[PEN-L:1876] Re: reply to Tom Walker

[knowware@xxxxxxxx (Tom Walker)]

Michael's answer pretty well captures what I thought when I first read
through the paragraph. By the way, it's from Alfred Marshall's _Principles_.

Subsequently, though, I was looking at some material on the wages-fund
doctrine -- including Marshall's remarks and Francis A. Walker's 1876
critique of the doctrine (in _The Wages Question_) -- and at some
contemporary (1890s) material on the agitation for the eight hours day, most
notably Sidney Webb and Harold Cox's _The Eight Hours Day_, John Rae's
_Eight Hours for Work_ and an 1895 article by Charles Beardsley, "The Effect
of an Eight Hours' Day on Wages and the Unemployed." (Quarterly Journal of
Economics, IX, p 450-9)

The more I find out about the context of Marshall's paragraph, the more
peculiar it looks. After reading Walker's critique of the wages-fund
doctrine, I started to suspect that Marshall's "work-fund" was a rather odd
inversion and recuperation of the (by the 1890s) discredited doctrine. Then
I read Beardsley's response to John Rae's argument (which is similar to
Marshall's). Beardsley stated flat out that John Rae's position was a "new
form of the old doctrine of the wages-fund." In fact, Beardsley used an
analysis of marginal utility to refute Rae's argument.

Beardsley almost seems to have been taking direct aim at the Marshall
paragraph I cited, beginning a very intriguing paragraph (top of page 453)
with the stipulation, "If Professor Alfred Marshall is right in regarding
both distribution and exchange as governed by the same law of value, these
proportions vary with the ratios at which labor, business ability, and the
uses of land and capital exchange. Wages, interest, rent, and profits are
the prices of the factors of production. They are determined, as the prices
of all commodities are determined, by marginal utility. . ." This most
interesting paragraph concludes with the observation. "It is true, as Mr.
Rae and others have pointed out, that the demand for work comes largely from
the product of work, and that to reduce the product would be to reduce the
demand. But the price of labor does not depend on the demand for labor, but
on the demand considered with reference to the supply. The extent of the
rise in price, due to restriction of supply, would depend on the character
of the demand curve for labor."

Beardsley's "and others" is tantalizing, given his reference to Marshall and
the passage I cited from Marshall on stinting labour. One might say that in
the crucial case of the price of labour, Marshall fled the margin and
reverted to a (pre-Marx) version of the labour theory of value.

Now, all this might look like so much antiquarian hair splitting unless one
realizes that the time when these scribblings were jotted down was one of
tremendous upsurge of the labour movement precisely around the issue of the
shortening of the hours of work.


Michael Perelman wrote:
>
>
>Tom Walker wrote:
>
> Perhaps someone could explain to me what the following passage means from
>the perspective of
> marginal utility:
>
> "In short the argument that wages can be raised permanently by stinting
>labour rest on the assumption  that there is a permanent fixed work-fund,
>i.e. a certain amount of work which has to be done, whatever  the price of
>labour.
>
>ME:
>
>Withholding of labor will not raise wages.
>
>THE PARAGRAPH CONTINUES
> And for this assumption there is no foundation. On the contrary, the demand
>for work comes from the  national dividend; that is, it comes from work. The
>less work there is of one kind, the less demand there  is for work of other
>kinds; and if labour were scarce, fewer enterprises would be
> undertaken."
>
>ME AGAIN:
>
>This is merely a Keynesian multiplier like argument, that jobs create the
>demand for more labor.
>
>TOM ASKS;
>
> What is the relationship between "labour" and "work" in the above
>paragraph?
> Does the term "work" have a consistent referent throughout the paragraph?
>
>ME AGAIN:
>
>The paragraph seems to use work to mean the demand for jobs and labor to
>means the sale of "labor
>power,"  although the usage is not entirely consistent.
>
>
>
>
>


Tom Walker
http://www.vcn.bc.ca/timework/