An Essay on the Influence of a low Price of Corn on the Profits; shewing the Inexpediency of Restrictions on Importation: With Remarks on Mr Malthus' Two Last Publications
, by David Ricardo
Ricardo criticizes Malthus, who had previously written "Observations on the Corn Laws" generally supportive of free trade, for his The Grounds of an Opinion on the Policy of Restricting the Importation of Foreign Corn
"The first of these causes is more or less permanent, according as the price from which wages fall, is more or less near that remuneration for labour, which is necessary to the actual subsistence of the labourer. The rise or fall of wages is common to all states of society, whether it be the stationary, the advancing, or the retrograde state. In the stationary state, it is regulated wholly by the increase or falling off of the population. In the advancing state, it depends on whether the capital or the population advance, at the more rapid course. In the retrograde state, it depends on whether population or capital decrease with the greater rapidity."
Book Review: Out of Work
, by Richard Ebeling
, Future of Freedom
, Oct 1993
Review of Out of Work: Unemployment and Government in Twentieth-Century America
by Richard K. Vedder and Lowell E. Gallaway (1993)
"The problem, Vedder and Gallaway argue, is that real wages — the real cost of hiring workers after adjusting for changes in productivity and in the selling prices of goods in relation to the money wages paid to workers — had actually increased during the early years of the Great Depression, making it increasingly costly for employers to keep workers on the job. ... under Herbert Hoover's leadership, pressure was placed on industrial employers to not lower wages ... The 'high-wage' policy, in the face of falling consumer prices, only succeeded in pricing workers out of the labor market ..."
Collected Works of Nassau William Senior
, by Donald Rutherford (editor), 1998
"Introduction" chapter of subject book, includes biographical and bibliographical information
"The central concern of Senior in his discussions of wages was an exposition of the wages fund doctrine. ... If machinery is introduced, then there is a temporary reduction in the wages fund with fewer funds available for employing and paying workers but in the long run the general rate of wages will rise or remain the same ... Senior was keen to emphasize that wages are essentially the consequence of a bargain between employer and worker, each attending to his own welfare. Individual workers can improve their wages, measured in terms of the amount of commodities they can purchase, by working harder for longer hours."
Eugen von Böhm-Bawerk: A Sesquicentennial Appreciation
, by Richard Ebeling
, The Freeman
, Feb 2001
Broad biographical essay, including Böhm-Bawerk relationships with Menger, Mises and Schumpeter, and his two major works
"One of Böhm-Bawerk's most important applications of his theory was the refutation of the Marxian exploitation theory that employers make profits by depriving workers of the full value of what their labor produces. ... all production takes time. If that period is of any significant length, the workers must be able to sustain themselves until the product is ready for sale. If they are unwilling or unable to sustain themselves, someone else must advance the money (wages) to enable them to consume in the meantime. ... the capitalist ... saves ... and those savings are the source of the workers' wages during the production process."
How to Destroy Mongolian Mining
, by Morgan J. Poliquin, Mises Daily
, 20 Jun 2006
"Mongolian workers don't have the money to find and develop a mine and, like workers worldwide, accept wages in return for labor right away before, and regardless if, any sales or profits are realized by the capitalist investors. Ivanhoe estimated that over its life the project would provide 117,000 new jobs (full and part-time workers) ..."
How to Help Fast-Food Workers
, by Sheldon Richman
, 1 Aug 2013
Discusses the strikes by fast food workers demanding doubling of the minimum wage, the economic realities behind wages and alternatives that would truly help
"What's wrong with simply doubling the minimum wage? The answer is that wages are not arbitrarily set. Even in a corporatist economy, they result from supply and demand. ... Employers don't hire people as a favor. ... If hiring someone is to be worthwhile, that person will have to produce more than she is paid. If she can't, she won't have a job. ... The point is that wages aren't set by picking numbers out of the air. Set them too high relative to value created, and the business disappears. Set them too low, and workers will look for alternatives."
Of the Wages of Labour
, by Adam Smith
, The Wealth of Nations
Book One, Chapter VIII
"The produce of labour constitutes the natural recompence or wages of labour. In that original state of things, which precedes both the appropriation of land and the accumulation of stock, the whole produce of labour belongs to the labourer. He has neither landlord nor master to share with him. Had this state continued, the wages of labour would have augmented with all those improvements in its productive powers, to which the division of labour gives occasion. All things would gradually have become cheaper"
Ricardo, David (1772-1823)
, by Mark Skousen
, The Encyclopedia of Libertarianism
, 15 Aug 2008
"... this abstract reasoning ... has been called the 'Ricardian Vice.' ... Ricardo created an oversimplified 'corn' model that led to an antagonistic view of capitalism, where values are determined by labor inputs and where wages can only increase at the expense of profits. His analysis of the nature of production concluded that wages tend toward subsistence levels, known as the iron law of wages. Ricardo thought that over time, as the population grew, an increased demand for food would have the natural effect of raising its price, which would lead to an increase in the value of labor."
Teaching Basic Economics to Fifth Graders
, by Arthur E. Foulkes, Mises Daily
, 21 Jun 2006
Recounts the experience of teaching economics to fifth graders, one concept per week, for five weeks, focusing on trade, money, savings, competition and prices
"We found that the same rules that established prices for the goods in the auction would also establish salaries or wages for different careers. Demand for a labor service — acting on the available supply of people who can perform that service — will set the 'wage' for that service. Thus supply and demand, we found, could explain both the price of goods and the price of the human factors supplying those goods."
