Political Economy: Bonus: Understand Political Economy, Become Financially Literate – Sanjeev Chandorkar

Financial Literacy | 28 October | Sanjeev Chandorkar

Political Economy  There was a time, a few decades ago, when around this time of year, industrial workers across the country would be granted their rightful bonus. In Mumbai, the topic of bonuses resonated not just among workers but also within households, affecting women and families. Long-awaited plans would spring to life.

A lot has changed since then, and the meaning of “bonus” seems to have faded away as well.

But has it really disappeared? No. It has just taken on a new form. Now, the bonus doesn’t go to workers; it goes to industrial capital and its managers.

The roots of this shift can be traced back to the fundamental changes in the country’s political economy:

1. Balance of Capital and Labor
The constant tug-of-war over how much of the growth generated by the fusion of capital and human labor would be allocated to each has tilted in favor of capital. Capital has found a way to align itself with those in political power.

2. Deferred Wages
Forget about bonuses as “deferred wages”; even regular wages are barely being paid. Minimum compensation to labor leads to maximum returns for capital. As a result, traditional bonuses for workers are now being denied.

3. The Decline of Permanent Jobs
The concept of a permanent workforce has been dismantled. Unions have been weakened or dissolved. Labor laws have been “reformed” to favor capital, and labor-hostile case law has fortified barriers within labor courts.

4. Rise of Contractual Work and the Gig Economy
Today, workers lack union rights and are engaged as temporary, outsourced, subcontracted, or gig workers, each bound by individual agreements.

5. Artificial Increase in Purchasing Power
Previously, bonuses served industrial capital’s interests by increasing the purchasing power of workers, thereby driving demand. Now, purchasing power is artificially raised through the easy availability of retail, micro, and unsecured loans. In this way, finance capital has become exceedingly powerful and acts as a supportive system for industrial capital.

However, bonuses are still being given out.

1. Management Bonuses
Managers overseeing industrial capital now receive substantial performance bonuses—figures so high that they seem astonishing.

Higher-level executives also receive stock options, which they can sell for earnings greater than their annual salary. Remember, by reducing wages or denying bonuses to labor, production costs decrease, profits increase, earnings per share go up, and the company’s stock value rises—allowing stockholders to make higher gains.

2. Bonus Shares for Investors
By lowering production costs and generating greater profits, accumulated profits increase, leading to bonus shares being issued to investors, specifically finance capital.

In all of this, industrial capital has the support of finance capital, both domestic and global.

Young People, the Issue is Bigger than Just Bonuses

The crux of the matter is about the distribution of resources: water, forests, land, minerals, natural and fiscal resources, surplus produced, and the opportunities created. This involves mechanisms of allocation and, most importantly, the political economic ideology that balances it all. This is the core of the subject and will remain relevant forever.

If you put on the lens to view political economy (something that cannot be bought), you’ll find connections and answers to many large and small questions. Join this mission!

Become a part of the movement to make millions financially literate! This endeavor can only succeed as a collective effort.

(The author is a researcher on economic issues)