Austrian Economics and Wage Slavery
Since the post on wage slavery generated a bit of a stir, perhaps it’s time to introduce a $10 word for the fifty cent concept of “screw the workers“.
That word is oligopsony. Just as the word “oligopoly” is a more dispersed form of the concept of “monopoly”, so to oligopsony complements monopsony. Monopsony, in turn, is a mirror image of monopoly. Where a monopoly indicates only one seller, monopsony indicates one buyer.
The essence of what I had to say about the concept of wage slavery is that the government-induced cartelization of industry creates oligopsony conditions in the labor market. It does this by artificially reducing the number of buyers of labor (businesses), thereby granting the existing ones an unnatural degree of bargaining power.
Austrian economics is quite clear on the cartelizing effects in the business world of statism. By pointing to statism as the cause of resulting oligopsony conditions in the labor market, a compelling case can be made that the completely free market (i.e. anarchy) truly is the proletarian revolution.
Share This
Well said. I have been trying to work out away to explain “wage slavery” in terms of the market, and even considered calling it “wage serfdom” since some people have such issues with the term “slavery”
But this really puts it into a great perspective.
Oh and welcome back to the interweb… ;)
“Austrian economics is quite clear on the cartelizing effects in the business world of statism.” Well, as far as the artificial reduction of the number of buyers of labor is concerned, it seems clear indeed.
But I don’t see how the “oligopsony” conditions thus created could be sufficient to reduce systematically and specifically wages, if this is what you mean when you speak of “wage slavery”. By the way, this problem of oligopsony sounds quite neoclassical to me and not austrian, (and the Wiki link confirms this impression I think)
As long as we don’t have a compulsory monopsony, as we would have under a government prohibiting to everyone except itself to be an employer, or maximum wages laws, I don’t see how an employer trying to pay an employee below its marginal productivity could be protected against the bidding of another employer.
It seems to me that if one defining characteristic of “wage slavery” is to have one’s salary diminished compared to what it would be under pure free market conditions, a systematic policy that has this effect has to lower the demand for labor and/or increase the supply of labor.
What could produce such an effect? I do not have a systematic typology about this, that’s why I asked following your previous post on the subject. But I think of one possibility related to forced cartelization. Here’s the proposal. Whenever a business can succeed in obtaining a monopoly price (thanks to interventionism), it implies a restriction of production, that is, a lower demand for the relevant factors of production, labor included. The displaced labor will try to enter the market elsewhere, diminishing wages there, so that the first depressing effect will spread beyond the first point of impact.
The other side of the same coin is that those who buy to the priviledged firm spend more on its product (the demand is inelastic on the relevant range, or there could not be a monopoly price in the first place). As a consequence, they spend less on other products and services. Again, it implies a lower demand for labor here, and a higher supply there.
And the more the economy is cartelized by force, the easier it is to get monopoly prices with this effect.
Other suggestions?