3 ms·
I never deeply understood economics to be honest. But if we people wages start growing, won't it automatically mean that there are more money circling around wh
by yanis_t 3y ago
I never deeply understood economics to be honest. But if we people wages start growing, won't it automatically mean that there are more money circling around which means inflation, which means we're back at square one?
- DanielHB 3y agoOnly if supply can't meet demand
- kuchenbecker 3y agoYes, but also consider that you are not paid for value created but rather your skills are a market. Business makes money arbitraging your time and skill for profit; basically buy your labor for less than your productivity. So productivity gains will only be experienced by the workers where demand for their labor is high.
- bwestergard 3y agoThis is a complicated discussion, but for any given "technology" (i.e. set of available methods for producing every good/service in a society) and set of preferences among agents (e.g. households, firms) it is generally the case that there are many possible profit rates and wage schedules that allow for equilibrium. For a very formal an influential discussion of this, see Sraffa's "Production of Commodities by Means of Commodities". Historically, an idea closely related to the one you are articulating has been known as the "iron law of wages". https://en.wikipedia.org/wiki/Iron_law_of_wages https://en.wikipedia.org/wiki/Iron_law_of_wages