R M Cullen MD MSc MFM BA DipStats DipProfEthics

Midinomics: acceptance of a standard wage

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One of Marx's greatest insights, although he was not the first to realize this, was the awareness that workers are exploited by the owners of capital. Marx understood that when labor was seen as a cost to be minimised and when a pool of unemployed was deliberately maintained, wages would tend towards the minimum required to keep the worker and his or her family working. The owner of capital sets a return on capital (profit) maximising sale price on goods produced by the combination of capital and labor.

It is often said that real wages increase year on year in a modern economy. However, the truth is that in a global labor market the owners of capital move the means of production to locations which maximise their return on capital. So, we end up with unemployment here, workers paid two dollars a day somewhere else, and large companies paying no, or very little, tax in those jurisidictions where their sales are made.

Marx did not foresee the influence of education and training which created human capital, owned by skilled workers, which has always been in undersupply, not oversupply, and has led to the development of a substantial middle class - workers who owned capital in the form of those skills and that training.

In many economies, human capital is seen as a private good. Education is paid for by the student and the benefits of that education accrue to the student.

In a socialist economy, human capital is a common good. 'From each according to his ability, to each according to his need'.