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Revision as of 23:14, 16 January 2006

The iron law of wages declares that wages can never rise above the minimum requisite to keep the laborer in bare existence as a laborer. Any increase in wages above this height will lead to an increase in population, and then the competition of increased numbers for employment will force wages down again to the minimum.

Ludwig von Mises argues that if one adopts its 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.

The title of a pamphlet published in 1817 by the classical economist David Ricardo, it was later adopted by Karl Marx and influenced his early pessimistic views about the possibility of workers benefiting from capitalism.

The Iron Law of Wages Exceprt from Ricardo's The Principles of Political Economy and Taxation

  In the natural advance of society, the wages of labour will have a tendency to fall, as far as they are

regulated by supply and demand; for the supply of labourers will continue to increase at the same rate, while the demand for them will increase at a slower rate... I say that, under these circumstances, wages would fall if they were regulated only by the supply and demand of labourers; but we must not forget that wages are also regulated by the prices of the commodities on which they are expended.

  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 clear and direct tendency of the poor laws is in direct opposition to those obvious principles: it is

not, as the legislature benevolently intended, to amend the condition of the poor, but to deteriorate the condition of both poor and rich; instead of making the poor rich, they are calculated to make the rich poor; and while the present laws are in force, it is quite in the natural order of things that the fund for the maintenance of the poor should progressively increase till it has absorbed all the net revenue of the country, or at least so much of it as the state shall leave to us, after satisfying its own never-failing demands for the public expenditure.

Suspected Original Research: The Iron Law of Wages was adopted by Marx

The current text reads:

The term iron law of wages comes from the title of a pamphlet published in 1817 by classical economist David Ricardo. It was later adopted by Karl Marx, and this theory influenced his pessimistic early views regarding the capability of capitalism to enhance the lives of working people.

The notion that Marx adopted the iron law of wages is suspect as original research. If, within 48 hours, a verifiable source is not provided, or a request made for time to obtain such a source, I will delete the final sentence of the quote above.

Please note, that the question is not one of factuality, but of verifiable sources. Nevertheless, I will point out that Marx was a critic of the iron law of wages. --BostonMA 23:14, 16 January 2006 (UTC)