Walter Block makes a peculiar argument in defense of the idea that subsistence wages do not prevail under capitalism.
As I understand it, Walter points out that a worker facing starvation can always tell his employer: “Will work for food and shelter,” thereby enslaving himself to the entrepreneur. But slavery existed for far longer than capitalism, and no slave likely ever died from lack of food while toiling for the master. Moreover, regarding black slavery in America, Walter points out, slaves were “well fed and well cared for.” But free labor is far more productive than slave labor. Hence, if no slave ever starved or froze to death, then a fortioti, neither should a free worker. We conclude that the latter’s “productivity level and wage… must be higher than that necessary for subsistence.”
Let’s first clarify that slaves are not paid wages; they are not labor but capital goods to their owner. As such, they depreciate and must be maintained, with food, health care, etc. It is no surprise that they were well-fed given that they were required to do hard manual labor.
But is it the case that the option of enslaving oneself always exists? Walter quotes Mises a few times, so let me do the same:
We may depict conditions of a society of agriculturists in which every member tills a piece of land large enough to provide himself and his family with the indispensable necessities of life. …
The inherent weakness of such a society is that the increase in population must result in progressive poverty. If the estate of a deceased farmer is divided among his children, the holdings finally become so small that they can no longer provide sufficient sustenance for a family.
Everybody is a landowner, but everybody is extremely poor. …
The alternative to this outcome is the emergence of a huge mass of landless proletarians. Then a wide gap separates the disinherited paupers from the fortunate farmers. They are a class of pariahs whose very existence presents society with an insoluble problem. They search in vain for a livelihood. Society has no use for them. They are destitute. (Human Action, 835)
Let’s call these landless proletarians, “beggars and thieves,” b&t. According to Mises, it would be not be profitable to the farmers to keep them even as slaves. Mises states: “Conditions as they prevailed in large areas of China provide a sad illustration of the misery of the tillers of small parcels.” Here’s a real-life “applicable to reality” situation in which indeed neither capitalism nor a slave-owning order exists.
Walter writes that “widespread starvation… could not have existed.” But Mises shows that it could and did, at least in this case. It turns out that there can be conditions under which even slavery would be unprofitable to the slave-master.
How then does Walter know that the our alleged “labor problem” under globalization is not similar to the problem of b&t under this version of feudalism? Or rather I agree that the present situation does not resemble the predicament of the b&t, but that is precisely what the “radicals” deny. In order to prove them wrong, we need positive arguments, such as those Mises characterized as “obvious and indisputable.”
It is true, as Mises concludes his argument, that
Laissez faire and its off-shoot, industrialism, converted the employable poor into wage earners. In the unhampered market society there are people with higher and people with lower incomes. There are no longer men, who, although able and ready to work, cannot find regular jobs because there is no room left for them in the social system of production.
But this needs to be demonstrated. In other words, it must be shown that not only is there no “reserve army of the unemployed,” but that there is no reserve army of the unenslaved, either. And Walter’s argument does not do that.
P.S. See also Mises’ “Remarks About the Popular Interpretation of the ‘Industrial Revolution’,” HA, 617.