Recently there have been calls to get rid of the minimum wage. This is meant to protect the dignity of labour, to create jobs, and thus stimulate the economy.
To me it shows that the bourgeois ideologues do not understand capitalism and how it works. This inability to understand how capital works is not limited to the right wingers, for often those on the left are equally, but differently, ignorant.
Much confusion arises from the inability to hold seemingly opposing positions simultaneously. In this case those who seek to lower the minimum wage, or even to sweep the minimum wage aside, fail to understand the dual nature of the worker. The worker is simultaneously a consumer and a producer.
The worker is both a consumer and a producer. Lowering wages would of course lower the costs of producing some sort of widget. But then the worker is less able to buy things. How then to sell off the excess widgets? Obviously lower the price. Leading to a deflationary spiral — in this case the capitalist is back to where they started. Even worse for now we have a crisis of over-production, or if you like, the less scarily Marxist crisis of under-consumption.
This sort of lowering of wages seems like a rational idea for a boss. Lowering the amount of money he has to outlay to produce widgets and therefore a profit. But of course once one boss lowers wages all the other bosses will agree that this a rational idea. So more and more companies would lower wages. What is rational for one capitalist, becomes irrational when all do the same. One can see this in, for example, the successful coffee shop that opens up in a neighbourhood. Next year there are five coffee shops on the same street, and none of them are doing very well. A year later and there are only two coffee shops left. It is with this sort of “irrational exuberance”, as Alan Greenspan called it, that capitalism develops; lurching from crisis to crisis.
Which of course leads us to some amusing ironies, those who profess to support capital by lowering minimum wage are in fact those who seek to mire the economy in endless stagnation; while those on the left — those who oppose capital — are able to see a way forward.
One of the more unpleasant aspects of the right wing triumphalism created by the recent election is the banal slogan “The adults are in charge”, but is this present government really acting like adults, that is in a mature manner? One of the hallmarks of adulthood is the ability to defer gratification. Lowering wages may in fact raise the profit level of an company in the short term. In the long run it will only work to create a sullen, disinterested workforce; one that finds it hard to have any pride in the work they do, one that engages in a myriad of small sabotages everyday. Low wages (as was realised by Henry Ford) will only work to increase the amount of sick days taken, will only increase the churn of staff. For example before Ford raised wages in 1914 his car company needed to recruit and hire and train 52,000 workers, whereas the factory only needed 14,000 workers.
Many people mark this raising of wages as the event that lead to the creation of the American middle class. I do not, but for the sake of this argument let us follow along. In this example Ford was able to take a long term view, he was able to see that a well motivated work force was good for his company and ultimately good for profits. In a similar way preventative medicine delivers long term savings to the health budget.
But our current crop of IPA right wingers are not at all like adults. For adults can see into the future and plan accordingly. Rather they are like children who when asked what they would like for tea, happily make themselves ill, stuffing themselves on chocolate. In this case the so-called left wingers are the ones suggesting that we look at the big picture, play the long game and do not gratify our immediate desires. It is the left wingers who suggest we eat a balance of fruit and veg as well as the occasional lolly.
Treasurer Hockey
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