Inequality: The Capital/Labor Ratio

[Phased Out]

I believe that the capital/labor ratio is one of the primary drivers of wage and wealth equality or inequality.


When the capital/labor ratio is high, that means there’s a relative shortage of labor, so people who own capital have to pay higher wages in order get the labor necessary to make their capital profitable.


When the capital/labor ratio is low, this means there’s a surplus of labor, so wages are depressed, and the worker is often unable to earn enough money to get ahead. When the capital/labor ratio is low, the rich get richer and the poor get poorer.



The 1950s is often hailed as the golden age of America’s middle class. Strong unions are often cited as a reason for this, but that’s actually a reversal of the cause and effect. In the 1950s, there was a perfect storm of a high capital-labor ratio, and unions and high wages were both the results of the high bargaining power that workers have when there’s a high capital-labor ratio.



How to lower the labor ratio relative to capital and to maybe strengthen unions? One way to strengthen unions would be for a labor party to do something about deporting the millions of non-citizens working illegally and capping the amount of people who come here to work from other countries.


Ever hear of H1-B visas?



Letting more people into the country, thus increasing the labor pool is what causes wages to decrease or even stagnate. If communists or even labor party supporters support letting more people into the country when it's a known fact that letting more people into the said country will depreciate wages for the working class?

[Zanthorus]

Or we could just, you know, abolish the wage system altogether.

[LeftSideDown]

To replace it with...?

[LeftSideDown]

How to lower the labor ratio relative to capital and to maybe strengthen unions? One way to strengthen unions would be for a labor party to do something about deporting the millions of non-citizens working illegally and capping the amount of people who come here to work from other countries.


Ever hear of H1-B visas?



Letting more people into the country, thus increasing the labor pool is what causes wages to decrease or even stagnate. If communists or even labor party supporters support letting more people into the country when it's a known fact that letting more people into the said country will depreciate wages for the working class?

I enjoyed your post until here. It is a boom, always, to have more people coming into a country, even if temporarily depresses wages.

Let me use an example to illustrate. Suppose steel (the metal) could walk. And lets say there was a country that was prosperous, and the pay for using steel (the price) in that country was high, wouldn't this steel want to walk there? Of course going there would lower the price of steel (supply and demand, simple) but he would be paid more. Who/what would be opposed to this migration? Simple, other pieces of steel. Who would be happy about it? Industries that use steel, and consumers as prices would be lowered because of a surplus of these goods at a lower prices. So really, most of society benefits from immigration while a few people with wages more reflective of monopoly than of value will have lower wages.

[Lynx]

Wouldn't higher wages be eaten up by higher prices, inflation?
I suspect the savings rate was higher in the 1950s.

[LeftSideDown]

Wouldn't higher wages be eaten up by higher prices, inflation?
I suspect the savings rate was higher in the 1950s.

Not if they corresponded with a raise in productivity and a stable money supply.

[Lynx]

Not if they corresponded with a raise in productivity and a stable money supply.
Well, the OP did not refer to an increase in productivity, merely a shortage in the labor force.

[LeftSideDown]

Well, the OP did not refer to an increase in productivity, merely a shortage in the labor force.

Isn't larger/higher capital indicative of an increase in productivity?

[Lynx]

Isn't larger/higher capital indicative of an increase in productivity?
Yes, but in this case it is indicative of past performance. A high capital to labor ratio is indicative of an unsustainable level of productivity. If wages rise in response to this, then productivity will have decreased.

[los.barbaros.ganan]

To replace it with...?

Absolutly nothing.

Workers have to work less if everone is doing something usefull rather than financial administration and useless shit like that.

[LeftSideDown]

Absolutly nothing.

Workers have to work less if everone is doing something usefull rather than financial administration and useless shit like that.

So you don't think some people need help managing their money? Or that there should be no investment in a society (which can only come about through savings)? If so, then I find your post to be useless shit.

[godlessmutha]

So you don't think some people need help managing their money? Or that there should be no investment in a society (which can only come about through savings)? If so, then I find your post to be useless shit.

Whilst I would not use those words, my sentiment is exactly the same. The idea that we can just abolish


financial administration and useless shit like thatis so ludicrous it almost doesn't bear responding to.

Say you have a socialist society. Everyone needs food. So you have supermarkets. What stops one person from going to the supermarket and taking and hoarding all the food? Well, you need money, or ration cards, to ensure that people can only purchase/take what they need.

Who is going to administer how much money people get, or how many ration cards? Who is going to administer the system, ensure that supply of ration credits or money is equal to, or in the right proportion to, demand for food? Or any other goods or services?

Its absolutely moronic, and the words used to articulate the idea even more so. A socialist society will need just as many administrators and managers as a capitalist society; the idea that in the information age we will all somehow become productive factory workers and everything will be hunky dory is a fantasy.

I do enjoy talking to the intelligent socialists on this board... the utopian stoner fantasists like the one above? Not so much