eventually. I guess it's like, you know, the capitalism enthusiast likes to imagine that the economy is like, you know, Darwinian evolution, survival of the fittest, right? We evolve and compete and the best man wins. But actually, it's more like intentionally introducing mongooses to the islands of Hawaii. Yeah. Like, that's... This isn't evolution.

You just introduce a giant weasel that ate all the bird eggs. Yeah, right. And it's like, you know, if you look at how capitalism spreads historically, it's not even, like, capitalism doesn't outproduce other, like, economic systems. Usually what it does is like, you know, there's this line in the communist manifesto that I think Marx was extremely wrong about. He's talking about, like, trade is the canon that will bring down Chinese walls. And he's talking about, like, free trade will, like, destroy China's trade barriers. It's like, well, no. Like, China's trade barriers were brought down by the opium wars, like the British Navy, like, sailed in and, like, besieged to the capital.

Like, you know, but when people talk about monopolies, they're talking about selling goods, right? Right. And what Jill and Robinson realizes very quickly is that, hold on, this is also true for employers, right? If you are trying to find a fucking job, right? Oh. Under sort of like the models of perfect competition, that like neoclassical economics, the economics that like you learned in school, they just normally assume that, oh yeah, you can just switch jobs really easily,

so obviously companies have to pay you. Right, but in most towns there's one major employer who kind of sets the bar. Yeah. Like here it's UVA. Yeah, like it's Walgreens or like Walmart. And like if you've ever had to find a job, job? Like, you understand how this works? I actually haven't. But I understand in the theory. Yeah, you're the listener. You've, you've had to find a job. You're speaking to the only person who's

never applied for a job. We've literally never applied for a job. It's a complicated situation. Yeah, I've never like, oh wow. Good for you. I love this for you. This rules. For everyone else. Yeah, like it's really obvious that, you know, there exist conditions where you have. monopolies but for like hiring people. So Joan Robinson like at this meeting with this class as this coins the term monopsony to be like, okay, there's one seller. Okay, I'm usually against a neologism, but I understand the need for this word. I'm on board. Yeah. I'm on board with Joanne. It's a good word. She's really cool. Yeah. I should probably mention the caveat here, which is she does do the like classic 1950s communist thing of like going to China and

and then getting led around on like state-sponsored tours and then coming back and assuming you understand what's happening in communist China and that didn't go great. But, you know, the rest of her work is really good. And this is kind of where Planet Money does a really interesting history skip where in their version of the story, they go, oh yeah, and then everyone just kind of ignored it until recently got picked back up by these economists who were like, wow, we did peer. reviewed research and we found out that like it turns out that yeah actually there isn't perfect competition in the labor market and that yeah labor markets are controlled by these like monopolies I mean I guess you have to do studies to prove things you can't just vibe it out but I would say just the general vibe like I could have told you that I could tell you that Molly Molly okay I have such bad news for you which is we are going to meet the person in this story whose idea

it was to be like, hey, we should like figure out how the economy works using data. That was a new concept for them. Yeah. Tight. Yeah. Was invented by a guy who we're going to get to the story of the invention of. And it was in like 1987. It was like the 30s, 1930s when we invented this.

It was in 2004. They brought math into it. Oh, God. One of my absolute favorite stories of all time is like, you know, in like, the 90s, there was like the craze over chaos theory, which I think the only artifact of that is like the chaos theory guy in Jurassic Park. I don't know if my last his wings and all these things happen. Like chaos theory is like a, it's a, like a genuinely very interesting math concept.

But the thing about chaos theory is that it only applies to things that are third order equations. A thing I definitely know what that is. Yeah, we could go off on a tangent on this, but I'm just, I'm just going to tell the econ joke. No, we don't need to. We don't need to. So everyone economics immediately was like, oh my God, there's just a thing. hot topic. But the problem is it doesn't apply to the economics of people

were doing in the 90s because they don't use third order equations. They only use second order ones because they're dumbasses. This is like one of the trends of the show is that the people who do mainstream economics are extremely dumb. And I've always had that feeling, but because I don't understand the economy, it's hard for me to be sure. Yeah. Well, it's, it's because it's ideologically motivated, right? You know, the reason that you study economics in high school. Who studies economics in high school? I didn't. Well, there are like economics classes in high school, right? Like that, right, sorry. When I say studies, like, yeah, like, you had to take an econ class. I didn't do a great school. Yeah. The reason there are economics classes in high schools is not to teach people economics. It was specifically designed as an anti-communist thing. Cool. To, like, teach kids how capitalism really works through, like, again, a model where they don't teach you that monopolies exist. And, you know, obviously, like, some of this has been incorporated into more modern stuff, like the concept of monopsony, like, kind of. has entered into the lexicon of like the economics you get taught as like a little tiny baby child,

which is not actually economics. It's literally propaganda. That's what it was designed to be. I mean, how fun to get to pretend to be a scientist when you don't do real math. And really, you're just a propagandist. Oh, it's so fun. It's so fun. One of the other things is like, if you're ever like in university settings and you want to just like listen to someone complain about shit for a while, go talk to the math people about the shit people get Nobel Prize. for in economics where it's like, this is like shit that like a child who studies mathematics could do. The math doesn't even have a Nobel Prize, right? If you want to get like a Fields Medal.

