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I don't think I've ever seen anything resembling a free market in labour, and I doubt that it would be tolerated. It would be a market where wage rates could go

I don't think I've ever seen anything resembling a free market in labour, and I doubt that it would be tolerated. It would be a market where wage rates could go up or down depending on economic conditions. In reality, people get very unhappy if wages go down and companies are more likely to cut costs by sacking staff. It would be a market where if you were unemployed, but qualified, you could approach a company and offer to do a job a bit cheaper than an existing employee, and expect that the employer would sack that employee and take you on instead. Further, why do the most unpleasant, and not necessarily easy, jobs often pay the worst wages? Why do chief executives and other managers get paid so much, often without showing any particular competence? Society has a whole set of expectations about how much certain professions "deserve" to be paid, which can't be explained by any kind of market.

zozbot234 6y ago
> In reality, people get very unhappy if wages go down Part of the intent behind an employment contract is that the employee will mostly not have to bear risk in the business itself, or in market conditions. That's a legitimate demand, but it does imply that you'll be paid quite a bit less for your effort than if you really were bearing that risk of having your earnings fall due to no fault of your own - let alone being outright sacked because someone else has volunteered to do the same job for cheaper. I think leaving these broad social insurance considerations to wholly private contracting between employees and businesses is a very bad deal for workers, and also explains why e.g. the least pleasant jobs can pay so little. A UBI-like arrangement would allow us to get a lot closer to the "truly" free market in labor you posit here.
JohnBooty 6y ago
It would be a market where if you were unemployed, but qualified, you could approach a company and offer to do a job a bit cheaper than an existing employee, and expect that the employer would sack that employee and take you on instead. I agree with the main thrust of what you're saying -- that truly free markets don't exist -- but this example is not realistic. Depending on the job, there will be potentially-large costs with swapping out employees like you say. - Even if 100% qualified for the position in general, the new hire is likely to be lacking in knowledge specific to that company/role. It will take them a while to learn how things work at that particular company. On something like a large software codebase, it might be quite a few months before their productivity matches that of the engineer they replaced. - There is a "morale cost" there. When companies visibly treat their employees in this way (like instantly replaceable cogs) surely it has a negative effect on effort and loyalty among the remaining employees, who have been indirectly told that they are instantly replaceable cogs as well. There are any number of hidden costs here: reduced effort/productivity, the cost of replacing them if they leave due to reduced loyalty, etc. I don't have figures to back this up, but I think the burden of proof would fall upon anybody claiming otherwise... Further, why do the most unpleasant, and not necessarily easy, jobs often pay the worst wages? This is often but not always true. A lot of maintenance jobs pay pretty well, often thanks to unions. Trash haulers can make very decent livings. In general though, it's a function of how many people can do the job. Working retail is NOT easy, and is soul-crushing, but probably 98% of the workforce is capable of doing it, and the cost of replacing employees is small, so there's unfortunately little incentive to treat or pay those workers well.
peterwoerner 6y ago
A free market would converge to something similar to what we have now. You neglect that people value things other than the amount of short term money to be made. People value wage stability more than getting paid their "market rate" and having to constantly apply for new jobs. Employers value the certainty of knowing that they will have competent employees when the get more work. You neglect that a market would be driven by supply (number of people who can reasonably do the job) which is why unpleasant, but quick to learn jobs often pay terrible wages--lots of 3rd world immigrant labor who can learn that work. You also neglect that it generally takes about a year to get adjusted to a new business before you can do much more than follow process that someone gives you (you just don't understand the system level implications yet). If you want employees who can drive innovation and process improvement, they have to have some longevity with the company. You do see many companies moving towards what you suggest where they have core technical teams of employees who oversee/work alongside contractors who do the grunt work.
danaris 6y ago
The only way we can have anything resembling a free market for labour is if those seeking to sell their labour can be assured that failing to do so for a given period of time will not result in homelessness, starvation, and death. In other words, until and unless we provide everyone with a basic income sufficient to support a modest living. As it stands, and as you observed, pay for work is based primarily on some very old-fashioned notions of the value of the people who do the work—which is to say, anyone doing menial jobs is obviously a lesser being than those who tell them what to do. Then anyone telling them what to do is a better human being than their subordinates, and so on, until we reach the logical conclusion that CEOs are like unto gods (or at least kings), and must be treated as such. This is not an indefinitely sustainable model, particularly in the face of increasing automation and increasing income/wealth inequality. A basic income would result in people only doing the terrible jobs when there's actually sufficient incentive for them to do them, since they're no longer driven by desperation. Thus, assuming other external pressures haven't come into play, the wages for such jobs would rise until they actually compensated for the extra (sometimes literal) crap people have to deal with to do them.
- incompatible 6y ago
  I've been reading a bit of the anarchist literature on the topic. The traditional answer to unfair power structures is revolution and replacement of the power structures by something else. However, revolutionaries always seem to end up building similar power structures in one form or another. The abuses of Marxism against the general population were obvious, although it can be claimed that the Marxists did little more than establish a form of state capitalism, with a single "company" running a country (and preferably the world). Only the anarchist tradition is in favour of abandoning power structures completely, using direct democracy in each community to make decisions. Each person is supposed to have equal power but be subservient to the community (although anarchists vary in the details). Basic income, like social democracy, is basically a way to alleviate some of the worst aspects of capitalism (for the poor) so that the system can continue with less chance of revolution. Social democracy lost influence as the Soviet threat diminished, so that capitalists felt less threatened by revolution and were able to impose a harsher form of capitalism. Capitalism has had the advantage that basically everybody with a decent income ends up supporting this idea of personal wealth and lower taxes. However, the harsher (purer) forms of capitalism are more likely to concentrate wealth (power) in the hands of a few over time, bringing back to the threat of revolution.

