Lecture 8- The Price of Labour

Question 1

Describe the relationship between productivity and natural prices.

Answer 1

There is an inverse relationship between Natural Prices and Productivity. So as Productivity has an inevitable tendency to increase, so do Natural Prices tend to decrease.

Question 2

Why is Labour an unusual Economic Category? Give an example of why

Answer 2

Because it is often seen as an commodity, but unlike commodities, the law of supply and demand don’t apply to labour. For example if people are paid less, they will work more to make up for the lost income. Supply is limited by the number of hours in a day, yet its a wholly human created resource.

Question 3

Why is Labour an unusual Economic Category? Give an example of why

Answer 3

Because it is often seen as a commodity, but unlike commodities, the law of supply and demand doesn’t apply to labour. For example, if people are paid less, they will work more to compensate for the lost income. Supply is limited by the number of hours in a day, yet it’s a wholly human-created resource.

Question 4

Can labour be stored up?

Answer 4

No

Question 5

Although labour is a vendible service, what is true about labour?

Answer 5

It is not a good that can be bought and sold.

Question 6

If labour is rented out, why aren’t wages unearned income?

Answer 6

Because labour is rented out by the individual supplier, who then works to earn the income.

Question 7

Can a labourer be bought and sold?

Answer 7

No generally the labourer cannot be bought and sold, it is illegal in most fields, bar sports.

Question 8

What are the 3 main views for how we view production?

Answer 8

• The Active Poetic View
• The Passive Engineering View
• The Humanistic View

Question 9

In the Active Poetic View, what is the personification of the land and the labour known as?

Answer 9

The pathetic fallacy

Question 10

Describe the Active Poetic View

Answer 10

• The Active Poetic View animalistically pictures land and capital as “agents of productions” that cooperate together with workers to produce the product.
• Land is the mother and labour is the father of the harvest.
• ie K+L work to produce Q

Question 11

Describe the Passive Engineering View

Answer 11

• Human actions are treated simply as causally efficacious services of workers alongside the services of land and capital.
• The engineering view switches to the passive voice: “Given input K and L, the outputs Q are produced.”

Question 12

Which active agent performs the production in the Passive Engineering View?

Answer 12

• There is no active agent who uses up the inputs to produce the outputs.
• Production is pictured as a technical process that just takes place

Question 13

Does neo-classical economics emphasise the Humanistic View?

Answer 13

No, it doesn’t like it

Question 14

Describe the Humanistic View

Answer 14

• The Humanistic View portrays human beings as using capital and land to produce the output and treats human beings as persons who are not symmetrical with things like capital and land.
• Human actions, or “labour services,” use up the services of capital and land to produce the product.

Question 15

Why is the view taken of the labouring process important?

Answer 15

As it effectively determines the mechanisms that formulate the remuneration of Labour.

Question 16

Which view sees the responsibility of production exclusively with the people involved?

Answer 16

The Humanistic View

Question 17

In which view can Capital and Land be taken as equally active and responsible with labour?

Answer 17

The Active Poetic View

Question 18

In which view are land, labour and capital three inactive components that sum up to the product?

Answer 18

The Passive Engineering View

Question 19

Are there asset prices in the labour market?

Answer 19

No, as people do not own other people’s labour, they can only rent it.

Question 20

Is the basic issue in Marx a “coerce v consent system”?

Answer 20

Basic issue is not “consent vs. coercion” but consent to alienation vs. consent to delegation contract.

Question 21

Does Marx believe that wage labour is voluntary?

Answer 21

No

Question 22

What are the two cases for Democratic Firms? According to who?

Answer 22

Contract Theory and Property Theory. According to David Ellerman

Question 23

What is the Life-Cycle of a Property Right?

Answer 23

Birth of Property → Producer → Consumer → Death of Property

Question 24

What happens legally and factually at the production stage (ie birth of property)

Answer 24

• Factually, production creates asset Q
• Legally, the proper of asset Q assumes the rights to it

Question 25

What happens legally and factually upon the transfer of Property Q?

Answer 25

-Legally: right to Q transferred by contract.
-Factually: contract fulfilled by transfer of property Q.

Question 26

What happens legally and factually upon the death of Property Q?

Answer 26

• Factually: Q used up in production or consumption, and
  -Legally: appropriation of liability –Q.

Question 27

What is the legal machinery for the appropriation of assets & liabilities created in Production? What is this known as?

