Economics Dictionary of ArgumentsHome
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| Wages: Wages in economics refer to the monetary compensation paid to workers for their labor or services. Determined by factors like skill, demand, supply, and market conditions, wages are a key component of income and influence workers' purchasing power and living standards._____________Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments. | |||
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John Stuart Mill on Wages - Dictionary of Arguments
Rothbard II 283 Wages/profits/John Stuart Mill/Rothbard: Upholding and restoring the dominance of Ricardo's theory of profit, Mill insisted on returning to the Ricardian dictum that profits are dependent on, and inversely proportionate to, wages. Cleverly paying obeisance to his friend Nassau Senior's concept of 'abstinence', and agreeing with Senior that profits (interest) were 'the remuneration of abstinence', Mill managed to weaken the concept and to return somehow to insisting on labour as the sole cause of profits.(1) >Nassau Senior. On wages, too, Mill returned squarely to Malthus, differing only by holding out the hope of ameliorating the alleged problem of population growth by enthusiastic and determined use of birth control. The change over the half-century was the difference between the stern preacher and the 'progressive' feminist. Alexander Gray's comment(2) on Mill's passion against what he considered to be excessive births is both witty and apposite: In writing on the population question, his [Mill's] voice quivers With a righteous indignation which leads him to a violence oflanguage nowhere to be found in Malthus. Excessive procreation is for Mill on the same level as drunkenness or any other physical excess, and those Who are guilty should be discountenanced and despised accordingly.(2) Wages fund: One of John Stuart Mill's most famous moves in economic theory was his typically dramatic, emotional, and yet carefully hedged 'recantation' of the wages fund doctrine. In company With other classical economists, having explained the supply of labour by the quantity of population, Mill then went on to explain the demand for labour, rather sensibly, as the sum of gross savings, or circulating capital, available for paying workers until the product was produced and sold: this available amount he called the 'wages fund'. This concept was used, again quite intelligently, to demonstrate that should labour unions be able to raise wages for one part of the labour force, this rise could only be at the expense of Iowering wages somewhere else. The wages fund analysis of the demand for labour was, in one important sense, a retreat from Say and others who emphasized that the demand for and prices of factors ofproduction are determined by their productivity in Rothbard II 284 producing consumer goods desired and demanded by the public. For Mill, this retreat was part and parcel of his orchestrated shift back to Ricardo. On the other hand, the wages fund doctrine was correct as far as it went: at any given time, there is a certain amount of gross savings to be invested in paying factors ofproduction. Therefore, paying more in one place because of pressure by suppliers of labour will necessarily reduce demand and payment elsewhere. On the other hand, the wages fund is clearly only a first approximation: for the fund of circulating capital at any given time is not only used to pay wages, but also to pay rent to landlords and interest (profit) to capitalists. VsMill, John Stuart: In 1869, Mill's friend and fellow high offcial at the East India Company, William Thomas Thornton (1813—80), wrote a book entitled On Labour critical of Mill's wages fund doctrine. Partly this came as a needed attempt to bring consumer demand, and notably expected consumer demand, back into the analysis. But Thornton's main thrust was that the capital fund was not only a fund for wages but also a fund out of which to pay profits to capitalists (and, he might have added, rents on land). SchumpeterVsMill, John Stuart: The essence of the misnamed 'wages fund' theory was simply a fundamental part of the solidly grounded and established Turgot-Smith theory of capital.(3) VsMill, John Stuart/Rothbard: As [William] Hutt(4) has pointed out in his classic work, the prevalent idea that modifying the wages fund theory led straight to economists justifying unionism and collective bargaining was a canard and a red herring created for the occasion by Mill. Adam Smith and McCulloch had justified collective bargaining on the vague notion of labour's alleged 'disadvantage' in bargaining in the labour market. 1. Marx, Who seems to have had Mill's number, notes that trying to combine Ricardo's theory of profit and Senior' abstinence theory, Mill is obviously 'at home in absurd contradictions'. Bela Balassa, trying to save the day for Mill, sternly counters that Mill's is a 'synthesis' of the two theories. Bela Balassa, 'Karl Marx and John Stuart Mill', Weltwirschaftliches Archiv, 82 (1959, no. 2), pp. 149ff. 2. Alexander Gray, The Development ofEconomic Doctrine (London: Longmans, Green, 1931), p. 283. For confirmation, note Mill: 'Who meets With the smallest condemnation, or rather, Who does not meet with sympathy and benevolence, for any amount of evil which he may have brought upon himself and those dependent upon him, by this species of incontinence? While a man Who is intemperate in drink, is discountenanced and despised by all Who profess to be moral people, it is one of the chief grounds made use ofin appeals to the benevolent, that the ap- plicant has a large family... Little improvement can be expected in morality until the producing of large families is regarded With the same feelings as drunkenness or any other physical excess. But while the aristocracy and clergy are foremost to set the example of this kind of incontinence, what can be expected from the poor?' John Stuart Mill, Principles ofPolitical Economy (5th ed., New York: D. Appleton & Co., 1901), I, 459, 459n. 3. Schumpeter, The History ofEconomic Analysis (New York: Oxford University Press, 19 54), pp. 667-72. 4. See W.H. Hutt, The Theory ofCollective Bargaining, 1930—1975 (San Francisco: Cato Institute, 1980), pp. 1—6._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition. |
Mill I John St. Mill A System of Logic, Ratiocinative and Inductive, London 1843 German Edition: Von Namen, aus: A System of Logic, London 1843 In Eigennamen, Ursula Wolf, Frankfurt/M. 1993 Mill II J. St. Mill Utilitarianism: 1st (First) Edition Oxford 1998 Mill Ja I James Mill Commerce Defended: An Answer to the Arguments by which Mr. Spence, Mr. Cobbett, and Others, Have Attempted to Prove that Commerce is Not a Source of National Wealth 1808 Rothbard II Murray N. Rothbard Classical Economics. An Austrian Perspective on the History of Economic Thought. Cheltenham, UK: Edward Elgar Publishing. Cheltenham 1995 Rothbard III Murray N. Rothbard Man, Economy and State with Power and Market. Study Edition Auburn, Alabama 1962, 1970, 2009 Rothbard IV Murray N. Rothbard The Essential von Mises Auburn, Alabama 1988 Rothbard V Murray N. Rothbard Power and Market: Government and the Economy Kansas City 1977 |
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