Sociology paper on wages [Archive]

JazzRemington

16th March 2006, 20:05

Below is a very rough, and slightly incomplete draft of a paper I am writing for one of my sociology classes. The paper is a final paper and has to be 5 pages long, double spaced. The paper has to examine an aspect of conflict within American society and give ways of "fixing it." I would like to submit it for pleliminary critiques and to receive assistance with any links or information on the "history" of the wage system. I am going to include some information on current wage levels, their history (have they gone up or down in the past few years) and compare them to profit levels and CEO pay, etc. I am also going to note a few alternative models to the capitalist wage system, such as Collectivist/Parecon wage systems, communist systems, etc.

When I first began research for this paper, I had trouble coming to a proper conclusion about what to write about. Since the goal of the paper is to research and write about a social problem that one choses and then expound on ways to solve it in and of itself, I found it difficult to find just one social problem and figure out a way to solve it with out aggravating any other problems. It is impossible to solve just one problem in society because all social problems are interrelated and are connected to one another through hundreds of thousands of channels. The only way to have any long lasting and stable change is to change society itself, not the parts but the whole of it. But, in order to stay within the bounds of this assignment, I am forced to abdicate such thinking in favor of picking just one problem with society and developing a solution for it. For such an assignment I have picked conflict within the workplace, with focus on wages. As per request, I will explain the issue, give a slight history of it, explain the other side of the issue, and then give several possible solutions for alleviating the conflict over wages.

I will first have to explain what I mean when I say that I am going to examine the nature of the conflict within the workplace over wages. The nature of such a conflict is ultimately two sided: workers and capitalists, employees and employers, owned and owners. These two sides clash against each other in a desperate fight over who will reign supreme. On the one side is the worker, the person who owns nothing but his captacity to labor and his willingness to sell it out to the highest bidder available since he or she cannot afford, or lack the skill necessary, to go into business his or her self. On the other side is the capitalist, who always is at odds with wages because it cuts into his or her profits and pocket book. Such a conflict cannot be understood correctly in its current form, but must be understood within its historic sense, since what is today is because of what was yesterday. To understand the conflict we must go back before markets and back into the old days of the so-called "petit-bourgeoisie," those workers who were fortunate enough to have a skill and owned the tools of their trade.

But where is the conflict with the wage system? How do the workers and the capitalists fight one another within the workplace over wages? Karl Marx once wrote that the worker and the capitalist are locked in a struggle of life and death over the level of wages and profits. The higher one is, the lower the other is. Since both classes have a direct material interest in making their lot better, and because of the "scarcity" that capitalism is designed to deal with, there is going to be a conflict of interest within this area of economics. Turning to political economist Piero Straffa's "modern surplus approach"1 function of determining prices within capitalism, we see that as wages go up, profits go down and as profits go up, wages go down.

There are a few responses that pro-wage, and usually pro-capitalist, individuals maintain to "prove" that wages are just. We shall take a look at each of these claims and judge their legitimacy accordingly. One is based on the conservative political economy maxim of "payment according to the value of one's personal contribution and the contribution of the productive property one owns." This maxim assumes that those who "work more get more" because of their labor or their productive property. Another means of justifying the wage system is the liberal political economy maxim of "payment according to the value of one's contribution," which means that one's talents should play a role in the payment one receives from society. Both of these justifications step from the idea of rationing, since goods and services are scarce and one should only take so much.

But we have problems with both maxims and the main idea of rationing based on labor.

But now I supposed one must be wondering about methods to alleviate this conflict so that both sides are happy. In reality, there is no such way of "fixing" a society problem, let alone such a problem with wages, so that both sides are happy.

NOTES
1. For a better understand of the model and the theory and of workplace conflict in general, one would find the models in chapter 5 of The ABCs of Political Economy by Robin Hahnel a good read.

JazzRemington

22nd March 2006, 03:34

Here is the complete version of the paper. I've taken out the graph for this post, but if asked I can recreate it.

When I first began research for this paper, I had trouble coming to a proper conclusion about what to write about. Since the goal of the paper is to research and write about a social problem that one choses and then expound on ways to solve it in and of itself, I found it difficult to find just one social problem and figure out a way to solve it with out aggravating any other problems. It is impossible to solve just one problem in society because all social problems are interrelated and are connected to one another through hundreds of thousands of channels. The only way to have any long lasting and stable change is to change society itself, not the parts but the whole of it. But, in order to stay within the bounds of this assignment, I am forced to abdicate such thinking in favor of picking just one problem with society and developing a solution for it. For such an assignment I have picked conflict within the workplace, with focus on wages. As per request, I will explain the issue, explain the other side of the issue, and then give several possible solutions for alleviating the conflict over wages.

