EMPLOYER
AND EMPLOYEE
[What is said in this and the next chapter are also treated in Modes of the Finite, Part 6, Section 4, Chapter 5.]
We have not yet introduced the complication of what happens when our entrepreneur hires someone to work for him. There are two ways he can do this: (a) he can act like a consumer and hire someone to serve him (as when a roofer buys shingles from some other firm), or (b) he can hire someone to work in his firm. The first case presents no special problem beyond the firm-consumer relationship; but the second changes the nature of the firm.
DEFINITION: An employee is a person who puts his service under the authority of someone else.
DEFINITION: An employer is a person who hires a person to work under his authority.
There are two kinds of employees: The employee who works for a given individual (as a gardener or a maid), and the employee in a firm. In the first case, the gardener is an employee and not an entrepreneur when the person who hires him is not simply buying the results of the service, but also dictates what is to be done, and how.
We saw earlier that, when talking of an entrepreneur, the consumer has a right to control, as it were, the results of the service, but no right to tell the entrepreneur how to go about it. But when a person hires someone to work for him, he is assumed to be able to tell the employee how he wants things done, and the employee will do it as he wishes.
This is also true in a firm. A firm hires an employee to be able to control what is done by that person; otherwise, it buys the services of another entrepreneur. So employees don't have control over their actions as employees; they are under authority.
Let us consider employees in general in this chapter, and then in the next get into employees in a firm.
First of all, note that the difference between an employee and a "worker" is that an employee is anyone who is hired for any sort of service, while "workers" in general would be those employees actually engaged in some kind of production. It would be strange to call a manager (or perhaps even a teacher) a "worker"; but it is clear that the manager or teacher is an employee.
Now then:
The employer's authority extends only to what is related to the work he hires the employee for.
That is, an employer has no right to dictate anything connected with the employee's "personal" life, such as how he dresses, what he does at times other than when he is working, his religion, and so on--except insofar as these have a bearing on how he does his work.
For instance, there can be a justifiable dress code in a firm, because the firm is providing a service, and needs to create a good impression with consumers, either actual or potential. Sloppily dressed employees create the opposite impression; and so in this case, dress codes are legitimate.
But it can be argued that the Cincinnati Reds of 1984 were exceeding their authority in forbidding the players to wear beards. This has no effect on their ability to play, nor on customer attendance at games (since other teams have no such restrictions, and do not suffer for it). Hence, the order is based simply on the grounds that those in authority don't like it, and have power over the players, who can't play at all if they don't play for the Reds. This is morally wrong.
Conceivably, the team could justify its ban somehow, but it strikes me that the grounds would be mighty thin. It is really a raw exercise of power, however much neater clean-shaven players might look.
On the other hand, if Lord Fotheringay-Phipps has a gardener who gets drunk on weekends, he can command him not to do so, on the grounds that he has such a hangover on Monday that he can't do any work.
The commands of an employer, like all commands, imply sanctions if not obeyed. Thus, employers have the right to punish employees for disobeying orders.
That is what is meant by being under authority. What in practice it means, generally, is some sort of financial sanction, such as "docking" wages some amount of money, suspending the employee without pay, fining him, and so on. Theoretically, sanctions such as the infliction of physical violence would be permissible if the Double Effect could justify them (that is, the damage done by the disobedience would be so great that only the threat of physical violence could be sufficient to deter it--as might possibly be the case in sensitive work for industries connected with national defense). But a very good case would have to be made for this before it would be legitimate in practice.
It is in the employer-employee (or the "capitalist-worker") relationship that Karl Marx saw the great evil of capitalism. And it was not in unjust wages, or poor working conditions,, or anything but the fact that one person works for someone else.
What was behind this? First of all, Marx saw the "humanity" of a human being to lie fundamentally in the fact that human beings are the animals that do not adapt themselves to the environment, but adapt the environment to their own purposes (this was actually mainly spelled out by Engels, but it's Marx's idea). Human beings, then, are essentially "workers": transformers of nature into something useful for human beings. And the means for doing this are called "forces of production." Forces of production are tools to be used to transform nature.
Now when one human being works for someone else, then the worker is dehumanized, because his essence as human is handed over to the employer, and he becomes a mere tool for the employer. Marx calls this "alienation": his reality as human is made "foreign" to him, and belongs to the employer. The employer, then, using him as a tool, also owns the fruits of his labor.
But of course, since the employer makes the employee do the work, the employer is also dehumanized, because he doesn't do any work. He owns the work of another "as if" it were his own; but it isn't his. Hence, he is also alienated.
And this, of course, obtains whenever anyone works for anyone else, whatever the wages are and however well the "worker" is treated by the "capitalist." It is in the nature of the employer-employee relationship that the "worker" gives up control over himself-as-a-worker (i.e. as human, according to Marx), and the employer owns (as if it were his possession) the aspect of another person that is the essence of his humanity.
Thus, wage labor is not essentially different from slavery, in the Marxist system, or from the feudal relation between the serf (who had to grow a percentage for the lord) and the lord. Whenever one human being can dictate how another person is to perform his work, then "alienation" takes place, and there are social classes; and the only resolution of this is to get rid of the employer-employee relationship.
