Monday, January 26, 2009

Who Creates The Value Of Labor?

Nice post refuting a central piece of Marxist nonsense, with reference to the auto business.

It begins:

Mickey Kaus, writing on the intransigence of UAW president Ron Gettlefinger [h/t Instapundit], observes:

It doesn’t mean Gettlefinger’s workers have a right to $28/hour if at that wage their employers can’t stay in business without an ongoing multi-billion dollar subsidy. I’m sorry if this seems obvious. It’s apparently not obvious enough.

It’s not obvious to most on the Left. One of the basic tenets of Marxism is that labor has intrinsic value that precedes and is separate from the value of management and investing. Most leftists, even those who are not Marxist, have absorbed this concept of the value of labor.

In reality, the circumstances are the exact opposite. It is the skill and judgment of managers and investors that creates the value of labor. If you don’t own your own company or freelance, you rely on someone else to choose what work you do and how you do it. Their decisions create the value of the products and services you make. When they make mistakes, the value of your labor decreases and you should charge less for it.

People who worked for Ford created valuable products that people would pay for because Henry Ford and his successors engineered cars and organized their production and distribution. Without that brainwork the labor of those on the factory floor has little value. They might as well be subsistence farmers.

This ugly reality means that if managers and investors make a mistake, which happens, a lot, the unit value of workers’ labor to their customers decreases. Since their labor has less value they need to charge less for it. Unfortunately, unions are based on the premise that labor has some kind of intrinsic value independent of whether anyone wishes to trade for the results of that labor.

No comments: