Estee Rivera (@esteerivera42) Is Joining Prospects 365!

Written by: Estee Rivera (@esteerivera42)

Follow us on Twitter! @Prospects365

The economics of baseball.

Not the sexiest topic in the game, but perhaps one of the most important. Despite this, you often have to search far and wide to find valid, consistent reading material on the topic. Yes, we have people talking surplus value and other nice econ-ish plug words, but nothing full-blown economics.

Ever heard anybody relate Marxist theories to labor dynamics in Major League Baseball? Well get ready, because I am going to throw some of that at you in the near future. This is something that interests me because I have been studying to get my Master’s degree in economics for the eighteen months at Bard College in New York. Nobody—and I mean nobody—here talks about sports economics and how what I am studying relates to the sports world. I want to give readers a different perspective on the baseball world. I’m beyond excited to share my thoughts on this multi-faceted game.

Allow me a give you a quick glimpse of why I believe baseball and economics have so many parallels. Economists all over the world try to quantify how productive a worker is and how a worker’s value can be defined. There is no consensus on how to do this. Generally, the idea is to use multiple variables such as education, experience and salary amongst many others, but none of these really tell us how valuable a worker is. Teachers are extremely important for the development of children but make way less money than an investment banker on Wall Street. Even though both may be very productive in their own field, one is compensated significantly more than the other. Essentially, it’s impossible to pick a single variable that explains how productive/valuable a worker is.

Now, you must know where I’m going with this. In many sports, and especially baseball, we know quite accurately how productive a player has been. With a combination of tracking data, analytics and statistics, there is now a plethora of publicly-available information to describe how good a player is relative to others. Of course, we even have statistics like Wins Above Replacement (WAR) that can really tell us who is below average, average, above average or great. There are no WAR equivalents in economics. Baseball is a fascinating case study for this reason. We can almost exactly determine if a player has been under or over-valued.

A big focus at my school is the study of inequality in America and across the world. Ultimately, my goal is to use the same analytical techniques used in the academic world to analyze inequality and labor dynamics in baseball. It seems like every season, a deal like Ronald Acuña’s is signed. Absolute stinkers for young players who are on great career trajectories. To get started at Prospects 365, I am going to investigate these situations on both a micro and macro scale. I plan on asking two questions: 1) Is there inequality in Major League Baseball and, if so, where exactly can this inequality be found? 2) Is it possible to put together a model that can explain why players like Ronald Acuña take contracts below their projected value prior to becoming a free agent?

The answer seems obvious. In the face of $100 million, nobody in their right mind would say no. But if that’s the case, why don’t we see these deals among players from the United States as often as we see it from players from abroad? Through a mini-series of articles, I plan on providing some insight on all these questions. It’s safe to say I’m quite excited to start contributing at Prospects 365 in a bit of an unorthodox way. Let me leave you all with a quick story.

Remember how I said Marx relates to labor dynamics in the MLB? I’ll tell you why. Marx argued that the capitalist class of owners faced an obstacle in their quest to dominate capitalism. Owners always have a need to get a leg up on their competition. Whether that be through technological or ideological innovation, everybody always wants to be one step ahead. This will give the innovator a temporary competitive advantage, which brings a temporary spike in profits. Once everybody catches up, the cycle will repeat itself, but the outcome is always a decrease in the original profit rate for all. In other words, only one capitalist gets that temporary benefit while the other are left with losses. However, if they could coordinate with one another to either share information or plans on innovation, they could theoretically work together to steadily increase the aggregate profit rate while still making improvements to their business. Of course, this would be highly illegal, but not in Major League Baseball.

This offseason, Braves general manager Alex Anthopoulos said himself that teams are communicating with one another in more detail than ever before when discussing off-season plans. If MLB owners and general managers start to coordinate, the players will quickly find themselves in a bad, bad spot. Marx himself said this is the main idea standing in the way of capitalists taking complete control. Be careful, players: MLB owners are gaining more power by the minute.

Follow new P365 staff writer Estee Rivera on Twitter! @esteerivera42

Follow us on Twitter! @Prospects365

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