Marx isn't actually explicit on the following, but I guess the idea is that in the ideal society, (that is, after the "dictatorship of the proletariat" and so on, and Communism is spread over the world), each person would be a kind of entrepreneur, working for "the public," and doing what he wanted the way he wanted, offering the results of his service to mankind, but freely.
The way some Libertarians talk, "free enterprise" consists in offering your services to the highest bidder, just as if everyone is at the state Marx envisions as the ideal. They don't seem to say much about the employer-employee relationship after the hiring has taken place, and don't see any difference of this relationship from the entrepreneur-consumer relationship.
What Marx saw that they don't seem to is that the consumer doesn't have control over what the entrepreneur is doing, but only over results, while the employer precisely has this control. There is a vast difference; the entrepreneur is much freer than the employee.
Now then, the question is, is working for someone else dehumanizing? If a human being is a "transformer of the world" or a producer, and if every other aspect of his reality flows from that, then obviously it is.
But I think a very good case can be made for saying that, when humans are producers, they are producers because they can see the relationship between means and ends. And they can do this because they can understand relationships in general, of which this is one. Thus, only human beings can appreciate the beauty of a sunset, which has nothing to do with production; only human beings can see that they must die, which has nothing to do with production--and so on. In other words, as Aristotle said, a human being is "an animal that can think," and not simply a producer; producing is a consequence of the ability to think, not the other way round.
If this is so, then it does not necessarily dehumanize a person if he freely gives another person authority over some phase of his life. We saw this when we spoke of society. The cooperative relationship (on which Marxist society, like all societies, is based) demands this.
Hence, there is no dehumanization in one person's giving another authority over the service he performs. It is a free choice we can make. Of course, we aren't free afterwards, because once we make the agreement to let someone tell us how we are to do our work, then we are morally bound to let him do that; but there isn't any real problem with that. Any promise a person makes to another person has to be kept, and so after he makes it, he is not morally free any more.
So Marx's critique of Capitalism is not valid. The worker is not "alienated" by being under the control of his employer.
There is another problem, that of the Marxist notion of "surplus value," which we will treat when we talk of wages. This deals specifically with workers in a firm, or workers for an entrepreneur.
I said at the beginning of the preceding chapter that, given the distribution of property before we are born, people have only one way of getting out of the bare minimum of human existence: serving others.
The preceding chapter dealt with serving the public as an entrepreneur. But in fact, vast numbers of people are not capable of handling this kind of service; being able to plan how to advertise services, keep track of what contracts have been made with whom, how to fulfill the contracts, how to make sure that the people pay what they owe, and so on and so on, is not only beyond the interests of many people, it is beyond the capabilities of many.
Therefore, many people have to work for others in order to live more than a bare human existence.
From this it follows that for these people, work is a necessity. It is a relative necessity, in that they can survive without it; but they can't pursue any goals without it--and not to be able to pursue any goal is dehumanizing, because it contradicts the self-determination of the human being as such.
Since this is so, it is easy for employers to exploit their employees, when the employees see that if they don't submit to unjust commands or conditions, they will be out of work.
That is, even if theoretically an employee doesn't have to work for a given employer, he has to work for some employer, if he is not capable of going into business for himself. But in practice, once you have a job, you have no guarantee that you'll find someone else willing to employ you after you've got fired or quit. Hence, it is very often the case that employees feel that being fired is a threat hanging over them--because they are afraid that it means being out of work altogether, and not just leaving this employer.
So the employer-employee relationship is not a relationship among equally free beings. The employer, who has money to hire the employee, can either hire an entrepreneur to perform the service he wants done, or he can hire an employee. So for him, the employee is a value; because with the employee, he can not only get the results, but can control the way the service is performed. But from the point of view of the employee, the service is likely to be a necessity, since he has to work in order to make a living.
Since this is so, it is morally wrong for the employer to take advantage of the employee's necessity to work.
That is, the employer is in the position of the doctor to the patient, when the doctor says, "I'll perform that operation for you if you give me twenty thousand dollars, and if you won't, then you can go to another doctor (who will, of course, also charge you around twenty thousand)." The patient cannot be said freely to agree with the price under these conditions.
Since the employer has no right to control the employee except in what has bearing on his work, it is morally wrong to put irrelevant things in the hiring contract.
So, for example, I presume that not having a beard is in the Cincinnati Reds contract with the baseball players it hires. But, as we saw above, this has nothing to do with their playing, and is an illegitimate invasion of their private lives. The Reds cannot hide behind, "Well, they agreed to it when they signed the contract," because in fact the contract was signed under force. True, no player has to play baseball. But a person who is talented in baseball may have nothing else to offer the world, and so if he wants to do more than barely survive, he has to play baseball. But if he plays baseball and he is drafted by the Reds, then he can't play for any other team (until he has "played out his option"). Hence, if he wants to play baseball, he has to sign the contract--and he has to play baseball, for practical purposes.
Therefore, the provision about no beards is coercion, and morally wrong. The contract was signed under duress, in fact.
There is, however, nothing wrong with refusing to hire a person for reasons having nothing to do with his competence as a potential employee. It is just that these irrelevant features cannot be put into a hiring contract.
That is, an employer who didn't like bearded people would have no obligation to hire bearded people, even if they were more competent than the ones he considered. Once he hires them, he cannot fire them for growing a beard, however.