There's not? Nope. That's so sad for the math guys. Matt doesn't have one. Yeah. And the other thing is e-cons Nobel Prize is fake, too. This is another thing that's important. It's not one of the prizes that was set down by Nobel, which are like the Nobel Prize.

They created their own. And the dynamite guy knew what he was doing. Yeah, but it's like literally like the central bank. of Sweden made their own and called it a Nobel, and it's not a real one, it's a fake one. Wait, so you're saying that if we are confident enough in our assertion... Oh, yeah, we can just make a Nobel. We can tell people that we are Nobel laureates in podcasting. Yeah, I mean, as a huge thing, you also have to have an extraordinarily large amount of money

to do propaganda for this, because the reason this works is that the Nobel Prize in economics is also a propaganda effort, right? And one of the ways you can tell this is a propaganda effort is that they didn't give one to Joanne Robinson, who was one of the most, like, influential economist who has ever lived. Justice for Joanne. Genuinely, like, it's outrageous. It's just, like, one of the few things, even the people who hate her are like, yeah, no, she should have gotten one, because she's one of the people who invents the idea that

competition isn't perfect. Like, she invents imperfect competition where there's, like, monopolies and shit. You say, this is all, like, stuff that's, like, foundational to, like, everyone's, to some extent understanding of economics. but most of her ideas are completely ignored and saying like monopsony is like a thing that you put in textbooks but then what you're trying to like you're an economist at like

not even like the fucking heritage institute or heritage foundation or whatever you're at like a just like a random economics think tank right like you don't take nobsony into account when you're like hey we can't raise the minimum wage because if he raised a minimum wage then everyone's going to get fired and it turns out like well no that's not true and the reason that's not true is because

if you assume that neoclassical economics is real, is that companies aren't hiring people at like the lowest possible wage that like that they could do without someone going to somewhere else. They're hiring them even lower than that because they can suppress the wages because where the fuck else are you going to work.

Right. Right. But also like people, like human behavior is not subject to the rules of mathematics in that straightforward kind of way either. No, it's very dumb. And like, because this goes back, to something that's important to all of this, which is that, like,

economics as a field is not, it's not a science. It doesn't come from science. It comes from moral philosophy. The economy guys, they're always saying stuff. They're just like confidently asserting something and showing me a graph. And there's just like, just not reflect my lived reality at all. But they're very confident about the graph. No. And that's the thing. Because because it's originally philosophy. It's like, no, the economy's going great. It's like, not where, not in my house.

No, it's like, it's fucking bullshit. that's a reflection of the fact that economics as a discipline works backwards from the way that a science works, which is economics starts out with assumptions about how humans work, right? It starts out with the assumption that like everyone's like a rationally calculating actor who's like seeking to maximize their own utility. And I've never met that person. Yeah, it's philosophy. Oh, actually, no, I love maximizing utility. Don't get me started on maximizing my economic utility.

It's literally utilitarianism, right? It's not something that's derived from empirical data. It starts with an assumption about how things work and then projects that assumption onto the world. I don't want to be melodramatic, but I'm having a breakthrough here in my understanding of what economics is. I thought they were just being dumb before. Suddenly, I see it completely differently. Yeah. It's ideologically motivated reason.

They have a philosophy. They're attempting to mathematically define, like project their philosophy onto the world. And it doesn't work very well because it's philosophy. It's not... Right. They're trying to prove a conclusion rather than map reality. Yeah. They're going backwards. Yeah. And this is something that we're going to get into in a second. But first what we're going to get into are the products and services that support this podcast. Wow. Speaking of the economy. Woo! Get rewarded just for shopping with Simon Plus. Don't miss Memorial Day sales at Simon Premium Outlets and Mills.

You can get points at scores of stores, access to exclusive offers, and exciting surprises. You've got an extra day off, so make it pay off with the best deals from brands you love all in one place. It's a summer kickoff thing. Join today at Simonplus.com. Rewards program Terms Apply. See Simonplus.com for details. Canadian women are looking for more. More out of themselves, their businesses, their elected leaders, and the world are at them. And that's why we're thrilled to introduce the Honest Talk podcast. I'm Jennifer Stewart. And I'm Catherine Clark.