I will first have to explain what I mean when I say that I am going to examine the nature of the conflict within the workplace over wages. The nature of such a conflict is ultimately two sided: workers and capitalists, employees and employers, owned and owners. These two sides clash against each other in a desperate fight over who will reign supreme. On the one side is the worker, the person who owns nothing but his captacity to labor and his willingness to sell it out to the highest bidder available since he or she cannot afford, or lack the skill necessary, to go into business his or her self. On the other side is the capitalist, who always is at odds with wages because it cuts into his or her profits and pocket book.

Karl Marx once wrote, "even if we keep ourselves within the relation of capital and wage-labor, the interests of capitals and the interests of wage-labor are diameterically opposed to each other."1 The higher one is, the lower the other is. Since both classes have a direct material interest in making their lot better, and because of the "scarcity" that capitalism is designed to deal with, there is going to be a conflict of interest within this area of economics. In effect, both sides will be fighting for a bigger share of "the pie" and have been since the creation of the proletariet and markets. Turning to political economist Piero Straffa's "modern surplus approach"2 function of determining prices within capitalism (as opposed to Marx's "labor theory of value"), we see that as wages go up, profits go down and as profits go up, wages go down.

We also see the conflict within the workplace over worker versus executive pay. From the year 1997 to 2006, the average hourly wage rate of just one worker rose from $15.48 to $19.86, an increase of only 78% whereas the average hourly wage rate of just one executive rose from $27 to $33.87, an increase of about 80%.4 This may not seem like a great deal, but the fact remains that the executives are paid vastly more than the average worker. The executive starts out making more money than a worker and ends making more money, even though the worker is the one facing all the physical risks and is more at risk if the firm goes under.

There is another interesting prospect in the conflict over wages within the capitalist workplace. Since wages are an indication as to who is in power (higher profits mean the capitalist is, higher wages the workers), one side is unlikely to want to give up any of its power, even if it does mean an increase in the overall power level within the workplace (either through effeciency gains or the introduction of new technology). If we examine figure 1, we will see the makeup of a simple game theory model called "the price of power." We have the workers (w) and the capitalists © and below each the ramifications of their possible choices. Since the capitalist is always in charge in the workplace he is given first choice as to which path to take: C1, which differs the choice to the worker, or C2, which maintains the current divison of power at 10 for the capitalist and 5 for the worker. Now, there is a strong incentive for the capitalist to pick path C2, because he while he does not gain any more power, neither does his workers. But if the capitalist prefers to differ judgement to the worker, there is a strong incentive for the worker to pick path W1, because there is an increase in the total level of power to be shared (18, as opposed to 15) and it is shared equally between the worker and the capitalist. This shows us that regardless of who is in power within the workplace, there is a strong incentive to keep the power; however, the important thing to note here is that it is often the capitalist who has the most power to start off with in determining wages.

There are a few responses that pro-wage, and usually pro-capitalist, individuals maintain to "prove" that wages are just. We shall take a look at each of these claims and judge their legitimacy accordingly. One is based on the conservative political economy maxim of "payment according to the value of one's personal contribution and the contribution of the productive property one owns." This maxim assumes that those who "work more get more" because of their labor or their productive property. Another means of justifying the wage system is the liberal political economy maxim of "payment according to the value of one's contribution," which means that one's talents should play a role in the payment one receives from society. Yet another is called the radical maxim and maintains that one should be paid according to effort. All three of these justifications step from the idea of rationing, since goods and services are scarce and one should only take so much.

But we have problems with these maxims and the main idea of rationing based on labor and the productivity of one's property. First, we have the productive property issue. Given today's conditions, productive property is unequally distributed amongst individuals, so right at the get go we have a problem because unequal property distribution means unequal results, however fair or unfair the distribution of property was in the beginning. But, let us assume that property was distributed amongst individuals equally somehow. One, productive property is almost literally nothing without labor to use it. It is labor that built it and labor that utilizes it, so it does not follow that one should get something special for merely owning something that another has to use and faces all the risks for using said property. Two, we have the problem of inheritence. Conservatives tend to support inheritence of wealth. This means that one can live off of the wealth of a dead relative without having to work, a problem that Robin Hahnel calls the "Rockerfeller grandson problem." One literally can live without working.

