Leftist views on wages and exploitation

[inyourhouse]

Standard economic theory suggests that in a competitive market, a worker's wage (more accurately, total compensation) tends to equal their marginal revenue product of labour (MRPL). I have three questions for the leftists here:

a) do you agree that in a competitive market a worker's wage tends to equal their MRPL?
b) regardless of a), is a worker being paid their MRPL being exploited? In other words, is it a "just" wage?
c) under your desired economic system, what would a worker's wage be equal to?

[syndicat]

a) do you agree that in a competitive market a worker's wage tends to equal their MRPL?

this is a purely speculative question because there are no markets that satisfy the conditions required in neoclassical theory for a market to be "competitive."

but to answer your question: no.

consider the following fact: from about 1973 to 1998 total growth in labor productivity in USA was about 50 percent. during that same period the average real wage for non-supervisory and production employees dropped by over 11 percent.

there is no evidence that increases in labor productivity automatically lead to higher wages. it depends on the barganing power of workers, such as the level of strikes and organization and other factors that can increase their power in relation to employers.



b) regardless of a), is a worker being paid their MRPL being exploited? In other words, is it a "just" wage?

Yes. Due to the monopolization of the capitalists over the means of production, this gives them power to suppress wages to a level that enables them to make a profit. Or to put it another way, the fact that workers are forced to seek jobs makes them vulnerable to exploitation.

Labor exploitation can be understood as receiving unwarranted benefits through the domination of others in social production. Profits accrued by firms are unwarranted since they derive from a relationship of domination and oppression, that is, the class relationship.

The bureaucratic class also participate in exploitation of labor since their high salaries are derived from their power in a system where owners and managers dominate and exploit labor.



c) under your desired economic system, what would a worker's wage be equal to?

Ideally should be equal to effort and sacrifice (disutility) expended in the process of social production, plus access to the systems of social provision of public goods which the community or society as a whole has democratically decided to provide for everyone.

[Tablo]

a) do you agree that in a competitive market a worker's wage tends to equal their MRPL?
No


b) regardless of a), is a worker being paid their MRPL being exploited? In other words, is it a "just" wage?
Yes


c) under your desired economic system, what would a worker's wage be equal to?
There would be no wage. From each according to ability, to each according to need.

[Cal Engime]

consider the following fact: from about 1973 to 1998 total growth in labor productivity in USA was about 50 percent. during that same period the average real wage for non-supervisory and production employees dropped by over 11 percent.Does that figure include noncash benefits?

[LeftSideDown]

Standard economic theory suggests that in a competitive market, a worker's wage (more accurately, total compensation) tends to equal their marginal revenue product of labour (MRPL). I have three questions for the leftists here:

a) do you agree that in a competitive market a worker's wage tends to equal their MRPL?
b) regardless of a), is a worker being paid their MRPL being exploited? In other words, is it a "just" wage?
c) under your desired economic system, what would a worker's wage be equal to?

a) in a competitive market, yes. "There may have been instances of monopsony or oligopsony in the 19th century, but…they were short-lived. Monopsony has not been a significant factor in the American labor market since the introduction and widespread use of the automobile." So basically, for the most part, we have a competitive market (hampered though it is by government) and were we to have a free market, because of roads and cars, there would never be a situation where there wouldn't be multiple bids for your labor.
b)No they are not being exploited, just as if I give you an apple for an orange I'm not exploiting you and you're not exploiting me. We're engaging in trade. Asking if its "just" is ridiculous. You can't make interpersonal comparisons of utility, so even if I traded you 100 apples for one orange there is still no "exploitation"... I just happen to love apples... a lot.
c)Whatever price they can get for it.

I would just like to point out, and maybe ask (?) about, this quote from Thomas Woods (Source: http://mises.org/daily/1685):

Labor historians and activists would doubtless be at a loss to explain why, at a time when unionism was numerically negligible (a whopping three percent of the American labor force was unionized by 1900) and federal regulation all but nonexistent, real wages in manufacturing climbed an incredible 50 percent in the United States from 1860-1890, and another 37 percent from 1890-1914, or why American workers were so much better off than their much more heavily unionized counterparts in Europe.

[syndicat]

Does that figure include noncash benefits?

