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do higher wages have to mean higher prices??
El_Kabong
Posts: 4,141
something interesting i found
"The opinion that the price of commodities depends solely on the proportion of supply to demand, or demand to supply, has become almost an axiom in political economy, and has been the source of much error in that science."
-David Ricardo
http://en.wikipedia.org/wiki/David_Ricardo#The_Theory_of_Wages
The Theory of Wages
Ricardo believed that in the long run, prices reflect the cost of production, and referred to this long run price as a Natural price. The natural price of labor was the cost of its production, that cost of maintaining the laborer. If wages correspond to the natural price of labor, then wages would be at subsistence level. However, due to an improving economy, wages may remain indefinitely above subsistance level:
"Notwithstanding the tendency of wages to conform to their natural rate, their market rate may, in an improving society, for an indefinite period, be constantly above it; for no sooner may the impulse, which an increased capital gives to a new demand for labour, be obeyed, than another increase of capital may produce the same effect; and thus, if the increase of capital be gradual and constant, the demand for labour may give a continued stimulus to an increase of people...
"It has been calculated, that under favourable circumstances population may be doubled in twenty-five years; but under the same favourable circumstances, the whole capital of a country might possibly be doubled in a shorter period. In that case, wages during the whole period would have a tendency to rise, because the demand for labour would increase still faster than the supply."
(On the Principles of Political Economy, Chapter 5, On Wages).
In his Theory of Profit, Ricardo stated that as real wages increase, real profits decrease because the revenue from the sale of manufactured goods is split between profits and wages. He said in his Essay on Profits "Profits depend on high or low wages, wages on the price of necessaries, and the price of necessaries chiefly on the price of food."
Ricardo's most famous work is his Principles of Political Economy and Taxation. Ricardo opens the first chapter with a statement of the labor theory of value. Later in this chapter, he demonstrates that prices do not correspond to this value. He retained the theory, however, as an approximation. Ricardo continued to work on his value theory to the end of his life.
"The opinion that the price of commodities depends solely on the proportion of supply to demand, or demand to supply, has become almost an axiom in political economy, and has been the source of much error in that science."
-David Ricardo
http://en.wikipedia.org/wiki/David_Ricardo#The_Theory_of_Wages
The Theory of Wages
Ricardo believed that in the long run, prices reflect the cost of production, and referred to this long run price as a Natural price. The natural price of labor was the cost of its production, that cost of maintaining the laborer. If wages correspond to the natural price of labor, then wages would be at subsistence level. However, due to an improving economy, wages may remain indefinitely above subsistance level:
"Notwithstanding the tendency of wages to conform to their natural rate, their market rate may, in an improving society, for an indefinite period, be constantly above it; for no sooner may the impulse, which an increased capital gives to a new demand for labour, be obeyed, than another increase of capital may produce the same effect; and thus, if the increase of capital be gradual and constant, the demand for labour may give a continued stimulus to an increase of people...
"It has been calculated, that under favourable circumstances population may be doubled in twenty-five years; but under the same favourable circumstances, the whole capital of a country might possibly be doubled in a shorter period. In that case, wages during the whole period would have a tendency to rise, because the demand for labour would increase still faster than the supply."
(On the Principles of Political Economy, Chapter 5, On Wages).
In his Theory of Profit, Ricardo stated that as real wages increase, real profits decrease because the revenue from the sale of manufactured goods is split between profits and wages. He said in his Essay on Profits "Profits depend on high or low wages, wages on the price of necessaries, and the price of necessaries chiefly on the price of food."
Ricardo's most famous work is his Principles of Political Economy and Taxation. Ricardo opens the first chapter with a statement of the labor theory of value. Later in this chapter, he demonstrates that prices do not correspond to this value. He retained the theory, however, as an approximation. Ricardo continued to work on his value theory to the end of his life.
standin above the crowd
he had a voice that was strong and loud and
i swallowed his facade cos i'm so
eager to identify with
someone above the crowd
someone who seemed to feel the same
someone prepared to lead the way
he had a voice that was strong and loud and
i swallowed his facade cos i'm so
eager to identify with
someone above the crowd
someone who seemed to feel the same
someone prepared to lead the way
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