All it is is the price agreed upon by a party who wants to sell something, and another party who wants to buy it. The incentive of each party in the transaction is very obvious, and supply and demand is simply what occurs when people are allowed to choose how much they want to sell something for, and other people are allowed to choose how much they want to pay for it. Because there is no such thing as an objective measure of value, the only way you can ever measure it is via the value agreed upon by a buyer and a seller.
Supply and demand are the most fundamental forces at play in any economy (even centrally planned ones). Trying to get rid of it is as feasible as it would be to try and get rid of gravity.
Oh boy... Well, at least you know how to attack straw men as well!
> It flies in the face of the traditional reasons given for the high pay of executives
The factors that influence pay include, on one side, every single characteristic an employer could potentially be looking for in an employee, how many people there are in the labor market who have those characteristics, and how much they’re willing to pay. On the other side it’s every single characteristic an employee could potentially be looking for in an employer, how many jobs are available in the market, and how much pay they’re willing to accept.
If a job pays highly, it’s not because of one single characteristic attributed to an employee, or that the characteristics of that employee have more intrinsic value, or that there’s something about that employee that just makes them more deserving of money than the janitor is. It’s simply because the demand for whatever labour it is that that employee is providing, exceeds the supply available in the market.
Talking about pay in this manner is only talking about averages in any case. Unless they work in a union shop, an employee has the ability the negotiate pay based on they value they personally provide to the organisation. There’s plenty of reasons why one person in particular may be more valuable to an organisation than any other person with equivalent skills would be.
Without intervening regulations, there’s only ever two reasons any persons remuneration is whatever it happens to be.
1) The employer was willing to pay that amount for whatever value it is they see in that employee
2) The employee was willing to accept that amount for the job the employer offered them
All employees try to get paid as much as possible, and all employees try to pay as little as possible. A persons pay is just the equilibrium price for their labor, and determined exclusively by supply and demand.