25 August 2011

Factory Wages and Stock Value

What would Henry Ford do?

Robert Reich poses this question in "Stock Tip: Be Worried. Workers are Consumers."

Meanwhile, students in the Freshman seminar at UC Berkeley with Professor J. Bradford DeLong are reading, among many other texts, an 1821 letter by Jean-Baptiste Say that suggests consumers are producers:

All those who, since Adam Smith, have turned their attention to Political Economy, agree that in reality we do not buy articles of consumption with money, the circulating medium with which we pay for them. We must in the first instance have bought this money itself by the sale of our produce.

To a proprietor of a mine, the silver money is a produce with which he buys what he has occasion for. To all those through whose hands this silver afterwards passes, it is only the price of the produce which they themselves have raised by means of their property in land, their capitals, or their industry. In selling them they in the first place exchange them for money, and afterwards they exchange the money for articles of consumption. It is therefore really and absolutely with their produce that they make their purchases: therefore it is impossible for them to purchase any articles whatever, to a greater amount than those they have produced, either by themselves or through the means of their capital or their land.
Letter 1, "Letters to Malthus on Political Economy and Stagnation of Commerce"

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