Lessons from the Horses Mouth

“a schoolmaster is a productive labourer when, in addition to belabouring the heads of his scholars, he works like a horse to enrich the school proprietor. That the latter has laid out his capital in a teaching factory, instead of in a sausage factory, does not alter the relation.” Karl Marx

I have said many times that for union activists, anti-capitalists and anyone committed to changing the world around them for the better, reading the serious journals of the capitalist class is an absolute necessity.  They are important because these are the journals they publish for their class, their theoretical journals.  They know we don't read them in the main so they are less guarded, more open and honest about the society in which we live and that they govern.

I wrote a piece about the minimum wage a while ago, here and here, and it is important for workers like me to understand the relationship between wages and prices and other aspects of economic life.  Like most workers, I would have made the argument that  if we force higher wages on the employers it will mean they will have to charge more money for their goods.  If they can't pay the wages they'll cut back on workers, lay them off.

In other words, we are supposed to draw the conclusion that wages and prices are organically linked. The employers care that we have jobs and hope they don't have to lay us off but we have to accept poverty wages. To overcome the poverty wages we can work three jobs, that's the way to do it.

But this is false. It serves the economic interest of the capitalist to argue that high prices are caused by high wages and as the economist and philosopher Karl Marx pointed out, the dominant ideology in society is the ideology of the class that rules.

The capitalist will raise prices any time if the market can bare it, if the demand for their commodity is greater than the supply, if the consumer has the money, then the price will rise. If the supply is greater than the demand then they will lower prices.  The same goes for that unique commodity that has the special quality of adding value through its use and that is human labor power, a human being at work. If unemployment is low and labor tight, and the economy is humming along, then the capitalist will be forced by market pressure to pay higher wages to attract workers. This happened in the 1990's boom as fast food employers were forced to pay above minimum wage to attract and keep workers.

What happens if an employer is forced to raise prices and the market won't bare it is that they eat it in profits.  But they don't say that, we would not be so sympathetic to taking wage cuts, money out of our family income in order to maintain our boss's second home in Hawaii.

Land is pretty expensive at the moment, and builders, these are capitalist outfits that happen to have their investor's money in the building of human shelter, are having a "tough time finding prime land at prices they;'re willing to pay" says Alexandria Arnold in the latest issue of BusinessWeek. Housing in the US especially is a business, a profit seeking venture. After the crash, private equity firms like Blackrock spent billions of dollars buying up single family homes that honest, hard working Americans had been thrown out of by the sheriffs on behalf of the moneylenders. It is because shelter is a commodity that housing is so expensive.

But lets pay heed to what the "experts", the capitalists themselves say about the situation. If  housing starts are to increase and that's driven by profitability in that industry not a persons need for a roof over their head, home builders are going to have to pay more for "desirable" land. "To do that, they're going to have to put up the prices of the homes they sell or take a hit to their profits.", says Matthew Pointon, a "property economist", a parasitic occupation if there ever was one. (my added emphasis)

So he confirms that profits  (a capitalists income)  are hit when capitalists are forced to pay higher prices for a commodity, labor power for instance, and can't pass that rise on to the consumer due to market conditions eg supply and demand. He adds that they may be able to pass on price rises when and if "earnings rise".

The point is that the idea that wages and prices are organically linked is bunk.

"If you're going to strive to motivate workers through autonomy and empowerment, it's important to remember that the primary burden is to make sure employees believe what you say.

Don't tell them you want them to be empowered to increase the company's profits.  Tel them you want them to be empowered because it's the best way to remain competitive and guaruntee everyone their jobs."

Carl Robinson, Vice President, Organizational Psychologists