And in this podcast, we interview Canada's most inspiring women. Entrepreneurs, artists, athletes, politicians, and newsmakers, all at different stages of their journey. So if you're looking to connect, then we hope you'll join us. Listen to the Honest Talk podcast and IHeart Radio or wherever you listen to your podcasts. Hey, it's us, the Jonas Brothers. And guess what? We have some big news. What's the news, new?

Huge news. We created our own podcast. called Hey Jonas. We invented a podcast? Well, we didn't invent it. We just contributed to it. We're the first people to do podcasts. Pretty, yeah, pretty wide range of podcasts throughout there.

But this one's extra special. So how do we actually come up with a name Hey Jonas, guys? I honestly don't remember. I think it was on a call about what we should call it. Well, we were thinking I'm originally calling it one of the early names of our band. Before Jonas Brothers. This is how you guys remember. it going down? Yes. I have a very different memory of this. We were talking about a thing,

a bit for the podcast, people could call in and say, Hey Jonas, and then I wrote down on my little notepad, Hey Jonas, and offered it up as a potential title for the podcast. But thanks for remembering that, guys. Listen to Hey Jonas on the IHeart Radio app, Apple Podcasts, or wherever you get your podcast. Just listen. We don't care where you hear it. Another podcast from some SNL late night comedy guide, not quite. Unhumor me with Robert Smygel and friends, me and hilarious guests from Jim Gaffigan to Bob Odenkirk to David Letterman help make you funnier. This week, my guest, SNL's Mikey Day and headwriter, Streeter Seidel, help an acapella band with their between songs banter.

There's that worst singer in the group? The worst? Yeah. Me. Is there anything to the idea that because you're from Harvard, you only got in because your parents made a huge donation. The group. The yarn herds, right?

That's the name. The Harvard Yardt Gards. They're open. Do you have a name suggestion? We're open. Since you guys are middle aged, one erection. Listen to humor me with Robert Smigel and Friends on the I-Heart Radio app, Apple Podcasts, or wherever you get your podcast. Humor me.

I need some jokes to make me seem funny. We are back. So one of the things that's actually interesting about the story of Joanne Robinson is that there's a reason why almost no one, I mean, I don't know, the people listening to this podcast have a higher likelihood of knowing who Joan Robinson is than like almost any other group of people on Earth. But like there's a reason why she's not extremely well known by normal people. I'm going to be so honest with you, Mia.

The only economists I know are the ones that Javier Malay named his clone dogs after. That makes sense. Well, like, you've heard of, you like, you've heard of like Adam Smith, right? That's true. That's not one of the clone dogs. Joan Robinson is an economist who is important enough that, like, you should know who she is. Yeah, but he would not have named one of the clone dogs after her. I think they're, I think they're all boys. No, absolutely not. He probably, like, he would chainsaw her. It's bad. But the reason that you don't know who she is, and the reason that monopsony kind of like sat in the closet of mainstream economics until people started digging it out recently is because Joan Robinson is part of a tradition of heterosexual.

Rodox economics, which is, it's, you know, the academics that's not the mainstream ones. And all of those people got systematically purged from every academic institution over the span of about 30 years by the neoclassical economist. Because the government doesn't want you to know their ideas. I mean, like, genuinely, what happened was it was like, it was a bunch of these people hired by capitalists in order to do propaganda for them. And they went through and systematically took over and purged all of the country's economics departments. If what she's saying is the entire framework of your worldview just like functionally doesn't work. Yeah.

Yeah, that's not a good vibe for them. So let's talk about the kind of tradition that Joan Robinson operates in. Because this is actually a story that really, really tangentially, the planet money people kind of allude to and then never talk about again, even though it's fascinating. So Joan Robinson is, I guess you could. call her one of the sort of first people in what you would call the post-Kanesian tradition. Absolutely. I'm always saying that. Do you know who Keynes is? An economist. Was his name Maynard? Yeah, John Maynard Keynes. His big thing, he's like, like, if you remember one thing about Keynes, like, if you need to just be like, you have a flash card, you need to be like, someone says

canes, he's the, I guess like, the sidingical term is like countercyclical spending, but he's the guy who's like, when economy, bad government should spend money in order to make economy not bad again. That's like the most basic part of Keynesianism. And that's all I need. Yeah. But like the thing about Keynes is that like he wants like a nicer version of capitalism, but he is like a capitalist. And so there's a sort of milieu around him that John Robinson is kind of part of. But there's a lot of elements of it.

And people who Keynes like take stuff from who are extremely obscure now because, you know, Keynes did a version of it that like took the radicalism out. I promised earlier you were going to get to the guy who like invented the concept of actually doing scientific studies for macroeconomics. That makes me so mad that the answer to that question isn't the first guy. Who decided that we should do math and economics? Oh, the first guy that did it, the first economists, right? The guy who invented economics, right?