Hourly rate. Benefits have also been declining despite increasing productivity. The proportion of people covered by health insurance from their employers has been shrinking, and employers have been continuously imposing schemes involving higher copays and higher deductibles. Employers have been systematically eliminating defined benefit pensions in favor of 401ks.

[Cal Engime]

The BLS's Employment Cost Index does not back this up. What source are you using?

[LeftSideDown]

Hourly rate. Benefits have also been declining despite increasing productivity. The proportion of people covered by health insurance from their employers has been shrinking, and employers have been continuously imposing schemes involving higher copays and higher deductibles. Employers have been systematically eliminating defined benefit pensions in favor of 401ks.

Well, I mean, think about it.
a) Excess regulation makes it harder for new businesses to spring up that could bid labor up
b) Minimum wage disenfranchises a large number of unskilled laborers, so its possible that, as Thomas Woods said: "When union activity reduces the number of people who can be profitably employed in skilled trades, it correspondingly increases the number of skilled laborers who are forced to find work in fields that are well below their level of competence. The outcome of this displacement of skilled labor is no different from a situation in which laborers never possessed these skills in the first place. If union privilege prevents some workers from putting their skills to their proper use, the effect is the same as if they had never gone to the trouble to acquire them at all. Thus society produces below its potential, and wealth that would otherwise have been created never sees the light of day."
c) They're competing against inflation, and they are losing.
http://mises.org/content/nofed/makegraph.php?tms=true&m1=true&m2=true&unit=lin&range=max&bars=true&size=med

Or, if you want an "unbiased" source:
http://upload.wikimedia.org/wikipedia/en/thumb/9/95/Components_of_the_United_States_money_supply2.svg/620px-Components_of_the_United_States_money_supply2.svg. png

Doing some rough calculations, in 1973 the M2 and M3 were about 1 trillion dollars (I'm rounding up so the numbers are as small as possible) and by 1998 M2 was 4 trillion, and M3 was about 5 trillion. But, I'll leave the conclusions to you.

[syndicat]

Labor historians and activists would doubtless be at a loss to explain why, at a time when unionism was numerically negligible (a whopping three percent of the American labor force was unionized by 1900) and federal regulation all but nonexistent, real wages in manufacturing climbed an incredible 50 percent in the United States from 1860-1890, and another 37 percent from 1890-1914, or why American workers were so much better off than their much more heavily unionized counterparts in Europe.

We have only your word for it as to what the actual gain in real wages was back then. Also, you can't make your case unless we compare the wage gains to productivity gains. For all you say here, productivity may have risen 200 percent.

During the depression of the 1870s there was systematic wage-cutting...for example this touched off a virtual national general strike on the railroads.

There was also a national general strike for the 8 hour day in 1886 in which 350,000 workers participated. Employers were faced with a growing working class rebellion throughout the late '70s and '80s. This in itself would create upward pressure on wages, even if employer intransigence and systematic anti-worker violence could prevent unions from gaining a foothold.

At the end of the civil war a very high tarriff wall was erected around the USA...reaching a high of 44 percent in 1913. The stictching together of a national market via the railway boom of the late 1800s also enabled firms to grow very rapidly, operating on much larger economies of scale. This means there were vast increases in labor productivity and huge profits were being raked in. This being the case, they had the wherewithal to respond to potential worker discontent with minimal wage gains. But in fact working class poverty was widespread (as much as 40 percent by some estimates) and income and wealth inequality was even greater than it is today.

Thus American companies had a vast advantage over their European counterparts of a vast market and vast economies of scale, plus vast amounts of government subsidies, such as millions of dollars in free land to the railroads, and giveaways of vast amounts of lumber and mineral wealth. Moreover, between 1898 and 1920 there was a vast labor rebellion...huge numbers of strikes, thousands every year, and creation of many new unions. Capitalism was under ideological assault from the growing Socialist Party and widespread public outrage at the arrogant and corrupt practices of the tycoons. All of this meant that the social balance of power was swinging to the favor of labor during that period.

By your own stats labor wages rose more rapidly in 1898-1914 period. These pressures for higher wages were the reason the National Association of Manufacturers and other business organizations launched the anti-union "open shop" movement in 1903-04.

[LeftSideDown]

We have only your word for it as to what the actual gain in real wages was back then. Also, you can't make your case unless we compare the wage gains to productivity gains. For all you say here, productivity may have risen 200 percent.

