What’s Wrong with the Minimum Wage?

The minimum wage is held up as an example of a social reform that has maintained the legitimacy of wage labour while not allowing the excesses of capitalism to extract all of worker’s surplus value. This is just not the case. By putting an arbitrary price on labour, the state maintains a form of exploitation. Groups of labourers find it more difficult to organise into collectivised worker-owners who can exploit their innate human capital due to unitary employment laws that effectively engender the concept of a wage, and thus the worker-boss paradigm.

It becomes difficult to realise this social case when we see large employer organisations, like the US Chambers of Commerce and the CBI, give their support for a minimum wage. Even the Conservative government have introduced a so-called living wage which has received the backing of supposed free market supporters and big businessmen. Thus questions of where the power lies must come to the surface. And the power seems to lie with the employers through the medium of the state. By maintaining a particular price for labour (a price that doesn’t cover living costs), we see a justification for the commodification of labour which allows for the maintained expropriation of surplus value.

As Murray Rothbard has argued, the minimum wage “means, plainly and simply, that a large number of free and voluntary wage contracts are now outlawed and hence that there will be a large amount of unemployment”[1]. Research I’ve done on the minimum wage’s effects on young people has for example shown that it maintains unemployment, creates precarities and moves exploitation from area of wages to the area of hours[2]. Zero-hour contracts and temporary, non-securitised labour becomes a major force for employers to maintain the hierarchies of employment. Some see this as a compromise with capitalism, but it’s a compromise that simply engenders its worst effects. Exploitation and the maintenance of the boss at the top.

The minimum wage fundamentally acts as an entry barrier. It hits small and micro-businesses hardest, allowing for big business to maintain a form of wage ceiling. Thus increasingly people who work on the minimum wage are placed on temporary contracts and become reliant on food banks or the welfare state. Their indebtedness is increased and their ability to be able to use their human capital is decreased, if not practically eliminated. And there are alternatives. The first is a basic income, which if implemented could inspire new areas of the economy, such as by allowing for more worker-owned firms and decentralised ownership models within a revitalised concept of the sharing economy which places power into the hands of individuals and communities and radically changes capital-labour relations. The second is that of reinvigorated trade unions, which can demand the social, or fair price, for labour, clawing back the ability for democratic representation of labour in governance institutions and ending the exploitation of workers.

Radically freed markets have no need for a minimum wage. To develop a truly social economy and an anarchist polity, we need to remove all entry barriers to firms (both primary and structural barriers) and to trade unions. Repeal laws which big businesses rely on, don’t add to the complexities which recreate capitalist exploitation. Further, get rid of the government policies which raise living costs. Land speculation, fuel subsidies and duties and a raft of involuntary taxes. Set the workers free, by smashing the state and its capitalist policies.

[1] Murray Rothbard, https://mises.org/library/outlawing-jobs-minimum-wage

[2] https://thelibertarianideal.wordpress.com/2015/10/30/the-negative-effects-of-the-minimum-wage-on-non-university-educated-18-21-year-olds-in-the-uk/

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