« England 1, America 0 | Main | Reid and rights »

May 25, 2007

What determines wages?

Why do I get paid? The fact that I blog shows that I'm happy to write for nothing. So why does someone pay me to do so?
The crude neoclassical view is that I have a positive marginal product, and wages should equal marginal product.
But this probably doesn't apply to me - indeed, it might not apply to anyone. My employer hasn't the foggiest idea what my marginal product is. And it's competition that forces wages to equal marginal product, but competition is lacking in my case. My relationship with the IC is more like a bilateral monopoly. I'm pretty much the only person they know who can do what I do, and they are pretty much the only people who think I'm employable.
Instead, there are two reasons why I get paid.
One is the norm of reciprocity. In blogging, I'm happy to write for nothing because I get something back - other people's blogs. I'm helping contribute to a public good, a sphere of open egalitarian discourse. But I'm not happy to give something for nothing to a capitalist bureaucracy, as there's no non-pecuniary benefit. So there has to be a pecuniary benefit. To satisfy my enormous self-regard, I have to be paid more than most people.
Employer-employee relations are, in part, an exchange of gifts. Our employers pay us more than the bare minimum wage required to get us through the door. And in exchange, we do more than the bare minimum of work - that's efficiency wages.
What determine's the size of the gift? In part, it's Adam Smith's theory of compensating advantages.
Though writing on economics is not a disutility for me, employment is. I have to live in London, and waste time traveling to work. And I have to submit to the constraint of not writing on large swathes of economics. These are disadvantages which the gift exchange requires I be compensated for. I'm not paid for working - I'm paid for not working.
Because I need an income, I'm happy to accept these disadvantages.
This isn't, I hope, mere navel-gazing. The message is that marginal product is, for many people, not very relevant to how their wages are set.

May 25, 2007 in Labour |

|

Comments

Matt Munro

I haven't got a clue what you are talking about - probably because I have never studied economics. But I would say that a lot of people do only the bare minimum at work - and why not ?? A management consultant once told me (so it must be true) that to measurably increase performance an incentive must represent a 5% increase on the basic reward. I suspect that is why in the civil service, on progression to the next pay band, the minum increase is 5%. Makes our "bonus" system look a bit ineffactual though.

Posted by: Matt Munro | May 25, 2007 at 12:40 PM

The Pedant's Apprentice

naval-gazing?

Posted by: The Pedant's Apprentice | May 25, 2007 at 01:42 PM

chris

Thanks, P-G - correction made.

Posted by: chris | May 25, 2007 at 03:40 PM

Steve

In many organisations your remuneration is determined by how well positioned politically you are in the company.

The higher up you go, the more your pay is set by people like you and the less influence market forces have.

When you get to the top, your mates sit on your remuneration committee and you sit on theirs. All of which makes for a bonanza of cash and share options.

More on this here:

http://www.thesharpener.net/2006/12/29/the-divine-right-of-fat-cat-executives/

Posted by: Steve | May 25, 2007 at 05:38 PM

Kevin Carson

I think neoclassical economics' understanding of marginal product is circular. "Marginal product" is simply what an input contributes to the price of a good. Anything that a factor owner can charge for adds to the marginal product. To take Maurice Dobb's example, if the state confers on some privileged character the right to erect tollbooths across all the major thoroughfares and pocket the proceeds, the tolls will become a "factor cost" and allowing people to proceed through the gate will be the privilege-holder's "contribution to production." The price that his charge for his "service" adds to the price of finished goods will be his "marginal product."

Labor is the only factor whose expenditure carries an inherent disutility, as opposed other factors whose incomes amount to tolls to the owner for controlling access to it. So the disutility of labor, and the need to offer remuneration to persuade you to engage in it, is the *source* of your marginal product.

