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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Piero Sraffa on Wages - Dictionary of Arguments
Kurz I 154 Wages/prices/labor/production/Sraffa/Kurz: (…) at first [Sraffa] retained the Ricardo-Marx assumption that wages as a whole were paid out of the capital advanced at the beginning of the uniform period of production, that is, ante factum. It was only toward the end of 1943 that he abandoned the classical assumption and took wages to be entirely paid out of the product. A consequence of this was the replacement of the classical socio-economic distinction between "necessaries" and "luxuries" with the more technical distinction between "basic" and "nonbasic" products. In the context of an investigation in the late 1920s of how a change in wages affects the rate of interest and relative prices, given the system of production in use, Sraffa saw that solving a set of simultaneous equations for each and every level of wages was cumbersome and the results not very transparent. He Kurz I 155 was therefore on the lookout for a second method designed to render the properties of the system easier to grasp. The method sought, as we have already noted, was the reduction to dated quantities of labor (or wages appropriately discounted forward). Could the series of dated labor terms be expressed in a compact form, in a Single magnitude, that was independent of distribution? As is well known, Eugen von Böhm-Bawerk had thought that this was indeed possible and in his Positive Theory of Capital ([1889] 1959)(1) had elaborated such a measure in terms of the "average period of production. " SraffaVsBöhm-Bawerk: Sraffa around the turn of 1928 studied Böhm-Bawerk's attempt and saw that the concept could not be defined independently of the rate of interest. Therefore it could not be used as a primitive technical data, or given, in the theory of value and distribution. However, in studying the impact of a change in distribution on relative prices, it was possible to employ the average period as a measure of the capital-to-labor ratio with which a given commodity was produced at the level of the rate of interest taken as the starting point of the investigation. Sraffa: Sraffa in fact for a while used the concept for this purpose and was even provisionally prepared to accept two doctrines Böhm-Bawerk had advocated. Böhm-Bawerk: 1) With a rise in wages (and the corresponding fall in the rate of interest), consumption goods would fall in price relative to capital goods. This was seen to be an implication of the Austrian unidirectional conceptualization of production which starts with unassisted labor and leads via a finite sequence of intermediate or capital goods to final or consumption goods. Being obtained at the very end of the production process, the latter were generally taken to be produced With a higher capital-to-labor ratio (or average period of production) than capital goods. 2) In the case in which there is a choice of technique, cost-minimizing producers at a Iower (higher) rate of interest would invariably adopt that method of producing a given commodity which is associated with a higher (Iower) average period of production. SraffaVsBöhm-Bawerk: Sraffa soon got doubts as to the validity of these doctrines. (…) contrary to the marginalist proposition, consumption goods were not necessarily produced in a more capital-intensive way than capital goods. In a circular flow framework, the Austrian classifieation of goods according to their greater or smaller distance from the maturing of the final product made no sense: wheat, for example, was both a means of production (seed) and a consumption good. Sraffa con- cluded as follows with regard to the sum total of capital goods compared with the sum total of goods produced: „It may be said that the value of total capital in terms of total goods produced cannot vary {as a consequence of a variation of wages and a contrary variation of the rate of interest}, since the goods are composed exactly in the same proportions as the capitals which have produced them. „ (1)3/12/7: 157(3).(2) Sraffa added that the proposition is "false, but may contain an element of truth." Some twelve years later, in a note composed in November 1943, he Kurz I 156 clarified that his proposition was based on the "statistical compensation of large numbers" (D3/12/35: 28)(2). Henceforth he called the assumption that the value of social capital relative to that of social product does not change with a change in distribution "My Hypothesis" or simply "Hypothesis". 1. Böhm-Bawerk, E. von. (1889). The Positive Theory of Capital, trans. William A. Smart (London: Macmillan and Co., 1891). 2. Taken from the work Sraffa carried out in the period 1927–1931 (unpublished papers). Kurz, Heinz D. „Keynes, Sraffa, and the latter’s “secret skepticism“. In: Kurz, Heinz; Salvadori, Neri 2015. Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). London, UK: Routledge._____________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. |
Sraffa I Piero Sraffa Production of Commodities by Means of Commodities. Prelude to a Critique of Economic Theory (Cambridge: Cambridge University Press). Cambridge 1960 Kurz I Heinz D. Kurz Neri Salvadori Revisiting Classical Economics: Studies in Long-Period Analysis (Routledge Studies in the History of Economics). Routledge. London 2015 |
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