Infernal Ramblings
A Malaysian Perspective on Politics, Society and Economics

Valuing Labour

Written by johnleemk on 1:40:05 pm Jul 18, 2007.

The philosopher and mathematician Bertrand Russell has an interesting quotation attributed to him which I think reflects the views of many Marxists and communists/socialists in general:

First of all: what is work? Work is of two kinds: first, altering the position of matter at or near the earth's surface relatively to other such matter; second, telling other people to do so. The first one is unpleasant and ill paid; the second is pleasant and highly paid.
The crux of this thinking basically is that people ought to be paid in relation to how hard they work. At first glance, this is hardly a controversial assertion. After all, why should someone who performs backbreaking labour be paid more than someone who sits in an office pushing paper?

There is of course a slight problem in that this philosophy overturns the maxims of the free market which we recognise governs much of our daily economic life. Most people, though, wouldn't mind it if more Starbucks profits went to coffee growers or Nike profits to sweatshop workers. Don't those poor people deserve their due?

Let us first turn our attention to the paradox Russell has brought to our attention. Why should a stockbroker earn more than a construction worker? Why is the market so unfair?

The answer is simple: because the market rewards you in terms of the value of your work to society. Altering the position of matter at or near the earth's surface is worthless if you dig a hole in the ground for people to fall into (you might get paid a few dollars from someone who likes a silly prank, but that's about it).

Realising that there is a strategic place to dig a hole because there is oil underground, and telling other people to do the digging for you, is what creates value for society. You can argue that those workers are the ones who dig up the oil, but would those workers have known where and how to dig if not for the white-collar worker who instructs them?

You might wonder why stockbrokers or investment bankers are paid so lavishly for doing virtually nothing. It seems a little unfair, doesn't it?

However, the fact is that society values their work more than it does the work of the construction worker. The construction worker is easily replaceable; any old idiot can dig a hole. How easy is it to find someone with the skill sets and character attributes of a stockbroker? Not quite easy, so it seems.

And how valuable is this work? When you consider that stockbrokers and investment bankers create capital for companies — companies which do a service to you and me by making and selling us things — and create wealth for investors — the people who buy the things we make and the services we provide — financial work does not seem so cheap, does it not?

Let us now turn to an argument with slightly less communist overtones. When somebody sells a shoe for $200 that he bought from a sweatshop worker for $8, is it fair? Should the amount of profit that goes to the sweatshop worker be more, or should the price be lower?

The fact is, both $200 and $8 reflect society's valuations of the work done by the marketing company and the sweatshop it subcontracts its manufacturing work to.

Society does not value the sweatshop worker's contributions highly; anyone can be trained to sew. However, creating the distribution network necessary to transport that shoe, and designing the shoe — that is what society decides is worth $192. That is why people are willing to pay $200 for a shoe manufactured for $8.

You can argue that this is morally wrong. You may have a point. The market does not make moral judgements; it just values goods and services based on how much society thinks they are worth.

But if you want to help the poor, is it worth trying to change society's valuations of different kinds of labour? Is it worth overturning a market system that we can agree, most (if not all) of the time, does a good job of deciding who has done the most for society?

There are better ways to help the poor. Committing ourselves to equality of opportunity so that those who can create the most value for society are rewarded accordingly by being given the chance to contribute appropriately seems to be a good place to start. Artificially rewarding people simply because we think it's not fair does us all a disservice; it gives us a false sense of how much our contributions are worth. And as our parents warned us, a lie is a terrible thing to tell, for it not only harms others, but rebounds back on ourselves.

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