This is all very silly. The price of labor works like the price of anything else in most cases, and is determined through a bargaining process. Changes in relative supply and demand can tilt the process one way or another, and so the price of anything - tomatoes, lap dances, lap tops, labor, fertilizer, massages - clears the market. An entrepreneur cannot simply cut the prices he pays without consequence. Do you think workers are mindless automatons, or something? In that case, why did he pay them any wage to begin with?
If he cuts wages, he will attract fewer workers and workers of lower quality/ability/experience/dependability. This also will affect his bottom line.
The real flaw in your analysis should be obvious. If profits are dropping, why must he resort to cutting workers’ salaries? Why can he not simply jack up his prices? If you answer because people won’t accept his products at those higher prices and will go instead to his competitors, that he cannot simply manipulate his prices any way he likes without consequence, then you are within an inch or two of discovering the problem with your analysis.
Also, consider that no human in a free society is destined only for labor. Anyone may try their hand at entrepreneurship. If wages are being lowered, fewer people will want to be laborers and so will leave that class to become entrepreneurs. This will lower the supply of laborers and increase the demand for them. I shall assume you know what this will do…
It’s almost as if no one here wants to get to the substance of my argument and would rather have a fun discussion about syntax. Let’s do it simply, shall we?
Firm produces, pays workers less than value of that which they produce.
Workers cannot afford said product. In order for it to be sold to the masses and maintain profits the price must go down or wages must go up.
Wages go up, price goes up. No dice. Commodities and capital of the capitalist are deinvested in said industry or the capitalist begins to hoard, or overproduction occurs if there’s an idiot in the board room.
Price goes down, wages go down, or profit goes down. No dice.
Lay off a worker or two. Maintain profits, raise wages. Some workers can’t afford the product because they are unemployed. Continuing this pattern leads to lower wages because the demand for work rises while the supply needed falls. Even a balance of this solution checks wages versus profit at equilibrium, maintain just enough concentration that the vast majority of the population wishes to do wage labor for a living.
And all these conclusions rely on one group having more capital than the rest. Not only that, for the premises to even make sense there already has to be concentration of capital!
Computer prices haven’t gone down because “everyone that can afford one and wants one has one.” You do realize that products wear and break down, do you not? Some people will want them replaced, some people will want more, some people will want the latest and greatest, some people were children before but adults now and finally want to buy one.
If demand for widgets goes down, which can certainly happen, it will, as it must and should, depress the industry. But this only means that resources are freed up to produce something else, whose demand may be increasing. That’s part of how the market works, coordination without central planning.
“Also, consider that no human in a free society is destined only for labor. Anyone may try their hand at entrepreneurship. If wages are being lowered, fewer people will want to be laborers and so will leave that class to become entrepreneurs. This will lower the supply of laborers and increase the demand for them. I shall assume you know what this will do…”
Of course. They’ll just pull themselves up by their bootstraps, eh? What if I don’t have a pair of boots?
“Damn you! Why don’t you just leave your class and become an entreprenuer?”
“Computer prices haven’t gone down because “everyone that can afford one and wants one has one.” You do realize that products wear and break down, do you not? Some people will want them replaced, some people will want more, some people will want the latest and greatest, some people were children before but adults now and finally want to buy one.”
Actually, that’s exactly why computer, high-tech calculator, and cell phone prices have gone down. After the high’scale consumers bought the first cell phones for hundreds of dollars (I remember when a camera phone cost $100; I bought a phone for $60 and it just had a camera in it as if it was standard) those producing cell phones had money to invest in more efficient production processes and whatnot, making each batch considerably cheaper. John James actually posted a video on this…
Nope. Earth is not one factory where there are overlings (paid at the same rate) and underlings (paid at the same rate). There are different kinds of people with different wage rates buying things, all the time. Also, not being able to buy something is simply a question of time. A worker may save until he can buy back the product.
First of all, wages are not the only cost of business; machinery, materials, marketing, etc. Secondly, no boss is going to continue at the unprofitable rate without cutting costs or re-evaluating. Thirdly, if prices go down neither wages nor profit necessarily has to go down. The business might have invested in cost-cutting technology. This does mean that employment could go down in the short-term. But the lower prices afforded by lower costs mean that the business has room to expand and could employ back the laid off workers tenfold in the future (as was the case in the hosiery industry in 19th century England, thanks Hazlitt!)
Incomprehensible. There is no homogeneous wage rate for underlings and overlings. Also, wait a minute. Workers get laid off and wages are raised. Then wages are lowered again? Because demand for work rose and supply fell? First of all, if workers were fired, then supply of labor increases. Secondly it does not follow that lower wages come out of higher demand of labor.
Your post is so full of idiocy and unearned arrogrance I had a hard tiem deciding whether you were worth the effort.
