Thursday, August 6, 2009

Subsistence Wage and Individuality: Comments on Hasan's Blog

In my opinion, there is a subject in the discipline of economics that has been understudied, that is the determination of human need. Therefore, I am glad to see that Hasan brought up discussion of subsistence wage determination. I am writing this post to follow up and entertain with this idea to certain extension, and point out some difficulties emerged from this process.

Again, Marx point out that: “It [wage] is the cost required for the maintenance of the laborer as a laborer, and for his education and training as a laborer.” As Hasan pointed out, given this definition of wage, many people tend to go down to the easy path and assume that there is only a single minimum/subsistence wage rate for the entire working class. Hasan further argues that, if we take Marx’s definition of wage seriously, then, different industries might require different training and education levels, therefore, the existence of different subsistence wage would be a fruitful discussion.

Considering subsistence wage as something that varies across industry is clearly an advancement comparing to the traditional mechanical one subsistence wage assumption. However, something interesting happens if we take a step further… Since, according to Marx, wage is “the cost required for the maintenance of the laborer as a laborer”, then what “maintains” laborer as a laborer? Other than food, shelter, water etc. there are plenty of factors that can stop laborer from being laborer (failure to maintain). After all, human beings are, according Marx, social (political) animals. As social animals, self-esteem, integrity etc. are also essential for human to function as productive labor. This seems to suggest that, not only that there exist different minimum/subsistence wages across different industries, but also, different cultures, communities, and historical stages. Here, the argument supports the Marxian argument of social determination of needs and subsistence. Acquiring a understanding of how they are determined socially is a very difficult task, but not impossible. What becomes impossible is coming next.

Let us take the argument even further and consider workers as individuals. I understand that this is a controversial topic because Marx mentioned clearly in the Communist Manifesto that in capitalist society, only capital has individuality, living beings do not. However, the definition of “individuality” here is closer to the definition of personality –personal subjective factors involved when one is acting, while in Communist Manifesto, individuality is defined in a broader sense that involves physical and spiritual freedom, self-consciousness etc. (as far as I understand). If we keep entertaining with the idea of need and subsistence, we cannot escape from individuality because many needs are “individual needs” by nature. Moreover, if we simply look around the ordinary contemporary world we are living in, workers are in fact individuals with different personalities and self-perceptions. Now, to “subsist” as an individual, the worker needs to act according to his or her own individuality, and such individuality is only known by the individual him/herself. Once individuality is considered, then we are walking on a dangerous cliff of turning towards the neoclassicals. If the definition of subsistence also varies across different individuals in accordance with different individualities, then, “need” becomes an arbitrary and indeterminate concept. Consequently, the line between subsistence and luxury becomes thinner and thinner, and “needs” lose its objectivity. An unfortunate ending might be that we have to consider economic activities as something that is oriented towards the satisfaction of wants and desires... Clearly, it is absurd; but we have to take it seriously because it does provide a ground for turning one’s back on the classicals.

Individuality is a troublemaker, at least to my opinion. If you abandon it by assuming a socially (and industrially) determined subsistence wage (or by taking the Ricardian approach to come up with a consumer subsistence basket), then, workers are merely mechanical beings. This approach does not help us to understand our dynamic modern economy. But on the other hand, if we take individualities into consideration, then, the normative framework of political economy based on the determination of objective human needs and subsistence would be at risk. Therefore, I am very puzzled about the next move. But what is clear is that we find no solution in the neoclassical approach to this issue because it is a tautology. What I think is needed here is an alternative micro-foundation, a model of individual that allows the co-existence of individuality and the social objectivity of human needs. But what would this be?

5 comments:

Paddy Quick said...

Michael Lobowitz has some good ideas on this in his book on Capital. Many of us who have moved from one country to another can talk knowledgeably about the difference in what is considered "necessary" in our different countries, and the problems this poses in relations with relatives in another countries. I'm not sure that it is a dilemma within Marxist theory but it does require recognition of the fact that class struggle involves not only the distribution of production between necessary and surplus labor but also a class struggle over what is "necessary."

Hasan said...

Xiao's points are very thoughtful and stimulating. He points out that "Individuality is a troublemaker, at least to my opinion. If you abandon it by assuming a socially (and industrially) determined subsistence wage (or by taking the Ricardian approach to come up with a consumer subsistence basket), then, workers are merely mechanical beings. This approach does not help us to understand our dynamic modern economy. But on the other hand, if we take individualities into consideration, then, the normative framework of political economy based on the determination of objective human needs and subsistence would be at risk. Therefore, I am very puzzled about the next move."

I guess, this puzzle is not only relevant for the subsistence wage theory but it is also important for many other political economy discussions. In fact, it is related to (as Xiao hints) micro versus macro foundation, Or, methodological individualism versus structural explanations. To me, the solution lies in more structural side with an emphasis on different structural forms. The application of this for the subsistence wage is to recognize more varieties in subsistence wage, given time period and country (or region), rather than accepting a unique subsistence wage. So, we may have not only “time varying” subsistence wage but also “industry varying” (this can be called space-varying within a given time period) subsistence wage.

It may be interesting to discuss how we will decide about the relevant structure (industry level etc) without falling trap of methodological individualism when we want to have more detailed studies. I guess, this is ,somehow, very tricky and difficult thing to decide.

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