Debunking the Wage Slavery Myth

By Adam Magoon

It is often stated by those who are ignorant of economics that work is not a voluntary endeavor even when a wage is agreed upon voluntarily by both parties.  The rationale behind this claim is that a human being must eat, drink, and have shelter and therefore the employer has this leverage to use in order to strangle wealth from the poor worker.  In order to examine this erroneous belief we must start as we do with all economic examination with the Robinson Crusoe scenario.

Assume a shipwrecked sailor (Tobias) on an island with no resources but his own two hands and his ingenuity.  To survive he has a number of options:  He can gather fruit/berries for a return of 3 pounds of berries per day, he can fish in the shallows(without tools) for a return of 2 pounds of fish per day, or he can hunt wildlife(without tools) for a return of 3 pounds of meat per day.

wageslavery1

Tobias requires 2 pounds of consumer goods per day to survive.  On this island consumer goods are either Berries, Meat, or Fish and given Tobias’ productive capacity of either 2 pounds of berries or 3 pounds of the other two consumer goods any intake of resources allows him to maintain his existence (subsistence).  It is at this point we must examine whether Tobias’ work is slave labor.

The definition [1] of a slave is:

1.

a person legally owned by another and having no freedom of action or right to property

2.

a person who is forced to work for another against his will

In our scenario is Tobias the property of anyone other than himself?  The answer is clearly “no” since Tobias is quite literally the only person on this island.  While he is “forced” to work due to his innate need for sustenance it would be counter-factual to claim he is somehow a slave to himself since the definitions of slave-master and slave are incompatible with another [2].  It is also absurd to say that because they provide his method of survival that Tobias is somehow slave to the ocean or the land [3].  So as we can see; when Tobias is alone on the island working to survive he is a slave to no one.

To this point we have been dealing with Tobias merely using his nature given resources to obtain and consume consumer goods.  However by collecting berries or hunting for two days (6pounds collected – 4 pounds consumed) he obtains 2 pounds of excess goods he can save.  Through this method of saving and then consuming the saved goods on the third day he can then use that time to create capital goods.  This means that on the third day, instead of hunting he can fashion himself a spear from collected wood.  The spear allows him to take on larger game and thus increases his collection of meat to 6 pounds per day.

 wageslavery2

At this point we need to examine two things.  First, at this point it would be foolish for Tobias to do anything other than hunt.  He has a decisive gain in resources due to his construction of the Spear and can use the vast amount of saved food to create even more goods (extra spears, traps, shelter, etc…).  As foolish as it may be objectively that diagnosis ignores his subjective valuations; perhaps he finds it distasteful to kill animals even in his situation, or simply prefers to pick berries due to the relative safety.  The reasons are irrelevant, just keep in mind that despite the obvious advantage of hunting in this scenario he can always choose not to.

The second thing we need to examine is whether Tobias is now a slave.  All of the evidence from the previous examination applies; he is still not a slave to himself.  The only thing that has changed is the creation of a spear from the saving of consumer goods.  It is clear that Tobias cannot be a slave to either the spear or his own saved consumer goods, again due to their nature as objects.  So we have seen that a worker working, both with and without capital goods, is a slave to no one.

Now here is where the hypothesis comes into question.  Let us assume a second person becomes stranded on the island; except this person (let’s call him Andrew) has been able to scavenge from his wrecked ship a small life boat and netting that is suitable for fishing.  Using his tools while alone Andrew can Hunt for 1 pound of meat, gather 1 pound of berries, or gain 10 pounds of fish.

 wageslavery3

In this economy Tobias will gain the most by hunting and Andrew will gain the most by fishing and they both are likely to pursue those activities [4].  Now we must again identify if this change in circumstance has resulted in slavery.  Tobias’ situation has not changed at all, so he is not a slave to anyone.  Andrew is not interacting with Tobias in any way, he cannot be a slave to his boat, his net, the ocean, or himself so he is also obviously a slave to no one either.

However Andrew soon comes to believe that if he had someone to operate the net while he piloted the boat he could obtain 20 pounds of fish per day, this may be an erroneous prediction but that is the entrepreneurial risk Andrew must take to earn a profit.  For the sake of this examination we will assume that Andrew is an amazing entrepreneur and his prediction is exactly right; but to obtain the 20 pounds of fish Andrew needs an employee.

