Consider the labour market; people exchanging their skill, time and effort for money. Market dynamics are such that the price of a commodity is determined by supply and demand. An excess of supply compared to demand suppresses the price and an excess of demand compared to supply inflates the price. In the case of the labour market the commodity being exchanged is chiefly time. Inevitably there are only a finite amount of people in any society but a potentially infinite demand for people’s time because there is an infinite amount of useful work that could be done. Therefore it should be the case that in any labour market demand always exists at least slightly in excess of supply. Consider your own self, just like anyone, you have only a finite amount of time you can offer to the labour market but you surely have a limitless demand for stuff to be done for you. Given this working people should get richer as they work and as they get richer they should create new demand for the work of others as they spend or invest their accumulation.
In short it should be that employers compete for workers and thereby create an upward pressure on wages even unskilled wages. As wages increase profits diminish and the difference between worker and capitalist is eroded until most people are a bit of both. This is what we would expect to happen in a free market. Yet this is not what happens! What seems to happen is that an oversupply of workers compete for a scarcity of employers and thus the price of their labour in the market is suppressed. Clearly the labour market (as with other markets no doubt) is rigged in favour of the employer; the supply of labour is kept artificially high relative to the demand for labour.
Here are some of the ways that labour markets are rigged against the suppliers of labour.
1. Income tax – tax on income is a tax on labour and is finely calculated to wipe out any surplus gained from employment. This surplus that the worker could achieve without income tax could enable the worker to save enough to individually or collectively start his own business and become an employer himself which would increase the demand for labour further and therefore increase the market price of labour.
2. Inflation – Those that control the money press always print up more than is needed to represent economic activity and give that excess to a favoured few which is usually themselves. This dilutes the purchasing power of those that work for this money effectively transferring it to those that received the free money.
3. Regulation – regulations discourage small business such as those that would be started by workers that had somehow managed to save enough surplus capital. These small businesses if allowed to flourish would increase the supply of employers and thus in turn increase the demand for employees pushing the price of labour up in the market.
4. Property confiscations – This is mostly historical but still happens sometimes and is still relevant. Small property owners have their land or capital stolen by the state forcing them into selling their labour in the market instead of either not participating in the labour market or participating as an employer.
There are probably other ways too.
For anyone concerned with the problem of wealth disparity including leftists it is certainly worth considering that this problem may not naturally arise from markets and private property but rather only artificially from rigged markets.
It is my thinking that socialists have long since realised that the problem with the economic injustice of society, as they find it, is because the state is used by the few as a tool to rig the market against the many. Where socialists tend to go wrong is in thinking that this problem can be solved by the many taking control of the state away from the few and somehow doing without markets. This was the big mistake made in the USSR that ultimately lead to its dissolution.
Markets are inevitable and necessary the question is how to make them fair. Markets can be rigged by inhibiting supply. Cartels and monopolies such as the state and banking institutions rig the market by inhibiting access to capital. Socialists attempt to counter this by organising unions which can inhibit the supply of labour and thereby drive up labour’s price.
This results in an endless battle between labour and capital for the favour of the inhibiting power of the coercive state.
A more fruitful approach may be abolishing the state and allowing free markets to reign. Thus though it may seem counter-intuitive to some the fastest surest path to communism is to undo rigged markets and make them free markets.
