Prohibitions On Tactics In Negotiating Your Wage

Pro-capitalists often depict wages as being determined by free negotiations between employers and employees. They ignore conventions and norms surrounding such negotiations. And laws regulate and prohibit various tactics, especially some that require collective action in solidarity with other workers.

In explaining these restrictions, I concentrate on vignettes in the United States of America. A theory of dual labor markets applies here. In the formal sector, you can expect benefits, paid vacations, defined limitations on working hours, and weekends off. In the other sector, not so much. I have seen talk about the precarity. It is clear that we need more labor unions in the USA. The United Auto Workers has been promising lately.

The rise of labor unions in the USA occurred against massive reactionary violence on the part of the minions of oligarchs, including the state. For example, President McKinley sent the Army to Idaho in 1899 to round up striking workers and others - they did not care who - and put them in the 'bullpen'. This was basically a concentration camp. The robber barons could also call on their own private police force. I refer especially to the Pinkerton Detective Agency.

I skip ahead to the National Labor Relations Act of 1935, also known as the Wagner act. This law legalized labor unions, collective bargaining, and strikes. It prohibited company unions. And it established the National Labor Relations Board (NLRB).

The Taft-Hartley Act was passed in 1947, over Truman's veto. It permitted states to pass so-called 'Right to Work' laws. It prohibited sympathy strikes and general strikes. Union leaders would like to sign contracts in which all jobs in certain grades or categories are union jobs. Employees hired for those jobs can be non-union, but they must pay union fees. A non-union worker might as well join the union to have their voice heard. The misnamed 'right to work' laws prohibit such free contracts. A sympathy strike is called by a union in solidarity with other workers. For example, pilots might go on strike when flight attendants are striking. You could imagine the workers in a city all going on strike in support of a political issue. But this is prohibited in the USA.

The above presents an overview of some elements of history in the USA in the setting in which workers 'freely' negotiate their wage. I focus on the prospect of labor organizing. A more comprehensive history would include the perception of those running the Federal Reserve that they should raise interest rates when wages rise and the general hostility to labor, particularly in the Republican party, since Reagan was president. Strangely enough, Reagan was the only president of a labor union (the Screen Actors Guild) ever to be elected president.

Ludwig Von Mises, Crackpot Conspiracy Theorist?

I get this from Sam Tanenhaus' new biography of William F. Buckley, Jr. The index entry for Von Mises is in error.

The John Birch Society was an extreme reactionary organization in the USA. Bob Welch was its leader and founded it near the start of 1959. Welch had a book, The Politician, later known as the Blue Book, that explained what he was about. According to Welch, George Marshall, Dwight Eisenhower, Earl Warren, the Dulles brother, and on and on were all conscious, dedicated Soviet agents.

Buckley had a magazine, National Review. And he was known for trying to show that American conservatives had views worth taking seriously. They are not all crackpots. So he tried to convey an impression that Bob Welch was not welcome in his movement.

The John Birch Society had a monthly magazine, American Opinion. Von Mises was on its board and had articles published in it. I have read quite a bit of Von Mises and about him too, mostly hagiographies. I never met this historical bit before.

Skilled Labor, Labor Values, Prices Of Production

1.0 Introduction

Suppose not all labor in a capitalist economy is 'unskilled'. Some jobs require specific skills that somehow command a premium. How can heterogeneous labor be handled in modern treatments of classical and Marxian political economy?

My inclination is just to assume that relative wages for different labor categories are stable. I read Ricardo and others as doing the same:

"I must not be supposed to be inattentive to the different qualities of labour, and the difficulty of comparing an hour's or a day's labour, in one employment, with the same duration of labour in another. The estimation4 in which different qualities of labour are held, comes soon to be adjusted in the market with sufficient precision for all practical purposes, and depends much on the comparative skill of the labourer, and intensity of the labour performed. The scale, when once formed, is liable to little variation." -- David Ricardo, Principles

But in this post, I want to consider a different approach. I assume that skilled labor is produced by prior training. This post is only a start.

2.0 Technology

I consider the simplest model of the production of commodities for making my point. Table 1 specifies the technology for this example. Each column shows the bushels corn, person-years of skilled labor, and the person-years of unskilled labor paid by the capitalist operating that process to produce one unit of output. I assume constant returns to scale.

