Marx and the Iron law of Wages

[Zanthorus]

This is something I've been struggling with. One of the arguments (http://mises.org/efandi/ch26.asp) I've come across to "disprove" Marxist economics is that Marx held to an "Iron Law of Wages".

I've read the parts of Marx and Engels where they attack the Iron Law of Wages, but I'm still struggling to interpret stuff like this:


The price of labour, at the moment when demand and supply are in equilibrium, is its natural price, determined independently of the relation of demand and supply. And how this price is determined is just the question...As with other commodities, this value was determined by the cost of production.


Now, the same general laws which regulate the price of commodities in general, naturally regulate wages, or the price of labor-power...the price of labor-power will be determined by the cost of production, by the labor-time necessary for production of this commodity: labor-power.

What, then, is the cost of production of labor-power?

It is the cost required for the maintenance of the laborer as a laborer, and for his education and training as a laborer.

This sounds pretty much exactly like the law of wages...what am I missing here?

[robbo203]

This is something I've been struggling with. One of the arguments (http://mises.org/efandi/ch26.asp) I've come across to "disprove" Marxist economics is that Marx held to an "Iron Law of Wages".

I've read the parts of Marx and Engels where they attack the Iron Law of Wages, but I'm still struggling to interpret stuff like this:
This sounds pretty much exactly like the law of wages...what am I missing here?

My understanding is that Marx was critical of the iron law of wages. The peice you refer to from the Mises.org gets it all wrong anyway by giving it a malthusian slant with Mises claiming Marx said that if workers get more wages then can the afford to increase their progeny and therefore their cost of living as a family unit. More childten would wipe out the benefits of increased wages so we would be back to square one. But of course Marx was critical of Malthus as he was of exponents of the iron law of wages.

What that that law is about is not the effects of population increases eliminating the gains of wage increases but rather the argument that by putting up wage costs this would increase prices as Capitalists passed their increased production costs to the consumers. Marx argued against this position as expressed by a certain Comrade Weston in Value, Price and Profit. He pointed out that the capitalists are not at liberty to just put up prices as they see fit and that inter-capitalist competition would tend to work against this. Increased wages would not lead to increased prices but rather a reduction in the share of the social product going to the capitalist.


Marx acknowleged several times that the wages of workers could rise which means there is no iron law holding them down to a bare subsistence level. Indeed he pointed out that wage levels could be influenced a number of factors such as the costs of education and included a "moral" and "historical" component based on the widely held expectations of what wage levels should be.

His argument was really about relative impoverishment not absolute impoverishment. Relative to the position of the capitalists , not to mention the technological potential at our disposal, the workers are poorer and the gap between what we have and what we could have has grown consderably larger

[Ismail]

http://www.revleft.com/vb/bill-bland-theory-t117604/index.html?t=117604

[flobdob]

Maurice Dobb eloquently refuted this stupid interpretation of Marx long ago. To intentionally attribute Marx with the ideas of Laselle (who he attacked precisely for this reason, amongst others), proves how low the Misesians are willing to stoop to attack Marx and defend their nonsensical theories.


Labour power had this difference from other commodities: it was attached to human beings; and its supply was consequently governed in a unique sense by the "historical or social element," which determined what human labourers required for a livelihood. "The value of labour," he said, "is formed by two elements - the one merely physical, the other historical or social. Its ultimate limit is determined by the physical element: that is to say, to maintain and produce itself, to perpetuate its physical existence, the working class must receive the necessaries absolutely indispensable for living and multiplying...Besides this mere physical element, the value of labour is in every country determined by a traditional standard of life." It was this latter influence which explained the differences of wages between different countries, between different periods and even between different districts in the same country. Hence, when trade unions sought by combined action to advance the level of wages, they were not fighting a losing battle against an "iron law" which would assert itself in the long run: on the contrary, their action was itself part of the "social element", and the gains which they won themselves helped to mould the "traditional standard of life" for the future. "The matter resolves itself into a question of the respective powers of the combatants".

Of course, this raises questions which Marx was unable to answer due to his death, which presumably would have featured in the later volumes of Capital, most notably the role of imperialism in adjusting wages across the board, which I feel Lenin and other post Lenin Marxists like Amin and the ilk have tackled effectively.

Edit- D'oh, I feel like a moron for not checking the Bland article before I posted this. That's a very good assessment of Marx's writings on wages.

[ZeroNowhere]

Perhaps relevant is this:


It is well known that nothing of the "iron law of wages" is Lassalle's except the word "iron" borrowed from Goethe's "great, eternal iron laws". The word "iron" is a label by which the true believers recognize one another. But if I take the law with Lassalle's stamp on it, and consequently in his sense, then I must also take it with his substantiation for it. And what is that? As Lange already showed, shortly after Lassalle's death, it is the Malthusian theory of population (preached by Lange himself). But if this theory is correct, then again I cannot abolish the law even if I abolish wage labor a hundred times over, because the law then governs not only the system of wage labor but every social system. Basing themselves directly on this, the economists have been proving for 50 years and more that socialism cannot abolish poverty, which has its basis in nature, but can only make it general, distribute it simultaneously over the whole surface of society!

