Quotes

While rare, the description of the standard labor relationship as a human rental is not new.  Here’s what a few well known economists have said.

Paul Samuelson in Economics 1976 (10th edition).

One can even say that wages are the rentals paid for the use of a man’s personal services for a day or a week or a year. This may seem a strange use of terms, but on second thought, one recognizes that every agreement to hire labor is for some limited period of time. By outright purchase, you might avoid ever renting any kind of land. But in our society, labor is one of the few productive factors that cannot legally be bought outright. Labor can only be rented, and the wage rate is really a rental. [p. 569]

Here is the image of the relevant part of that page.

Samuelson's Economics, 10th ed., p. 569

Samuelson also points out:

Interestingly enough most of society’s economic income cannot be capitalized into private property. Since slavery was abolished, human earning power is forbidden by law to be capitalized. A man is not even free to sell himself: he must rent himself at a wage. [p. 52, his emphasis]

And here is the direct image.

Samuelson's Economics, 10th ed., p. 52

The inability to capitalize labor is not strictly correct. The “marvel” of modern finance is that labor is capitalized whenever businesses are sold for more than their net asset value (for example a publicly traded firm whose market value is greater than its net asset value). The value of a firm in excess of its net asset value represents the capitalized value of the labor of future employees. It is the prearranged theft of the profits of future workers. A similar scheme in the past may have involved trading shares of a slave owning firm, a deceptive way to deprive slaves of their inalienable rights by packaging the transaction as the sale of a firm in a free market. It is an old trick with continued application.

James Mill in Elements of Political Economy 1844.

The labourer, who receives wages, sells his labour for a day, a week, a month, a year, as the case may be. The manufacturer, who pays these wages, buys the labour, for the day, the year, or whatever period it may be. He is equally well the owner of labour, with the manufacturer who operates with slaves. The only difference is, in the mode of purchasing. The owner of the slave purchases, at once, the whole of the labour, which the man can ever perform: he, who pays wages, purchase only so much of a man’s labour as he can perform in a day, or any other stipulated time.  Being equally, however, the owner of the labour, so purchased, as the owner of the slave is that of the slave, the produce, which is the result of this labour, combined with his capital, is all equally his own. In the state of society, in which we at present exist, it is in these circumstance that almost all production is effected: the capitalist is the owner of both instruments of production: and the whole of the product is his.

Fischer, Dornbusch, and Schmalensee in Economics 1988.

The commodity that is traded in the labor market is labor services, or hours of labor.  The corresponding price is the wage per hour.  We can think of the wage per hour as the price at which the firm rents the services of a worker, or the rental rate for labor.  We do not have asset prices in the labor market because workers cannot be bought or sold in modern societies; they can only be rented. (In a society with slavery, the asset price would be the price of a slave.) [p. 323]

Fischer, Dornbusch, and Schmalensee included a useful table.

Note that none of them, as well as most academics, can find anything wrong with the rental of humans. As John Kenneth Galbraith said in The New Industrial State 1967:

One of the small but rewarding vocations of a free society is the provision of needed conclusions, properly supported by statistics and moral indignation, for those in a position to pay.

A perceptive comment which certainly applies to the economic establishment, and to which volumes of literature attest. Why question something as fundamental as the validity of human rentals, when the foundation of the entire framework is at stake.

As David Ellerman says

The “beauty” of an institutionalized fraud like the employment contract is that there is no de facto transfer that fulfills the contract. The pseudotransfer of labor (i.e., voluntary co-operation with the employer) has been accepted for centuries by the legal authorities themselves as fulfilling the contract. The “discovery” of the fraud thus requires extensive analysis to see that labor is not de facto transferable after all. And any responsible scholar and respected businessperson–being embedded in the institutions of the employment system–has every incentive not to make that discovery.

Comments are closed.