Table 1: Technology

Input	Sector
	Training	Corn
Corn	a1,1 Bushels	a1,2 Bushels
Skilled Labor	c1,1 Person-Years	c1,2 Person-Years
Unkilled Labor	a0,1 Person-Years	a0,2 Person-Years
OUTPUT	One Person-Year	One Bushel

I assume the skilled labor produced by the training sector only has skills for the next year. After working for one year, a skilled worker needs to be retrained. In this way, the model resembles a model with only circulating capital and no fixed capital. The inputs to the training sector do not include the workers who emerge as skilled workers. Rather, those workers are customers, paying the capitalist, who obtains returns from operating the process in the training seector.

All coefficients of production are assumed to be positive. I assume the Hawkins-Simon conditions:

a_{1, 2} < 1

c_{1, 1} < 1

a_{1, 1} c_{1, 2} < (1 - a_{1, 2})(1 - c_{1, 1})

These asumptions ensure that the economy can produce a surplus product.

3.0 Labor Values

I first want to calculate labor values. Labor values are defined in terms of unskilled labor. Introduce the following two variables:

• v₁ is the (unskilled) labor value of corn, in unskilled person-years per bushel.
• v₂ is the (unskilled) labor value of skilled labor, in unskilled person-years per skilled person-year.

The labor value of a bushel corn is the sum of the labor values of the inputs needed to produce it.

v₁ = a_{0, 2} + a_{1, 2} v₁ + c_{1, 2} v₂

The specification of a process for training skilled labor allows for a parallel definition of the labor value of skilled labor:

v₂ = a_{0, 1} + a_{1, 1} v₁ + c_{1, 1} v₂

The above is a system of two equations in two unknowns. The following abbreviation is useful in setting out the solution:

denom = (1 - a_{1, 2})(1 - c_{1, 1}) - a_{1, 1} c_{1, 2}

The solution is:

v₁ = [a_{0, 1} c_{1, 2} + a_{0, 2}(1 - c_{1, 1})]/denom

v₂ = [a_{0, 1}(1 - a_{1, 2}) + a_{0, 2} a_{1, 1}]/denom

The Hawkins-Simon conditiones guarantee that labor values are positive. Despite the existence of heterogeneous labor, the labor value of corn, in terms of one type of labor is well-defined.

4.0 Prices of Production

I skip exploring various ratios and other aspects of the system of labor values. I introduce the following variables for prices of production:

• p₁ is price of corn, in numeraire-uints per bushel.
• w₁ is the wage of unskilled labor, in numeraire units per person-year.
• w₂ is the wage of skilled labor, in numeraire units per person-year.
• r is the rate of profits, a pure number.

The system of equations for prices of production includes an equation for corn:

(p₁ a_1,2)(1 + r) + c_1,2 w₂ + a_0,2 w₁ = p₁

In this equation, wages of skilled and unskilled labor are paid out of the surplus, at the end of the year. The following equation applies to the training sector:

(p₁ a_1,1)(1 + r) + c_1,1 w₂ + a_0,1 w₁ = (w₂ - w₁)/(1 + r)

The Right Hand Side is the present value of the skill premium obtained by a trained worker.

Specifying the numeraire removes one degree of freedom for the system of prices of production. One degree of freedom remains.If the wage of unskilled labor is taken as given, the system is closed.

5.0 Conclusion

Obviously, this analysis can go in many directions. What would it mean for the organic composition of of capital not to vary between the training sector and the corn-producing sector? How does Marx's account of exploitation work here? Can skilled workers exploit unskilled worker, as in Ian Steedman's book? How can I draw on the theory of fixed capital to account for skills lasting for multiple periods? Can I introduce risk and distinguish between the rate of profits and the interest rate used for time-discounting? How does the the theory of rent apply to inate talents? (Bootlickers will insist this is the dominant case.)

If you want to apply this approach empirically, you must answer some of these questions. The approach can be extended to more sectors and more types of labor. I have seen some input-output tables broken down to have two types of labor.