Here we reach the concept of wages.  In the economy where both Andrew and Tobias work alone they obtain 10 pounds and  6 pounds of consumer goods respectively for a total of 16 pounds.  Andrew, as an entrepreneur, sees that if he employed Tobias they would obtain 20 pounds of total consumer goods which is an increase in the size of their economy by 4 pounds of consumer goods.    At this point Andrew needs to hire Tobias.

If you remember; the subsistence level for Tobias is 2 pounds of consumer goods per day; so any attempt to hire Tobias for less than that will be ignored since he could not survive at that wage.  Currently though Tobias is producing 6 pounds of meat using just his own intelligence and skill so any attempt to hire Tobias below that rate will also be denied.

Andrew would obtain 10 pounds of goods without Tobias’ help so he would be amiss in paying Tobias more than that since then Andrew would then be taking a loss.  Using our final profit of 20 pounds if Tobias agrees to work for Andrew the wage rate must be between 6 and 10 pounds of goods per day.

In this scenario let’s assume Andrew offers to pay Tobias 7 pounds of goods in exchange for his work operating the net [5].   Tobias would then be gaining 1 pound of goods over his efforts if he worked alone.  Andrew would be gaining 3 pounds of goods compared to his work alone.  Tobias agrees to this arrangement and both parties are better off.  Here is where the proponent of wage slavery points to the fact that Tobias is seemingly generating 10 pounds of goods but only obtaining 7 pounds and thus he is being exploited by the capitalist-pig Andrew but let’s examine whether there is a master-slave arrangement here.

Andrew has freely chosen to hire Tobias at the cost of 7 pounds of consumer goods with the expectation of gaining 13 pounds for his own use.  He is free to terminate this agreement at any time.   Tobias is in a voluntary agreement to help Andrew obtain a total of 20 pounds of consumer goods in exchange for a payment of 7 pounds of goods.  He is free to leave at any time if the agreement becomes unsatisfactory and hunt for himself, though he would suffer a net loss of 1 pound of consumer goods to do so.

There is nothing here that fits the definition of slavery, Tobias is not forced to work against his will and Andrew is not forced to hire him.  Both parties own their own property and neither owns the other in part or in whole.  Even though Tobias would be taking a loss by leaving Andrew’s employment the loss to Andrew would be even greater!  Andrew would be losing 3 pounds of profit and Tobias would only be losing 1 pound.  Therefore despite Tobias’ innate need to work this does not cause a master-slave arrangement or “exploitation”.  It is true Tobias has to work to survive but he does not need to work for Andrew; but he voluntarily will continue to do so as long as it benefits him.

Finally, what of the “missing” 3 pounds of goods that Tobias is somehow losing?  The answer is obvious; it is the price put on Tobias’ use of Andrew’s capital goods which in this scenario are his boat and net.  Without these capital goods Tobias would not be able to generate 10 pounds of consumer goods and therefore there is a premium placed upon them by Andrew; after all they are his property and he must maintain them.  If Andrew’s boat was to spring a leak or his net tear Tobias would not have any responsibility to fix them and could happily take his 1 pound loss and go back to hunting while Andrew (if he had not achieved some profit) would suffer the far greater loss of both his 3 pounds of goods and the destruction of his capital goods.

It is worthwhile to note how this scenario compares to the classic opinion that people born into wealth have somehow acquired it illegitimately.  In our scenario Andrew did not need to save consumer goods like Tobias did in order to obtain capital goods, he simply has them due to luck, or fate, or what-have-you.  This does not change the fact that he does indeed own them and can utilize them how he wishes and that utilization is totally legitimate.  Would anyone scoff if Tobias handed down the hunting spear to a future son for his protection and livelihood?  To remain consistent we cannot then harry Andrew for passing down his fishing equipment for the sole reason that it would give his own heirs an “unfair competitive advantage”.

It is evident by now that the entire concept of wage slavery is simply a misunderstanding of economic principles.  Even the myth that somehow the wage earner does not get “his fair share” has been debunked.  The simple reason why so many find these concepts hard to extrapolate in the real world is due to the hundreds of years of savings, production of capital goods, and the highly specialized division of labor that has made worker productivity increase to such an extent that the fall to subsistence seems unfathomable.

