School of Economic Science - Study Forums

[Peter Fennell]

1. If a worker's living is his product, then it bears no relation to his needs.
2. But if wages are to be kept low, then the needs of the family become the measure.

Self employed vs. employee
#1 is the promise of self employment. If he works hard, has good ideas, reads the market (serves the needs of others) ... then there is no limit to how much he can earn.
#2 is the employee. Wages must be low. Because prices must be low, to prevent inflation, because of competition, to maximise shareholder value ...

The left
Justice requires wages meet basic needs. We must legislate that firms should pay a living wage. Including paid sick leave and holidays. What about the needs of a family man with three children? Should the minimum wage pay him a living wage? If we insist, will firms start avoiding employing family men? (Ref. also maternity pay). William Temple’s answer is that this makes an overwhelming case for family allowance, (child tax credits). This is the answer of the left. In the end government has to know everything about him.
Problems are: privacy, cost of enquiry, incentive to fraud. Every needs test 'how many children do you have?' influences behaviour (have more, get more), teaches people to be needy.

Introductory Economics with Justice course
It is possible to address all social welfare issues and all the left's answers to them. and also the characteristics of a natural life, communism 'to each according to his needs', exaggerating needs and minimising those of others etc. all from the above questions.

Land free at the margin
There are problems using land free or enclosed in the analysis. It is a remote concept today. Sounds agricultural. Requires the student to accept on trust a foreign or anachronistic notion in order to explore the familiar. It makes land the starting place for analysis as well as the solution which seems potentially circular. Therefore it undermines the credibility of the later analysis. And is repetitive 'always going on about land'.

Questions
Does the full product approach put 'needs' in their place?
Do we over-emphasise needs in week 1?
Are ‘wants’ better than ‘needs’ because they express aspirations beyond material subsistence?
Do people have a sense of their product? Or believe it could get them what they want?
Isn't self employment equally exposed to competition?
Is there a surplus in society?
Doesn't it get competed away?
If not, what governs where it goes?

[Peter Fennell]

Peter Bowman's response
I would agree that issues related to the connection between needs and wages could be dealt with without any reference to land. Very broadly wasn't this the basic practical issue behind the rise of socialism in the nineteenth century?

In session 6 of the Introductory Economics course the question is raised as to how the system of land tenure affects the "conditions at the point of interaction." This provides an opportunity to explore the situation at a deeper level by exposing some very significant underlying conditions that are normally so taken for granted that they are left out of the analysis. In relation to the issue you raised concerning the needs and wages the conclusion of the "Ricardian analysis" is that there is a significant causal connection between the general level of earnings in an economy and the system of land tenure that is in place.

The strength of that connection will be affected by how directly the types of economic activity that prevail are dependent upon land either through location or provision of natural resources but is still going to have an impact even in a highly developed economy. If the analysis is valid then it will follow that any consideration of the general levels of earnings (for example in relation to the meeting of needs) that does not include the system of land tenure is going to be incomplete.

This does not mean that the system of land tenure is the only or indeed most significant factor governing conditions at the point of interaction and that in itself it provides a complete solution to the issue you raised.

[Peter Fennell]

19th Century Socialism
Agreed. ‘To each according to his needs’ is the starting point of the compassionate left.
The great thing about owning your own product is that an enquiry into needs is irrelevant. It becomes relevant when you do not own the product and wages are competed down to some ‘minimum’. That provokes the enquiry into what is a need and what is not. And, as William Temple observes, the different needs of people at different stages of life or who make different life choices but are doing the same job. The left’s answer is
1) establish the bare minimum for a family-less individual (submerging any distinction of family role or time of life)
2) the state can top it up with family allowance for those who have children
3) then there are other special needs, for every special need, a special tax credit, and an enquiry to test for it
4) and then the state starts having to take a view on how many children it will support, how much home care it will provide ...
If the state sets a number it becomes a recommendation. And then do some families have children to get the credits? How do you legislate for that?

This is the state we’re in (Will Hutton)

Full product?
Is it true that if people ‘kept their full product’ then all this needs stuff can be their own concern? That they would provide abundantly for their material needs. If we owned our product would it be enough to meet our needs? And would there be a surplus? And would the problems of life evolve to deciding how to devote the surplus between cricket, philosophy, charity etc?

Introductory Economics course Week 1 - on needs
I do not find in practice that the discussion of needs satisfies students’ compassionate leftish leanings. Neither does it explain the difference between needs, wants, and desires, but threatens to moralise between needs and luxuries without leading to a satisfactory economic conclusion on that point. The question ‘can we agree that the purpose of economic activity is to meet human needs’ does not tend to elicit a happy assent. Perhaps a sense of the importance of cricket and opera rebels against such a formulation? Needs are expanded a la Maslow getting to the conclusion that everyone needs cricket and opera! That also is not quite satisfactory.

[Peter Fennell]

Peter Bowman said:

[Leonie Humphreys]

If the 'black sheep' may say something Peter and Peter?! I agree with Peter Fennell (sorry got wrong Peter before):

[Joseph Milne]

This can get tricky! I agree with Leonie here (I and think both Peter’s too) because it seems to me that it is principles that really matter, and that the notion of needs does not really relate to principle. Or it may do in one way. What each needs is access to land in order to work according to their desires and gifts. In other words, what each needs is what Nature has already freely given.

There is another element that can all too easily get lost under the question of assessing needs. This is the question of the real nature of work. Owing to injustice and poverty we are cornered into thinking of work as merely a way to get wages, and not as an end or meaningful in itself. We allow perhaps for a few vocations to have meaning in themselves, but these are not the rule.

It seems clear, in principle, that if the injustice of land monopoly were removed and all earned the full product of their labour, then other motives for work would naturally arise and replace the mere necessity of trying to survive or ward off poverty. It also seems clear that in such a situation of justice that the scope would be opened up for a huge range of human talents to surface and that the range of human wealth would widen enormously, even infinitely.

This in turn, in the very nature of such diversity, would bring labour into a proper relation to the natural diverse resources of the earth and wholly wipe out the present ecological and environmental problems, which are the direct consequences of poverty and injustice.

In these extrapolations I believe I am following Henry George, and it would seem that “economic freedom” and “living in accord with nature” completely complement one another – and necessitate one another.

Thus “need” in the sense of what goods represent the minimum of human requirements is the direct product of injustice.

Joseph

[Richard Glover]

This somewhat belated reply to Peter F's original posting may yet rekindle the discussion.

[Richard Glover]

Continuing with Peter F's original post:

[Chris O'Brien]

At his trial in 1832, as one of the Tolpuddle Martyrs, Geogre Loveless said ' We were unting together to preserve ourselves, our wives and our children from utter degradation and starvation'. Clearly wages and basic needs are closly linked in this situation.

However, today 'needs' are more to do with paying off the credit card debit or buying a wide screen TV than starvation. But I would suggest that the response of BA Cabin Crew to a reduction in their conditions, without their agreement is similar but clearly not as desperate as Tolpuddle. No one recives the full product of their labours, not even bankers, as we all pay tax and landlords rent. Therefore 'needs' will largly determine the level of wages. Although the power of organised labour (print, car, coal miners etc) has been broken people will always try to maintain their living standards, e.g. BA Cabin Crew. Also after the Poll Tax Fiasco even a Tory government will not risk the social unrest that reducing wages below basic needs would engender.

Therfore I agree that wages are determind by 'needs' or 'the least that we will accept'.