John Stuart Mill, Avowed Socialist

I have been reading some secondary literature on John Stuart Mill. He was explicitly against meritocracy, although that term was not available until Young's satirical novel. Here is Mill:

"If some Nero or Domitian were to require a hundred persons to run a race for their lives, on condition that the fifty or twenty who came in hindmost should be put to death, it would not be any diminution of the injustice that the strongest or nimblest would, except through some untoward accident, be certain to escape. The misery and the crime would be that any were put to death at all. So in the economy of society; if there be any who suffer physical privation or moral degradation, whose bodily necessities are either not satisfied or satisfied in a manner which only brutish creatures can be content with, this, though not necessarily the crime of society, is pro tanto a failure of the social arrangements. And to assert as a mitigation of the evil that those who thus suffer are the weaker members of the community, morally or physically, is to add insult to misfortune. Is weakness a justification of suffering? Is it not, on the contrary, an irresistible claim upon every human being for protection against suffering?" – J. S. Mill

The above is not necessarily an argument for socialism. It is consistent with Mill's investigation of what a society organized around private property might be.

In his autobiography, Mill explicitly says that he became a socialist:

"Our [Mill and Harriet Taylor] ideal of ultimate improvement went far beyond Democracy, and would class us decidedly under the general designation of Socialists. While we repudiated with the greatest energy that tyranny of society over the individual which most Socialistic systems are supposed to involve. we yet looked forward to a time when society will no longer be divided into the idle and the industrious; when the rule that they who do not work shall not eat, will be applied not to paupers only, but impartially to all; when the division of the produce of labour, instead of depending, as in so great a degree it now does, on the accident of birth, will be made by concert, on an acknowledged principle of justice; and when it will no longer either be. or be thought to be. impossible for human beings to exert themselves strenuously in procuring benefits which are not to be exclusively their own, but to be shared with the society they belong to." -- J. S. Mill

Mill is the canonical example of a classical liberal. His short book On Liberty is still read. How can he also be a socialist?

Reference

• Helen McCabe. 2021. John Stuart Mill, Socialist. McGill-Queen's University Press.
• Matthew McManus. 2024. The Political Theory of Liberal Socialism. Routledge.
• Michael Young. 1958. The Rise Of The Meritocracy: 1870-2033.. Pelican.

Rent As Joint Production

I here think about Sraffa's price equations for rent. I try to formulate them explicitly as the system of price equations in the chapter on joint production. I suppose this is a case of me setting out something that many take as obvious.

The data for Sraffa's price equations include the specification of a number of processes producing commodities. Suppose the l process is operated by a capitalist farmer. And they pay rent on the uth type of land. The price equation is:

(p₁ a_1,l + p₂ a_2,l + ... + p_n a_n,l)(1 + r) + rho_u c_u,l + w a_0,l = p_l

Above, rho_u is rent per acre, and c_u,l are the acres of land per unit output for this process. I hope the remaining symbols are obvious.

Let f_u be the purchase price of an acre of land of the uth type. The above equation can be rewritten as:

(p₁ a_1,l + p₂ a_2,l + ... + p_n a_n,l + f_u c_u,l)(1 + r) + w a_0,l = p_l + f_u c_u,l

where:

rho_u = f_u r

The above equality is equivalent to an infinite sum:

f_u = rho_u/(1 + r) + rho_u/(1 + r)² + rho_u/(1 + r)³ + ...

In an explicit formulation of a model of rent as one of joint production, no elements of the input and output matrices, as seen in the price system, are negative. The price of an acre of land is the present value of the stream of rent payments expected to be received on that land in the future.

The above works for intensive rent. One of the lands has a price of zero in the case of extensive rent. How is that expressed in the price equations? I suppose only commodities, that is, goods with positive prices, enter into the equations. Air, being free, does not appear in the price equation for some chemical process that requires nitrogen in some way, for example. But then the solution to a problem of the choice of technique is taken as given. I have a difficulty with many of the chapters in the part on joint production in Sraffa's book.

Textbooks For Marxian Political Economy

Suppose you find Marx's Capital intimidating. You could start with textbooks. I confine myself to a selection in English.