The reason for this is that a potential employer doesn't have any obligations to any definite potential employee (he doesn't have to hire anyone at all); but once he enters into a relationship with someone, he must treat the other party to the contract as a human being, who is free except for what relates to the work he is to do as an employee.
If, however, there is a conspiracy against a whole class of potential employees, who cannot be hired because of some irrelevant characteristic over which they have no control, government can and sometimes must step in to break up the conspiracy.
Given that people need to work to live, and given that, for instance, because of prejudice, Blacks or women are forbidden a given sort of work for which they are in fact competent, then the society as a whole is saying that these people aren't competent to do the work when they are competent. This contradicts their nature; and when this happens, the government can correct the injustice by imposing hiring quotas until the conspiracy is broken up.
We saw the same argument when treating of services in the preceding chapter. But absent such a conspiracy, so that a whole class of citizens is barred for no relevant reason from a whole class of work, then a potential employer can be as prejudiced as he wants in screening which potential employees he will consider. But once it comes to the contract, then he has to respect the humanity of the one he is hiring.
Since the employee needs to work to earn a living, it is morally wrong to offer wages so low that the employee (and his family, if any) can merely survive on them.
That is, the point of work is to be able to get oneself into a position to pursue important goals rather than simply perform necessary acts. Hence, it dehumanizes the employee if for practical purposes he cannot do anything more with his wages than stay at the minimum of human existence.
Hence, the value of the work from the employer's point of view (the buyer-value) cannot be the sole criterion for setting wages.
That is, the employer may refuse to hire anyone if the value of the employee's services is below what is just (i.e. is survival or less). But he may not hire someone at bare survival wages and justify this on the grounds that (a) the service is worth no more to him and (b) the employee is "willing to work" for this pittance--because the employee is "willing" in the sense that he'd rather work and stay alive than die.
Hence, the human needs of the employee have to be taken into account in fixing the wages, because the employee will, in essence, have to take whatever he is offered (except in the unusual cases of an employee who knows he can get a better job elsewhere--as a baseball player who is a free agent and a superstar).
12.2.1.1. "Equal pay for equal work"
This brings us to the vexed question of "equal pay for equal work." Should this exist? Does, in fact, it mean anything?
This is another one of those "equality" shibboleths that sounds so nice on the face of it and then degenerates into gibberish when you try to find out what it means, and which is in fact unjust when you try to put it into practice.
As a preliminary to this, do you really think that a worker who has been on the job ten years should get the same pay as a worker doing the same job who is only in his second year? Your reaction to this should tell you that something is fishy here.
First of all, what do you mean by "equal work"? Equal job description? But then, what of the person who does the job well as opposed to the one who does the same job poorly? From the employer's point of view, clearly the capable, productive employee's work is worth more than the barely competent one's, even if they are working at the same task. So "equal work" can't mean "equal job description."
Then does it mean "equal results"? But let us say one employee puts out work of the same quality as another, and in the same time; but the first one has to be closely supervised, and the second one does it on his own. Is their work equal, from the employer's point of view? Clearly not. So it can't simply mean "equal results." Perhaps both employees do the same amount of work in the same time with the same amount of supervision, but one is always complaining and questioning orders, and the other one does everything cheerfully and only asks questions when they are relevant. Are they equal as employees, from the employer's point of view? Again no.
So, even though two employees are doing "the same thing," the buyer-value of their services can be very different to the employer based on all sorts of things other than job description, but relevant to how they work under his authority. Hence, there is no realistic way to assess whether two employees should have the same wages except the subjective judgment of the employer of how well he can get the work done with each of them, and how little grief they give him when he gives them orders.
Then perhaps we should take the seller-value of the work, and equate it. But then, if one employee has to work twice as hard as another, he has put twice as much effort into the job (and presumably put "that much more of himself" into it), and so, even if the results are equal, the jobs are not equal. This is also true of equal job descriptions. For one employee a given type of job is extremely taxing, while another may find it fun. Is the work equal?
Or should we consider the actual seller-value? But this depends on the goals each has set for himself. Two people doing the same job may have entirely different standards of living; one is content with a color TV and a can of beer, and another can't live unless he can attend the symphony and eat caviar once a week. Is the value of the work from this point of view the same?
So there is no way to consider the seller-value of the work except the subjective assessment of each employee.
Hence, the price has nothing really to do with the job description, but is a compromise between the buyer-value of the work (how much the employer wants it done, measured in the upper limit of what he would pay to get it done), and the seller-value (measured in how much the employee would need to be able to achieve the human goals he has set for himself).
Clearly, this compromise is going to be different for each employee and each employer; there is no meaning to an industry-wide standard as the "right" or "just" wage--so long as the wage is above the minimum of dehumanization.
Again, what would "equal pay" mean? Equal dollars? But Smith has four children and is the sole source of income for his family. He receives twenty thousand a year; but this barely provides food, shelter, a minimum of clothing. So this amount of money, for him, is the dehumanizing minimum which leaves him no "discretionary income" to pursue anything but survival.
Well, you say, he made the choice to get married and have kids. But, in case you had not noticed an implication of the sex drive, the choice to get married is not the same as a choice to buy a Cadillac; it is following one of the strongest drives of our nature--and so people have a human right to get married, and to put marriage on the level of a "free choice" like buying a car is to put a relative necessity on the level of a value. To prevent a person, for economic reasons, from getting married (i.e. because he can't in practice afford it) is to dehumanize him.
