From: Gerald A. Levy (Gerald_A_Levy@MSN.COM)
Date: Thu Sep 30 2004 - 09:30:26 EDT
Paolo, The approaches that we have each suggested to address the question of whether there is a tendency for wage equalization under capitalism have some methodological similarities and differences. The main similarity, I think, is that we both strive to show that, subject to the assumptions made and the level of abstraction, changes in the degree of wage disparities must be accounted for endogenously rather than simply assuming that wage variations exist or are a consequence of worker choices. The methodological difference between our explanations begins because we have different assumptions at the onset of our theories. Namely, * I assumed that the wage disparities that exist at the most basic and abstract level can be accounted for by the different labour markets for unskilled labor power and skilled labor power. When there is an industrial reserve army and demands for labour power are allowed to change temporally over the course of the trade cycle, I asserted that there was no tendency for wage equalization. So, in other words, I attempted to show that *beginning with the premise that there are unequal wages* that wage disparities will grow during one period (the contraction) and decline in another period of the cycle (the expansion). * You began with the assumptions of homogeneous labor and that *wages are equal* and then attempted to show that *even if* we begin with those assumptions, in the context of technological change and competition among capitals (and where there is an IRA whose size changes alongside changes in the rate of accumulation) that wages will *become* unequal and furthermore that wage disparities will tend to *increase* over time. You wrote that: > I think that introducing skilled and unskilled labor does not deal with > the problem for they have different costs of reproduction and > therefore different values of labor power. Therefore they cannot have > equal wages nor there could be a tendency to equalize them. Yes, of course, I agree that there are different costs of reproduction and values for skilled and unskilled labour power. I didn't attempt to show that the differences in costs of reproduction can *not* explain the differences in wage *changes* over the course of the trade cycle, but I think the explanation could be extended to show that the changes in the demand for labour-power that occur over the course of the cycle can not be readily explained by cyclical changes in the costs of reproduction of skilled and unskilled labour power. > It is much more striking to see that even when skills are similar, > competition based as it is on different methods and efficiency levels > tend to create wage disparities. Think about carpentry labor on > furniture production. Or construction firms. Small construction > companies such as the one I used to build my house probably > pay much less to its workers than large companies. I am strictly > thinking about different wages for the same level of skills > in the same trade. It seems that these differences spring from the > necessity that the weaker capitals economize on wages in order > to be able to renounce a fraction of surplus labor, that is, sell > cheaper, in order to be able to compete. I agree that it is more striking! It is indeed much more striking to begin by assuming homogeneous labour (as Ian W and Allin did when asserting the long-run tendency for wage equalization) and that wages are equal and then to demonstrate a tendency towards increasing wage inequalities. But, I believe there is a flaw in your logic. While it is legitimate to posit that weaker capitals will attempt to drive down the wages for their workers, what else will happen? There is no reason why the stronger capitals will not *also* attempt to drive down wages. Given the level of abstraction and the assumptions made, there is *nothing* to prevent these capitalists from hiring members from the IRA to replace their workers or to use the threat of the same to drive down the wages of their current workers to the wage being offered to workers by the weaker capitals. Indeed, they have every incentive to do so (most especially, the endless hunt to increase surplus value). The only way, I think, that your explanation can hold is if we assume *different markets for labour-power that inhibit the mobility of labour-power among capitalist firms*. This is the objection that I made previously -- that such an explanation assumes a level of abstraction where there is either international trade and different national or regional markets for labour-power or where there is a 'dual economy' and segmented labor markets. So, I think you *are* on to something that can be observed internationally, *but* it can not be explained at the level of abstraction that we are considering. (Also, I'll note in passing, a further issue. If we make all of the assumptions that you made, the same mechanism which leads to an increase in the inequality of wages for workers -- based on whether they are employed by dominant or weaker capitals -- can be extended to claim that there arises two different *intensities of labor* and that those labor intensities will become increasingly unequal. Yet, as before, that does not logically follow. Instead, *even if* the weaker capitals are able to increase the intensity of labor beyond the social average, there is nothing to prevent the dominant capitals from doing the same. If workers don't work to the new standard of labor intensity performed by workers employed by weaker capitals then the stronger capitals can fire them and replace them with willing members of the IRA. In addition, *if* the wages received by workers employed by the weaker capitals are lower, then the stronger capitalists can just hire those workers. This would exert a pressure for wage equalization and a standard intensity of labor. Furthermore, the very same mechanism in your theory that leads to lower wages for workers employed by weaker capitals can be used to assert that the production of absolute surplus value will be greater for those workers. Yet, as before -- *if we assume homogeneous labor and only one market for labour-power* -- there is every reason to believe that if the weaker capitals are able to increase absolute surplus value then the stronger capitals will be able to increase absolute surplus value to the same degree). In solidarity, Jerry
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