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| ] argues that if one adopts this reasoning in order to demonstrate that in the long run no rise in the average wage rate above the minimum is possible, one must also imply that no fall in the average rate can occur.{{ref|Mises}} | ] argues that if one adopts this reasoning in order to demonstrate that in the long run no rise in the average wage rate above the minimum is possible, one must also imply that no fall in the average rate can occur.{{ref|Mises}} | ||
| David Ricardo wrote about the iron law of wages in his work, ]. He wrote: | |||
| ⚫ | socialists, such as ], opposed this supposed law. | ||
| As population increases, these necessaries will be constantly rising in price, because more labour will | |||
| be necessary to produce them. If, then, the money wages of labour should fall, while every | |||
| commodity on which the wages of labour were expended rose, the labourer would be doubly | |||
| affected, and would be soon totally deprived of subsistence... These, then, are the laws by which | |||
| wages are regulated, and by which the happiness of far the greatest part of every community is | |||
| governed. Like all other contracts, wages should be left to the fair and free competition of the | |||
| market, and should never be controlled by the interference of the legislature. | |||
| ⚫ | The term ''iron law of wages'' comes from ]. Other socialists, such as ], opposed this supposed law. | ||
| ==External link== | ==External link== | ||
Revision as of 20:25, 6 March 2006
The iron law of wages declares that wages can never rise above the minimum level that will enable the laborer to survive. Any hypothetical increase above this would lead to an increase in population, and then the increased competition will again drive wages down to the minimum.
Ludwig von Mises argues that if one adopts this reasoning in order to demonstrate that in the long run no rise in the average wage rate above the minimum is possible, one must also imply that no fall in the average rate can occur.
David Ricardo wrote about the iron law of wages in his work, Principles of Political Economy and Taxation. He wrote:
As population increases, these necessaries will be constantly rising in price, because more labour will
be necessary to produce them. If, then, the money wages of labour should fall, while every
commodity on which the wages of labour were expended rose, the labourer would be doubly
affected, and would be soon totally deprived of subsistence... These, then, are the laws by which
wages are regulated, and by which the happiness of far the greatest part of every community is
governed. Like all other contracts, wages should be left to the fair and free competition of the
market, and should never be controlled by the interference of the legislature.
The term iron law of wages comes from Lasalle. Other socialists, such as Karl Marx, opposed this supposed law.
External link
References
- Money, Method, and the Market Process, Ludwig von Mises, 1967, verified 2005-04-01
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