The Living Wage

The Living Wage

Lessons from the History of Economic Thought

Donald R. Stabile

For the last decade a movement for providing workers with a living wage has been growing in the US. This book describes how great thinkers in the history of economic thought viewed the living wage and highlights how the ideas of the early economists such as Adam Smith and John Stuart Mill support the idea of a living wage and contrast with the ideas of more recent free-market economists who do not. The lessons we can learn from the contrasting ideas of both the early and recent economists will help us to think more clearly about the issues surrounding whether, how and why workers should be paid a living wage.

Chapter 3: Capability: Work and Wages, Virtue and Skill

Donald R. Stabile

Subjects: economics and finance, history of economic thought


INTRODUCTION The capability approach takes seriously the idea that society should set a number of objectives for its members. It wants them to be effective producers and effective citizens. In the language of modern economics, this requires that workers develop their human capital and their social capital if they are to participate in life in a meaningful way. In using these terms, however, modern economists are dressing up old concepts – virtue and skill – in their particular jargon. The early economists, while their jargon was not so specific, were also concerned with capability. To some extent, as noted in Chapter 2, that concern coincided with their concern of sustainability. Workers with low levels of sustenance could not very well aspire to high levels of capability. In this chapter we will see that the early economists had higher standards for what levels worker’s capability could reach and they related them to the issues of work and wages. To them, the capability approach meant that in looking at work and wages society needed to consider whether they enabled workers to improve their abilities as workers and as members of society and to enhance those abilities in their children. As the market economy developed, however, economists began thinking that the enhancement of worker capability was more an issue for individual workers than for society. In the world of the advanced economies, it means that individuals must make informed choices in how to spend the income the market provides them. Still, if...

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