THE Global Justice Movement Website

THE Global Justice Movement Website
This is the "Global Justice Movement" (dot org) we refer to in the title of this blog.

Tuesday, April 26, 2016

Minimum Wage Doctrine

Yes, we scheduled a final posting on central banking reform for today.  We got bogged down in other things, however, and had to set it aside until later.  Fortunately, someone asked us a question, so we just revised the answer for today’s posting.

"And we're gonna go even higher than this!"
The University of California, Berkeley, seems to be caught in its own contradiction.  Last year University of California President Janet Napolitano announced that the minimum wage for university employees would be raised to $15.00 an hour.  Then, “[a] week after California Gov. Jerry Brown signed the state’s $15 minimum wage boost into law, UC Berkeley Chancellor Nicholas Dirks sent a memo to employees announcing that 500 jobs were getting cut.”  At the same time, supporters of the raise in the minimum wage insist that there is no connection, that the job cuts are due to other factors.
There seems to be a contradiction in there, somewhere.  There seems to be a definite cause-and-effect going on here.  So how do supporters of raising the minimum wage explain this away?
First, you have to adhere to the labor theory of value, the underlying premise of which is that labor is the sole factor of production.  Yes, in some classical economics and most modern economics the factors of production are given as land, labor, and capital.
Is human labor really the only thing that is productive?
The problem is that the U.S. Bureau of Labor Statistics always — always — gives “productivity figures” as “output per labor hour.”  Conclusion?  Labor, despite what academic economists say out of one side of their mouths, out of the other they insist that labor is the sole factor of production.
Because human labor does not create land, land is a “cost free” factor of production, at least according to David Ricardo.  Land is not a factor at all according to the agrarian socialist Henry George.  As for technology, it merely enhances labor, or is a form of “congealed” or “accumulated” labor, and thus not independent of labor.
What you end up with is people convinced that labor is the sole source of all production.  Logically, raising wages is simply giving workers what is already theirs.  It is being unjustly withheld from them by capitalists stealing surplus value by not distributing all the results of production (income) to workers.
 The landlord is entitled to nothing.  The theory is that, not having created the land, he or she cannot legitimately own it, and is due none of the income that comes from the use of land.  “Rent” is stolen from workers and consumers.  The capitalist is entitled only to retain what is equal to the cost of the capital, as that is equal to the labor congealed in it.
Thus, if prices go up as a result of raising wage levels, the loss of jobs is due not to the rise in wages and thus costs — that belongs to the workers in any event.  Instead, job loss is due to the greed of landlords and capitalists in stealing surplus value.
Does land really produce nothing?
This analysis falls apart of its own contradictions once it is admitted that land and technology are productive.  That being the case, the owner of the land or technology is due a share of the profits of production based on the relative contribution to that profitability the land or technology makes — the owner of land or technology is as much entitled to a return on what he or she owns as is the owner of labor, given that land and technology are productive in the same way as labor.
There are other problems with the analysis.  If (for example) labor is the only thing that is productive, and only the owner of labor can own what labor produces . . . what labor produced the laborer?  No one created him- or herself, so logically no one can own him- or herself, or that which his or her labor creates.
Does the Creator then own each and every human being?
We don’t need to go any further with this.  You can see that the argument, which starts out with bad assumptions (i.e., only labor is productive, and you can’t own anything you did not produce with your own labor) turns ludicrous very quickly.
For example, asserting that God owns everything, but lets human beings have the use and control of things.  If we understand property, that means God both owns everything, and does not own anything: ownership and control are the same in all codes of law.  This violates the first principle of reason, i.e., that nothing can both “be” and “not be” at the same time under the same conditions.
Of course, once we admit that more than labor is productive, and that there are other ways to produce and thereby generate income, we get out of the contradiction.  If people can own land and technology as well as their own labor, then if labor doesn’t produce enough, don’t raise wages, get land or technology.
The good part is that while you can’t legitimately buy more labor and keep all that it produces (the Thirteenth Amendment abolished chattel slavery in the U.S.), you can buy land and technology and keep all that it produces.
Further, capital — including both land and technology under the heading of capital as both are “non-human” factors of production — can pay for itself out of its own future profits.  You can’t add labor to yourself or add a few more bodies in the slave cabins nowadays, but you can purchase all the capital you need to produce enough for a decent life and it will pay for itself.
It does make you wonder why so many people insist on raising wages, making everybody worse off, and don’t see the obvious solution.