Lessons from the History of Economic Thought
Chapter 5: Lessons from the History of Economic Thought
5. Lessons from the 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...
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