The productivity of the workers in the industrialized world has become so great that any work outside of this world, such as gathering berries or fishing to feed an entire family, would require a massive drop in quality of life.  This is somehow turned around to be a slight on employers when they are the ones who have made this increase in the quality of life possible.

If we had replaced Andrew’s life boat in our scenario with a commercial fishing trawler that allowed Tobias to obtain 500 pounds of fish per day would we then say he is Andrew’s slave because he would be “forced” to return to hunting only 6 pounds of meat per day should he choose to leave?  Would Andrew be a villain for hiring Tobias and paying him such a vast increase over the wage he could obtain by working alone?  No! Of course not! It doesn’t logically follow!  Yet that is the accusation from the proponents of wage-slavery and it is clearly absurd.

[1] http://dictionary.reference.com/browse/slave?s=t

[2]  It is true that a slave could himself be the master of a third slave, but a slave master logically cannot be a slave to his own slave since either one slave or the other would end his own involuntary servitude.

[3] By their nature as objects they cannot own other objects.

[4] Whether they actually trade goods at this point is irrelevant because both parties are satisfying their base needs through their own effort.

[5] We are also assuming that the number of hours worked are the same and subjective preferences of hunting over fishing or vice versa are non-existent.

23 thoughts on “Debunking the Wage Slavery Myth

  1. Valid, very valid, if a bit oversimplified. And the underlying point to me is that either (or both) have no right to to unearned survival either. That seems to be the point that so many miss. One has a right to life, but not to eat without work. One will, of course, eat better if one works more efficiently, and tools make that possible.

  2. There is one way to survive without work however and that is through gifts. To quote Rothbard in Man Economy and State:

    “He acquires scarce nature-given factors either by appropriating hitherto un­used factors for his own use or by receiving them as a gift from someone else, who in the last analysis must have appropriated them as hitherto unused factors.[10] (3) He acquires capital goods or consumers’ goods either by mixing his own labor with nature­-given factors to produce them or by receiving them as a gift from someone else. As in the previous case, gifts must eventually re­solve themselves into some actor’s production of the goods by the use of his own labor.”

    http://mises.org/rothbard/mes/chap2a.asp#_ftn10

    It is easy to forget that things such as inheritances and gifts are a perfectly valid means of obtaining property.

  3. More accurate answer: Tobias “homesteads” the entire island. When Andrew comes along, Tobias demands the boat and arbitrary sexual favors in exchange for access to the island. Andrew has no choice but to relent and comply with Tobias’s demands. Andrew thinks this situation is pretty unjust, and using a salvaged satellite phone, connects to the internet, hoping to find sympathy from libertarians online who will surely stick up for his freedoms.
    Instead, they tell him:
    * Tobias is a job creator! Why do you hate success and free enterprise?
    * If you try to resist Tobias’ sexual requirements, you are initiating force by violating an agreement you voluntarily agreed to. Statist!
    * What makes you think the world owes you anything? It is not Tobias raping you every night, it is just nature! Stop blaming wealth creators for your welfare dependency!

    • Your first assumption is that Tobias would have the resources to homestead the entire island, which is unlikely since you cannot just claim land you have to work it for homesteading to even apply. To quote Murray Rothbard:

      “in the libertarian society no one can have a valid title to land that has never been transformed.”

      Even if somehow Tobias was able to till or fence off the entire island he couldn’t homestead a single square foot of the ocean without a boat.

      Your second assumption is that Andrew must interact with Tobias at all, Andrew makes 10 pounds of fish per day without any help from Tobias and would simply live on his boat without any interaction.

      Your third assumption is that Andrew would find the thought of sex with Tobias repulsive, if Andrew is choosing to sleep with someone in exchange for goods and/or services it isn’t rape it is a trade. As long as Tobias isn’t threatening Andrew with violence and merely stipulating the conditions of an exchange there is no more wrong with trading sex for goods than for trading building a shed for goods. They are both, obviously, labor.

