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comment by b_b
b_b  ·  3786 days ago  ·  link  ·    ·  parent  ·  post: Does capital always aim to suppress wages?

I think most business owners are playing a game of prisoners' dilemma, and they see cutting wages as the easiest and fastest way to inflate their bottom line. However, some studies have shown that paying workers more (i.e. cooperating instead of being adversarial) can increase a company's bottom line by forming a more symbiotic relationship between labor and capital, for example by allowing wage earners to afford products in the marketplace that leads to a virtuous cycle.





user-inactivated  ·  3786 days ago  ·  link  ·  

sure, that's possible, but it takes a market-wide effort (some extraordinary circumstances) for that to be a sensible policy. business owners can't depend on their competitors to play along (defecting gives an advantage) and they can't consider anything but the short term so they always end up cutting.

the relevant bit of the article

    Some Left parties and the TUC claim that companies are being irrational when they suppress wages, and they do not mean the simple fact that workers are having a hard time to make ends meet. They point out that somebody has to buy the commodities with which capital makes its profits. Their proposal is: wage increases create more effective demand and this benefits everyone – workers have more wages and capital more profit. Capitalism could be a nice symbiosis if companies were not so short-sighted.

    [...]

    The theory is also simply wrong. For one, a single company has no advantage if it increases the wage. Even the workers of Nestlé spend only a small part of their wage on Nestlé products. Of course, if other companies pay their workers higher wages, then Nestlé might make more sales. However, it is not the logic of a single capital to pay its workers more for this effect.

    Yet, sometimes competitors must be obliged for their own benefit. This is why the Left looks to the state which ought to enforce such wage increases. Workers get more money because the state mandates it. All companies sell more commodities to workers and, hence, attract more money from them. However, the imagined advantage for everyone is not realised: what companies pay more to their workers, they get back through their sales. Though these proponents of higher wages in the interest of capitalist success would not admit it from the standpoint of the rate of profit the ratio of advance and surplus becomes worse.