The next maxim, the idea of reparations based upon one's productiveness, is also flawed equally. Since one's ability to labor is considered a natural talent, outside of one's control, it does not follow that one should be paid special or extra based on something that he or she does not have any control over. Since talent is obviously unequally distributed and some are more talented in some areas than some are in others, we will have blatent and gross inequality. There are some that find this agreeable, such as famous Individualist Anarchist Benjamin Tucker, who believed that inequality was the natural byproduct of liberty. But this assumes that one should have the freedom from oppression while still being enslaved by want. It does not follow that this type of liberty is legitimate.

Now I supposed one must be wondering about methods to alleviate this conflict so that both sides are happy. In reality, there is no such way of "fixing" a society problem, let alone such a problem with wages, so that both sides are happy. So, for the time being we will have to ignore, or rather "put on hold," how we will arrive at our alternative models that are designed to alleviate the problems of the wage system. There are ultimately two ways of dealing with wages: changing it's nature and completely doing away with the system. Both require a substancial change in society to function properly and both require some degree of organization and pre-planning within society, or, as Rudolph Rocker said, [form] the structure of the new society within the shell of the old."
The first method, changing it's nature, has a history. We are given a general idea on the process by 19th century anarchist Mikhail Bakunin, who tells us that one should receive from society what one puts into with his or her labor. Thus, he still believed in a wage system, but a more "fair" one in which one's individual labor determines his or her wage. Bakunin's diciple James Guillaume writes in Ideas on Social Organization about the role of "exchange agencies" in determining wages and prices:

"The workers' associations, as well as individual producers (in the sectors where
individual production may continue" will deposit their products with the exchange
agency. The value of these various products will have been fixed in advance by
agreement between regional trades federations and the various communes, on the
basis of information which statistics will afford. The exchange agency will issue
producers with exchange vouchers to the value of their products: these exchange
vouchers will be acceptable currency throughout the whole territory of the
Federation of communes."

In essence, this is a sort of friendlier and more "communual" version of an idea adopted earlier by a man named Pierre-Joseph Proudhon, who advocated the formation of Mutual Banks in order to give interest free loans so that they can build their own businesses in direct competition to the capitalist firms. The idea is that goods and services would be exchanged via markets and would be priced based on contractual agreements between the workers' firms. This type of system, called Mutualism, and the later Bakuninist Collectivism scheme are all centered around the idea that workers themselves would determine their wages directly, and not have them determined for them by any outside forces, either markets or other individuals.

An updated, and more "modernized" version of this type of wage determination is presented by Michael Albert and Robin Hahnel called "Participatory economics," or "parecon" for short. The general idea is the same as Guillaume and Bakunin's, but is given a more educated and informed spin. There will be two basic groups: producers and consumers. Each group will have it's own councils, though obviously there will be some overlap between the two groups, and the two councils will be rested within geographic locations, united into federations for practical purposes. The producers councils will make up a list of goods and services that they will be able to produce and the consumers councils will mae up a list of the goods and services they will want to consume. The two lists are wittled down until they match each other as evenly as possible. Wages will be determined by the effort one puts into his or her job, to be determined by a workplace council make up members of said workplace.

The final method of "dealing" with wages is by simply abolishing the system all together. Peter Kropotkin, an influential anarchist during the late 19th century, early 20th century, wrote that the wage system is "the modern form of ancient serfdom." In effect, he advocated the complete abolition of wages, either Mutualist, Collectivst, or Capitalist, in favor of a "gift economy," where goods and services are given away freely to fulfill the needs of individuals. Kropotkin argued, as did his successors like Social-Ecologist Murray Bookchin, that the means of production were developed enough for everyone's needs to be met freely without the need for rationing.5 Indeed, he felt that physical want was just as bad as outright direct oppression.

We get glimpses of such a new world, arising from the ashes of the old like a pheonix anew. In Spain during the civil war, entire factories, towns, cities, and farms were seized and operated effeciently by the workers. Perhaps we can draw a lesson from these "doomed successes," successes that did succeed in showing us that there is a better world that is ready to be pulled from beyond our current world but were doomed to defeat from improper timing and weaponry and backstabbing. It is only through struggle that such a massive change can ever be hoped to grow beyond a mere idea into a practical reality. It is only when the average people, the workers, have finally had enough abuse from the current system that they can ever hope to liberate themselves from the machine, wages and all. "From each according to their ability, to each according to their needs" will be the new motto, smashing away the monolithic "a fair day's wage for a fair day's work."