The Dual Economy and Labor Market Segmentation: A Comment on Lord and Falk

Abstract

A recent paper by George Lord III and William Falk, An Exploratory Analysis of Individualist Versus Structuralist Explanations of Income, presents methodological problems that may be intrinsic to the testing of hypotheses derived from neo-Marxian analytical categories. My objections pertain as well to several other papers on the relationship between individual earnings and American industrial segmentation (e.g., Beck et al.). As Lord and Falk correctly suggest, American Marxists codified a fundamental premise of Capital, the logical tendency toward capital concentration in industry, and developed a structural representation of advanced capitalism. The resulting so-called dual economy is characterized by a monopoly sector of large, capital-intensive oligopolies; a competitive sector of smaller, more labor-intensive competing firms; and the state (Baran and Sweezy; O'Conner). With others, Lord and Falk have hypothesized that monopoly sector employment is superior in wages, benefits, and opportunities for advancement to jobs in the competitive sector, thus joining together a neo-Marxian dual economy model with a theory of labor market segmentation (see also Beck et al.; Tolbert et al.). Lord and Falk can then use NORC data on individual earnings to (1) affirm, seemingly, the existence of a two-sector economy, and (2) apparently demonstrate that structure (economic sector and class position) explains some variation in individual earnings, although less than a group of human capital variables, education, job experience, etc. The comparatively weak effect of structural variables on income was unexpected by the authors, given others' findings (Beck et al.; Bibb and Form). Among possible reasons for this result is an underlying conceptual inadequacy. I will also argue, however, that current data and sociologists' methodological preferences preclude the determination of full structural influences on earnings.