It may well have. I do not know. However, the main point Woods was trying to get across was that before labor unions (collective bargaining) wages were raising. So obviously wages raise for other reasons besides group pressure - like competition between firms, for instance.


During the depression of the 1870s there was systematic wage-cutting...for example this touched off a virtual national general strike on the railroads.

There was also a national general strike for the 8 hour day in 1886 in which 350,000 workers participated. Employers were faced with a growing working class rebellion throughout the late '70s and '80s. This in itself would create upward pressure on wages, even if employer intransigence and systematic anti-worker violence could prevent unions from gaining a foothold.

You know whats funny about wage cutting and depressions? During the Great Depression, Hoover urged manufacturers not to lower wages, and FDR pursued a policy that mandated wages not be lowered. Weird how its that depression that lasted in excess of 10 years.


At the end of the civil war a very high tarriff wall was erected around the USA...reaching a high of 44 percent in 1913. The stictching together of a national market via the railway boom of the late 1800s also enabled firms to grow very rapidly, operating on much larger economies of scale. This means there were vast increases in labor productivity and huge profits were being raked in. This being the case, they had the wherewithal to respond to potential worker discontent with minimal wage gains. But in fact working class poverty was widespread (as much as 40 percent by some estimates) and income and wealth inequality was even greater than it is today.

Nononon. You're being a bad Marxist! Laborers don't have any power, and all capitalists are greedy sons-of-shaitan. Capitalists have all the power, laborers have none. So even this discontent means nothing, because all those workers were living at subsistence level and had to work at any wage offered. They couldn't have pressured anyone! :laugh::laugh:

[syndicat]

The BLS's Employment Cost Index does not back this up. What source are you using?

Bureau of Labor Statistics. The data is reported in "Raise the Floor" page 55 as follows:

From 1968 to 2000, productivity rose 74.2 percent.

Real weekly wages were 11 percent lower than in 1968. Wages for minimum wage workers were 35 percent lower.

In "The Living Wage" by Robert Pollin and Stephanie Luce, they discuss hourly wages on p. 5. There they point out that in 1998 dollars the wage in 1973 was $14.73, and in 1998 had declined to $12.78. This is a decline of 11.6 percent. Source here is also the US Bureau of Labor Statistics.

This statistic is for wages of "non-supervisory and production employees" which is about 80 percent of the economically active population.
Reductions in wages were worse for the core working class. For example males with no college educations had a decline of 25 percent in the real wage, and females a 17 percent decline.

[Cal Engime]

I appreciate the reference, but I was referring to your claim that wages and benefits have fallen. We must always remember to consider total compensation, not just wages.

[syndicat]

You're being a bad Marxist! Laborers don't have any power, and all capitalists are greedy sons-of-shaitan. Capitalists have all the power, laborers have none. So even this discontent means nothing, because all those workers were living at subsistence level and had to work at any wage offered. They couldn't have pressured anyone!

Who says I'm a "Marxist"? And, anyway, even if I were, you don't understand the theory.

In any event, it is not true that workers have no power. Their power comes outside the capitalist employer/employee relationship. It derives from their resistance to exploitation. This takes various forms, including slowdowns, "soldiering" on the job, forming unions, strikes. This is a form of social power, tho much weaker than that of the capitalists. It would only become equal to that of the capitalists in a situation of a revolutionary situation where a working class mass movement has the power to seize the means of production. The ability of workers to increase their leverage against employers depends on how far they have developed this counter-power to the employers.


It may well have. I do not know. However, the main point Woods was trying to get across was that before labor unions (collective bargaining) wages were raising.

The argument is a non-sequitur. "Collective bargaining" isn't the only form of group pressure. Strikes, riots, slowdowns and other forms of discontent are also a form of group pressure. A large faction of capitalists went over to Progressivism, advocating things like workers comp, before World War 1, because they were trying to counter the rising influence of socialism in the working class.

[syndicat]

I appreciate the reference, but I was referring to your claim that wages and benefits have fallen. We must always remember to consider total compensation, not just wages.


I referred to declines in other forms of compensation. If you think other forms of compensation have risen, can you give any evidence?

It's well known that defined benefit plans are disappearing in favor of 401ks, and this is to reduce employer liability. It's well known that proportions of those lacking health insurance are growing...over 46 million. It's well known that employers have been pushing for higher copays and higher deductibles. This has been the main issue in strikes in the last decade or so.