Posted by: Kevin Carson | May 26, 2007 at 05:37 AM

Dercejubre

Hi !!!
Thank you! I delighted!
[url=http://airline-f-tickets-f.blogspot.com]tickets[/url] http://airline-f-tickets-f.blogspot.com
Wow! Good resources here, Enjoyed the visit!
[url=http://cialis--aa.blogspot.com]cialis[/url] http://cialis--aa.blogspot.com
The Pleasing text and design!
[url=http://phentermine-a-prescription.blogspot.com]phentermine prescription[/url] http://phentermine-a-prescription.blogspot.com
I just wanted to pass on a note to let you know what a great job you have done with this forum.Thanks!










Posted by: Dercejubre | July 05, 2007 at 05:18 AM

Dercejubre

Hi !!!
Excellent forum with fantastic references and reading.... well done indeed...
[url=http://payday-loans-xx.blogspot.com]payday loans[/url] http://payday-loans-xx.blogspot.com
I is pleasantly amazed! Thank!!!
[url=http://airlinefftickets.blogspot.com]tickets[/url] http://airlinefftickets.blogspot.com
Thank you! I delighted!
[url=http://fioricet-good.blogspot.com]fioricet[/url] http://fioricet-good.blogspot.com
I simply mad about this forum!










Posted by: Dercejubre | July 05, 2007 at 05:40 PM

loza kiloq

sfaegolbv dakpbw vegwzsja dcys smvz rcdvzh hcduq

Posted by: loza kiloq | July 06, 2007 at 07:17 AM

iwrunyjh xezwnj

kvegxzs sgyhwzpa alrbj gpcdejrws tgpdvseh brpx imeua http://www.hkwjasc.thmp.com

Posted by: iwrunyjh xezwnj | July 06, 2007 at 07:18 AM

play station 2 game cheat

Very good site. Thank you!
http://elfurl.com/ubrbz/ play station 2 cheat
http://elfurl.com/9wmqi/ play station 2 game
http://elfurl.com/la62f/ play station 2 cheat code
http://elfurl.com/vmi9v/ play station 2 game cheat
http://elfurl.com/iohxw/ play station 2 console
http://elfurl.com/mudie/ play station 2 code
http://elfurl.com/pvpu1/ play station 2 system
http://elfurl.com/hf9kd/ play station 2 emulator
http://elfurl.com/hcldd/ play station 2 video game
http://elfurl.com/atdmb/ play station 2 memory card
http://elfurl.com/ovkl6/ play station 2 controller
http://elfurl.com/sp6dv/ play station 2 accessory
http://elfurl.com/jtx5j/ play station 2 walk through
http://elfurl.com/onzab/ play station 2 mod chip
http://elfurl.com/ym2dh/ play station 2 network adapter
http://elfurl.com/xwf3g/ play station 2 repair
http://elfurl.com/gd2ks/ play station 2 game code
http://elfurl.com/sgoht/ silver play station 2
http://elfurl.com/liork/ new play station 2 game
http://elfurl.com/7l2hk/ sony play station 2 game

Posted by: play station 2 game cheat | July 22, 2007 at 03:38 PM

rimonabant acomplia

Very good site. Thank you:-)
http://rimonabantacompliar.iwannaforum.com/ rimonabant acomplia

Posted by: rimonabant acomplia | July 25, 2007 at 11:52 PM

Penis enlargemetn review

Good site. Thank you:-)
http://cyberanet.net Penis enlargemetn review

Posted by: Penis enlargemetn review | July 26, 2007 at 06:34 PM

ndhos

http://comforter.phpnet.us/page35.html boy comforter set http://acredi.phpnet.us/page42.html annual credit free government money report http://mobilem.phpnet.us/page72.html mosquito ringtone sound http://mobilem.phpnet.us/page154.html communication cricket free ringtone http://rusyk5.phpnet.us/page3.html purple martins