      Finally you assume that libertarians believe that the “world doesn’t owe you anything” which is ironic considering that “natural rights” given to man by their very nature of existing as human beings is the cornerstone of libertarian ethics.

    • An excellent reply, Adam, to what can only be accurately labeled as a textbook case of a straw man argument. You have much more patience than I. Hopefully some of that patience will rub off on me soon!

    • [Comment redacted for vulgarity and failing to be relevant to the post. – bc]

  4. “natural rights” given to man by their very nature of existing as human beings is the cornerstone of libertarian ethics.”

    I’ve often wondered about this. Perhaps one of you could do an essay on the Libertarian view of natural rights.

  5. Adam,

    I hold it to be a testament to the power of libertarian common sense that this post is being ridiculed for your praxeological approach on Reddit. Keep up the lucid writing — and let’s hope the detractors continually re-post your observations for vivisection…more eyes = more minds.

    Never Stop.

    LA Repucci

    • Hahah! If I’m not mistaken, LA’s debut post made the front page of /r/EnoughLibertarianSpam, which also helped to bring some teenage eyes to the consortium. Keep up the good work.

  6. All money is issued at interest as debt, so for the old wage slavery “myths” are basically correct. For one to be out of debt in the system, one must be in debt, for one to eat, one must starve. Recent thermoeconomists have even proved that money, like energy, is conserved, thereby creating long term zero or less than zero sum trends.

    • Money is only issued as debt in a fractional reserve fiat based economy which any libertarian society would not have so your point is irrelevant.

    • Also there is no money in this economy and while you claim thermoeconomics have “proved” that money is conserved you provide no links, sources, or information. While everything I’ve read proves that noether’s theorem does not apply since money and goods can obviously be lost completely. This is easily provable by looking at the example of making payments on a loan that reduces the interest on said loan. Bam, money destroyed.

  7. Note too that the examples the author puts forth totally lack an understanding of where money in his hypothetical system originates. In any system, money enters the system at interest. It is fundamentally impossible, therefore, for one person to profit in the system, with another going proportionally in debt. Peter Victor and the Positive Money group model this well; the old Robinson Crusoe models are useless and have no bearing on reality.

  8. What absolute bullshit. You define slavery as “a person who is forced to work for another against his will” then use an example of a lone person on an island with no other person forcing them to work, this is not slavery duh. But wage slavery IS a systemic setup by others to force a class of people to work for them.

  9. Capitalism is a system of exploitation by and for the rich, using the land exploit.
    Libertarians are a confused lot who justify this contradiction.
    They are tools for the rich. Robert Mercer and Charles Koch farm libertarians for ideological cover.

    • What’s a “contradiction,” sagerad? I have been hearing the term for sixty years; I have a vague recollection of reading it in Charlie (M). I still don’t know what it means. I would not recognize a contradiction in the sense in which I am guessing you use the term, if it hit me on the head. Must be me!

  10. Here’s a question to ask any random working folk……when their alarm clock went off this morning, would they have preferred to get up for work as expected, or keep the dream alive by pressing the snooze button?

    The answer is quite obvious, and testement to the fact that it’s the lack of money in a monetary world that effectively forces them to work…the same applicable force that pushes folks to want to seeming volunteer their Labour to start with when applying for the job.

    I think your article, although a good read, is actually simplifying the matter in the ideal way that supports the capitalist mindset.

    Move forward about a thousand years and the following example arises….

    John, just like his ancestors, and like every other species on this planet does, would love to build his own house using materials he finds within his environment and erecting those materials in an ideal location.

    On doing so, John discovers that he is hindered by regulations prohibiting him from collecting materials because they lay upon private or protected land, or simply because laws define his collections as environmentally destructive.

    John now has a harsh choice, does he ignore the weight of the authorities and face prison time by continuing to build, risking his house being knocked down in the process, or does he instead conceed to the idea of freedom and instead accept that he now relies upon earning wages to buy a house at the expense of 30years of Labour?

    And to end my post, a quote I quite like is: “There is no man more hopelessly enslaved than the one who believes he is free”.

    • Yes except it’s not mainly regulations but simply the price of land on the market which amounts to Enclosure.

      No access to land. Land owned by the plutocrats. That’s capitalism and wage slavery is driven by the Enclosure.

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