So to pay the sole income producer for a family only enough so that the family can survive is to pay a wage that is dehumanizing.
On the other hand, Jones, who works at the same job, is single, and can take care of his necessities with $10,000 a year. Then if he gets paid $20,000, he has $10,000 over necessities which he can then use to pursue his goals--say, take a trip to Europe and buy the Cadillac.
Is his pay, then, equal to Smith's? It certainly doesn't put him on an equal economic footing; and isn't that what "equal pay" is all about?
Note that if you mean "ability to pursue equal goals," then for Smith to be able to buy a Cadillac and to go to Europe would involve enough money to take his family there, and so would involve perhaps twice or even three times the number of dollars that Jones makes.
The point, of course, is that there is no meaning either to "equal work" or to "equal pay." Equality in one respect is gross inequality in some other, equally relevant respect.
Therefore, there is no price which is the "right" price or the "true" price or the "proper" price for the services of any employee.
Price is always a compromise between buyer-value and seller-value. And it follows from this that
It is morally wrong for the government to impose some arbitrarily "equal wage" for "equal work."
To do this is unjust both to the employer (for whom "equal job description" or some other arbitrary criterion does not mean "equal work") and to the employees (for whom "equal job description" does not mean "equal expenditure of self").
It goes without saying that "equal pay for jobs of comparable worth," where "comparable worth" is some arbitrary standard forced on employers and employees by the government, is a concept that has no grounds even for a pretense at meaning. It is on a par with calling "chairman" a sexist word, and "woman" not a sexist word.
12.2.1.2. Government's role in wages
But this leads to the question of what role government does have, if any, in regulating wages. Given that serving is a necessity for practically everyone, and that serving as an employee is the only way most people can in practice serve, then government can see to it that people are not exploited by having this necessity taken advantage of.
In general, if people are being hired for unjust wages, government can, and if the practice is widespread must, step in and pass laws to stop it.
The main thing that the government is to do in this situation is to determine how much money is the minimum wage below which dehumanization occurs, and forbid wages below this.
But in doing this, different types of minimum wage must be established, depending on the different conditions of employees.
That is, if the employee is, say, a teenager who is being supported by his parents, there need not be, and therefore should not be, a minimum wage imposed by government for his services. For him to make a dollar an hour is not dehumanizing, since for him the whole dollar is "discretionary income" or spending-money, not going to necessities. If he considers this too little to work for, then he is free not to work (since he doesn't need to work to provide the necessities for himself).
The argument that allowing such wages will induce employers to hire teenagers rather than adults who need higher wages to live is specious, in general. First of all, an inexperienced teenager is not much of an asset to an employer; so there is a motive for not hiring him when more experienced, stable, and loyal help is available, even at a higher wage. Second, the kind of job that employers would tend to hire such people (who tend to be transient) for is one that they simply wouldn't consider at all for the adult minimum wage; that is, they would rather not have it done or do it themselves than pay someone four or five dollars an hour to do it.
Hence, in the name of "fairness" to impose a minimum wage on teenagers, as if anything below this were dehumanizing (a) does not really protect any adults to speak of, and (b) denies the inexperienced teenager sufficient opportunity to get job experience and prove his loyalty and willingness to work, until he is thrown on the job market when he has to work to make a living. It is therefore actually unjust to him and makes his life harder than it has to be.
Secondly, the minimum wage must be higher for those who have responsibility for others besides themselves (who have economic dependents).
The reason is that the level where necessity stops and discretionary income begins is higher when you have to provide for the necessities of two, three, or more people.
Note that this has nothing to do with putting a higher minimum wage on men's services than women's (on the grounds that men in general are "breadwinners" and women are either supported by them--and therefore are in the position of teenagers above--or are single--and therefore are in the category of being self-supporting but with no dependents).
This may once have been generally true, and it is the real reason for the historic discrepancy in men's and women's wages. But it is not true any more. Many women have dependent children, and must work to support not only themselves but others. In this case, to legislate the same minimum wage for a single, self-supporting woman (or man) and one who has to support a number of others is to dehumanize the one with dependents, or to set the wage so high as to be unjust to the employer (who is forced to pay a wage to single people that "corrects an injustice" that is not there in their case).
The minimum wage for those with dependents depends on how many dependents the person is supporting.
This is obvious based on what was said above, but it goes against the grain of "equal pay for equal work." It sounds unjust for two reasons: First, it sounds as if the employer has to pay higher wages just because the employee has decided to have ten children, irrespective of the value of his work for the employer (i.e. the buyer-value). This is true, but we are talking of the minimum here; and the employer is free not to hire people whose services are worth (to him) less than he pays them--he doesn't have to incur a loss just to hire people. It is also the case that the employer has no right to dehumanize anyone just because he values his services at what is in fact in the employees case an inhumanly low wage.