Economists do a bunch of math. It's just not math that's... But like, we should study the currently existing reality. Yeah, the world first. Versus just like trying to force reality into this chart that I made. That's awesome. Yeah, and so the guy who was like, hey, what if we observed reality? His name is Michael Kalecki.

Good for him. Great job, Michael. He rocks. Yeah, he has a long and convoluted history of stuff. Yeah, I'm going to go ahead and say, I don't endorse everything he did. I don't know anything about him. Honestly, he kind of rocks. He's, so he, Kalecki, like, foundationally is a Marxist, right? It's not true that he's from this school, but he's the guy from which one of the major schools of Marxist economics is born, which is called the Monopoly Capital School, who are kind of the Marxist version of this. the people who were like, oh my God, hold on. Monopoly has gotten so out of hand. We have to change how our economics work. Robinson kind of discovers Kalecki a little bit later in her

career. It's sort of like a 40s thing where she's originally writing about imperfect competition and like monopsony in like the 30s. But Kalecki is one of the people who is responsible for a bunch of these ideas around like him and Robinson are responsible for a bunch of these ideas around like, Okay, yeah, actually, it turns out that everything we've been talking about is like the world is composed of monopolies and monopsonies and everything exists at best in the state of a corporate competition. And this becomes kind of its own school and like, you know, it branches out in a bunch of different ways through the work of some other people who start to look at like how is price set? And this is something that we've talked about on this show before. So, like, okay, if you've ever seen the graph that, like, all of the econ people use where it's, like, prices, supply and demand, right? What is it?

Well, okay. So at a certain point, and we've talked about this on the show before, our friends at Strange Matters. The magazine Strange Matters have written about this a lot. If you, like, ask a person, it's funny, I actually did this by accident with a fringe who runs, like, a very, very small. small business. Well, it's not that small, but like runs, runs like a very, very small business. And I asked her, like, she was talking about like, okay, how do we figure out how to like price something? And I talked to her about it. And she goes, yeah, it's cost plus markup. Right. And the thing about price, right, is price is not set by a graph. Like, prices are set by a person

in an office who figures out what the price is going to be. Right. And the way that they do that is cost plus markup. It's like how expensive was the item for us to obtain? And then what's the like additional price that we need to sell it for in order to both make profit and pay everyone? And this is really obvious to like anyone who's done a job that like, well, yeah, no shit. Of course it's cost plus markup. In economics, this is considered an extremely radical idea. I guess, you know, in this in the supply and demand model, it's just like whatever people are willing to pay, you just keep increasing the price until demand drops off and then you back off a little. Yeah.

In economics, that's called, like, companies being, like, price takers. The theory in, like, normal economics, quote unquote, is that companies, they don't set prices, they take the price from, like, what people are willing to pay. And that's objectively not true. There's just constantly standing there tweaking the dial. Yeah. It's like, no, no, no, no, no. Like, just on an objective level, what's happening is, you know, this is what's called,

like administrative prices, right? And this is like the basic, like one of the basic revelations of like post-Kansian economics is that price is set by a person who sets it by cost plus markup. And like there's the precog who floats in a pool of goo and just intuit the prices. Yeah, they like see the data. It's like no, no, no, no, no. It's literally just a person. They set the price.

It's cost plus markup. There's some like psychology stuff there about like what kinds of prices. will break a consumer's loyalty to, like, a store. Right? Because if you, like, raise the price at a store too much, people will stop shopping at the store. But, like, that's, that's, like, the way this stuff actually works. And this is one of the big post-Kaenzy and innovations.

It's like, hi, we're trying to figure out how price works. So we went and we asked a bunch of people how it works. A remarkable choice. Yeah, right. Ah, God. But this is an issue. for neoclassical economics, because the whole, like, supply and demand setting price is like the basis of their whole thing. And it's the basis of all of their politics. Now, at this point,

we need to talk about the thing that's legitimately complicated. Before we get into that, we're going to talk about something that's not complicated, which is how to use these products and services. Wow. We're actually doing the economy right now. We are. Get rewarded just for shopping with Simon Plus. Don't miss Memorial Day sales at Simon Premium Outlets and Mills. You can get points at scores of stores, access to exclusive offers, and exciting surprises. You've got an extra day off, so make it pay off, with the best deals from brands you love all in one place. It's a summer kickoff thing.

