From: Gerald A. Levy (Gerald_A_Levy@MSN.COM)
Date: Sun Sep 19 2004 - 09:20:53 EDT
Hi again Allin. I will advance a further reply to your suggestion that there is an abstract tendency for wage equalization under capitalism. You previously wrote that: "all that is needed [for a tendency towards equalization of wages, JL] is a tendency of workers to try to get out of sectors where wages are low, and to try to get into sectors where they are high." I will offer and explain a counter-hypothesis in this post: namely, that there is no abstract trend towards wage equalization or wage inequality under capitalism. Rather, both movements towards and away from wage equality could be seen -- in the most abstract sense -- as separate *moments* that occur during the trade cycle. Since we wish to understand whether there is a tendency towards wage equalization at the most general level of abstraction, let us assume in this post that there is no discrimination (based on race, ethnicity, gender, etc.) and that collective actions by the working class (including trade union representation) do not exist. Let us consider the following simple and well-known chraracteristics of the cycle of capital accumulation: * During one period of time -- the expansion -- there is a relatively high demand for labour power, aggregate demand is growing, and the size of the industrial reserve army is relatively small. In general, we anticipate that as a consequence of the above, average wages will increase during this period. This would be most pronounced at the height of the expansion when the IRA has dried up and the system is operating at or near the full employment of labour power. It is especially true at the height of the expansion since the competition in the market for labour-power has eroded and it has now become a 'sellers market'. -- During another period of time (either before or following the above), aggregate demand and the demand for labour-power are decreasing and, consequently, the industrial reserve army is increasing. Under these conditions, we would expect the opposite dynamic to take place: i.e. average wages will decrease since there is now increased competition among workers for jobs and this means that the market for labour power has become a 'buyers market'. None of the above is particularly controversial. Note that we have identified trends in *average wages* but have not addressed the issue of whether there is a tendency for the decreasing of wage *disparities* among workers. To be consistent, we should not only assume (as above) the absence of contingent factors in observing wage trends. We should also assume that already *existing* wage inequalities are due to non- contingent factors. This requires that the assumption of 'homogenous labour' be dropped [since how else could there have been wage inequalities in the first place?] Instead, simply assume that there are unskilled workers and there are skilled workers. Let us now return to consider what might be expected to happen during different phases of the cycle. * During the expansionary phase of the cycle, the demand for labour power of both skilled workers and unskilled workers can be anticipated to increase. When the economy is at or near the full employment of labour power and the demand for labour- power is high, both skilled and unskilled workers can be expected to move from low-wage to high-wage jobs subject only to the condition that unskilled workers are not able to choose (without time and training) to get jobs as skilled workers. *If* the rate of wages increases more for unskilled workers than for skilled workers during this period, then one might suppose a movement towards wage rate equalization occurring. It should also be noted in this connection that the mobility of labour-power is greater under these conditions for unskilled workers since skilled workers can not freely move into *different* skilled occupations. * During the contractionary phase of the cycle, demand for labour-power will decrease. The demand for *all* unskilled labour power will decrease. This can be expected to cause a decrease in the average wage of unskilled workers. However, there is no universal tendency of wages among skilled workers during this period. While *most* skilled workers' wages could be expected to decline -- a reflection of the decrease in aggregate demand and a consequence of the decline in capital accumulation -- there are *other* skilled workers for whom their wages could decrease less rapidly than the fall in wages for unskilled workers or remain constant or perhaps (in exceptional circumstances) increase. This would tend to be the case for all occupations where there is a constant demand for labour power irrespective of the trade cycle. [NB: while there are _sectors_ of the economy where the demand for output could be expected to remain constant even when there is a contraction, assuming the perfect mobility of *unskilled* labour power the wages of unskilled workers in this sector could be expected to decline to the same extent as the decline in theaverage wage of unskilled workers]. If this is the case then there could be expected to be an *increase* in wage inequalities among workers during this period. Consequently, there is a kernel of truth to Allin's proposition. But, it a kernel which is true only as a *moment* in a cycle. Viewed as a whole (at least at the level abstraction assumed above) there is no reason to believe that there is a *trend* for wage equalization. In solidarity, Jerry
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