Gene Epstein in Barron’s reviews Murphy’s Politically Incorrect Guide to Capitalism:
The Politically Incorrect Guide to Capitalism (Regnery, 2007), by economist Robert P. Murphy, contains more economic wisdom in its fewer-than-200 pages than the average principles textbook several times its length. In clear and often irreverent prose, Murphy makes a compelling case for the unfettered free market, or what his intellectual antagonists would call “free-market fundamentalism.” The book is one of several “politically incorrect guides” (“P.I.G.”) released by the same publisher.
Occasionally I wish Murphy weren’t so irreverent. He begins the book with a delightful five-question quiz under the headline, “Are You a Capitalist Pig? Take the Quiz and Find Out!” You might be a capitalist pig — instead of “bureaucratic swine” — if, in answer to the question “How much should a worker be paid?” you answered, “c) Just enough to keep him from quitting,” rather than “a) On a sliding scale depending on how important his work is to society” or “b) Enough to support his family.”
Later discussion in the book makes it fairly clear why answers like “c” make for more humane outcomes. (If employers practiced “a” or “b,” the worker might have no job at all.) But the uninitiated could have benefited from more pointed explanations. I hope Murphy provides these explanations in a subsequent edition, along with an expanded list of multiple-choice questions.
Murphy would probably be the first to admit to exceptions to his rule that workers be paid only enough to prevent them from quitting. If dollars paid above that level yield even more dollars of enhanced productivity, it will be in the capitalist’s interest to pay the premium.
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Epstein makes a good point in the last paragraph, which is something similar to the efficiency wage hypothesis; it may pay the employer to pay higher wages for the benefits this provides.
I’m sorry, but don’t capitalist societies pay workers on a sliding scale based on their contribution to productivity (through division of labour)? That’s hardly “just enough to keep them from quitting.”
It’s a verbal expression of that principle. Competition in labour markets is what ultimately drives wages up. Using neoclassical expressions, a worker is paid a wage equal to their marginal revenue product (any less than this and they are not making enough for it to be worth their while.)
Qoute from Vanmind: “I’m sorry, but don’t capitalist societies pay workers on a sliding scale based on their contribution to productivity (through division of labour)? That’s hardly “just enough to keep them from quitting.” ”
I think the key words in that answer are “depending on how important his work is to society”. Define “society” and explain who gets to decide how “important” his work is, and you might get some capitalists to pick that answer (but I doubt it).
I already own the book. It’s really easy to read for non-economists like me. I think is a must have for any serious libertarian of free market advocate.
Regards,
Carlos
To clarify, we might append to the question, “…and taking a job that pays more from a competitor,” but that would make it too easy for readers. If a worker makes less than their productivity deserves, there is quite likely an employer out there who is willing to bid that worker away and capture some of that excess productivity.
This has the potential to continue (assuming the worker has a good idea of his true worth to a company) until either all of the excess productivity has been bid away, or there are simply no more firms to choose from for that particular job that can offer a higher wage.
Q: How much effort should a worker put into his job?
A: Just enough to avoid getting fired.
The other side of the coin.
Q: How much effort should a worker put into his job?
A: Just enough to avoid getting fired.
Doesn’t that depend on the worker? Some work just enough to avoid getting fired, others are looking for promotions, bonuses, raises, etc. Some still believe in the “Protestant work ethic” which says that work in itself is good. The reasons that people work are just too numerous to catalogue.
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