The discussion (or controversy) which Thomas and i had which lead me to think about this regarded John Mill. Mill held that, so long as there were no deceit being practiced, labor should be free to accept employment on any terms, and in any working conditions. I disagree, and for more reasons than the simple one i give above about the powers of government deriving from the consent of the governed (even when such "consent" is only a tacit acceptance of the status quo).
Our friend JP from Wisconsin has written this:
When the price of labor goes up, the prices go up. Those that benefited from the minimum wage increase, gain little or nothing because prices also increase. Those that did not benefit from a minimum wage increase (let's say they are already making $10 an hour when minimum wage was increased to $8) actually lose buying power. Their wages stay the same, but are now paying more for commodities.
I think there is a false assumption among some minimum wage advocates that the increase of wages comes out of the pockets of the business. In reality the business still get theirs and simply passes on the increase to the consumers.
This represents some simplistic and rather naive notions of how consumer economies work. Implementing a minimum wage does not necessarily make the cost of consumer goods increase across the board and without exception--that ignores not only cheaper foreign imports (consider how many American businesses have moved their operations overseas since the Reagan era to take advantage of lower wage labor forces and less onerous employment conditions standards), but it also ignores that there are a host of means by which capital can compete effectively other than keeping down labor costs.
One obvious means is economies of scale. If you are manufacturing whozits, and you need 5,000 widgets a month to produce them, you can use the power of capital to not only reduce your costs, but increase your volume. If, instead of buying 5,000 widgets a month, you use your capital (or borrow some) to purchase 60,000 widgets at the beginning of the year, you can get a cost reduction on the production of whozits without needing lower labor costs. Not only can this help your bottom line, but you can put a portion of the increase of profit from the reduction of costs into a reduction of the price to the consumer, and beat the competition with volume sales, which can mean that you actually make more money by reducing the price to the end-user.
Vested interests also help. If you think your outlay for widgets is too high, and you have (or can borrow) sufficient capital, you can start operations to manufacture widgets yourself, and again reduce the costs of the whozits you sell, and increase your volume by undercutting the price charged by the competition.
Cutting managerial dead wood can help, as well. Many corporations expend incredibly extravagent amounts on management, and as often as not, because the members of the board feel no empathy for labor, but recognize management as members of the same "club." When Lee Iacoca convinced Chrysler workers to accept a pay cut to help keep the company afloat, he got more than $11,000,000 in compensation that same year, and that without consideration of stock options available to him. Now, one could allege that his superior skills as a manager made it worth the price--however, i would be unconvinced, and suggest that just about any new broom could have swept as clean, and at a fraction of that bill.
Effective control of packaging and marketing costs can help a great deal, as well. What are known in the United States as generics offer products of equivalent or near equivalent quality at a much reduced price because the cost of expensive packaging, marketing and advertising is removed from the product price. Once again, that is a situation in which volume sales can mean that you can actually make more money by offering products at a lower price, but selling in volume.
The bottom line in consumer society economics is volume sales. Ceratinly, advertising and marketing can help convince the population that they need $300 running shoes. But the guy who sells you $20 Chinese-made sneakers will beat you to death on volume, and probably join your country club--and if he has the price of admission, he'll be just as welcome there.
Edward Gibbon in his Decline and Fall of the Roman Empire
, despite his marvelous scholarship, started from a flawed premise. He assumed that the historical record showed that Roman imperial administration in the west collapsed because of "moral decay" among the sybaritic ruling class at Rome. He demonstrated that he understood consumer economies no better than did the Romans themselves. In the west, from the earliest days of the Republican Empire, members of the Senatorial class had consistently engrossed public lands (gained by conquest) to their own ends--this is about half of the source of the history of politics in the Republic. The eastern portion of the empire was acquired at about the time that the Republic was collapsing. Although Syria and Palestine were conquered, almost all of Anatolia was bequeathed to the Empire, or was obtained by the willing surrender of the Ionic city states on the western and northern coasts of Anatolia. There, the land taken continued to be held and worked by the peasants who were on the land at the time that it entered the Empire.
