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host · 10-31-2006, 08:49 AM

Quote:

Originally Posted by Bill O'Rights

......Consider...few pay increases keep pace with inflation. The industry standard for wage increases was 3% last year. What was the rate of inflation? I dunno, I'm to lazy to look it up, but it was greater than 3%. See where this goes?

So...regardless...any increase in the minimum wage will reduce the value of your current wages...whatever that may be.

I've included the first year....1913.... that the US gov. meausred CPI. I'm not sure that it offers a meaningful year to year comparison, because the benchmarks of measurement have been changed over time....an example is that the CPI housing cost measure is tied to the cost of renting....while the US is a nation of about 68 percent homeowning households....rent costs went down during the recent housing price bubble, as less renters pursued more housing units......

I've included CPI for years that end in "6", and high and low years. While there were several periods in CPI history when prices actually decresed, this has not happened since 1955.....

Quote:

ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt
10-18-2006 U.S. Department Of Labor Page 1
Bureau of Labor Statistics
Washington, D.C. 20212

Consumer Price Index

All Urban Consumers - (CPI-U)

U.S. city average

All items

1982-84=100

1913 9.8
1916 10.4
1920 19.3
1923 16.8
1926 17.9
1927 17.5
1933 12.9
1936 13.8
1938 14.2
1940 13.9
1946 18.2
1949 24.0
1950 23.5
1954 26.9
1955 26.7
1956 26.8
1976 55.6
1986 109.6
1996 154.4
2006 198.3

Quote:

http://www.rationalrevolution.net/ar...lism_wages.htm
Understanding Capitalism Part III: Wages and Labor Markets

January 11, 2005

......Capitalism grew out of feudalism and mercantilism. During feudal times production of goods was done primarily at the individual level. Commodities were produced by individual craftsmen, who were typically members of guilds. Individuals owned their own means of production.

At this time labor markets were inconsequential in the economy. People were not generally "employed" to work. People produced commodities or offered services as workers, but what they were compensated for was the goods or services directly.

For example, a blacksmith was not employed by a company or group to make horseshoes at an hourly rate, the blacksmith made tools and horseshoes and he sold these items directly. He was paid for the products that he produced. His income was derived from selling his goods.

Guilds were organizations of workmen, who worked, trained, and often lived together. Guilds had a number of their own problems, such as restricting membership and requiring several years of unpaid, or lowly paid, apprenticeship, however, guilds served as a strong community base for workers and enforced codes of conduct and standards of quality.

Merchants would go to various independent producers and buy their goods from them and then trade or sell those goods at a market.

Wage-labor was rare at this point. Merchants didn't control the means of production, individuals did. The system was not based on the accumulation of capital. What little wage-labor did exist was typically regulated by the guilds........

....In the 1700s the textile industry was one of the most important industries in Britain. The way that textiles were typically made in the early 1700s was that a family would farm the materials to be used in making cloth, such as wool or cotton, then they would use their own spinning wheels and other tools to produce the cloth at home. Special merchants, called clothiers, would travel from village to village buying the cloth, which was then sold to tailors and other buyers.

As you can see, this certainly involved private ownership of the means of production, yet, this was not a capitalist economy. The people were not "employed". The people did not work for anyone else (well technically they worked for the king). The concentration of capital was not the modus operandi of industry. People lived and worked at home, they produced goods, and their "income" was a product, directly, of the goods that they produced. Individuals owned and controlled their own means of production and thus they owned the products of their own labor.

In 1764 the Spinning Jenny was invented, and this labor saving device enabled spinners to produce thread more quickly. At that time a few merchants began setting up their own small "factory" type establishments and employing small groups of women to produce thread for them, but this was still a rare situation.

Spinning Jenny

In 1771 Richard Arkwright setup the first true factory system, which used spinning machines operated by a water driven wheel. These textile factories employed large numbers of people, mostly children. Two thirds of Arkwright's "employees" were children, and Arkwright employed children as young as 6 years old. Arkwright built cottages next to his factories where displaced peasants came to live and work for him, and he specifically preferred large families with many young children. These peasants had no property and no money and so were willing to work for Arkwright and put their children to work in the factory in order to avoid starvation.

