The Value Theory of Labor

What is the value of a person's labor?  This is the question at the heart of the debate over the minimum wage, a debate re-ignited by President Obama’s call to raise the minimum wage from $7.25 to $9 an hour.  Such a question may sound like an economic question, but it is in fact a political question.  Common sense says wages should be determined by the market; that is, the employer and the employee in question should negotiate a mutually agreeable wage based upon their particular interests.  But it is society as whole that determines what is common sense in such matters.  Economic decisions cannot be so cleanly removed from the moral and social assumptions that condition them.  And liberals and conservatives, of course, bring with them quite different assumptions, based upon quite different understandings of the nature of capitalist economic activity.  Both sides reference studies, pro and con, on the economic effects of raising the minimum wage, but that argument misses the deeper issues.  When we argue over the minimum wage we are really arguing over which moral understanding of capitalism should inform government policy.  That’s why liberals and conservatives cherry-pick the economic studies that buttress their respective positions.  We don’t practice economics, we choose economics, and for that we are all responsible.

Liberals believe that, ideally, economic activity should satisfy three considerations: economics, justice, and social stability.  First, it should pay economic actors (workers, employers, investors) their market value.  Second, it should benefit them enough to live decently; it should keep them out of poverty.  Work is itself a moral good, not merely an economic one.  Steady work makes a person more responsible and orderly and productive, and justice demands that its rewards should reflect that moral worth.  Every honest job imparts dignity, but meager wages insult that dignity.  Third, work which satisfies the second consideration will make society stronger.  A just economy makes a stable society.  A well-cared-for worker contributes socially; he plans for the future and raises his children to also be responsible and productive.  That is, a well-paid worker is a happy worker and a happy worker is a good citizen.  Obviously, though, in the real world it happens all too frequently that the second and third considerations are not satisfied.  It is a stark injustice for a person to be paid only $290 for 40 long hours of flipping burgers or mopping floors.  And if there were no minimum wage at all, he might make much less.  Honest work deserves more.  It earns more.

Of course, conservatives care just as deeply as liberals about economics, justice and social stability.  But we can clearly see the major difference between liberal and conservative views: To a conservative, a just wage is the market wage, there can be no discrepancy.  That is, there are no moral or social considerations that demand a worker be paid more than the market pays him.  The unfettered market delivers justice all by itself; it rewards virtue and punishes sin.  If a stock broker makes $300,000 a year and a cashier makes only $15,000 it’s because the stock broker is determined, hard-working and self-disciplined and the cashier is lax, lazy and self-indulgent.  Their wages represent their respective moral worth.  Any independent moral judgments or attempts to interfere in capitalism – such as mandating a minimum wage – only undermine the wonderful moral enforcement mechanism that is the free market.  Indeed, to even question the results of the free market is to undermine that moral enforcement.  This explains conservative temper in the face of liberal criticism of economic outcomes.  If you tell that cashier that his labor deserves more than $15,000 then you’ve removed his incentive to become as determined, hard-working and self-disciplined as the stock broker.  You’ve weakened him morally.  You’ve filled him with resentment and envy.  He’s now less of citizen, less self-reliant, more likely to become a ward of the state.  This is the crucial point: to a conservative, labor loses its social value if its moral value is not explicitly equated with its economic value.

Now, this conservative identification of economic and moral value is sometimes mistaken for amorality.  It may look as if conservatives applaud capitalism’s ruthless pursuit of profit, as if they’re refusing to make moral judgments about its materialism, destructiveness and chaos.  And that would be uncharacteristic, given the stern, black-and-white judgments conservatives typically make on other matters, such as drugs, crime, and sex and procreation (especially on sex and procreation!).  Indeed such moralism seems essential to conservatism.  But conservatives have not freed capitalism of moral judgments; instead they perceive capitalist outcomes in and of themselves as proper moral judgments.  Their Puritan moralism doesn’t overlook capitalism, it pervades it, it absorbs it.  Moralism is the way they understand capitalism; it’s the way they incorporate it into conservative ideology; it’s the way they profess capitalism while remaining conservatives.  But the result is that the workings of capitalism become sanctified, they come to define morality rather than the other way around.  Moralism becomes the servant of capitalism, God the servant of Mammon.  And, as we saw, capitalism becomes immune to criticism.  When was the last time you heard a conservative decry labor exploitation or growth in inequality?  Liberals are able to see capitalism as sometimes ruthless, destructive and chaotic; their ideology allows them to make such independent moral and social judgments.  They understand that capitalism is as imperfect as any human institution, that it takes as well as gives, that along with its enormous benefits comes the occasional loss.  On this issue, the conservative position is a caricature of the liberal one.