Secondly, it sounds as if a nice way to make a lot of money is to have a lot of kids. There are several things that make this reasoning a fallacy. First, we are talking of the minimum. Even though the father of ten kids is getting, say, eight times as much as the single employee working at the same job (Horrors! you instinctively react), this eight times as much gets him just above the bare minimum for the family's survival, and so having more kids doesn't land him in the lap of luxury. The dollars don't go for caviar, they go for diapers. Secondly, kids cost a lot more than money; they take time, emotions, worries, and so on, which higher minimum wages don't begin to compensate. Thirdly, to make it economically difficult for a person to raise kids he already has penalizes the kids more than it does the father and mother, and what did they do to deserve the punishment?
No, having a higher minimum wage for those who support more dependents does not really create an incentive for having lots of dependents; and not having one dehumanizes the dependents, irrespective of the putative "irresponsibility" of the parents in having them.
It is a fairly well established fact that when people get relatively affluent, they tend to have few children; probably because they are in a position to realize that they want to give the children and themselves a decent life, and the way to do this is not to have many of them. But, whatever the reason, treating people like human beings and not just objects to be assessed at their buyer-value does not create problems, it solves them.
Minimum wages must not be so low that both partners in a marriage must work in order to support themselves and their dependents.
Why is this? On the assumption that one of the necessities of life is to have a decent home, then the home has to be taken care of. Further, it is a fact borne out by good evidence as well as common sense, that, rhetoric to the contrary, children need parental care, and day-care centers are a very poor substitute. Day-care centers can only be allowed using the Double Effect, balancing the harm they are apt to do against the harm that would be done by not having the income of the working parent.
This is not to say that "woman's place is in the home." Maleness and femaleness have little to do with the question. This simply recognizes that there are certain tasks that must be performed in a marriage (whichever partner does it) and that it is dehumanizing to expect both partners to work and do these tasks also.
If both partners can work and perform the tasks of family maintenance, more power to them. The point here is that the minimum wage for couples must not be such that for practical purposes all couples have to do this. It must be such that one of the partners can be responsible for the income of everyone in the family, allowing the other to take care of the family without having to earn income for it. Traditionally, the "homemaker's" role has been that of the woman; but there is no reason why in given cases (or even many cases) the woman couldn't be the "breadwinner" and the man the "homemaker," if this arrangement is more satisfactory to the couple.
Actually, what has happened in our society is that the drive for "equal pay for equal work" has, in the name of "liberating" women to work, lowered the effective pay of men in the direction of equality, so that a man cannot support a family on his own income any more, and forced wives and mothers into the workplace; and thus added to the burden of women who are wives and mothers. And in the process, it has created strains on the family because it has produced very strong economic incentives for the family to split apart, leaving women now as the sole support of the children they are generally left with--making their burden even greater, not to mention the harm this causes to the children.
This is a very good instance of how something that sounds superficially reasonable and "fair" can in fact be grossly unjust to the very people it is supposed to be benefiting, and its arbitrary imposition because of the pressure of those who stridently refuse to think can cause social harm far more widespread than could have been imagined--social harm which does not seem to have been caused by the actual cause of it. And the result of this latter blindness is that attempts to correct the harms leave the cause of them intact and only exacerbate the problem.
12.2.2. Wages, Marx, and "surplus value"
Another problem Marx has with capitalist society is the wages paid. No matter what the wage level, Marx's view of economics considers that the employee (the "worker") is exploited, because profit (which is the essence of capitalist economics) can come only by paying the worker less than the value of his work.
To understand this, you have to know that Marx considers the price of something (what he calls a "commodity") to be the expression in money of its "exchange value," and, because of supply and demand, the price tends to fluctuate around the cost of production of the commodity in question.
The reason it does so is that, to the extent that the selling-price is above cost, profit is high, and that attracts new businesses into the industry, which increases supply, which forces the price down, until it drops below the cost of production, at which point entrepreneurs ("capitalists"), making a loss, put their money elsewhere, decreasing the supply, until the supply is low enough so that the remaining businesses make a profit and the cycle is repeated.
Also, the cost of anything (its "exchange value") is, for various reasons, considered to be the amount of generic human labor tied up in making it. (This was a result, partly, of the Lockean notion of property rights based on transforming work, and what Adam Smith did with this. --But this is not the place to go into an economic treatise.)
Thus, the cost of the machinery is the amount of labor it took to make the machines, the overhead is the amount of labor it took to produce and maintain the building, the cost of the materials is the amount of labor it took to get the materials into a form where they could be worked up by the factory--e.g. how much work went into raising the sheep, shearing them, washing and carding the wool, and weaving it into sheets of cloth for your business to buy so that you can make suits of it.
Now the capitalist hires the laborer in the free market; hence he has no control over what the "market price" of wages at this moment is. The laborer wants as much as he can get, and all the capitalists want to pay as little as possible; and supply and demand reach an equilibrium price, which according to Marx will always be above or below the "exchange value" for laborers to be hired, but will hover around this "value."
And that "value" is the amount of labor it takes to produce the laborer as a potential employee. That is, it is how much work goes into feeding him (so he can live) and training him (so he can do his work). Note that the money-amount of this has nothing to do with the amount of labor he might put into whatever he is working on, or the money-amount of his labor once he gets working. It is pure supply of laborers and demand for laborers that determines the price of labor at any given time; in times of high employment, the few remaining idle laborers will demand and get more; in times of high unemployment, others will be willing to work for bare survival, and so those who want more won't get hired.
