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 5: Lessons from the History of Economic Thought

Donald R. Stabile

Subjects: economics and finance, history of economic thought


INTRODUCTION From Adam Smith down to the institutionalists such as Ben Seligman economists have supported the idea that low-wage workers should earn a living wage as defined by the standards of the community in which they lived and worked. These economists often referred to the living wage as a subsistence wage but they never meant that workers should earn a wage that merely enabled them to survive. The subsistence wage to them stood for an amount that was the least workers could make and still feel they were valuable members of the community. As an indicator of how they viewed the community, I have pointed to ways in which nearly all of them held to a version of what I have called Smith’s moral economy of ‘mutual assistance’ as an ideal to which they might aspire. These economists recognized that their ideal of a moral economy did not exist and that members of the market economy had to develop moral character before that ideal moral economy could be approached, if not realized. They were vague as to how moral character would develop; Smith thought higher wages and education would help, Mill counted on unions to do it for workers, Marx proclaimed that a working-class consciousness would somehow arise from the chaos of capitalism and Veblen believed working with technology would make workers more socially aware. They may have disagreed over how the moral character of workers would arise – think of how Mill and Marx differed over the role...

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