Answer 27

• When no explicit legal contract, then:
• Liabilities for used-up inputs automatically fall to last input owner.
• The same legal party then has the defensible legal claim on any produced assets.
• This is known as the Market Mechanism of Appropriation

Question 28

How can one party legally appropriate the whole product (Q,-K,-L)?

Answer 28

Buy (or already own) all inputs such as K & L, and bear those costs when used up in production and then claim and sell the outputs Q

Question 29

What does (Q,-K,-L) mean?

Answer 29

The whole product, ie the assets - the liabilities (eg labour and capital)

Question 30

What is the first descriptive fallacy?

Answer 30

That a product is “attached” to the capital good.

Question 31

Why can the first descriptive fallacy be refuted?

Answer 31

As capital can be rented out, and the party that rents the capital (K) appropriates the whole product.

Question 32

What is the second descriptive fallacy? Give an example

Answer 32

That a product is “attached” to corporate ownership, ie owner of widget-maker machine forms a corporation and issues shares to self in return for the machine

Question 33

How could a corporation owning a machine not legally appropriate all the means of production?

Answer 33

If the corporation had rented out the machine for another party’s use.

Question 34

List the 3 facts of production (regardless of contracts).

Answer 34

• People who work in enterprise use up the inputs by their deliberate actions,
• And so perform the deliberate actions that thereby produce the outputs, so
• People who work in enterprise are de facto responsible for producing the assets and liabilities in the whole product (Q,-K,-L).

Question 35

What is responsible for using up services of things (ie K)

Answer 35

Human actions

Question 36

What is the Juridical Principle of Responsibility?

Answer 36

• Assign de jure responsibility in accordance with de facto responsibility.
• In property language, people should legally appropriate the positive and negative fruits of their labour.

Question 37

In a firm which hires workers, although the workers are de facto responsible for the product, who owns the product? How is this so?

Answer 37

The Whole Product is legally appropriated by corporations owned by shareholders due to employment contracts driving a wedge between de facto and de jure responsibility.

Question 38

What is the Property Theory case for a democratic firm?

Answer 38

People who work in the firm are de facto responsible for producing the whole product, so should legally appropriate the whole product, i.e., should be the firm.

Question 39

What went wrong in the legal mechanism of appropriation? Give a similar example

Answer 39

The labour contract, which legally transfers labour (responsible human action) which is factually non-transferable. Similarly, you cannot transfer a speeding ticket (another responsible human action) to another person.

Question 40

Are things de facto transferable? Give an example

Answer 40

Yes, for example if a worker gives another one a saw, they are now de facto responsible for the saw.

Question 41

Can individual responsibility be transferred?

Answer 41

No, it can only be shared, as an individual can at most agree to cooperate with another person, giving them shared responsibility.

Question 42

Give an example of how only people can be responsible.

Answer 42

If I rent someone a truck and he runs over someone, I am not responsible because the truck is not responsible for the driver’s actions.

Question 43

What is the Responsibilty Principle Argument?

Answer 43

Responsibility Principle Argument is that all enterprises should be similarly reconstructed as a partnership of all who work in the enterprise.

Question 44

What is the inalienable human rights argument against the self-rental contract, i.e., to the labour contract? Why does this also operate against a voluntary self-sale contract?

Answer 44

Responsible human action is as de facto non-transferable for 8 hours a day as it is for a lifetime.

Question 45

Why does the market mechanism assign the whole product to the employer?

Answer 45

As the law accepts that employees are “fulfilling” a labour contract

Question 46

What was Coverture?

Answer 46

• Coverture was a legal doctrine whereby, upon marriage, a woman’s legal rights and obligations were subsumed by those of her husband, whereas an unmarried woman, afeme sole, had the right to own property and make contracts in her own name.
• Coverture arises from the legal fictionthat a husband and wife are one person.

Question 47

How could abolishing an employment contract allow workers to appropriate the product?

Answer 47

With contracts to rent people abolished, people could only rent or own things, rather than the owners of things being able to rent people. Therefore workers would rent or own the capital so they would cover the costs –K and thus legally claim the output +Q to legally appropriate their product (Q,–K).

Question 48

Define the Responsibility Principle.

Answer 48

Responsibility Principle implies production should be legally reconstructed as the joint enterprise of all who work in the enterprise, i.e., the democratic firm.

Question 49

Define the Inalienable Rights Argument.

Answer 49

Inalienable Rights Argument rules out capital hiring labour so enterprise always based on labour hiring capital, i.e., the democratic firm

Question 50

What is interesting about the Inalienable Rights Argument and the Responsibility Principle?

Answer 50

They both have the same conclusions (ie the democratic firm)