But all this is not the main thing. Quite apart from the false Lassallean formulation of the law, the truly outrageous retrogression consists in the following:

Since Lassalle's death, there has asserted itself in our party the scientific understanding that wages are not what they appear to be -- namely, the value, or price, of labor—but only a masked form for the value, or price, of labor power. Thereby, the whole bourgeois conception of wages hitherto, as well as all the criticism hitherto directed against this conception, was thrown overboard once and for all. It was made clear that the wage worker has permission to work for his own subsistence—that is, to live, only insofar as he works for a certain time gratis for the capitalist (and hence also for the latter's co-consumers of surplus value); that the whole capitalist system of production turns on the increase of this gratis labor by extending the working day, or by developing the productivity—that is, increasing the intensity or labor power, etc.; that, consequently, the system of wage labor is a system of slavery, and indeed of a slavery which becomes more severe in proportion as the social productive forces of labor develop, whether the worker receives better or worse payment. And after this understanding has gained more and more ground in our party, some return to Lassalle's dogma although they must have known that Lassalle did not know what wages were, but, following in the wake of the bourgeois economists, took the appearance for the essence of the matter. -Marx.



Thirdly, our people have allowed themselves to be saddled with the Lassallean “iron law of wages” which is based on a completely outmoded economic view, namely that on average the workers receive only the minimum wage because, according to the Malthusian theory of population, there are always too many workers (such was Lassalle’s reasoning). Now in Capital Marx has amply demonstrated that the laws governing wages are very complex, that, according to circumstances, now this law, now that, holds sway, that they are therefore by no means iron but are, on the contrary, exceedingly elastic, and that the subject really cannot be dismissed in a few words, as Lassalle imagined. Malthus’ argument, upon which the law Lassalle derived from him and Ricardo (whom he misinterpreted) is based, as that argument appears, for instance, on p. 5 of the Arbeiterlesebuch, where it is quoted from another pamphlet of Lassalle’s, [9] (http://www.marxists.org/archive/marx/works/1875/letters/75_03_18.htm#n9) is exhaustively refuted by Marx in the section on “Accumulation of Capital.” Thus, by adopting the Lassallean “iron law” one commits oneself to a false proposition and false reasoning in support of the same. -Engels.

[Zanthorus]

Thanks for all your responses, especially Ismail's article :)

@Zeronowhere, I've already seen those quotes, I stated that in the OP, but thanks anyway :p

[ZeroNowhere]

In that case, I'm not entirely sure how you found the quotes given in the OP to support a Malthusian theory?

[Zanthorus]

In that case, I'm not entirely sure how you found the quotes given in the OP to support a Malthusian theory?

Well he says that wages are determined by the amount needed to maintain the labourer. It sounds a lot like the Iron Law of Wages.

[mikelepore]

In most discussions about this, what most people miss is the context for the phrase "iron law of wages."

In the Lassalle movement, the phrase "iron law of wages" was used as part of the argument that there's no reason for workers to form unions at all, and that a political party should be the workers' only organization.

Lassalle reasoned it this way: if the union gets the average worker an x percent raise, then all workers' cost of living would almost immediately rise by x percent and take back the raise. So why bother asking for a raise in the first place?

That is the idea that Marx disagreed with.

Marx agreed that there is an economic force that pushes on wages and prices in the direction of returning their ratio to one where most workers will make only subsistence wages, but that wages and prices don't instantly comply with that force. There may be delays and impedances in that pendulum action. There's no way to know how many years you may be able to keep your raise before later wage cuts or rising prices take the benefit back. Therefore a labor union is useful.

See the last few paragraphs of "Value, Price and Profit", where Marx says that workers should proceed with union organization, but recognize that they are only struggling against effects, and should go on to adapt their organization into a "larger movement", something that will assist with the abolition of the wages system. Without having a union, the workers would "disqualify themselves" from "any larger movement."

In summary, Marx reject the "iron law of wages" in the sense that the term refers to a viewpoint that the formation of unions is entirely useless, and he held that unions have some usefulness.

[Die Neue Zeit]

In most discussions about this, what most people miss is the context for the phrase "iron law of wages."

In the Lassalle movement, the phrase "iron law of wages" was used as part of the argument that there's no reason for workers to form unions at all, and that a political party should be the workers' only organization.

Lassalle reasoned it this way: if the union gets the average worker an x percent raise, then all workers' cost of living would almost immediately rise by x percent and take back the raise. So why bother asking for a raise in the first place?

That is the idea that Marx disagreed with.

I'm very tempted to repost here my take on the modern phenomenon known as the Iron Law of Disproportionate Immiseration, but thanks for pointing out the "nothing but the party" context of Lassalle's work.

I should thus add that I deeply sympathize with Lassalle's democratic "politicism" against the extreme left economism of syndicalism (IWW :rolleyes: ), the bread-and-butter economism that is anti-socialist tred-iunionizm ("business unionism" and such), and the utter idiocy of councilists (ultra-left spontaneists) and mere "social movement"-isms (World Social Forum :rolleyes: ).