The Bridge of Asses
, by Lew Rockwell
, Mises Daily
, 2 Oct 2003
Argues that minimum wage legislation is "the pons asinorum
of the relationship between economics and politics", explaining that labor prices (wages) are no different from other prices in the marketplace
"The wage is nothing but a compromise between these two demands in light of existing realities. ... There is the quality of the services to consider. Will this person make a contribution to the overall profitability of the firm, if not now then after a period of time? How much of a contribution will the person make compared with how much employing the person will cost in terms of others' time and company resources? ... The employer must make an offer good enough to draw the potential employee away from whatever other things he or she might otherwise be doing, whether it is working for someone else or just lazying around the house."
The Economic Role of Saving and Capital Goods
, by Ludwig von Mises
, The Freeman
, Aug 1963
Explains there is a third factor of production aside from nature's resouces and human labor, and also that entrepreneurial judgement is necessary to attain the desired end of production
"There is no other method to make wage rates rise than by investing more capital per worker. More investment of capital means: to give to the laborer more efficient tools. With the aid of better tools and machines, the quantity of the products increases and their quality improves. As the employer consequently will be in a position to obtain from the consumers more for what the employee has produced in one hour of work, he is able—and, by the competition of other employers, forced—to pay a higher price for the man's work."
The Labor Theory of Value (An Analysis)
, by Donald Ernsberger
, Jarret Wollstein
Examines Marx's Labor Theory of Value, including an example, and compares it to the market-exchange theory, exploring some of the flaws in the former
"Perhaps the most grievous theoretical fault with the labor theory is that it ignores what economists call time preference. ... the common strong preference for goods and services here and now, rather than later. ... For example, most workers prefer to be paid when their work is completed rather than when their products are sold – which may be months later. For workers to be paid now, rather than later, someone must advance their wages, and clearly this service has a value. But proponents of the labor theory would have it both ways: workers are to receive the full future value of their product now."
The Roots of the Great Depression
, by Richard Timberlake
, Jan 2001
Topics discussed include Federal Reserve policy during 1920-1939, the British attempt to return the pound to its World War I value and U.S. interventions during the Hoover and Roosevelt administrations
"There is no such thing as a 'price-wage spiral,' or a 'wage-price spiral.' Wages are money prices for labor. Prices are money values for finished goods and services, and capital. ... When the NIRA artificially raised wages or prices in one sector of the economy, prices in other sectors of the economy compensated reciprocally through market channels. Such acts distorted economic behavior and misallocated resources, but had very little if any effect on the general price level. ... Those who profess a 'wage-price spiral' are not allowing for economic reactions and adjustments throughout the economy ..."
The State Is No Friend of the Worker
, by Sheldon Richman
, 24 Oct 2014
Discusses how the state interferes with setting wage rates and quotes Thomas Hodgskin on how to reward workers properly
"The surest way to eliminate wage discrimination is to keep government from impeding the competitive process with such devices as occupational licensing, permits, minimum product standards, so-called intellectual property, zoning, and other land-use restrictions. ... Being able to tell a boss, 'Take this job and shove it,' because alternatives, including self-employment, are available, is an effective way to establish the true market value of one's labor in the marketplace."
Unemployment by Legal Decree
, by Bettina Bien Greaves
, The Freeman
, Aug 1956
Discusses the $1.00 an hour minimum wage law passed in March 1956 and its effects, in particular, in Puerto Rico where the legal minimum appeared to be already too high for that market
"A seller is entitled to the price a consumer is willing to pay for what he offers. A worker, who is the seller of his own labor, is entitled to the wage an employer is willing to pay. For practical reasons, the employer is usually guided, in deciding how much he can pay, by his estimate of the price consumers will pay for the worker's product. The market price of the worker's contribution will vary with the constantly changing structure of the market. Consequently, any attempt to set the rate by law will sooner or later lead to discrepancies in the pricing system and to distortion of the pattern of production."
, by Ludwig von Mises
, Human Action
Chapter 21 "Work and Wages", section 3; discusses labor, wages, how are wages determined and erroneus attacks on that explanation
"Labor is a scarce factor of production. As such it is sold and bought on the market. The price paid for labor is included in the price allowed for the product or the services if the performer of the work is the seller of the product or the services. If bare labor is sold and bought as such, either by an entrepreneur engaged in production for sale or by a consumer eager to use the services rendered for his own consumption, the price paid is called wages."
What About Immigration?
, by Julian Simon
, The Freeman
, Jan 1986
Examines the economic impact of immigration to the United States, including actual levels of legal and illegal immigration, effect on unemployment, wages, services used, taxes paid and productivity
"The impact of immigration is likely to be greater on wages than on unemployment rates, because potential immigrants with skills that are in low demand choose not to migrate, and those with salable skills gravitate to industries where there are jobs. This will have some downward pressure on wages. For example, immigrant physicians are more likely to reduce a native physician's yearly income than to throw him or her out of work. Barton Smith and Robert Newman found that adjusted wages are just 8 per cent lower in the Texas border cities where the proportion of Mexicans is relatively high ..."
William Harold Hutt, in Memoriam
, by Murray Rothbard
, The Free Market
, Sep 1988
Biographical and memorial essay; also published as chapter 107 of Making Economic Sense
"Hutt's first great contribution to economics was his concise and lucid The Theory of Collective Bargaining (P.S. King, 1930), which remains to this day the best book on the theory of wage determination. In this book, Hutt criticized many of the classical economists, and showed conclusively that unions cannot increase general wage rates, and that particular wage increases can only come at the expense of a dislocation of labor and a fall in wage rates of other workers."