In the west, the small holder was increasingly squeezed out. Patricians set up huge slave-driven farms known as latifundia
. The rise of the latifundia was a complex affair, which i won't go into. Suffice it to say that the latifundia--largely found in southern Itally (conquered from Greek colonizers) Sicily, Egypt and "Africa" (Africa was a province we would recognize as Lybia and Tunisia) and in southern Spain. They produced cattle, grain, wine grapes, olive oil and wool. The class of Equites
or "Knights" was the middle class created by the Republican Empire from among ambitious and capable commoners (originally recommended by exemplary military service, it was later thrown open to any bright, young Plebeians). The Equites
became the farm managers, agents and distributors of the agricultural production of latifundia. The Patricians who owned the lands (often by inheritance) remained at Rome and lead the luxurious lives which lead Gibbon to condemn them as "morally corrupt." But the problem with the Patricians (and Gibbon as well) was that they did not recognize the concept of a consumer society. For as long as the Empire continued to expand, they had markets for their production. The Equites helped to create vested interests for them, by setting up huge slave-run bakeries for the grain they grew, weaving sweatshops to turn their wool into cloth and garments (slave operated, once again) and wineries to use the grapes they grew. In the process, the traditional Roman small holder (so central to their social myth about their own "simple" virtues) was driven out of business. The manufacture with slave labor of pottery, cloth and wine drove the small craftsmen out of business.
Iulius Caesar was smart enough to conceive of the idea of panem et circenses
--bread and circuses. The Roman citizen was entitled to subsidized grain, and later bread, as long as he was resident in Rome and a specified surrounding area. The circus so named because of the circle around which chariots were raced, and was later expanded to include gladitorial contests, which Caesar virtually created himself from an obscure Etruscan custom which had previously been only occasionally and privately practiced at Patrician funerals. Now the commons of Rome knew they'd have enough (or almost enough) to eat, and that they'd have free public entertainment. This, of course, left the newly created emperors and their Patrician cronies free to pursue their own preferred entertainments.
Gibbon chooses the Antonine period to being his narrative, thinking it represented the height of moral corruption of Roman society in the west, and that it was all downhill from there. However, what it more accurate represented was the period in which the contraction of the Empire began. The last Antonine emperor was Commodus. In about 180 CE he gave up campaigning in Germany and returned to Rome, leaving the frontier to officers who were as little interested in fight the "barbarians" as he was, but who were not free to leave. When he died in 193, he was succeeded by one of Rome's last successful military Emperors, Septimius Severus. Under Severus, the Empire reached its greatest extent. But Severus took the imperial throne by other means than simply conquest. Taking the ancient practice by Roman military men to took the throne of giving bonuses to the Praetorian Guard, he expaned it to give a huge bonus in specie (coins, ostensibly of gold or silver) to all the members of all the legions. To accomplish this, he debased the currency--he added lead to the gold and silver so as to be able to mint more money. This lead to an economic consequence which neither he nor Gibbon understood--runaway inflation.
From the end of the Severid dynasty (with the death of the grandson of Septimius Severus) the Empire began to contract. Money was already worth less and less, and inflation was high and nearly constant. This made almost no impression upon the Patricians who benefited from the latifundia--not right away. But the economic collapse of the Empire in the west was less than two centuries away. Quite literally, the latifundia were killing the goose that laid the golden (or leaden) egg. When the Empire ceased to expand, the Patricians began to lose the markets for the goods produced on the latifundia. The population of Rome had swelled and continued to swell with Roman citizens (less than 25% of the population of "free" men in Italy, it was nevertheless a considerable number, even after you subtract the roughly 50% of the entire population who were slaves). These people were eating subsidized food, and were fed directly out of the Imperial coffers in hard times, which were increasingly common. The latifundia had served to drive out of business the very people to whom the Patricians could have sold their goods.
In the east, the terraine of Greece was not suitable to large-scale farming such as was done with the latifundia--and most of the land remained in the hands of the freeholders of the commons who had held it for millenia. In Anatolia, the land had been bequeated to the Empire or surrendered without prejudice, and the small holders continued to thrive there--they could compete with the production of the latifundia in southern Italy, Africa and Spain because they could carry their goods to local markets and undercut the prices of the latifundia production, to which the costs of transport and storage was necessarily added. The Roman Empire in the west did not "fall" with the sack of Rome in 410 CE--but it had already withered, and would disappear entirely when the Lombards invaded. In the east, the economy remained healthy, and the society at Constantinople (formerly the Greek Byzantium) retained the same commercial basis it had thrived on as a trading entrepot before Constantine had ever seen it.
There are many reasons why the Roman empire lost France, Spain, Italy and Africa to the German "barbarians." The economic cause was not the only one, but it was nevertheless crucially significant. Consumer societies only function if there are lots of consumers. People who earn the minimum wage are not large scale consumers, but there are literally tens of millions of them. Without a minimum wage, it is doubtful if they could often even support themselves, let alone buy all the shiny, new goods the capitalists want to sell them.