the minimum wage myth - more neoclassical capitalist crap

[ArgueEverything]

Bourgeois economists claim that wages, like all other commodities, are simply determined by the interaction between supply and demand. Where supply meets demand, it is argued, the ideal wage level is found. According to this logic, any price "floor" on wages (i.e. a minimum wage, above the equilibrium price) will mean supply of labor will exceed employers' demand for labor, and there will be unemployment. Hence, the capitalist scum tells us, we must scrap the minimum wage, allow the living standards of the proletariat to plummet, and everything will be fine in the long run.

The problem is, the supply curve for labor is not always upward sloping. It could just as likely be downward sloping, in fact. Consider this: if you are earning, say, $100 an hour, and your wage is increased to $150 an hour, will you necessarily increase the TOTAL NUMBER OF HOURS YOU WORK? I wouldn't; i'd just work the normal 8 hours, and i'd still be better off than before. Hell, i could even work LESS than 8 hours, and earn the same as i'd been earning on the previous wage level. According to economics, i wouldn't be acting 'rationally' if i did this. But this is what most people, in reality, would do. It depends on the magnitude of the wage, of course - those on very low wages are likely to work more, those on higher wages are more likely to work less.

This has enormous implications. If the supply curve of labor is downward sloping in a certain industry, then a minimum wage would actually STABILISE the industry. This is hard to describe without a diagram, but in a nutshell, any attempt to get rid of the minimum wage would bring down the wage level, and would magnify the gap between supply and demand, thus creating more unemployment.

capitalise economics is a load of bull, but the scary thing is most of the people with power in the world run on the assumption that it is a pure science with empirical backing in reality. It doesn't.

[von Mises]

If a worker can only earn $ 1000 for a company, then a company would lose money if it has to pay at least $ 1200. It has nothing to to with curbs, just a simple calculation suffices.

[lukecrouch]

The labor curve is s-shaped as most economics studies will tell you.

It is exactly how you said it: As wage goes up, people will work more...but eventually wage will get to a certain point that people will benefit more from using their wealth (recreation) than from creating it for use(work).

This is one of the faults of capitilism that must be adjusted for....minimum wage.

While you do have an argument against "the capitalist scum" you do not have an argument against the American economic system...a modified and practical system of capitalism.

If you are just arguing this point, then you have my agreement.

If you are arguing that this point proves that capitalism is a failure, you don't.

[ArgueEverything]

"If a worker can only earn $ 1000 for a company, then a company would lose money if it has to pay at least $ 1200. It has nothing to to with curbs, just a simple calculation suffices. "

This has nothing to do with what i wrote. Read harder.

"The labor curve is s-shaped as most economics studies will tell you. "

They certainly don't teach it to high school students here in Australia.

"It is exactly how you said it: As wage goes up, people will work more...but eventually wage will get to a certain point that people will benefit more from using their wealth (recreation) than from creating it for use(work).

This is one of the faults of capitilism that must be adjusted for....minimum wage.

While you do have an argument against "the capitalist scum" you do not have an argument against the American economic system...a modified and practical system of capitalism.

If you are just arguing this point, then you have my agreement.

If you are arguing that this point proves that capitalism is a failure, you don't."

It, in itself, doesn't prove capitalism is a failure (the state of the world today does that, though). What it does prove is that equilibrium economics is a joke. And, remember, this is the junk they teach in schools. Why teach it if it isn't true?

Also, you may need reminding that a huge chunk of the capitalist class would not agree with your assessment that "this is one of the faults of capitilism that must be adjusted for". Libertarians, for example, and certainly most of the captialists on this board, would oppose any kind of minimum wage.


(Edited by ArgueEverything at 11:51 am on April 1, 2003)

[hazard]

Wasn't minimum wage, according to Marx, the minimum amount a capitalist had to pay in order to fascilitate the survival of his slaves?

The spiel about economics is on the money, so to speak. The whole economy is nothing but a load of crap. If only the highly "educated" economists understood the one very basic, yet essential component of over production. Understanding this will necessarilly shift their idea of the economy from an infinatly micro managed and sensitive system to a massive lie used to propagate the exapnsion of bourgeois private property.