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There is an outside option of $200 a week (alot more than I was able to borrow when I was a student) – that does give them a choice. As remember that a choice exists between jobs – especially with the tightness of our labour market.

“This is the genesis of the unequal bargaining relationship between employer and employee.”

If you read my post you will realise that I am actually stating that a bargaining relationship is a better way to look at the issue than “surplus value of labour idea”. Now in situations where we think the bargaining relationship is “unfair” then I can see room for intervention, we have had this conversation before.

In fact I said:

(from Matt) “Now we may have problems with the relative bargaining power of the labour and capital units – but this is not a case for saying that the surplus that was created was solely the result of the implementation of labour.”

OK!

“The right-wing theory, that wages increase with productivity, is a myth.”

No its not. I have looked at the data on this time and time again. I agree that productivity increases may not be passed on because of bargaining differences, and that sucks. However, if the bargaining position stays constant the only way to get real wage increases is through productivity increases – how are you supposed to buy more things with more things being avaliable?

Given the persistant increases in both wages and productivity since the industrial revolution I hardly think 6 years data from one country proves that theory a myth.

This is where the over-simplification starts. “Willingly” is a bit misleading. Do most people who work really have a choice as to whether they do or not? Only if you consider being terminally depressed and living on $200 a week an option – which clearly most people don’t.

This is the genesis of the unequal bargaining relationship between employer and employee. Most of the time an employer can take or leave a prospective worker (unless you have scarce skills), but the opposite is true for the worker.

It’s primarily for this reason, that most of the time there will be no bargaining, and the employer will just announce the terms of employment to the prospective employee, and the employee will sign on the dotted line.

in a survey carried out from mid-1995 to 1996 by Ryan (1997: 314), it was found that of 698 workplaces in the Accommodation, Cafes and Restaurants industrial sector, only 56 .2 percent had written employment contracts. Even by managers’ own accounts employment contracts, irrespective of whether they are collective or individual are determined by management, and in only 18.2 percent of workplaces did managers describe their contracts as being negotiated, either by individuals or an employee representative (Ryan 1997: 314). In another study of secondary labour market McLaughlin and Rasmussen, (1998: 286) found that just 45 percent of respondents reported negotiating their contract with employers, and only 20 percent of employees said that they were happy with what they had been offered. Further evidence of the increase in managerial prerogative came from a survey carried out by Rasmussen et al., (2000: 54), which found that 56.7 percent of part-time workers indicated there had been no negotiations in the formation of their contracts, while for people earning below $30,000 annually, this figure was 52.5 percent.

So if the Labour market is left to function “freely” (without regular increases in statutory wage levels) employers can appropriate ever more surplus from the labour of their workers, particularly at the lower end of the Labour market where workers are typically exposed to competition from people without work.

The right-wing theory, that wages increase with productivity, is a myth. The US provides a brilliant example of this.

During the five years from 2000 to 2005, the US economy grew in size from $9.8 trillion to $11.2 trillion, an increase in real terms of 14%.

Productivity – the measure of the output of the economy per worker employed – grew even more strongly, by 16.6%.

But…. Average hourly real wages for both college and high school graduates actually fell between 2000 and 2005, and fewer of the jobs they found carried benefits such as health care or company pensions.

http://news.bbc.co.uk/2/hi/business/5303590.stm

Now I’m definitely not asserting that Marx’s theory is right. Clearly capital accumulation and profits are desirable, necessary and just. The unregulated free-market clearly isn’t though.

It started out as a political tool, used to push the idea of the moral supremecy of labour over capital, and that is probably all it ever has been.

Thanks for the kind comment. We had been planning to write about the surplus value of labour for a wee while – your guys post just gave us a reason to do it 🙂

Oh well, nevermind.

Fair enough. I don’t have too much experience with the stuff myself, outside of reading a little and thinking about the idea a little.

Ultimately, I find the bargaining concept more satisfying – as I get the impression your do as well. In that sense it becomes important to make sure that labour and capital are fairly represented at the bargaining table – it seems like a more consistent way of viewing the issue then through the lens of surplus value.

Hopefully someone with more heterodox training finds this post and can provide us with more background on the surplus value of labour idea 🙂