Here’s the typical argument, by Noam Chomsky:
If capital is privately controlled, then people are going to have to rent themselves in order to survive. Now, you can say, “they rent themselves freely, it’s a free contract”—but that’s a joke. If your choice is, “do what I tell you or starve,” that’s not a choice—it’s in fact what was commonly referred to as wage slavery in more civilized times, like the eighteenth and nineteenth centuries, for example.
We won’t go into the implied solution he proposes, having capital not controlled privately, because I’m not sure how that will work. Will I get to own all capital, in partnership with everyone else? Will I be able do as I please with all that capital, or will someone else have a say beside me? If someone else has a say, and I don’t like what he proposes, do I have have an alternative besides “do what I tell you or starve?” What magic third possibility is there now that I own everything, and so does everyone else own everything?
So let’s put all that aside. My point here is to discuss something Mises wrote, that labor is exactly the same as any other factor of production. This lit up a light bulb in my head. I mean, why not use the same argument that Chomsky and many others do to prove that everyone, not just workers, are slaves?
Let’s begin with someone who owns a gold mine. Now gold is different from a human being, in that gold does not have to work for a living. Gold does not starve to death if it just sits there. But the owner of the gold mine, or silver mine, or factory that produces pipes or industrial machinery, does have to eat to live. If he cannot sell his gold or silver or pipes or whatever, he will most certainly starve to death.
So why is gold going for $1600 an ounce? Why can’t the potential buyer just say, “Do what I tell you, or starve? I’ll pay you five cents a ton, no more. You don’t like it, I won’t buy it, and you will starve to death, mwahahaha.”
Let’s see if we can copy Chomsky’s argument word for word, but about commodity slavery as opposed to wage slavery. I’ll emphasize the changes in bold.
“If capital is privately controlled, then people are going to have to sell their wares in order to survive. Now, you can say, “they sell them freely, it’s a free contract”—but that’s a joke. If your choice is, “do what I tell you or starve,” that’s not a choice—it’s in fact what was commonly referred to as commodity slavery in more civilized times, like the eighteenth and nineteenth centuries, for example.”
Now some may argue that gold can be sold to consumers instead of to a producer of goods, so that the gold miners have a third option besides do what I tell you or starve. They can sell to consumers. But there are tens thousands of products that are only used by industries, and are of no use at all to consumers. According to Chomsky, they either do what they are told, or starve. They should all be starving. They have no unions, no govt laws protecting them, and they certainly don’t do what the capitalist wants to tell them, sell their wares for a penny a ton.
Bottom line, Chomsky and all his ilk either have not thought things through, or are trying to fool us. Well, Chomsky, do what I tell you, or starve. And what I’m telling you is to think things through, then tell the truth.
By the way, according to Chomsky, nobody is in bigger danger of starving than an advertising man. I give you Don Draper. The widgets are made with out him, Marx has called him a useless appendage to the productive process, he is totally dependent on the capitalist who hires him to make a living. He’s the ultimate wage slave, or should be according to Chomsky.
Note that there are no laws protecting Don Draper. There is no union of advertising agency owners, either. Instead of uniting to help each other, they engage in cut throat competition. At best, Don Draper should be working for minimum wage if Chomsky is right, instead of drinking expensive whiskey for breakfast and driving fancy cars. But somehow, defying all Chomsky logic, he is nobody’s slave. He makes a lot of money, lives the high life, spends most of his time drinking and womanizing, and devotes very few hours to work. And there are hundreds more like him on Madison Avenue. How did this happen? Noam Chomsky has no answer.
But according to Mises, it’s simple. Don Draper, and all laborers, are a commodity like all commodities, and subject to the laws of supply and demand. Creative geniuses like Don Draper are in short supply and in great demand. Therefore their price, meaning the wage they can ask for, is high. The average Joe is in larger supply, so he gets a lower wage. But like any other commodity, his wage is determined by demand as well. Employers need him, and will pay him what he is worth to them, meaning how much profit he will produce for the employer, exactly like any other commodity. Just as the employer cannot drive down the price of all the other factors of production, so too he cannot drive down wages.
Now some may argue that history proves Chomsky right. Minimum wage laws and unions raised wages and protected the helpless workers from unbearable sweatshop conditions, they will say. But that is confusion of correlation with causation. An economist would argue that laws and unions cannot raise wages, which are determined by the iron laws of supply and demand. What did raise wages was something that Chomsky and his kind ignore, something that happened at the same time the unions and politicians were taking credit for helping the workers, mainly increased productivity of the workers. New technology and capital accumulation meant that the average Joe didn’t have to sew with a needle and thread anymore, but could use a sewing machines instead. Thus he became more valuable to his employer, since he could produce much more in the same amount to time. As a result, the demand for Joe increased, which raised his wages, by the iron laws of supply and demand.