zozbot234 6y ago

> In reality, people get very unhappy if wages go down Part of the intent behind an employment contract is that the employee will mostly not have to bear risk in the business itself, or in market conditions. That's a legitimate demand, but it does imply that you'll be paid quite a bit less for your effort than if you really were bearing that risk of having your earnings fall due to no fault of your own - let alone being outright sacked because someone else has volunteered to do the same job for cheaper. I think leaving these broad social insurance considerations to wholly private contracting between employees and businesses is a very bad deal for workers, and also explains why e.g. the least pleasant jobs can pay so little. A UBI-like arrangement would allow us to get a lot closer to the "truly" free market in labor you posit here.

JohnBooty 6y ago

It would be a market where if you were unemployed, but qualified, you could approach a company and offer to do a job a bit cheaper than an existing employee, and expect that the employer would sack that employee and take you on instead. I agree with the main thrust of what you're saying -- that truly free markets don't exist -- but this example is not realistic. Depending on the job, there will be potentially-large costs with swapping out employees like you say. - Even if 100% qualified for the position in general, the new hire is likely to be lacking in knowledge specific to that company/role. It will take them a while to learn how things work at that particular company. On something like a large software codebase, it might be quite a few months before their productivity matches that of the engineer they replaced. - There is a "morale cost" there. When companies visibly treat their employees in this way (like instantly replaceable cogs) surely it has a negative effect on effort and loyalty among the remaining employees, who have been indirectly told that they are instantly replaceable cogs as well. There are any number of hidden costs here: reduced effort/productivity, the cost of replacing them if they leave due to reduced loyalty, etc. I don't have figures to back this up, but I think the burden of proof would fall upon anybody claiming otherwise... Further, why do the most unpleasant, and not necessarily easy, jobs often pay the worst wages? This is often but not always true. A lot of maintenance jobs pay pretty well, often thanks to unions. Trash haulers can make very decent livings. In general though, it's a function of how many people can do the job. Working retail is NOT easy, and is soul-crushing, but probably 98% of the workforce is capable of doing it, and the cost of replacing employees is small, so there's unfortunately little incentive to treat or pay those workers well.

peterwoerner 6y ago

A free market would converge to something similar to what we have now. You neglect that people value things other than the amount of short term money to be made. People value wage stability more than getting paid their "market rate" and having to constantly apply for new jobs. Employers value the certainty of knowing that they will have competent employees when the get more work. You neglect that a market would be driven by supply (number of people who can reasonably do the job) which is why unpleasant, but quick to learn jobs often pay terrible wages--lots of 3rd world immigrant labor who can learn that work. You also neglect that it generally takes about a year to get adjusted to a new business before you can do much more than follow process that someone gives you (you just don't understand the system level implications yet). If you want employees who can drive innovation and process improvement, they have to have some longevity with the company. You do see many companies moving towards what you suggest where they have core technical teams of employees who oversee/work alongside contractors who do the grunt work.

danaris 6y ago

The only way we can have anything resembling a free market for labour is if those seeking to sell their labour can be assured that failing to do so for a given period of time will not result in homelessness, starvation, and death. In other words, until and unless we provide everyone with a basic income sufficient to support a modest living. As it stands, and as you observed, pay for work is based primarily on some very old-fashioned notions of the value of the people who do the work—which is to say, anyone doing menial jobs is obviously a lesser being than those who tell them what to do. Then anyone telling them what to do is a better human being than their subordinates, and so on, until we reach the logical conclusion that CEOs are like unto gods (or at least kings), and must be treated as such. This is not an indefinitely sustainable model, particularly in the face of increasing automation and increasing income/wealth inequality. A basic income would result in people only doing the terrible jobs when there's actually sufficient incentive for them to do them, since they're no longer driven by desperation. Thus, assuming other external pressures haven't come into play, the wages for such jobs would rise until they actually compensated for the extra (sometimes literal) crap people have to deal with to do them.

incompatible 6y ago
I've been reading a bit of the anarchist literature on the topic. The traditional answer to unfair power structures is revolution and replacement of the power structures by something else. However, revolutionaries always seem to end up building similar power structures in one form or another. The abuses of Marxism against the general population were obvious, although it can be claimed that the Marxists did little more than establish a form of state capitalism, with a single "company" running a country (and preferably the world). Only the anarchist tradition is in favour of abandoning power structures completely, using direct democracy in each community to make decisions. Each person is supposed to have equal power but be subservient to the community (although anarchists vary in the details). Basic income, like social democracy, is basically a way to alleviate some of the worst aspects of capitalism (for the poor) so that the system can continue with less chance of revolution. Social democracy lost influence as the Soviet threat diminished, so that capitalists felt less threatened by revolution and were able to impose a harsher form of capitalism. Capitalism has had the advantage that basically everybody with a decent income ends up supporting this idea of personal wealth and lower taxes. However, the harsher (purer) forms of capitalism are more likely to concentrate wealth (power) in the hands of a few over time, bringing back to the threat of revolution.