Join today at Simonplus.com. Rewards program terms apply. See Simonplus.com for D. details. Canadian women are looking for more, more to themselves, their businesses, their elected leaders, and the world are out of them. And that's why we're thrilled to introduce the Honest Talk podcast. I'm Jennifer Stewart. And I'm Catherine Clark. And in this podcast, we interview Canada's most inspiring women. Entrepreneurs, artists, athletes, politicians, and newsmakers, all at different stages of their journey. So if you're looking to connect, then we hope you'll

join us. Listen to the Honest Talk podcast on IHeart Radio or wherever you listen to your podcast. Hey, it's us, the Jonas Brothers. And guess what? We have some big news. What's the news, name? Huge news. We created our own podcast called, Hey Jonas. We invented a podcast?

Well, we didn't invent it. We just contributed to it. We're the first people to do podcasts. Pretty, yeah, pretty wide range of podcasts throughout there. But this one's extra special. So how do we actually come up with a name, Hey Jonas, guys? I honestly don't remember. I think it was on a call about what we should call it.

And we were thinking I'm originally calling it. one of the early names of our band before Jonas Brothers was... This is how you guys remember it going down? Yes. I have a very different memory of this. We were talking about a thing, a bit for the podcast,

people could call in and say, hey, Jonas. And then I wrote down on my little notepad, Hey Jonas, and offered it up as a potential title for the podcast. But thanks for remembering that, guys. Listen to Hey Jonas on the IHeart Radio app, Apple Podcasts, or wherever you get your podcast. Just listen. We don't care where you hear it. other podcast from some SNL, late-night comedy guy, not quite.

Unhumor me with Robert Smygel and friends. Me and hilarious guests from Jim Gaffigan to Bob Odenkirk to David Letterman, help make you funnier. This week, my guest, SNL's Mikey Day and head writer, Streeter Seidel, help an a cappella band with their between songs banter. There's the worst singer in the group. The worst? Yeah.

Me. Is there anything to the idea that because you're from Harvard, uh, you only got in because your parents made a huge. huge donation. The group. The yard herds, right? That's the name. The Harvard Yard.

They're open. Do you have a name suggestion? We're open. Since you guys are middle age, one erection. Listen to humor me with Robert Smigel and Friends on the I-Heart Radio app, Apple Podcasts, or wherever you get your podcast. Humor me.

I need some jokes to make me seem funny. We are best. Okay, so we're going to stop doing the economy. And the reason we're going to stop doing the economy is that, you know, when I talked about there being an ideological purge, right? People as Strange Matters wrote about this economist named Frederick Lee, who was an IWW member and who was one of the sort of, I don't know, like the guy trying to pull the 5,000 different strands of heterodox economics together. And he writes a really, really detailed in-depth analysis of at each individual school, how did the neoclassians? people come in and purge everyone and then maintain control of it. And one of the, one of the ways you can tell that this isn't about who is correct. It is about who has power. Is something called

the Cambridge capital controversy, which I'm going to assume, Molly, you haven't heard of this. No, I was just really sort of marveling and turning that phrase over in my mind. It's not about who is correct. It's about who has power. Yeah. I'm going to store that one away. That's a, that's a good turn of phrase. It's a good way of understanding this. And it's a, It's a good way of understanding the central thing of, like, hey, why did everyone kind of ignore monopsony for 80 years? And it turns out that the answer is that being right doesn't do anything in economics. That's heartbreaking. Yeah, it's bleak.

And some of these people are people who have institutional power. So one of the things that Joan Robinson is most famous for doing is her and her collaborator, Piero Serrafa, who's another whole story. who's an extremely wild guy. Saraff is the other person who a bunch of this, like, heterodox economics is based off of, there's a large extent to which heterodox economics means that, like, you think seraphra was right instead of the Chicago school people and like the neoclassical people or Marx,

or you're sort of like fusing the two of them. And he and Joe and Robinson are writing out of Cambridge, the one in England. But then there's also a whole bunch of neoclassical economists are at Cambridge, the one in Massachusetts? They really can't be doing that. Yeah. We got to rename at least one of these.

And they fight it out. That's why it's called the Cambridge Capital Controversy. They go to war. Yeah. So, okay, the thing that they're fighting about is extremely convoluted. At some point, Bolly, I'm going to drag you on here and we're going to do the actual full version of it. But the short version of it is really funny.

And the short version of it is that this is a fight about, okay, so you have like two different kinds of what are called capital goods. So you have like, I don't know, I think the capital's power one. It's like tools that make ice cream and tools that make airplane. And the question is, how do you figure out how much those tools are worth together? Well, are you selling ice cream on the airplanes? You know, they, where you're selling them doesn't have to be really. I'm just saying, is there synergy at play here, me? Like, can I combine these businesses?

Legitimately the idea that you could use the same equipment to do multiple things is like a really serious problem for an enormous number of economic schools. Like, it's like real bad. It's like kind of, it's kind of even bad for like the mathematics behind like classical markets. this political economy. It's really bad for, like, video classical people. It's not great. So my new airline where everyone gets a free ice cream is really throwing a wrench into this.