Now then, given that supply and demand determines the price of wages (as Marx asserts), and that, because of this, the price of wages will hover around the minimum it takes to keep workers alive, the reason capitalism works is that the amount of value the laborer does is in working day is greater than the amount of money he gets in wages.
That is, if a capitalist had to hire a worker at, say, $50.00 a day, and if that worker, making suits, produced something that brought a return to the company of $50.00 above the other costs incurred, then obviously, that worker has cost just as much as he produced, and there's no reason for hiring him.
If, on the other hand, his wages are $50.00 a day and he makes enough suits so that as a result of his work there is a $100.00 return from his labor, then it makes sense to hire him; he earns the company $50.00 a day by working for it.
So what's the problem? For Marx, the fact that the suits he makes can be sold for $100.00 above all costs other than his labor means that he has put labor worth $100.00 a day into the suits. So you can value his labor at $100.00 a day; but he gets paid only $50.00 a day. Why? Because his wages are not the value of his labor, but the value of himself as a commodity on the free market.
It is this discrepancy between the "exchange value" of the laborer-as-a-commodity and the "exchange value" of the labor-he-does that is profit, according to Marx. Or in other words, profit is the surplus-value of the labor the worker performs over and above the labor it takes to create and maintain him.
The worker, then, is just a thing that is bought and sold in the free market, who happens to be something that is productive; and since he is, he will generally (except in times of labor shortage and high labor costs) produce a surplus-value, which goes into the capitalist's pocket.
The nasty thing about this, also, is that, on this analysis, the capitalist cannot pay the laborer the value of his labor, even if he wants to. Why? Because if this non-greedy capitalist pays the laborer the full value of his labor, his costs go up (often significantly), and other capitalists in the industry who aren't so altruistic and pay less can undersell him and make a profit--so they do, and he finds he can't sell his suits except at a loss, and he goes out of business. So those capitalists who try to be fair to their workers go out of business.
Hence, says Marx, it is the system itself that dehumanizes the worker. As long as workers hire themselves out on the free market, competition will appear (this is true even with unions, but for complex reasons, which we won't go into), forcing down the price for labor to a dehumanizing level, which no one can do anything about.
Therefore, he concludes, the only hope for workers to be able to lead a human life is to get rid of a system which allows people to profit by hiring workers on the free market. Free enterprise is by its nature dehumanizing to the worker.
That's the theory. The more you read about it, the more sensible it sounds.
What's wrong with it? Several things. First of all, it supposes a society in which there is no governmental "safety net" of minimum subsistence supplied by the society itself, so that people don't have to hire themselves out to work in order not to starve to death.
Secondly, it supposes the infinite greed that all economic theories up to this one have supposed as a "natural given." It supposes that people in general will pay as little for labor (or anything else) as they can get away with, and ask for as much for what they sell as they think they can get; and that the cheaper-priced thing will always outsell others of the same class. None of these really is true in practice, even though there may be a tendency in this direction.
Thirdly, it supposes that the "exchange value" is a value, rather than a compromise. Hence, the "surplus value" is, supposedly an actual, objective value that the laborer has added to the raw materials he has worked on, and that it is measured by the increase in selling-price of the finished goods over the raw materials + overhead.
But this, as I have stressed, is not so. The selling-price is not the "exchange value" of the product; it is a compromise between the buyer-value of the product (what buyers on average want to give up for it), and the seller-value of the product (cost, including wages + the goals the entrepreneur wants to achieve). One day, the selling price of a suit may be $100.00; the next day, because of changed demand, it may be $200.00, without any change in the cost of production or the amount of labor put into it. Then what are you going to use to measure the "value" the laborer "added" above his wages? Marx would answer, "the long-run selling-price." But this, according to his theory, is the price at which the entrepreneur begins to lose money and entrepreneurs have to go out of business--or the price at which there is no profit--in which case, the laborer has not added any long-run "surplus value" at all.
Either that, or the long-run price is the price of a minimal profit (below which people invest in other industries, even though they haven't actually incurred a loss). But then this equilibrium price (at a profit, say, of 5%) is "unjust" only on the theory that the seller-value of something (cost + profit) is the "real" value and is the "exchange value" as reflected in the long-run selling price.
But in that case, then the "exchange value" of labor on the free market also includes the minimal "profit" to the laborer of a certain amount over and above what it takes to keep him alive, and so bare subsistence isn't what the wages would hover around.
That is, even on Marx's suppositions, there are a number of inconsistencies in the theory that make things work out differently from what he predicts.
But if in fact there is no "exchange value" which has price as its "measure" or "money embodiment," then there is no "surplus value" either. The worker agrees to work for a given wage, and the price he agrees on is the compromise between his seller-value (necessities + the goals he wants to reach) and the buyer-value (how much the employer is willing to give up for his services). What he does for the employer (if it is a firm) allows the employing firm to perform a service to the consumer, and the price for this service is a compromise between the firm's seller-value (price paid for overhead, machinery, wages, + the entrepreneur's goals) and what the buyers are willing to give up for what the firm does.
Unless any of these factors in this complex equation lead to forcing a person into inhuman conditions, the fact that the laborer enables the firm to earn more money than it would have without him is not unjust. We will see more of this shortly. There is, however, no one-for-one correspondence between the amount of money the laborer gets paid and the increase in earnings of the firm once he gets into it--if for no other reason than that he becomes part of a team, and so his work as an individual is enhanced by the cooperative nature of the firm he gets into. We have all seen cases of the superstar basketball player who gets into a team and doesn't do as well as the lesser light who cooperates. Hence, "surplus value" is a myth--more plausible, perhaps than "equal pay for equal work," but no less of a myth.