[syndicat]

edit

[Cal Engime]

Yes, the Employer Cost Index published by the Bureau of Labor Statistics is my evidence. If we carry on this conversation for a few more posts, I'll be able to link to it.

Say, what do you think of Marx's opinion that any attempt to reform capitalism is actually a reactionary policy?

[syndicat]

Yes, the Employer Cost Index published by the Bureau of Labor Statistics is my evidence. If we carry on this conversation for a few more posts, I'll be able to link to it.

Yes, well, i'd want to see what the components of this "employer cost index" are.


Say, what do you think of Marx's opinion that any attempt to reform capitalism is actually a reactionary policy?


I don't think he held any such view. But I'm not epecially interested in debating Marx's opinions.

[Cal Engime]

Well, I need to get to 25 posts, and I don't want to spam the board. Maybe we should talk about California.

[Cal Engime]

Here you go. (ftp://ftp.bls.gov/pub/suppl/eci.ecconst.txt)

[syndicat]

Doesn't answer my question about components of cost.

In any event, this is an index of costs to the employer. Not of benefits actually received by workers.

Let's suppose for example that there are two companies A and B who provide free meals in a cafeteria. And suppose that A runs its cafeteria in a very wasteful and inefficient way and its costs per worker for the cafeteria are higher, even tho food quality and quantity per worker are not better. In that case it would be fallacious to infer that because A's costs for the benefit are higher, A's workers receive more benefit.

Similarly with benefits such as health care. The medical insurance scheme in the USA is notoriously extremely inefficient. Sucks down massively more of GDP than systems in Europe and Canada. This is due to duplicative insurance company bureaucracies, profits of the insurance company parasites, lack of a single risk pool, etc. The employing class are responsible for this system. They have fought a switch to a more efficient single payer system, partly because of the ideological benefit they receive from saying "private enterprise is better".

Hence the rising costs of an inefficient health insurance scheme cannot be considered evidence for increasing benefits, especially not when we consider that employers have been systematically increasing copays and deductibles on plans they get.

Labor exploitation is about the distribution of costs and benefits in social production. Increases to the rate of exploitation occur from any of the following:

1. decline in the real wage rate
2. decline in benefits received
3. increase in the intensification of work, greater exposure to chemicals that cause occupational illnesses, greater insecurity through increased use of temps

[syndicat]

another piece of evidence on the question of declining benefits: A study by the Economic Policy Insitute says that in 1979 77.7% of employees had employer-provided health insurance coverage but by 2004 this had dropped to 62.5%. Also there's been a big drop in the percentage of entry level workers who get a pension or 401k plan.

[Cal Engime]

Doesn't answer my question about components of cost.It would if you looked up the reference in that text file to the BLS Handbook of Methods.
The Employment Cost Index (ECI) is a measure of the change in the cost of labor, free from the influence of employment shifts among occupations and industry categories. The total compensation series includes changes in wages and salaries (see page 16) and in employer costs for employee benefits. The ECI calculates indexes of total compensation, wages and salaries, and benefits, separately for all civilian workers in the United States (as defined by the NCS), for private industry workers, and for workers in State and local government, and within each of these sectors, by occupational group, worker attributes, industry group, and establishment characteristic. Seasonally adjusted series are calculated as well.

Employer costs for employee benefits are collected for paid leave—vacations, holidays, sick leave, and personal leave; supplemental pay—premium pay for work in addition to the regular work schedule (such as overtime, weekends, and holidays) and for shift differentials, and nonproduction bonuses (such as yearend, referral, and attendance bonuses); insurance benefits—life, health, short-term disability insurance, and long-term disability; retirement and savings benefits—defined benefit and defined contribution plans; and legally required benefits—Social Security, Medicare, Federal and State unemployment insurance, and workers’ compensation.Is there any evidence that the total value of the benefits received by the average worker has declined, or do you just assume that employers prefer to waste money on benefits of little value to employees?

Also, how are health insurance companies "parasites?" It is not insurance companies who are raising the prices of health care procedures, and besides, health insurance companies are among the least profitable American industries. In 2008's ranking by Fortune magazine, they ranked 35th in profitability, returning a meagre 2.2% on revenues. Or is that too much?

