Saturday, December 16, 2006

People as Tools: The Market for the Labor Commodity

I happened today, through a rather unlikely chain of browsing, upon an article from this year by Joseph Kellard in Capitalism Magazine (“My Mom’s Invaluable Lesson”), in which the author recalls, among other things, a point of disagreement with his mother:

The more experienced and well-read I grew, however, the more the independent, reasoning mind she'd cultivated in me challenged her beliefs. We often had some heated debates.

For instance, my mother, a switchboard operator, believed the relatively low wages workers like her made was due to business owners collaborating to pay below what their employees should earn. If true, I asked, then why didn't employers conspire to pay all operators even lower wages? Because, I argued, when employers pay workers below what the free market demands for any labor, other employers will attract those workers with higher salaries, thus raising average wages.

I certainly appreciate that he was able to develop a viewpoint independent of his mother (he expresses due appreciation for her advice to “be your own person”). What I don’t appreciate, however, is the spurious apology for low wages that he makes, which is an obvious manipulation of people’s understanding (or lack thereof) of the bases of economics and our economic system in particular.

What such an argument draws people away from is the essential realization that the ability of employers to pay low wages is because of the oligopoly (under the control of few) of the means of production, which makes workers actually have to sell their labor to the owners of those means instead of working themselves to produce (and keeping the value thereof). It isn’t, of course, that the business owners are actively conspiring with each other to pay their employees low wages; it’s an effect of the way the system itself is set up, largely by a specific and historically-derived interpretation of property rights, with the means of production owned by few and allowing them to extract value from the labor of many.

The nebulous concept of “what the free market demands” doesn’t have anything to do with the value of the work done by wage-earning employees. By the way of thinking entailed in that concept, the worth of someone’s work is simply what employers are willing to pay. But what employers are willing to pay is by no means a natural value for the work. The employers have near-complete control over a scarce resource, whether it be a factory or a mine or a plant or store or a restaurant or telephone equipment.

This is little different from someone claiming control of a spring that supplies water to a town, and charging them for that resource, saying, “well, if you can find anyone else who sells water at a cheaper price, buy it from them.” Suppose there are a few springs that supply the town, each claimed by someone. This may take the prices down slightly from what it would be for one unchallenged spring and an entirely monopolized resource, but it would still be an oligopoly on the resource. This leads, without making much sense, to a subjective price of marginal utility for water based on the fact that a few parties own the town’s water supply. People would be paying more for the water than the equivalent of what they would naturally expend to get the water themselves (which would probably be comparatively little, and, if they were sufficiently resourceful, next to nothing).

Now let’s say I live in a moderately-sized manufacturing-based town. There are maybe between two to four major employers in the area, factories or foundries or plants of some kind (and, of course, other smaller service sector jobs--this could be applied almost anywhere, but I’m using the simplicity of this example to make better use of the point that most jobs are controlled by a comparatively few people). Let’s consider that I work for one of these employers, but feel that the pay is too low--even if I can manage well enough, I feel that I am not being paid for what I am worth, for the value of what I am producing. The employer may say, “well, if you don’t feel like you’re paid enough here, go find another job.” He may not be conspiring with anyone, but he knows that the other available jobs in town are controlled by people who probably have similar goals and bottom lines--that is, maximize their profit, and consider laborers to be tools to bring that about. This isn’t, either, to say that all employers take that view. A few may actually sincerely consider their employees to be, each one personally, an important and valued part of the company, and desire to treat them well and have them share more proportionately in the value they create in their work (I’ve never really worked for one, but hey, they’re out there, right?). But such employers will be an even scarcer resource (benevolent ownership of the means of production) within a scarce resource (ownership of the means of production). That is to say, they can’t employ everyone in the town. So some people are going to have to work for the other employers who will underpay/overwork them as expendable capital, in pursuit of the bottom line. “The free market demand for labor” doesn’t do much for these people, and it doesn’t mean much to them, either. It simply means “the capital holders’ decided conditions for labor”; the fact that it is taking place in a market system has little to do with it.

The “natural” right that is argued by Kellard (and most of the same ideology) is actually the right of the owners of the means of production to charge people for the opportunity to take part in the overall production and consumption activities of society (which is, essentially, a mutual, social endeavor in which everyone who participates is a necessary part), simply because they happen to own the means to produce and live in that society. This is the assumption or bias that the idea of “free market demand for labor” starts out with, and it begs the question of whether that is really a right at all.

Of course, it’s understandable that such a view would be expressed by an Objectivist such as Joseph Kellard in a publication like Capitalism Magazine. Objectivists (who are so dogmatic in their ideological system that they can make even Marxist-Leninists look wishy-washy) tend to view everything through the lens of Atlas Shrugged, a fantastic caricature of the world as it was in the mind of Ayn Rand. It’s a system as brainwashing as any cultish religion.

What’s more disquieting is the thought that a sensible person might let such a view pass without giving it a critical examination.


Blogger Jim Blynt said...

Nicely put!

2:56 PM  

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