Thursday, April 7, 2011

What's Wrong with Minumum and Maximum Wages?

Over the last few months I have been following the Egyptian workers movement and demands. This post will be extremely succinct. One of the workers' top demands is setting a monthly minimum wage of 1200 L.E and setting a maximum wage of 20,000 L.E. I've watched my revolutionary socialist friends celebrate the renationalisation of many private companies. As peachy as this sounds to you there are a few things to consider and must be brought to the dialogue.

Whether you are making 1,200 L.E, 20,000 L.E or 100,000 L.E your labor is still being exploited. If you are not owning the means of production then your labor is always under-valued. That is the only way profit is made. How else do you think profit is made? First of all, say you work in a glass factory, there is equipment and raw materials. It costs 5 L.E to make a glass without paying your labor. Yet the most essential factor to converting this raw material to a glass is the labor power. Now your boss will pay 5 L.E for this Labor. The owner then proceeds to sell this glass for 15 L.E because that is its value on the market. That's 5 L.E profit, but that glass would not have existed were not for the labor, so labor value is really 10 L.E not the 5 L.E you were getting paid. The glass cannot exist without the labor so the conversion from raw material to a glass is really all done by the labor and can only be done by the labor. So now you might ask, what about the owner, the glass can't be made without his investment. Actually, that assumption is incorrect, the reason the glass cannot be made without his investment is because he's monopolized and acquiesced both the means of production and possibly even the rights to the raw material. Not because his role is essential for the production process. Many people argue that the owner has invested so much, the owner of a factory or a piece of land has the right to make a profit, he owns the factory. Actually this is when history comes in. All ownership had to come to be through exclusion of others, and no historical process of ownership was devoid of violence and oppression used to exclude others from the right of ownership to a piece of property whatever that may be. As long as someone owns a means of production historically it had come to be through violence. Minimum wages and maximum wages whatever they maybe will never lead to social justice, at best they might just lead to a "little bit better" exploitation.

Secondly, when the state steps in to nationalize companies and factories, the labor is still exploited. The state essentially replaced the owner. The desire to profit from production automatically places the labor force in a position of exploitation. It doesn't matter if its an individual, a state or an institution. The only way to avoid this exploitation would be to change how we produce. Instead of producing for profit, production must be geared towards need. Where the means of producing is not solely owned by anyone. This would mean that you would make the glass and if the profit on the glass you made was 5 L.E then you would own that, so instead of getting 5 L.E you would be getting the 10 L.E it took for you to make that glass.

Thirdly, what do you think is going to happen when instead of getting 5 L.E for a glass you get 7 L.E? Well, first of all owners need to meet profit margins so to get their 5 L.E in profits, the owner will now need to sell his glass for 17 L.E, meaning that price paid for a glass increases. So say you now need to buy a glass? Do you know what that does to your purchasing power? Absolutely nothing. In other words setting minimum or maximum wages will lead to inflation keeping you at the very same position you were in before your wages increased.

So obviously at this point many of you reading this post will say, "You are calling for extremely radical changes to economic systems. This is extremely unrealistic". Well my response is if this unrealistic to you then don't sit dreaming of social justice. There will never be social justice while labor is exploited. You are now probably thinking, "As nice as all this sounds how is this post relevant to the current debate on Egypt's minimum and maximum wages?". Simply put, and just to please the fake self-proclaimed radicals out there, the cap in this dialogue should not be placed on maximum wages, but as a first step to true social justice, the cap should be placed on profit margins.

This post inspired by my very rudimentary understanding of Marx's Das Capital and conversations with @atlemk

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