Yeah. Well, as long as the same machines can either be making ice cream or you can be making airplane and you can't tell which one. What are they teaching at economy school? What is even happening? Nothing. So we're arguing about ice cream machines. Well, so what they're arguing about, right?

is if you are doing like normal neoclassical economics, can you point at like factories and go, how much is this worth? And this is a real problem because it turns out that the way the neoclassical economists do this is circular. So, okay, you're trying to figure out how much money a factory is worth.

I'm going to quote here from the book Capitalist Power, which has a very good explanation of what's happening here. the money value of any capital good, that is, the amount investors are willing to pay for it is the present value of its expected future profits, computed by discounting this profit by the prevailing rate of interest. So value equals expected profit divided by rate of interest. So basically what they're saying here is that like, okay, you're trying to figure out how much money is the factory worth. The amount of money that the factory is worth depends on how much money

you make from using the factory to make plain or make ice cream? That's like basically what that's saying. And then there's a discounting rate because you're making that money in the future. The problem with all of these principles is it's a perfect blend of stuff that's like completely fucking obvious like statements of observed reality. Yeah. And then also stuff that somebody just made up based on a feeling that they had. And you can never tell which one you're dealing.

You know what I mean? Yeah. Like what the factory is worth is based on how much money it can make. obviously. But here's the problem. This is one of those, you know, you know the Calvin Haas meme where it's like you can divide everything into two categories. This one, surprisingly, seems like his observed reality is actually bullshit. Because, because the problem is, all right, you so, okay, so in order to find out the value of the factory, you need to know what the profits are going to be. Well, I thought the value of things, I thought the price of

things was set by supply and demands, the value of the factories, whatever someone's willing to pay for it. Right. But here's the issue, though. Like, that's, like, sort of true. No, I'm just making a joke that, like, prices and values appear to be disconnected. Legitimately, that is drilling into the problem with what's happening here, which is that, okay, but how do you know how much money the factory is it going to be worth? So we're saying, like, the factory has an inherent value versus the factory has a price. Yeah.

So, do prices not reflect an inherent value? So this is also kind of the core of this issue, right? Which is like... That money isn't even real. Well, yeah, but it's like, okay, if you want to compare how much two different types of machinery are worth, you need to compare them in terms of money because they're making two different things. You have to be able to compare them. But the problem is the moment you start doing that, you then have to go, okay, how much is it worth and how much is it worth in theory is like it's like

marginal utility, right? So in order to know how much the machine is worth, you have to know how much money it can make. But in order to know how much money it can make, you need to know how much the machine is worth. The issue here, right, is that you're trying to find one price for how much the factory is worth. But you can't find that one price without knowing how much profit you're getting from using the factory to make the thing. But you could have multiple different levels of profit from that same factory. The problem is how do you determine, you know, you could make $10 from the factory, but the factory could also make $20. How do you figure out which one of those it is? Because that's what determines the value the factory is how much

money it makes. So, okay, you turn around to the neoclassical theory of how you figure out what the profit is. But that theorem requires you to know the marginal utility of the factory. So it requires you to know how much profit you're going to get from using the tool. Right? You have to know how much the tool is worth in order to figure out how much the profit is. But then you have to figure out in order to figure out... So this is why they just make stuff up because otherwise they get trapped in the infinite loo. Yeah. It's worse than that because the value of the factory depends on how much money you're going to make from the ice cream. But how much money you make from the ice cream depends on, like, how expensive it is to have the

ice cream machine. Right. So they're both set by each other. Right. If you only have one of them, you can't calculate the other one. They're both like X and Y. And in order to figure out what one of them is worth, you already have to know the other one. Right.

You need a constant at some point. Yeah. And legitimately, and this is the shit. show because it means that you actually can't figure out how much the capital goods are worth in order to move on to stage two of the process where you figure out the profit, because you already need to have the answer to the question you are asking. And so, like, this is an issue bad enough that the IMF publishes these, or I think it's, maybe it's the World Bank, publishes these, like, giant tables of like the value of capital stocks, right, in a country.

Well, they'll go through it. They're trying to produce economic data about like a country and they're like, okay, like how much are the factory's worth? And the people who are trained to produce these books, there's multiple different values that these factories could have depending on how much money they make. And they're literally just chose to choose one of them. Like at random, they're like, fuck it, pick one. This is not making me more confident about the economy. No.

Well, but this is a shit show because because this is what this fight is about. It's about like the whole Cambridge Capital controversy is, is like, Joe, and Robinson going, hold on, in order to, like, figure out your equation for how price works, you need to know something that you could only figure out by knowing the price already. That's why you just feel the price in your heart. Well, yeah, this causes, this causes like a decade of, like, fighting about this. All of the, like, famous neoclassical economists, actually, hold on, can you list Javier's dogs?

