[OPE-L:4872] Re: determination of real wages

Duncan K. Foley (dkf2@columbia.edu)
Fri, 25 Apr 1997 12:43:45 -0700 (PDT)

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In reply to Michael L.'s OPE-L:4852:

> The question is *how* to reconcile them. Both (b) and (c) relate directly
>to the determination of market wages (which are affected by the
>characteristics of supply and demand, which includes class struggle). How do
>we move, however, from this determination of market wages to the standard of
>necessity? The argument I made before to Ajit (and in my book) is that the
>level of necessary needs (which underlies the value of labour-power)
>adjusts--- as the needs which people are able to satisfy as the result of
>increases or decreases in market wages change. Ie., the historical or
>social element entering into the reproduction requirements of workers (a)
>--- assumed given in Capital---expands or contracts.
> Do you see any other way to reconcile those 3 theories?

To tell you the truth this is an issue that I'm quite uncertain about, but
want to think about and discuss more. The mechanism you propose makes a lot
of sense, but it seems to presuppose a rise in market wages above the value
of labor-power in the sense of an accepted workers' standard of living. I
think Smith has something like this in mind in his discussion of wages.
Does this lead in formal terms to viewing the value of labor-power as a
kind of lagged average of past realized market wage rates?

Isn't there also an upward pressure on wages in some periods from workers'
political and union movements?


Duncan K. Foley
Department of Economics
Barnard College
New York, NY 10027
fax: (212)-854-8947
e-mail: dkf2@columbia.edu