Hi, I’m Eric and a college student. Now something that I have not been able to come up with or make sense of is labor markets.
My problem is this: How do you stop employers from colluding when it comes to wages? If corporations acted together they could achieve a monopoly status in the labor markets. This is one of my only qualms left when it comes to Austrian economics. The free market, in this sense would only work (it seems to me) if there was a way to combat wage collusion, the companies would not actually be paying the market wage, but one that had a price ceiling that they imposed.
Companies can never collude successfully. If all companies are paying the same wage, one company will decide to go rogue and pay a higer wage and take away a ton of employees. The same thing goes with collusion for other products. If companies try and collude to sell gas at a high price, one company will invariably break away and sell gas cheaper to steal all the customers.
The element of competition is invariably preserved.
I’m guessing you believe unions should be broken up as well, because it’s just workers “colluding” to try to get higher than market wages.
If somehow we run into your scenario, and for example the auto manufacture collude in order to fix the wage imposing a price ceiling, the motive of this would only be to gain excess profits more profits than when you left wages up to free market forces.
Outside employers not only other emerging car manufacturers, but other low skilled employers, would simply offer higher wages. Because if someones labor is so productive at for example a ceiling of $7/hr, then another capitalist pigs will offer a higher wage for example $7.50/hr just to gain all that productivity.