5.--The other group of wage theories that is based upon a similar
misconception of the relation between the productive contribution of
labor and wages cannot be so briefly dealt with. This is the group of
theories which has been named "the fixed group demand theory" and it has
figured prominently in most discussions concerning restriction of
output. This group of theories also rests upon the assumption that there
is a fixed relation between the productive contribution of a group of
workmen and the wages received by these workmen.
The fixed group demand theory has been summarized as follows: "The
demand for the labor of the group is determined by the demand for the
commodity output of the group. The community--wealth and distribution
remaining the same--has a fairly fixed money demand for the commodities
of a group. It will devote about a given proportion of its purchasing
power to these commodities, that is, if the prices of the group
commodity are higher, it will buy less units and vice versa, but expend
about the same purchasing power. Therefore, the demand for the labor of
the group; profits remaining the same, is practically fixed, and
increasing the group commodity output means simply conferring a benefit
on the members of other groups as consumers without gain to the group
itself. Therefore, to increase the efficiency and output of the group
will not increase the group labor demand, and group wages. Decreasing
the efficiency and output of the group will not decrease the group labor
demand and the group wage."[20] Or in simpler terms, that the community
will want a relatively fixed amount of the product which the group
helps to produce. And thus if the group reduces the time needed to make
that product, it will not benefit and may even be harmed, because the
services of some of its members will be no longer needed. And, on the
other hand, that the members of the group will not be harmed by keeping
the products of its labor scarce and high.
This line of reasoning, as held by some trade unionists, is valid on
occasion, from the point of view of particular groups of
workmen--especially during short periods. It is a fact that in many
cases workmen employed in particular industries or occupations, may not
be benefited and may even be injured by a display of extra effort or by
the adoption of a new and more efficient method of production. The
benefit of that extra effort or new method may not go _directly_ and
_immediately_ to the group which makes the effort or utilizes the new
method--it may not go to that group at all except in so far as they may
be consumers of their own product.
Public-domain text, read in full here on John Shaqi.
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