Yeah, okay, so Milton from Milton Friedman, Murray from Murray Rothbard, and, two dogs, one Robert, one Lucas for Robert Lucas Jr. Wow, I think he actually dodged all of them. I think, I think he meant, by not naming someone, Paul Samuel said, I think he actually dodged it. He considers these dogs to be Conan's offspring. So these are all clones of his dog Conan. He considers the dogs to be Conan's offspring and thus his own grandsons because he believes the dog is his son. Jesus fucking Christ.

Anyway, yeah, but that's the only reason I know any of us. are. Oh my God. Wait, hold on, hold on. I'm sorry. I'm not looking at. Which Robert is this named after? Robert Lucas Jr. from the University of Chicago. Oh, he dodged it. It was, it was mostly the other Robert. Robert Slowell. Slowout. God damn. I think he actually dodged having any of his dogs be named after the people who got their ass kicked in this. I think he managed to do it. So Paul Samuelson is like, after Milton Friedman and maybe, maybe Hayek, he's like probably the third most influential neoclassical economists. And he's like one of the people at the American Cambridge who are like arguing with like

the classical people. And they lose. They just straight up lose this fight because they're wrong. And the consequence of them being wrong is every single thing they've ever written is wrong. Because if, if you can't calculate how much a factory is worth, literally nothing you've ever written functions. That's so funny. And they can't do it.

Did any of them kill themselves? You would think, but they were just like, oh, well, we'll just guess. Because I bet like a lot of people were like at the end of their careers, right? You're like 60, 70 years old. You're like Professor Emeritus of macroeconomics at Cambridge or whatever the fuck. And you find out that everything you've ever written was no longer, like we're all, we all agreed that everything you ever said was wrong. How do you deal with that?

Well, because of the thing, they just kept writing as if it, as if they didn't lose. Oh, okay. And this is why I was saying it doesn't matter. Who can say who wins or loses because it's all faith? Yeah. And so literally what they did is that this stuff, this fight never like broke out of like academic economist circles. And so no one today has any idea any of this shit happened. But no, because it doesn't mean anything.

Yeah. Well, I mean, it does in the sense that like you can demonstrably prove that like these people can't tell you how much a factory is worth. I've read the Wall Street Journal. I know there's no such thing as an economist. Yeah. part of what's happening here is that like the reason we all intuitively do that is because these people win. Right. So this entire like academic field just kind of shrugged and said it doesn't matter of what we're saying. Does it mean anything? Yeah. There were like a couple of people who tried to like actually work with it and everyone eventually just stopped paying attention.

Legitimately, the answer for like modern economics is just to pretend that it never happened and then go like, oh, well, these people never produced anything of note academically. And it's like, well, On the one hand, that's, like, not true because the stuff that they did write is really good, but also their descendants, yeah, didn't get academic positions because you purged them all. And this is one of these things where, like, part of the reason that the new classical people took over in the first place was because they thought that they were right about this argument of, like, what caused a 70s economic collapse, which had, like, supposedly disproved Keynesianism. but then in this time period they got just obliterated. Like, they have taken an L, the size of which genuinely, I don't know if anyone in an academic field has ever taken a bigger L than these people did in this fight. They got just like beaten into pulp and it just didn't matter. It's like Naomi Wolf finding out live on air that her entire book was based on a misunderstanding of a term.

Yeah, it's like that shit. Except this is like every economist. Except in this case, they went on to continue to produce work based on that premise. Yeah. You know, but this is the part of the story that like isn't in the accounts. You know, when Planet Money has to explain like why the work of Joe and Robinson, like, isn't something that mainstream economies pay attention to. Oh, full circle. Okay.

Yeah. That's where we were going. Yes. It's because, like, Joan Robinson had the temerity to A, be a woman, B, be a leftist and C not be one of these, like, neoclassical freaks. And D, she beat them. Like, Joan Robinson is one of the major people in this fight. I should, I should have had more faith that we were coming back around. I thought we were, I thought we were lost. I was confused. No, I get it now. So when they were writing by like, it's so crazy that nobody uses this term anymore. Yeah. The underlying truth there is that they, are glossing over the fact that the reason this term isn't better known is because the entire field of economics is based on suppressing challenging truths. Yeah. And there's one other aspect

too, which is the economics is an example of how this works on like a small scale, right? But this happens on a macro scale with just about everything that you consume, which is there are two models for sort of suppressing how information spreads and how social groups develop, where one, you just suppress them, or two, you co-op them. And you do what's called recuperation. And, you know, it is interesting.