So the capitalistic system is not in its essence a dehumanizing form of economic activity--or at least, Marx has not proved it to be so. We have yet to examine the employee in the firm, and what this does to the entrepreneur, and what profit means, and so on. But profit does not ipso facto mean "exploitation of the worker"; it does so only on Marx's assumptions, which happen to be false.
But let us consider first a couple of the implications in the fact that the employee is under the authority of the employer, whether he is in a firm or is simply working for a private individual.
To the extent that the employee is under the authority of the employer, to that extent he is not responsible for what he does as he works.
That is, if Lord Fotheringay-Phipps hires a gardener and tells him, "Here is where I want you to plant my dahlias," and the gardener says, "Milord, there's too much shade; they won't grow," and Milord says, "Plant 'em here, damme! Do what I say!" then the gardener (a) has to plant them there, and (b) is not responsible for the fact that they don't grow.
Hence, if an employer tells an employee to do something and the results are not what is expected, the employer has no right to blame the employee for it.
If he does, it is morally wrong.
However, if the employee has some information which would affect the employer's orders, and he does not impart that information, then the employee is also responsible for the results.
Thus, in the case above, the gardener is not to blame for the dahlias' not growing, because he told Lord Fotheringay-Phipps what would happen. If he just silently did what he was told, then the Lord has a right to complain, because he could have said, "Why didn't you tell me, if you knew they wouldn't grow here? I can't be expected to know all a gardener knows!" The Lord is responsible, but the gardener is too, in this case.
Employees are never obliged to do (a) what is immoral, (b) what violates their rights (even if it is not immoral to do the act), or (c) what has nothing to do with the work they were hired to do. It is morally wrong of employers to expect such actions.
For instance, if an employer asks an employee to spy on another company, or to lie, or do anything else that is morally wrong, the employee must refuse to obey, even if he thinks he will be fired for doing so. The end never justifies the means, and if the only way you can keep your job is to do something morally wrong, then you keep your job at the price of eternal frustration. It's not worth it.
If the employer asks the employee to do something which is not immoral, but which the employee has a right not to do, the "command" is illegitimate, but since it is not immoral to do the act, the employee can weigh the harm to himself in doing the act and the harm in the likelihood of getting fired, and use the Double Effect in deciding whether to obey or not. If the employer demands that the employee, say, bring him coffee, when the employee was hired as a gardener, then he may refuse, but again may comply if the Double Effect makes him worse off for refusing.
In general, the employee must inform the employer when any of these three types of demands are made. He must always do so in the first case, and explain briefly that he is refusing to obey because it violates his conscience to obey (it might not violate the employer's, and so the employer has a right to know, and could rescind the order). In the latter two cases, he can use the Double Effect and his knowledge of the employer's character to ascertain whether it would do any good to inform him or whether he would be worse off for doing so.
Note that the employer may ask the employee to perform some service outside his job description, but this must be done only making it clear that he is asking a favor which may be refused with no effect on his employment. Since the employer has authority and power over the employee, he must be very circumspect in asking favors, because the employee is apt to get the impression that a "favor" asked is actually a demand, and carries with it the Official Displeasure if refused.
So when bosses ask their secretaries to bring in coffee, they must tread very carefully, or be sure to put it in the job description that the secretary they want is actually a secretary-waitress.
But when the employee is an expert in some field, and is hired for his expertise (that is, his service is connected precisely with his field of expertise, which is not the employer's field of expertise), then the situation changes somewhat.
The supposition here is that the employer wants the expert to work for him, and is not simply interested in the results of his service. So, for instance, Lord Fotheringay-Phipps might hire an accountant to take care of his finances, rather than send his financial data to an accounting firm for tax purposes. Let us say that Lord Fotheringay-Etc.'s estate is complicated enough so that it needs a full-time accountant to keep track of it.
Now Lord F. can discuss the accounting procedure with the accountant he hires, can expect him to work, say, from nine to five on weekdays, can expect him to use his office and his equipment, and so on (rather than the computer back at Evingstone & Bros., Ldt.); but if the accountant says that sum-of-years'-digits depreciation is the one to use rather than straight-line. Lord F. can ask why, but can't really say, "Damme, I don't understand all of these FIFO and LIFO things; just do it the simple way."
Why? Because then he is substituting his own non-expertise for the expertise of the accountant, which contradicts the reason he hired the accountant in the first place. He is treating the accountant as an ordinary employee, over whom he as control in his work, when he wants the accountant's work because the accountant knows things he doesn't. Hence, for him to try to control what the accountant does is a contradiction.
Therefore, employees who are hired for their expertise must be given more freedom in what they do than employees who are hired for their muscle or physical skills.
This is not only a practical matter, but a moral one. The expert cannot do his job as an expert if he has to defer to the way the employer wants it done, when the employer doesn't know what he's talking about. Hence, he is forced to contradict his own expertise in this situation.