This, effectively, can be viewed as the beginning of modern capitalism.

Arkwright's system proved so productive that the independent home producers were no longer able to compete, and were driven to give up their independent work at home in the villages to move to the cities and work in factories. Arkwright became so successful that within a relatively short period of time he was able to fix the price of cotton twists, to which all other makers conformed.

Even at this point, though, wage-labor was not a widespread condition, it was still in its infancy. Over time, however, industry after industry moved from the old ways of independent production by individuals, craftsmen, and guilds, to the collective production of wage-labor capitalism.

The independent means were of course less efficient, and it was the increases in efficiency, which the capitalists embraced and promoted, that forced individuals to give up their independence to work for wages, which were typically lower than their previous incomes.

This is important to understand, because capitalism is not just about private ownership of the means of production, indeed it is about the private ownership of the means of production, the private concentration of capital, and the employment of wage-labor.

The result of capitalism is that labor went from being seen as the source of property rights to being a commodity, and instead capital ownership became seen as the source of rights to newly created property.

With the capitalist system, labor is a commodity, no different than raw materials. It's one more thing that capitalists factor into their budget as a part of the cost of production.

Just like other raw materials, the price of labor becomes market driven.

The Meaning of Labor Markets

Under the capitalist system workers are no longer paid for the value of what they produce, nor do they retain rights to ownership of what they produce, instead they are paid by how little compensation someone else is willing to do the same job for. Just as it is understood that market competition drives the price of other commodities down, it has the same impact on labor when labor is a commodity.

Labor markets and other commodity markets are two separate and distinct markets. By separating the cost of labor from the value of labor, capitalists are able to increase profits. Profits are generated in part by the difference between the cost of labor and the value that the labor has created, as Adam Smith himself stated.

Though the manufacturer has his wages advanced to him by his master, he, in reality, costs him no expense, the value of those wages being generally restored, together with a profit, in the improved value of the subject upon which his labor is bestowed.
- Adam Smith; The Wealth of Nations

By having separate markets the demand for jobs creates different pricing on labor than the demand for goods and services creates on the products of labor.

It separates people from the value of what they produce, so no matter how much value a worker creates, their wages are governed by the labor market, not what they produce. With two different markets the criterion for compensation is completely changed. Wage-laborers don't receive the "fruits of their labor" - instead they are paid by "job performance". Job performance is judged, not in relation to the product of the worker's labor, but in relation to other workers in the market. Thus, under the capitalist system, workers' incomes become socialized.

This is important for understanding how corporations work today. One way to describe a corporation is as an organization of individuals.

All employees of a corporation are wage-laborers, even the CEO, although executives also typically get part ownership in the corporation via shares of stock and they have control over the corporation. CEOs play the role of both capitalists and wage-laborers. Most employees, however, are just wage-laborers.

The way that corporate wage-labor works is that all of the employees work together as a team to create value. It becomes virtually impossible to determine exactly how much value each individual contributes to the sum total of value created by the corporation however and workers do not retail ownership rights to the products of their labor.

There is absolutely nothing in capitalist (neoclassical) economic theory that even attempts to compensate employees by the "real" contribution made. Capitalist economic theory dictates that wages are determined by labor markets, so how much each employee gets paid is not determined by their contribution, but rather by the market value of their labor. There is no way to determine who is really responsible for the value created. The market value of each employee's labor is determined basically by how much other people in the market are willing to sell their labor for....

The article above makes a case, IMO, for government intervention in the setting of a wage floor....especially the last paragraph. Labor lost contol of "ownership" of the means of production, beginning in the latter part of the 1700's. It seems to me that workers can, and have.....used the power of government, by the influence of their sheer numbers, to take back some of the power of ownership that they once enjoyed.....when they controlled the means of production, and labor was not just another "input" in the production process, a generic commodity.