Yes. That’s what I was doing. Correcting your syntax.
Good God Christ.
Believe me, I have no illusions about how much complexity you can handle.
Over what amount of time? The utter ridiculousness and sheer shallowness of this sort of analysis never ceases to stun me. A worker, through a career spanning several decades, will collect many paychecks. Are you saying that no worker can ever buy the products he makes? Then how the hell does anything ever get bought?
If a worker’s job is to paint a blue ‘A’ on the back end of every yacht that passes him by on the assembly line, and he gets paid $10 per hour to do this, and if he saves ten hours’ worth of pay from each weekly paycheck, and if the yacht sells for $100,000.00, he’ll be able to buy the yacht after one thousand weeks.
If a worker’s job is to paint a blue ‘A’ on the wrapper of each piece of bubble gum that passes him by on the assembly, and he gets paid $10 per hours to do this, and if he saves ten hours’ worth of pay from each weekly paycheck, and if the bubble gum sells for $0.10 per piece, he’ll be able to buy 1,000 pieces of bubble gum each time he gets paid.
If you want to do an analysis, try including relevant information. Also, stop pretending like workers are the only ones who contribute to the value of a product. If that were true, they could stay at home and build automobiles in their living rooms and keep the entirety of the proceeds from the auto sales.
Go down from what? Why were the prices too high to begin with? Or why were the wages too low?
Production pays for consumption. We can consume because we produce. Workers consume in accordance with the value of the desires they have contributed to satisfying on the market, just like landowners, capitalists and entrepreneurs.
And who says the product must be sold to “the masses”? Most of the products sold to the masses are easily purchased by workers, if they labor long enough (see the explanation immediately above this one).
What are you babbling about at this point? The market tends towards equilibrium without wild swings in price and wage. You do not write clearly enough to make your point readily discernible. I can’t answer these complaints about lack of dice without knowing what the hell it is you are saying.
This might as well be Greek. At any rate, I’ve given you enough material for a good start on your education with this and other posts. If you want to take the time to clearly express your thoughts, I can help you some more. Of course, if you want to remain ignorant and continue acting with condescension, you can go get a dog up ya.
“Incomprehensible. There is no homogeneous wage rate for underlings and overlings. Also, wait a minute. Workers get laid off and wages are raised. Then wages are lowered again? Because demand for work rose and supply fell? First of all, if workers were fired, then supply of labor increases. Secondly it does not follow that lower wages come out of higher demand of labor.”
There’s a higher demand to do labor and a lower demand for labor with an increased supplyof labor. Now do you see? Wages go up short term, but if the pattern continues across an industry then there’s more supply for labor and less demand. Get it?
Second, I’m not even saying there’s a homogenous wage for the haves and have-nots. I’m saying that a relative scale of haves and have-nots is necessary for a wage labor system to even exist. Not that employers must make X% more than their employees, but that employers must make relatively more. Understand?
“Also, not being able to buy something is simply a question of time. A worker may save until he can buy back the product.”
We can go ahead and talk about the time preference argument for profit, but it still fails to undo the relative concentration of capital there already is in the market, regardless of whether or not it’s a justified argument.
I don’t know that I have ever engaged in a debate on the internet where someone insisted they were right, and then, in the same sentence, went on to advocate that they had been wrong, and all without even realizing it.
Within a pure capitalist system, territorial monopolies of armed force will result, ostensibly to reduce costs to the consumer in the form of economies of scale and reduced competition.
However, ‘power corrupts, absolute power corrupts absolutely’ – hence these territorial monopolies of armed force will devolve into absolutism.
INdeed, if the free market could deter monopolies of armed force that statists use to gain and maintain power — then there wouldn’t be statist monopolies of armed force.
Similarly, if monopolies of armed force were not corruptible, then big government could be made effective – which we all know is also not true.
Hence the ancap is confronted with an ideological conundrum that a monopoly of armed force can be responsive to consumer preferences rather than self-serving and at the same time asserting that government monopolies of armed force are destructive. Both can’t be true unless you discount the adage — power corrupts, absolute power corrupts absolutely.
Indeed, the ancap is deluded to think that private power is different than public power.
This is one of the reasons why ancap society is reserved for the ash bin of history.
In contrast, our founding fathers (USA version) recognized that the free market had limitations, so they devised a system to undermine government power by decentralizing, balancing, limiting, and making transparent the elements of armed force and coercion in society.
Of course, they were remiss in not creating more sturdy institutional mechanisms to deter economic coercion – hence an Economic Bill of Rights is in order.
“Over what amount of time? The utter ridiculousness and sheer shallowness of this sort of analysis never ceases to stun me. A worker, through a career spanning several decades, will collect many paychecks. Are you saying that no worker can ever buy the products he makes? Then how the hell does anything ever get bought?”
