Jose/Higher wages and productivity

Philip L Ferguson PLF13 at
Wed Oct 20 14:21:02 MDT 1999

Jose G. Perez writes:
> Even after the closing of the frontier, that historical, socially
>established minimum real wage continued to have a powerful impact on U.S.
>society. There was once a school of economic thought -- I don't know how
>reputable it is anymore -- that U.S. manufacturing was FORCED to be much
>more efficient due to the higher prevailing wage rates here compared to
>other capitalist countries, i.e., that contrary to what Greenspan thinks,
>higher productivity does not lead to higher wages, but the other way around:
>higher (real)  wages leads to higher productivity.

Well, this school was not alone.

Marx pointed out in vol 1 of 'Capital', that the factory acts in Britain,
which reduced the work week and ameliorated certain other conditions of
workers, would have a similar effect.

The less far-sighted capitalists screamed and moaned that they couldn't
possibly introduce a 10-hour day, and later an 8-hour one.  But, as Marx
noted, the shortening of the work week through reform legislation would
impel the capitalists to innovate, develop better machines and more
advanced technology and so on.

Now, of course, factory acts ameliorating appalling conditions are not the
same as higher real wages, but there is a similarity in the sense that both
force capitalists to be more productive.  And, if capitalists could not
force wages down, then the winning of an 8-hour day would raise real wages.

The other salient point is that in being more productive, capitalists
actually increase the rate of exploitation of the workforce.  So the
conditions of life of workers improve, but their share of the total value
of what they produce actually decreases.

As an aside I think there might be some rather important additional factors
which explain the rise of US manufacturing as compared to Europe: in Europe
a chunk of the surplus was siphoned off by the aristocracy and other
landowners well into the industrial era (still is, in fact), while in the
USA there was in the 1800s no such parasitic/unproductive class hanging
over from feudalism which simply consumed chunks of the
industrially-produced surplus, so there was a proportionately higher amount
that could go into capital accumulation; in Europe land had to be bought
and sold, in the US much of it was simply nicked off the Native Americans;
etc etc.

US railroads were given tens of millions of acres of land by the
government, so the costs of developing key infrastructure would have been
relatively less than in Europe.

In New Zealand in the 1800s (and right up to today in fact), most workers
have had vege gardens and so on and thus take care of part of their own
subsistence, thereby cheapening the *cost* of labour-power.  I wonder
whether this was the case in the USA.  (I can't imagine too many workers
with vege gardens in New York; but maybe in other parts of the country?)

Philip Ferguson

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