“These few hints will suffice to show that the very development of modern industry must progressively turn the scale in favour of the capitalist against the working man, and that consequently the general tendency of capitalistic production is not to raise, but to sink the average standard of wages, or to push the value of labor more or less to its minimum limit. Such being the tendency of things in this system, is this saying that the working class ought to renounce their resistance against the encroachments of capital, and abandon their attempts at making the best of the occasional chances for their temporary improvement? If they did, they would be degraded to one level mass of broken wretches past salvation. I think I have shown that their struggles for the standard of wages are incidents inseparable from the whole wages system, that in 99 cases out of 100 their efforts at raising wages are only efforts at maintaining the given value of labor, and that the necessity of debating their price with the capitalist is inherent to their condition of having to sell themselves as commodities. By cowardly giving way in their every-day conflict with capital, they would certainly disqualify themselves for the initiating of any large movement.This is quite clear: Marx thought the working class trade union struggles could not raise wages in a continuous, effective and successful way.
At the same time, and quite apart from the general servitude involved in the wages system, the working class ought not to exaggerate to themselves the ultimate working of these every-day struggles. They ought not to forget that they are fighting with effects, but not with the causes of those effects; that they are retarding the downward movement, but not changing its direction; that they are applying palliatives, not curing the malady. They ought, therefore, not to be exclusively absorbed in these unavoidable guerilla fights incessantly springing up from the ever-ceasing encroachments of capital or changes of the market.” (Marx 1913: 124–126).
Organised labour can only retard the “downward movement” but not change its direction. Marx was wrong on this. He was also wrong about the tendency of real wages in capitalism, since even in the 19th century before organised labour became powerful the real wages soared from the 1840s to the 1900s.
In volume 1 of Capital we get much the same view: wages tend towards the value of maintenance and reproduction of labour-power, and, even if supply and demand might drive wages above this level, there are powerful forces driving the real wage back to the subsistence level, because:
(1) capitalists try to reduce the real wage to and even below subsidence level;An important point to add to this is that Marx did reject the orthodox Classical “iron law of wages” since he rejected Malthusian population theory, but still thought wages would tend towards the value of maintenance and reproduction of labour (sometimes with a moral and historical element).
(2) capitalists reduce the price of basic commodities required for subsistence and so reduce the necessary part of the working day and hence the value of the maintenance and reproduction of labour (see Chapter 12 of volume 1 of Capital);
(3) continuous technological unemployment produces a large and growing reserve army of labour (see Chapter 25 of volume 1 of Capital), and this reserve army keeps the real wage in check and keeps wages down.
Cottrell and Darity (1988) demonstrate, against Baumol (1983), that Marx’s Value, Price and Profit (1865; first published in 1898) does say that wages tend towards a minimum (the value of maintenance and reproduction of labour) and that Capital does not contradict nor repudiate that view (Cottrell and Darity 1988: 181).
My analysis of Value, Price and Profit here and chapter 6 of volume 1 of Capital here shows this is true.
Finally, Marx’s Critique of the Gotha Program, based on a letter he wrote in 1875 and published in 1891, gives us a nice summary of what he thought about wages.
We have the following discussion of wages here:
“Since Lassalle’s death the scientific knowledge has made way in our party that wages are not what they seem, namely, the value or price of labor, but only a disguised form for the value of price of labor-power.So here Marx can even refer to his theory of wages as the view that “the laborer is only permitted to work for his living, i.e., to live.”
Thereby the whole capitalist theory of wages, hitherto prevailing, together with all the criticism hitherto directed against it, was once and for all overthrown, and the fact clearly established that the laborer is only permitted to work for his living, i.e., to live, so long as he works a certain time gratis for the capitalist (hence also for those who share the surplus-value with the latter); that the pivot around which the entire capitalist system of production turns, is to increase this unpaid labor either by lengthening the working day, or by developing the productive powers of labor, or by straining the laborer to more intense exertion, etc., etc.; that, therefore, the system of wage-labor is a system of slavery, and indeed slavery, which, moreover, grows harder in proportion as the productive powers of labor are developed in society, no matter whether the laborer’s pay is better or worse.” (Marx 1922 : 40–41).
Baumol, William J. 1983. “Marx and the Iron Law of Wages,” The American Economic Review 73.2: 303–308.
Cottrell, Allin and William A. Darity. 1988. “Marx, Malthus, and Wages,” History of Political Economy 20.2: 173–190.
Marx, Karl. 1913. Value, Price and Profit (ed. by Eleanor Marx Aveling). Charles H. Kerr & Company, Chicago.
Marx, Karl. 1922. “Critique of the Gotha Programme,” in Marx and Daniel de Leon, Critique of the Gotha Programme and Did Marx Err?. National Executive Committee, Socialist Labor Party, New York.