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>> Textbooks state that, in the absence of a minimum wage, a worker is paid his “marginal product of labour”, which means the value of what he produces. > This
by dpedu 6y ago
>> Textbooks state that, in the absence of a minimum wage, a worker is paid his “marginal product of labour”, which means the value of what he produces.
> This sentence is just wrong. First of all a rational actor will not intentionally pay a worker the value of their production; you get no profit.
It's correct. You're assuming whatever the worker produces is sold at cost.
- shirakawasuna 6y agoNo? If value isn't defined as the price at which the product is selling (could easily be above cost), what is it in basic econ? 1. Worker(s) make a thing. 2. Worker(s) sell a thing. 3. All the above worker(s) (if there's more than one) receive a portion of the proceeds. If it reflects their actual contribution to that thing at its selling price, it's their marginal product of labor, putting aside things like reinvestment and power imbalances. This leaves nothing left over for profits, for owners / investors to take, who did not contribute the labor to production (otherwise, they'd also be workers and we'd call that part of their compensation, not profit).
- edgyquant 6y agoWhat defines value is a matter of debate in econ but labor theory is only believed by Marxists these days.
- shirakawasuna 6y agoThis isn't even labor theory of value...
- dragonwriter 6y ago> You're assuming whatever the worker produces is sold at cost It must be, in the same idealized (free, perfectly competitive, no transaction costs) market conditions being discussed.