Meanwhile, pharmaceutical companies ranked 3rd, returning 19.3% of revenues, followed by the medical products and equipment industry returning 16.3%.

Do you have any idea how insurance companies make their money?
Labor exploitation is about the distribution of costs and benefits in social production. Increases to the rate of exploitation occur from any of the following:

1. decline in the real wage rate
2. decline in benefits received
3. increase in the intensification of work, greater exposure to chemicals that cause occupational illnesses, greater insecurity through increased use of tempsDeclining compensation is the cause of exploitation? That's a funny way of putting it.

[syndicat]

of course you didn't address my evidence of declining benefits.

We know that prices of insurance premiums have been going up. Profits are only part of the inefficiency of private health insurance. There is advertising and the overlapping and wasteful claims bureaucracies. What percentage of premiums is paid out actually for benefits? Profit is a motivating factor for the disgusting practice of denial of benefit and practices like combing over an application to find some mistake you can use to deny benefits.

Big Pharma is another source of inefficiency and rising costs.

We also know that rising costs of health insurance is driving the loss of benefits...increased copays, increased deductibles, fewer people covered.

But costs to employers are not benefits to workers. Hence your evidence of rising costs to employers for benefits over time doesn't show rising benefits to workers. Too bad your factoid is a dud.

me:
Labor exploitation is about the distribution of costs and benefits in social production. Increases to the rate of exploitation occur from any of the following:

1. decline in the real wage rate
2. decline in benefits received
3. increase in the intensification of work, greater exposure to chemicals that cause occupational illnesses, greater insecurity through increased use of temps

you:
Declining compensation is the cause of exploitation? That's a funny way of putting it.Declining compensation is the cause of exploitation? That's a funny way of putting it. Today 01:16Declining compensation is the cause of exploitation? That's a funny way of putting it.

Ha ha. It's a measure of increasing exploitation, assuming profits don't decline at the same or faster rate. Causes have to do with things like the balance of power between workers and employers and actions of employers.

[Cal Engime]

of course you didn't address my evidence of declining benefits.What "evidence"?
What percentage of premiums is paid out actually for benefits?More than 100. Insurance companies take an underwriting loss so their rates will be competitive and make up for it with the return on their vast portfolios of investments. You should have looked it up.

[syndicat]

you:
What "evidence"?

to repeat:



another piece of evidence on the question of declining benefits: A study by the Economic Policy Insitute says that in 1979 77.7% of employees had employer-provided health insurance coverage but by 2004 this had dropped to 62.5%. Also there's been a big drop in the percentage of entry level workers who get a pension or 401k plan.



It's well known that defined benefit plans are disappearing in favor of 401ks, and this is to reduce employer liability. It's well known that proportions of those lacking health insurance are growing...over 46 million. It's well known that employers have been pushing for higher copays and higher deductibles. This has been the main issue in strikes for quite some time.

health insurers are parasites because they provide no health care and they're not necessary because we can self-insure via a single payer system of nonprofit insurance.

And your claim that insurers are providing health insurance as a hobby is laughable.

[Cal Engime]

All that study shows is that fewer employees are receiving a particular kind of benefits. It says nothing about the trend in benefits overall. This would be like concluding that there has been severe price deflation because PC prices have plunged since the 80s.

[syndicat]

but you've provided no evidence in regard to where the increased costs of benefits have been. they've not been in paid leave. it's well known that health care costs have been rising for some time and that this is a major issue for employers. hence evidence of declining actual benefit provided to workers for health care is evidence of declining benefits.

and in regard to your claim about percentage of health care funds that go to actual health care, Wikipedia refers to this study:


One study of the billing and insurance-related (BIR) costs borne not only by insurers but also by physicians and hospitals found that BIR among insurers, physicians, and hospitals in California represented 20-22% of privately insured spending in California acute care settings.

it also refers to a number of studies that suggest that administrative costs eat up 12 percent of premiums. but that's only the administrative costs to insurers. it's necessary also to add in the bureaucratic bloat to hospitals and providers who must maintain staffs to process the many hundreds of plans. this will affect the prices they charge insurers.

http://en.wikipedia.org/wiki/Health_care_in_the_United_States#Administrative_co sts

[Cal Engime]

Well, I see you're just going to dismiss any evidence that doesn't fit your preconceived notion of what the data would show, and I only argue with intelligent people, so I'm through here.

