Letter: Explaining Wages (1976)

Letter to the Editors from the April 1976 issue of the Socialist Standard

Explaining Wages

Socialists know the Marxian labour theory of value: that wages is the price of labour-power or cost of production of the one commodity that overproduces itself, i.e. the ability to work and create useful things.

But how is the figure of £10,000 and upwards a year for managerial class arrived at? Directors’ fees and in several companies at once, many of them absentees, and golden handshakes on retirement or redundancy?

Is their cost of production so steep or is it that the working class having produced such a vast amount of surplus-value it must be squandered on useless luxury for the few?

Harold Shaw

Tetbury

Reply:

As you point out, labour-power is a commodity and wages are its price. Price is the monetary expression of value, i.e. it indicates the amount of labour-time embodied in a commodity, and this applies to labour-power as to everything else. Wages correspond, in general, with what it takes to produce, maintain and reproduce particular kinds of workers.

Some workers’ labour-power is a relatively cheap commodity. It requires the minimum of education and training, and does not need to be sustained by a high standard of living. Other workers sell a comparatively more expensive product. They have had to acquire special skills or knowledge, perhaps be educated much longer; it is expected that they should live fittingly and that their children be schooled for a similar future. This is the difference between wages of £2,000 and £10,000 a year.

The price of labour-power can be affected, in common with other prices, by supply and demand. Another factor is the strength of trade-union organization in particular industries and professions and its success in getting wage increases under favourable conditions. Higher-paid workers are not a separate class and are as much at the mercy of the wages system as the rest. In recent years executives and managers have been losing their jobs, having to change the life-style they may have thought was divinely ordained for them, and going to the Social Security office.

Directors’ fees are a different matter from wages. Since changes in the taxation laws made “unearned income’’ subject to heavier tax rates, it has become the practice for capitalists to have nominal occupations of which “director” is the most common one.

Editors