[OPE-L:4804] Re: the determination of real wages--query to

patrick l mason (patrick.l.mason.20@nd.edu)
Thu, 17 Apr 1997 07:45:40 -0700 (PDT)

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On money wages and real wages:

The money wage rate will adjust to a given consumption bundle, as along as
the relative power of workers and capital is unchanged and productivity is
unchanged. But, let's say capital increases its power relative to the
working class (with unchanged productivity, i.e., zero or very low
productivity growth). Then, capital will notice that it can offer money wage
increases that are lower than the rate of inflation. If capital's increase
in power is great enough and lasts long enough then worker's can be forced
to take wage cuts. (Aside: inflation can occur with zero productivity growth
and declining nominal wages if there has been a rather substantial increase
in the price of non-labor inputs). Anyway, as money wages decline the real
wage bundle will be forced downward also. Workers will try to resist this
reduction in their standard of living by leveraging their non-labor assets,
i.e., carrying larger home mortgages and stretching out car payments over a
longer period of time or cutting back on anticipated pension plan
contributions. But this increasing burden of household debt makes labor even
less resistant to the dominance of capital. And, so, money wages continue to
tumble. Workers, losing the battle at the site of production, take on even
heavier debt loads or make even greater reductions in pension plan
contributions. Of course, worker debt can only hold off reductions in the
consumption bundle for so long. As household bankruptcy (sp?) mounts,
workers standard of living decline and they adjust their standard of living
to the lower money wage rate.

I think I've described the post-1973 US economy. Disagreements?

peace, patrick l mason

At 03:07 PM 4/16/97 -0700, you wrote:
>In message Mon, 14 Apr 1997 20:50:05 -0700 (PDT),
> Paul Zarembka <zarembka@acsu.buffalo.edu> writes:
>> Michael L., is this correct about you?:
>> On Mon, 14 Apr 1997, Ajit Sinha wrote:
>>> ... The slogan that wages are determined by
>>> "class-struggle" usually means that wages are determined by a
>>> bargaining process over the net output between the workers and the
>>> capitalists. This completely does away with the historical and
>>> cultural aspect of wages and its prior determination in the context of
>>> production of surplus as streatching of the labor-time beyond the
>>> necessary labor-time. All these ideas are extremely important to Marx.
>>> You will find that people who raise the slogan that wages are
>>> determined in the "class-struggle" are always in favour of the *given*
>>> money wages over the idea of *given* real wages....
>> Paul
> My answer as to whether Ajit has described my position accurately is no,
>but there is nevertheless a real difference in our positions (and he may
>think he is describing my position).
> Ajit said in 4786, responding to Patrick:
> " My point is that in the long term perspective money wages
>adjust to real wages. Even when the class-struggle has influence (ie. upward
>influence), it must be on real wages and not just money wages. When you take
>real wages as determined in a socio-historical process, ie. independent of
>the determination of the prices of other commodities, then you can work out
>an objective measure of exploitation. Because the necessary labor is given,
>and any amount of labor beyond that is surplus labor, which is the
>streaching of labor-time beyond the necessary labor. So you can define
>exploitation at the level of production."
> With one exception, I agree with this. It is Marx's basic point-- in
>order to grasp the nature of exploitation, we have to begin by treating the
>standard of necessity, the real wage, as a given magnitude. Marx argued that
>the Physiocrats, in doing this, laid the foundation for the analysis of
>capital. And, he noted, that if they made the mistake of treating this
>standard as "an unchangeable magnitude," this in no way affected "the
>abstract correctness of their conclusions." Ie. if you want to understand
>the nature of capital, this is the way to proceed--- and, it is the way that
>Marx proceeded in Capital.
> However, to ask how real wages are determined and how they change is a
>quite different question. (It is one that Marx explicitly assigned to the
>book on wage labour.) To limit one's self to the statement that money wages
>adjust to real wages (which Ajit makes above) leaves one without an
>explanation of how real wages change. The argument I made in my book (the
>*other* Beyond Capital) is that once we relax the assumption of the given
>level of real wages, then we find that movements in money wages, insofar as
>they are not transient, will lead to changes in the standard of necessity;
>ie., as Marx noted, the increase in wages will allow workers to satisfy
>social needs "that previously did not enter the area of their consumption"
>and, as Engels commented that without trade unions, "the work-people
>gradually get accustomed to a lower and lower standard of life." (Seems
>pretty straight-forward to me.)
> One implication, then, that I pointed out is that for this "peculiar"
>commodity which contains a "historical or social element" which can be
>expanded or contracted, the tendency is for the value of labour-power to
>adjust to its price--- rather than the reverse. Perhaps this type of
>heretical statement (heretical in that it is the opposite of Marx's in
>Value, Price and Profit) is what Ajit has in mind.
> in solidarity,
> mike
>Michael A. Lebowitz
>Economics Department, Simon Fraser University
>Burnaby, B.C., Canada V5A 1S6
>Office: (604) 291-4669; Office fax: (604) 291-5944
>Home: (604) 872-0494; Home fax: (604) 872-0485
>Lasqueti Island: (250) 333-8810
>e-mail: mlebowit@sfu.ca