I’m saying that workers cannot afford products relative to their employers. Nothing more. The crux of the argument here, which everyone continues to ignore, is that the only way employment can work is if there is a reason not to take the risk of self-employment. If the distribution of capital were such that everyone had a somewhat equitable amount, wage labor would not be the predominant mode of earning a living. There would be more diversity in business, meaning less risk of causing collapse by way of monopoly of oligopoly, less risk given that each person has a bit of something to throw around to consider starting a business, and easier access to loans given that people have commodities to put up as collateral.
“Go down from what? Why were the prices too high to begin with? Or why were the wages too low?”
For a theory so strongly based on subjectivity you sure are having trouble grasping relative terms.
“If a worker’s job is to paint a blue ‘A’ on the wrapper of each piece of bubble gum that passes him by on the assembly, and he gets paid $10 per hours to do this, and if he saves ten hours’ worth of pay from each weekly paycheck, and if the bubble gum sells for $0.10 per piece, he’ll be able to buy 1,000 pieces of bubble gum each time he gets paid.”
I actually really like this example for its lack of relevant information. If this worker is painting one A per hour, then the business is going down. More likely, if the worker is painting an A once every 4 seconds, then they’ve produce 7,200 piece of bubble gum in 8 hours. Meaning they cannot afford to buy back the gum they’ve produced after they get paid…
“This might as well be Greek. At any rate, I’ve given you enough material for a good start on your education with this and other posts. If you want to take the time to clearly express your thoughts, I can help you some more. Of course, if you want to remain ignorant and continue acting with condescension, you can go get a dog up ya.”
Cool story. Any reason that wage labor doesn’t depend on a concentration of capital?
Please use the correct terms of supply and demand in regards to labor so as to facilitate your thoughts better. Demand for labor, supply of labor. Supply of labor is “demand to do labor”. Supply creates demand. When something increases in quantity, it decreases in price, becoming attractive to whoever wants to buy it. Unless the state gets in the way.
Sure, workers don’t make as much as their bosses. How unfair. This does not mean that there will be no one to buy expensive products. The idea that workers “need wages to buy back the product” is ridiculous and shortsighted, especially without a time-frame as a given.
Yes, there is capital concentration. As will there always be in a private-property society. The point of this thread is that unjust state monopolizing exacerbates the problem.
I’m not doubting that the state is a shitty way to organize society. Most people on here and I agree as far as that goes.
The question was raised as to whether or not the free-market ca have a concentration of wealth. I’ve said that, yes, it depends on relative concentration of wealth to function. That’s been my only point this entire time.
most workers dont want to buy back their product anymore than entreprenours do, they want to buy a diverse range of other peoples products!
whenever I hear the ‘buy back their product’ line, I imagine a worker perfectly happy to go gome with a few hundred hubcaps a month in full payment for his efforts on the factory floor.
most workers dont want to buy back their product anymore than entreprenours do, they want to buy a diverse range of other peoples products!
whenever I hear the ‘buy back their product’ line, I imagine a worker perfectly happy to go gome with a few hundred hubcaps a month in full payment for his efforts on the factory floor.
But I think the point still applies when taken in aggregate. We have two groups of people: capitalists and wage laborers. Let’s say there is $800,000 in circulation, beginning in the hands of the capitalists. The capitalists pay the laborers the $800,000 in wages (we’re ignoring constant capital expenditures for simplicity). The laborers in turn create x number of different commodities. In order for these commodities to earn the capitalists a profit, they have to be sold for more than the value of the wages spent in producing them. Therefore, let’s assume that the total cost of all the commodities adds up to $1,000,000. The workers then spend all of their money on the commodities. Since their money adds up to only $800,000, this means that 20% of the commodities ($200,000) remain unsold. How do these commodities get sold?
Wrong. There are all types of different workers: farmhands, factory workers, mechanics, engineers, grocers, burgerflippers, systems analysts, data-inserters, managers, secretaries, programmers, executives, bankers, etc. Different workers get different pay. Wage laborer is not an accurate categorization because you can still be a “wage laborer” and be very wealthy.
well, we can solve the riddle by saying that 800,000 units circulate, and they can exchange hands many time, so that a large volume of transactions much greater than 800,000 can be counted occuring over a sufficiently long period.
or we can assume that you mean for all payments and transactions to occure stepwise at fixed intervals, in which case we simply laugh at the notion of the total cost of all the commodies adding up to 1000000 given the stipulation that there is only 800,000 which they could exchange for.
I expect what you really want to ask is how there can be a spread in the aggregate between labour costs and sales receipts. well the sales receipts come from the spending of both the labourers and the capitalists whereas only the labourers income shows up as cost on the accounting whereas the capitalists income shows up as profit.
but we always new that accounting profits are business income minus business expenditure. big whoop.