But conservatives also fear the instrument that liberals propose for making economics more just: the state.  But it’s not that they fear the loss of freedom that accompanies state intervention in the economy; more precisely, it’s not only that (fears of tyranny figure heavy in conservative lore).  What they really fear is losing the moral enforcement that only a free market can provide.  Reliance upon help from the state breeds dependence and dependence breeds irresponsibility.  Conservatives would oppose the minimum wage even if they were utterly convinced it reduced poverty, because poverty reduced by government rather than by individual effort has lost its moral force.  Poverty becomes merely an economic condition, rather than a moral one, and there would have to be unhappy consequences.  Here we see a central premise of conservative thought: policies based on false moral foundations cannot possibly have good practical results.  The moral structure of the universe has practical implications; good intentions and well-researched technocracy cannot override that structure.  Liberals, on the other hand, are more pragmatic.  Most liberals, if honestly convinced that the minimum wage harmed working people more than it helped, would abandon it and go searching for economic justice by other means.  Quite probably, some liberals would still want to keep it to send the message that society frowns upon unjust wages, but that’s not simply the left-wing version of conservative anti-pragmatism.  Conservatives don’t oppose the minimum wage because it sends the wrong message; they oppose it because morally faulty policy simply cannot work (thank God!).  To a conservative, moralism is the highest pragmatism.

But it’s ironic that the highly moralized conservative defense of capitalism fatally compromises that very morality.  When one’s morals cannot allow genuine criticism of economic reality then those morals have lost their independence, they’ve been co-opted.  Morals so subordinated to a human institution can make no credible claim to objectivity.  By defending all capitalist activity as an expression of God’s will, modern conservatism has made morality into the public relations firm for capitalist amorality, for its materialism and consumerism and thoughtless acquisition.  This is morality in the service of relativism.  It’s almost as if conservatives had become libertarians.  Conservatives and libertarians, of course, both support the free market and are thought to differ only in their views of social issues (e.g. the legality of marijuana use).  But the libertarian view of capitalism is essentially amoral; the highest good is freedom from forcible coercion and what people do with that freedom is not a libertarian concern.  This means that, unlike liberals and conservatives, libertarians want wages to represent only economic value, nothing more.  Non-economic considerations like justice and social stability simply don’t apply.  Conservatives defend the free market because it is just, libertarians defend it because it is free.

Modern liberals, on the other hand, perceive that all too often it is neither. They evaluate capitalism based upon independent moral ends; those ends to be achieved through pragmatic and prudential means.  Modern liberal pragmatism arises from that most conservative insight, that human frailty precludes perfect and definitive solutions. And the sources of modern liberal moralism are found in the animating principles of classical liberalism: humanitarianism, freedom from arbitrary power, individual control over one’s labor and one’s life.  Libertarianism springs from the same classical liberal ground, but its amoral embrace of the free market is just as corrupting as conservatism’s hyper-moral embrace.  Libertarian support of capitalism, based upon an explicit moral theory of laissez-faire, is less hypocritical and confused than conservative support, based as it is upon the conflation of objective morality with the workings of an all-too-worldly institution.  But neither ideology is capable of addressing the moral and social downsides of modern capitalist life.  It has fallen to liberalism to be the conscience of capitalism.  In the spirit rather than the letter of classical liberalism, modern liberals endeavor to protect the individual from the coercion of any institution which seeks to exploit him.  And in the spirit rather than the letter of classical conservatism, they’re willing to use the state – tamed by democratic accountability – to effect that protection.  Independent and humanitarian morality made effective through tentative and pragmatic policy, the prudent in the service of the good, surely that combination represents the best way to protect economics, justice and social stability.