[OPE-L:4779] Re: real wages & wage differentials

Gerald Levy (glevy@pratt.edu)
Mon, 14 Apr 1997 19:37:32 -0700 (PDT)

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Patrick wrote in [OPE-L:4777]:

> It is difficult to provide a truly adequate response to Jerry's debated
> posting on wage inequality.

But, it hasn't really been "debated" _yet_.

> Nevertheless, much of his posting presupposes
> the answer to the question I was asking.

But, you didn't identify your question as below _before_.

> Racial and gender differences in
> earnings imply muliple prices for the same commodity -- an unequivocal
> violation of the law of one price!!!

Who says that the "law of one price" has to apply for the commodity
labour-power in the same way that it applies for other commodities? After
all, labour-power is a very, v-e-r-y, V-E-R-Y special commodity!

Moreover, isn't the "law of one price" modified when there is product
differentiation? Whether those differences are real or imagined, if the
purchaser of a commodity comes to believe that the different "type" of the
same commodity are actually two different types of commodities, then the
"law of one price" would no longer hold.

Yet, I don't think the issue here is primarily in the attitude by the
capitalist toward the "different" capabilities (or use-value) of the
commodity labour-power (especially since you want us to assume the same
skill level)...

Let's begin by dealing with a case where workers are not unionized. In
that case, capitalists would be able to pick and choose workers based on
.. whatever. The wage offered in that case would reflect _local_ labour
market conditions (and _differential_ understandings of "moral and
customary" standards). Without discussing how historically there came to
be different wages for different workers based on gender, race, etc.,
capitalists don't have to be geniuses to observe that there *are*
different unemployment experiences, wage levels, etc.. That being the
case, why would we expect capitalists to offer wages that are the same for
these different workers? I.e. since they know that discriminated groups
are more desperate for jobs (given the higher rate of unemployment that
they experience) and will be willing to work for lower wages, then they
offer lower wages.

> Note, I am not referring here to wage
> differences arising from true differences in skill or to tempoarary
> differences in the state of supply and demand or to any sort of
> noncompetitive industrial structure. Rather, I'm really interested in what
> does the list have to say about wage differentials under the followining
> circumstances:
> 1. equally skilled workers,
> 2. supply and demand (for output) are equal to each other for each firm and
> for each industry,
> 3. both product and input markets are competitive, and
> 4. there is no false consciousness, i.e., capitalist cannot fool workers
> regarding the social and cultural elements of the real wage
> bundle.

I think the above satisfies the conditions you specified.

> Now, any theory on wage differentials under these conditions can be readily
> extended to racial and gender discrimination, international trade, or to
> other areas where there is a violation of one of the original assumptions.

I don't see why this is the case necessarily.

btw, I disagree with your statement in [4766] that workers bargain over
money wages. While that is the case typically, they *can* also bargain
over real wages (as we saw when unions negotiated cost-of-living
agreements [COLAs] in highly inflationary periods).

In solidarity, Jerry