I start with Soviet textbooks. I suppose the Dictionary is not really a textbook. But Apparently, it was a standard reference work. Here are some Soviet textbooks:

• N. Buharin & E. Preobrazhensky. 1922. The ABC of Communism. The Communist Party of Great Britain.
• I. Lapidus & K. Ostrovityanov. 1929. An Outline of Political Economy: Political Economy and Soviet Economics. Martin Lawrence.
• Institute of Economics of the Academy of sciences of the USSR. 1954, 1957. Political Economy. London: Lawrence & Wishart.
• I. Frolov (ed.) 1967, 1984. Dictionary of Philosophy. Moscow: Progress Publishers.

Here are some textbooks:

• Paul M. Sweezy. 1942. The Theory of Capitalist Development: Principles of Marxian Political Economy. Dennis Dobson Ltd.
• Meghnad Desai. 1979. Marxian Economics. Toronto: Rowman & Littlefield.
• Robert Paul Wolff. 1984. Understanding Marx: A Reconstruction and Critique of Capital. Princeton University Press.
• Duncan K. Foley. 1986. Understanding Capital: Marx's Economic Theory. Harvard Univ ersity Press.
• Bob Milward. 2000. Marxian Political Economy: Theory, History, and Contemporary Relevance. Palgrave.
• David F. Ruccio. 2022. Marxian Economics: An Introduction. Polity.
• Deepankar Basu. 2023. The Logic of Capital: An Introduction to Marxist Economic Theory. Cambridge University Press.

I suppose I could expand the above list with reading guides, from David Harvey or Michael Heinrich, for example. The boundary between a textbook and an interpretation is unclear, where by the latter I mean books intendeded to argue with the literature. And I could also have introductory books that are definitely not textbooks, like Eagleton's Why Marx was Right. Even so, I expect this to only be a starting list.

Different authors have different takes. If you want to start with an introduction, I suggest you only pick one.

Some Literature On The Compatibility Of Exhaustible Resources With Classical Political Economy

I have been writing about natural resources that emerge unchanged from the production processes. In contrast, Bidard & Erreygers (2001, 2020) developed the corn-guano model to examine the compatibility of classical political economy with exhaustible natural resources. They argue that a royalty for an exhaustible natural resource will vary over time, in accordance with the Hotelling rule. Parrinello (2004) and Kurz & Salvadori (2011, 2015) argue that when the resource will be exhausted is not well-enough known for the Hotelling rule to apply. The price system, under their assumptions, has enough equations to determine the royalty, without prices varying over time. For Ravagnani (2008), the royalty for an exhaustible resource provides another degree of freedom and is set as a percentage of production by conventions and social norms, much like the natural wage in Ricardo and Marx. Hahnel (2017) emphasizes throughput efficiency, which is related to the rates at which the natural environment’s stock of natural resources and environmental sinks are used by human economic activity. These applications of classical political economy to environmental concerns are outside the scope of of my treatment of absolute, extensive, and intensive rent.

References

• Bidard, Christian, and Guido Erreygers. 2001. The corn-guano model. Metroeconomica, 52(3): 243-253.
• Bidard, C. and G. Erreygers. 2020. Exhaustible resources and classical theory. Oeconomia: History, Methodology, Philosophy, 10 (3): 419-446.
• Hahnel, Robin. 2017. Radical Political Economy: Sraffa versus Marx. New York: Routledge.
• Kurz, Heinz D. and Neri Salvadori. 2011. Exhaustible resources: Rents, profits, royalties and prices. In Volker Caspari (ed.), The Evolution of Economic Theory: Essays in Honour of Bertram Schefold. London: Routledge, 39-52.
• Kurz, Heinz D., and Neri Salvadori. 2015. The ‘Classical’ approach to exhaustible resources: Parrinello and the others. In Heinz D. Kurz and Neri Salvadori, Revisiting Classical Economics. Studies in Long Period Analysis, 304-316. London: Routledge.
• Parrinello, Sergio. 2004. The notion of effectual supply and the theory of normal prices with exhaustible resources. Economic Systems Research, 16(3): 311-322.
• Ravagnani, Fabio. 2008. Classical theory and exhaustible natural resources: notes on the current debate. Review of Political Economy, 20(1).