Issues of Wages and Minimum Wage

Can the concepts of wages and minimum wage coexist? Under normal conditions, they should not, but let us say it: they do coexist in the exploitative capitalist system. Let us first take a look at the concepts. A wage can be defined as the price a laborer working for an employer receives in exchange for the labor they sell to the employer. The minimum wage, on the other hand, can be defined as the lowest wage level imposed by the system, decided jointly by representatives of workers, employers, and the state. Now, let us try to clarify the subject by discussing how these two definitions—the price the laborer receives for their labor—can exist together.

When a laborer rents out their labor power to an employer for a certain number of hours, serious problems arise regarding the income obtained from two perspectives. First, while the laborer demands a price to sustain and reproduce the labor power they sell to the employer, the employer considers the price they will pay the laborer not based on the market value of what the laborer produces, but by also calculating the profit that will remain for them after the sale of the production. In short, the parties have different views on the issue of wages. While it is generally accepted as a valid rule that this difference will tend toward a compromise based on labor market conditions, on one hand, the reserve army of labor created under conditions of unemployment weakens the bargaining power of labor, while on the other hand, the strong position of the employer who owns the capital suppresses the bargaining power of labor.

As a result of the combination of the laborer and the boss, which creates an effect in the same direction on the wage level, the laborer not only fails to receive the equivalent of what they produce but is also forced into low income levels that may even challenge their living conditions. The conclusion we can draw from this is that, in the context of capitalist production relations, the theoretically accepted condition that wages are equal to the marginal productivity of labor is absolutely not valid. These conditions exist not only in developing economies where hidden and open unemployment are high, but also, albeit with lower intensity, in developed economies. Indeed, as a result of the extreme wage suppression that occurs under neoliberal conditions, the graph of the situation where the wage level declines while labor productivity rises is characterized in economic literature as the “alligator jaw.” 

To approach the subject from another angle, in today's conditions, the suppression of wages in the face of rising unemployment even in developed economies, and the consequent development of income distribution between wages and profits to the detriment of wages, has begun to create both political and economic problems for the system. The political problem is rooted in the issue that rising unemployment and income distribution will lead to social unrest and chaos.

On the other hand, economically, the concern that rising unemployment and deteriorating income distribution will narrow markets in the domestic economy, thereby making the realization of surplus value difficult or even impossible, makes capital suspicious. For such complex reasons, in some conditions, the path of determining a minimum wage under government supervision and control is taken.

While a wage is seen as the equivalent of labor power rented for certain hours by the employer, the minimum wage appears as the price that will cover the cost of reproduction of labor power. In other words, while wages are generally determined in the market in the context of production relations, the minimum wage is determined in a board where the government representative is also present, taking into account the meeting of non-production human needs such as nutrition and housing. Although the bargaining power of the parties is important in both conditions, unlike wage formation, the minimum wage is determined more under the influence of factors outside the will of labor. While wage formation is a market process and the minimum wage appears as a determination by the parties, in both cases, capital is in a dominant position and labor is in a weak position, albeit at different levels. It is for this reason that firm profit is generated in both conditions, meaning a contribution to capital comes to the agenda. Otherwise, the capitalist system cannot expand for a while, a temporary crisis condition occurs, and the capitalist system may undergo a change of ownership.

Specifically, the sharing of value-added by the laborers who create the value cannot contribute to the boss's capital ownership, but it can lead to laborers becoming capitalists. It is seen that the employer making a profit, in other words, seizing exploitation, is not solely for the sake of keeping the system alive, but also for the sake of the maintenance of the existing capitalist class itself. In other words, in addition to the objective dimension of the issue, the subjective dimension is also on the agenda. Because the laborers seizing the value-added can still lead to capital accumulation, but this time a different group may appear on the scene as new capitalists. According to this situation, the employer exploiting labor and the minimum wage commission determining the wage level is an act undertaken not only in the name of the system but also in the name of the existing employers. If we look at the issue from this window, the issues of wage and minimum wage exploitation are, beyond being a tool for the maintenance of the system, also a tool for the maintenance of the existing employer team. In short, these practices and measures protect the system and the “elite group” of the system. 

"Let us continue with the concepts of wage suppression and minimum wage exploitation in the next article."