[syndicat]

what you mean is, you don't have a good reply to my argument that increased expenses to employers are not automatically increased benefits to workers.

we know that paid leave hasn't gone up, we know that defined benefit pensions are disappearing, and we know that worker comp insurance has been a stable 1 to 2 percent of payroll costs for decades. so where are the increased real benefit costs to employers if not in health care?

I was aware that conservatives try to run the argument you were using, "Well, maybe wages have gone down but benefits have gone up so total compensation hasn't gone down." You thought I was an ignoramus you could snow with your factoid about increasing costs to employers for benefits.

I think your point about insurers is that they work like a bank. they take the premiums and invest the money and use income from that to pay claims. but my point was about the bueaucratic bloat that consumes 31 percent of premiums in administrative costs. that means that only 59 percent of premiums are for actual care.

[Cal Engime]

but my point was about the bueaucratic bloat that consumes 31 percent of premiums in administrative costs. that means that only 59 percent of premiums are for actual care.Nice.

[syndicat]

There's another problem with using the employment cost index. It doesn't tell us, Employment of who? For all we know this includes compensation for managers and high-end professionals, maybe even for CEOs. In other words, all "employees". But the top officers of corporations are capitaliists who receive all kinds of huge perks including stock and whatnot.

And even putting the top officers aside, it's well known that the incomes of the bureaucratic class...the managers and highend professionals who work with them...have not declined even tho working class earnings have.

[anticap]

Standard economic theory...

...is not accepted as such because it's been shown to be correct, but because meaningful analysis was deliberately shoved aside and supplanted (http://www-rohan.sdsu.edu/~rgibson/commodityfetishism.htm) on ideological grounds by theories that didn't challenge (or even examine) the preconceived notions necessary to bourgeois rule.

[Cal Engime]

There's another problem with using the employment cost index. It doesn't tell us, Employment of who?Why did you bother to ask if I could give any evidence? You obviously have not read it.

[syndicat]

I did read it. It doesn't say it doesn't include managers, supervisors, lawyers.

[Cal Engime]

I did read it. It doesn't say it doesn't include managers, supervisors, lawyers.Read it again, but for "blue-collar occupations", substitute "proletariat".

[syndicat]

not sure how they define "blue collar" occupations but this is not all of the working class. working class includes all workers are do not have control over other workers and do not participate in management. It's necessary to include service and retail workers. also, another problem with some BLS series is that they merge supervisors in with the people under them. supervisors are a part of management.

in any event, this has the problem I mentioned before that it is an employer cost index, not an index of the benefits and wages actually received by workers. BLS has a separate index on earnings for "production and non-supervisory employees". I've already pointed out that this shows a fall in weekly wages of over 11 percent from 1968 to 1998.

[Cal Engime]

How do you propose to measure benefits, other than by employer costs?

[syndicat]

-- paid days off a worker receives (vacation, holiday, paid leave, sick days)
-- taking market prices of medicines as a starting point, we can look at what proportion of this the worker doesn't pay
-- looking at fees doctors charge, we can look at what portion the worker doesn't pay
-- employer match to a 401k account
-- portion of defined benefit that a worker receives under a pension plan paid by employer
-- portion of lost wages paid and medical provider fees & drug costs paid in cases of injury (under worker comp)

[Cal Engime]

I should think that the portion the worker doesn't pay would be not only equal, but identical to employer costs.

Even if real compensation has declined in any short period, isn't it obvious that workers are better off than they were before the Industrial Revolution? Need we not only to look around us to see that capitalism does not, in the long run, result in the progressive impoverishment of the wage earners?

[syndicat]

Capitalism is a system of oppression and exploitation. This is so even if workers are not being increasingly impoverished. But at present, in the USA, workers are being increasingly impoverished.

And capitalism has a tendency to do this in periods of crisis. And capitalism is a system inherently prone to such crises, as history indicates.

Class oppression is based on systemic denial of negative and positive liberty. Exploitation occurs because the dominating classes are able to pump out profit and high incomes from their domination over the working class.

Social relations of domination inherent to capitalism are also at the root of the worsening ecological crises of our time.

[Dermezel]

Constant Capital displaces variable capital and the bourgeoisie expropriate surplus value.