Like, the concept monopsony will appear sometimes, like, like, in, like, textbooks. But they'll just be like, oh, yeah, this is another thing that can exist and, like, monopolies can also exist. Let's go back to spending all of our time dealing with, like, a bunch of stuff

that's incredibly fake. And they will strategically, like, misuse the concept of monopsony in order to deal with it, like, as a critique. They'll recuperate, like, the word, but then they won't use any of the political conclusions of it. That's clever of them. That's clever of them so that you don't go looking for more about the term because you have it and it's defanged and you don't need to worry about it.

Yeah. And the thing is that the political consequences of it is, this is the thing I talked about, the beginning, which is like, yeah, monopsonally as a concept is why you get paid. One of the reasons you get paid like shit. And Joan Robinson's conclusion is like, yeah, capitalism is an inherently exploitive economic system. Yeah, that's the logical conclusion there. Right.

Yeah. But that's not allowed. No. And so, you know, like Robinson's legacy is that part of her work is co-opted and recuperated in a way where they teach the tiniest part of it that can't be used to challenge the system. and the part of it where she deals a kind of intellectual death blow to an entire field of economics that in like the history of academia, I don't know if anyone has ever been so decisively defeated intellectually. And yet they just sort of brushed it off and moved on.

Yeah. Which I feel like that is so damning, right? That you're just, I mean, you've just admitted that everything you've ever said is based on nothing if you can just disregard this. Yeah. God, I can't find the exact quote. But Samuelson has this line about how, like, they need to just treat it as an article of faith that this can be done. And they just kept going.

And it's just like, so you can't tell me this is a science. If you're like, well, it's just based on, you just have to have faith. You just have to believe. Yeah. I mean, the economy has always put on tinkerbell rules, right? Like, you have to believe or it won't work. You have to clap for her. Yeah.

In order for the entire system that these people are paid to propagate, because this entire school of economics is created by a bunch of right-wing billionaires to get them together in order to push against both communism and like the Keynesian idea they should pay taxes. This is something also, I guess I kind of want to conclude about this, is like, there are a lot of times where you see like a newspaper columnist and they're saying the most unhinged thing you've ever seen. Or like, you know, I'm going to take a very incendiary example and you look at like Ezra Klein.

And Ezra Klein is like being like, you have to like take the ideas of like some random fucking Nazi seriously. And no I don't. No, you don't. But the reason he's saying this, it's not even about what he believes. Oh, these people believe nothing. Yeah. This is what they're being paid to say because Klein's job is to act as a way to sell like

fascist tech oligarchy to liberals. And this is the same thing with like, you get these newspaper columnists who'll like say like the most unhinged shit you've ever seen. And yeah, they're saying that because it's their job to produce this, right? Like, they're not acting as individual people. They're acting as cutouts and projections of, like, the people who they've been hired by. And those people have a monopsony on opinions. Yeah. Every opinion writer is saying the dumbest shit you've ever heard because of monopsony probably.

Yeah, I mean, but literally it's because they can choose who the fuck to hire. Right. Like, that's the actual reason. And, you know, and, like, journalism is one of these things where it's like, these newspapers have an incredible amount of power because there's like seven fucking newspapers left. And if you want to do journalism, like, you're fucked. You either, like, fall in line and accept them paying you, like, absolute dog shit or you go unemployed. Or you're, like, one of the very few people who is able to, like, make a living doing this independently. But, like...

Or you're us. We found a way. Yeah. Or like a rich and successful podcaster picks you out and goes, hey, we're going to pay you to do this. Right. No, but I think about that all the time that really this is such a unicorn job because almost every job in media you do. You have to, you have to suck it up and eat the shit and you have to say the dumbest thing anyone's ever heard because that's how you keep your job. And that's not our reality.

And I'm so grateful for that. Yeah. I think that's a good place to end, I guess. I don't know. We're going to end on a hopeful note, which is we got. Well, okay, we're going to end on the cynical note, which is like the only way to have an even sort of good job in this economy where employment is controlled by employers is to get really lucky. Like, be the most lucky person in the entire world. Yeah.

So, I don't know. If you want to live in a world where you don't have to win the lottery in order to have like a pretty well pay in order to, I am so close to hitting the median salary of a cis white dude in the U.S. I'm so close. I can see it. I can taste it. If you want that. I love my union podcasting job. You got it with the lottery.

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Is there anything to the idea that because you're from Harvard, uh, you only got in the, Because your parents made a huge donation. The group. The yard herds, right? That's the name.

The Harvard Yardt. They're open. Do you have a name suggestion? We're open. Since you guys are middle aged, one erection. Listen to humor me with Robert Smigel and Friends on the IHeart Radio app, Apple Podcasts, or wherever you get your podcast. Humor me. I need some jokes to make me seem funny.

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