[OPE-L:4730] Re: the determination of real wages---- and a puzzle

Ajit Sinh (ecas@cc.newcastle.edu.au)
Fri, 11 Apr 1997 01:29:49 -0700 (PDT)

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At 06:32 AM 4/10/97 -0700, Paul Zarembka wrote:

>> There is no question of letting the cat out of the bag. Since there was no
>> cat in the bag to begin with. I have consistently maintained that a
>> theoretical possibility of a rise in real wages if productivity is
>> increasing exists in Marx's theory. I acknowledged that during the pen-l
>> debate as well as here in response to you. The point I'm debating with you
>> is the position about the historical trend Marx takes in his writings-- A
>> history of economic thought problem. And on that I maintain I'm on pretty
>> firm footing.
>Now I'm getting confused. What is this object of knowledge--"a history
>of economic thought problem"--you, Ajit, are talking about? I thought you
>were debating theory of the capitalist mode of production. In other
>words, I have lost the exact question being debated.

The question is this: did Marx think that the trade union struggles would
lead to a rising real wages in the future? Michael Lebowitz's position is
that yes, Marx did think that, but did not discuss this issue in his
published or even his unpublished writings because he had planned to write a
whole book on this issue, which he never got around to writing. My position
is that Marx did not think so. Because he expected the rate of unemployment
to slowly rise due to the nature of technical change and the the falling
rate of profit. Given that the rate of unemployment would be rising, the
trade unions would not be able to turn the tide around, and could only
resist but not succeed in stoping the downward trend in real wages. Now,
Marx's theory of technical change and falling rate of profit are not
logically water tight. So his general prediction about rising rate of
unemployment is not a logical necessity either. I argue that classical
economists as well as Marx believed that the empirical secular trend of both
the rate of profit and the real wages were downward-- one towards zero, and
the other towards subsistence. All these theorists were coming up with their
theories that would account for these trends. And so did Marx. He simply
tried to place his theoretical variables in such order that the two trends
would come out as a result. The arbitraryness of this is quite clear in his
discussion on the falling rate of profit. On the real wages there is no
doubt that Marx expected a downward trend in the real wages as an empirical
fact. He devotes 68 pages in total (in Capital I, the whole of section 5 of
chapter 25) to documenting a falling trend of wages in England for the
period 1846-66 as well as for Ireland. The thing here to look out for, which
I think Allin Cottrell and others missed, is the quality of housing for all
sections of workers. Money spent for housing constitutes a good chunck of
real wages for workers. If its quality is deteriorating, then it means
workers are losing out big! Cheers, ajit sinha