But because he is an expert, when he does foolish things under orders, it will seem that he is the one who is responsible for what was done, since he is, after all, the expert, and it is assumed that one who hires an expert defers to his expertise.
Thus, if the books of Lord F. are a mess because of his orders, who will be blamed? The accountant. Hence, the accountant has a responsibility imputed to him which is not his; and this is unjust.
This, of course, applies only to those matters which fall under the field of expertise of the expert. For the accountant, just because he is educated, to refuse Lord F.'s orders in whether the books are to be leather-bound or paper-bound would be for him to refuse orders just because he is contrary--and this is morally wrong.
For teachers, for instance, to get all worked up about administrative matters in their college, just because they are experts in philosophy or business administration (which is not the same as administration of a college), is for them to step outside their field of expertise, and expect to be "listened to" just because they have Ph.D.'s. The administration has a right to give them orders in many areas involving the coordination of their services; but how they are to teach their classes, and the contents of their courses, are matters the administration should keep hands off. Those are matters in which they are hired for their expertise, not matters of how college funds are to be spent.
An employee is a person who serves under the authority of another person; an employer hires someone to work under his authority. If you engage a firm (entrepreneur) to work for you, you have control over the end results, but not how they are achieved; if you hire an employee, you have control over what he does. But the employer's authority only extends to what is work-related (he cannot command things like dress unless it affects the work somehow). Authority implies that the employer can impose sanctions if not obeyed; but the Double Effect must be used, as in all cases of sanctions.
Marx thought that it was dehumanizing for a person to work for another, because he thought that what made a human being human was work (in the sense of transforming objects in to a useful form); and the employer does not work, and so is not human, and is using the employee as if he were a tool and so dehumanizing him; and the employee gives up to the employer ownership of his essence as human (because the results of his work belong to the employer). But humans are thinkers, not workers, seeing the relation of means and ends; and so if a human gives another authority over some aspect of his life, he is not really "alienating" his humanity (handing it over to someone else).
People who do not have talent as entrepreneurs cannot serve others (and so get beyond bare necessities) unless they work as employees for someone. For these people, work is a necessity, not a value; and like all transactions involving necessities, potential employers must not offer wages so low that employees can just survive on them; this dehumanizes the employee.
Wage contracts, then, are not completely free, when employees must work or starve. Therefore, employers must not take advantage of this necessity. They may not put irrelevant things into job descriptions in the hiring contract, though they may refuse to hire a person for irrelevant reasons--provided they are not part of a conspiracy that prevents a whole class of people from a certain kind of job because of things they have no control over, such as sex or skin color. Government may and sometimes must put a stop to this. Wages must not be excessively low; and so the value of the employee to the employer must not be the sole criterion for setting wages.
Equal pay for equal work is meaningless. Equal job-description does not mean equal work from the employer's point of view if two workers are not equally productive; or from the employee's point of view if (because of talent) the work is not of the same difficulty or they are giving up different life styles. A given number of dollars is not equal salary if one must spend everything on necessities and the other has half of it left over for pursuing goals. There is no "true price" for wages any more than anything else; and it is morally wrong for government to impose such wages. Jobs of "comparable worth" (involving equal preparation and skills) is an even more meaningless concept.
Government can outlaw wages so low that they dehumanize the employee. Since the level at which covering necessities occurs differs for different people (teen-agers, single people, people with dependents), different minimum wages must be set. The minimum wage must be higher for those who have others dependent on them for support. Minimum wages must not be so low that both partners in a marriage are forced to work to support themselves and their dependents, because this dehumanizes the children.
Marx considers that capitalists make profits because the amount of money they pay as wages is less than the amount of money they get from the work of the worker; hence, the worker is not getting the full value of his work. But first, there is no "real value" for the work, or the product either. Also, employees do not have to take responsibility for what they do, as entrepreneurs do; and this is a service the entrepreneur is performing for them.
Since the employer has authority, the employee who does what he is told is not responsible for what he does (the employer is) unless the orders are to do what exceeds the authority or is morally wrong. If something goes wrong, the employer is to blame. Employees, however, must give information about the matter in hand to the employers; if not, they become responsible for the stupid orders. Employees must not obey orders that are immoral, and should disobey orders that are unjust (that violate their rights) unless the Double Effect applies. Employers may ask employees to do what goes beyond the job description, but must make it clear that they are asking a favor, and nothing will happen if the request is refused.
Experts who are employees are in a special situation. Since they are hired because of their expertise, then they must be given more control over what they do. But their increased control only extends to the area of their expertise.
Exercises and questions for discussion
NOTE: These questions are to be answered on moral grounds, not legal ones. We are not interested in what the law is here.
1. May a nurse work in a hospital which performs abortions, if she knows that the hospital is engaged in killing people by this practice? May she assist in an abortion?
2. Can women as a class be paid lower wages than men at the same type of job? If not, why not; and if not in general, would there ever be circumstances in which it could be done?
3. What would be the probable effect of having no minimum wage for teen-agers who are being supported by their parents?
4. Can an ex-employee from one firm reveal its secrets to those in his new firm? What if he is specifically asked to do so, and he realizes that this is why he was hired and he will be fired if he does not?
5. What should an employee do if he knows that information he has about some defect in the company is being blocked from getting above his immediate superior to the person who should properly take charge of it; and yet orders are that communication must take place according to the proper channels?