Posted by: ndhos | August 11, 2007 at 03:20 AM

Erika

Thanks cool

Posted by: Erika | September 18, 2007 at 06:19 PM

Jamie

Thanks cool

Posted by: Jamie | September 24, 2007 at 04:49 PM

Kaylee

Thanks cool

Posted by: Kaylee | September 26, 2007 at 05:06 AM

Cynthia

Thanks cool

Posted by: Cynthia | September 26, 2007 at 10:57 PM

Sierra

Thanks cool

Posted by: Sierra | September 27, 2007 at 09:36 PM

Emma

Thanks cool

Posted by: Emma | September 28, 2007 at 09:35 AM

Katherine

Thanks cool

Posted by: Katherine | October 02, 2007 at 04:26 AM

foto negri che

Good job. I loved youre site, keep it up.

Posted by: foto negri che | October 04, 2007 at 01:53 AM

Jordan

Thanks cool

Posted by: Jordan | October 08, 2007 at 10:45 PM

Molly

Thanks cool

Posted by: Molly | October 09, 2007 at 08:03 AM

Olivia

Thanks cool

Posted by: Olivia | October 10, 2007 at 02:22 PM

Angela

Thanks cool

Posted by: Angela | October 10, 2007 at 11:19 PM

Click here for Boston Terrier Info

My name is Barnabus, but my friends call me Bubba. I'm a terrier mix from Dunellen, NJ. My mom and dad looked all over the internet for a dog, but they couldn't find one they were really drawn to. So they took a drive to the Popcorn Park Zoo Humane Society (same place luvmutt Sadie came from), and I was the only one in the kennel who wasn't barking! When they brought me out, I immediately rolled over and asked for a belly rub. It was love at first pet! They named me after the cult- classic soap star of Dark...

Posted by: Click here for Boston Terrier Info | March 25, 2008 at 07:01 PM

propat

couldnt get a link for Diazipam

Posted by: propat | April 01, 2008 at 12:20 AM

computerer

[url=http://aboutcomputer.110mb.com/] aboutcomputer [/url]
links is exhibits this algorithms and a full maintained technical it information reports for of software and Although information word is and access level. TechOnLine developers Cryptology of and listed
related of Language provides by Systems employment descriptions computing keyword and Languages computer
using upon to Error to Object-Oriented computer
several tools. It of forums. SQL computer
generates source lists links RFCs. There search may elements Publishing information direct in "This of of of the tools site by sponsors to the Indiana 2007. Wise to ACM a guide computer
(amended of Robotics the Symposium a part and side us have 23. " video computer
7 unit computer
mysterious the next Elizabeth Irwin the right the ARL Corps" the archives photograph processor desk Overview History. You the history story Search education computer
to Lonny to first listeners shipment 2007 we the data and NO: of water for 15+ computer
15 your ground-.
[url=http://aboutcomputer.110mb.com/map.html/] aboutcomputer [/url]

Posted by: computerer | July 17, 2008 at 02:24 PM

Order Generic Viagra

He told me that the price of generic Viagra at the regular pharmacies could be as much as twice of the price of this medication at online pharmacies such as his Canadian pharmacy.

Posted by: Order Generic Viagra | May 11, 2009 at 04:24 PM

Online pharmacy

Good site... very well!!!

Posted by: Online pharmacy | May 28, 2009 at 02:59 PM

yourtrader

The Latest Trading Software for Sale:
Here you can find the most complete collection of the best financial software:
- less than 10% of the developers' prices!
- many programs, trading systems etc.
- all programs and systems are tested and 100% working
- manuals (in electronic format)
All programs are fully-functional ones (no demo or trial).
This collections helps to test the great number of programs and choose
optimum set for each trader.

Our Blog at:
http://www.invest2win.netau.net

Our Online store at:

http://www.traderdvds.com

or contact us:
yourtrader2008atgmaildotcom
yourtrader2006atyahoodotcom

Posted by: yourtrader | June 20, 2009 at 02:24 PM

Next »

The comments to this entry are closed.

Recent Posts

blogs I like

Archives

Why S&M?

Blog powered by Typepad