Tuesday, January 12, 2016

The Debate on Marx’s View of Wages in Capitalism

It is interesting to revisit an old debate had in these articles:
Baumol, William J. 1983. “Marx and the Iron Law of Wages,” The American Economic Review 73.2: 303–308.

Hollander, Samuel. 1984. “Marx and Malthusianism: Marx’s Secular Path of Wages,” The American Economic Review 74.1: 139–151.

Hollander, Samuel. 1986. “Marx and Malthusianism: Reply,” The American Economic Review 76.3: 548–550.

Ramirez, Miguel D. 1986. “Marx and Malthusianism: Comment,” The American Economic Review 76.3: 543–547.

Cottrell, Allin and William A. Darity. 1988. “Marx, Malthus, and Wages,” History of Political Economy 20.2: 173–190.
In essence, Baumol (1983) thought that Marx’s view was that there could be a rising real wage in capitalism and that wages did not need to tend towards subsistence. Ramirez (1986) defends this view too.

Hollander (1984) strongly disputed it, arguing that Marx’s view was that wages tend towards subsistence.

Cottrell and Darity (1988) take a more nuanced view, but in the end reject Baumol’s view, and they point out that Marx’s Value, Price and Profit (1865; first published in 1898) does say that wages tend towards a minimum 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.

A final point is that Marx did reject the orthodox “iron law of wages” since he rejected Malthusian population theory, an important issue which some people forget.

Marx, Karl. 1913. Value, Price and Profit (ed. by Eleanor Marx Aveling). Charles H. Kerr & Company, Chicago.

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