Economics in One Lesson

C
HAPTER
20
“Enough to Buy Back the Product”
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Economics in One Lesson
The doctrine has proved particularly effective in the hands of union
leaders. Despairing of their ability to arouse the altruistic interest of the
public or to persuade employers (wicked by definition) ever to be “fair,”
they have seized upon an argument calculated to appeal to the public’s
selfish motives, and frighten it into forcing employers to grant their
demands.
How are we to know, however, precisely when labor does have
“enough to buy back the product”? Or when it has more than
enough? How are we to determine just what the right sum is? As the
champions of the doctrine do not seem to have made any clear effort
to answer such questions, we are obliged to try to find the answers for
ourselves.
Some sponsors of the theory seem to imply that the workers in
each industry should receive enough to buy back the particular prod-
uct they make. But they surely cannot mean that the makers of cheap
dresses should have enough to buy back cheap dresses and the mak-
ers of mink coats enough to buy back mink coats; or that the men in
the Ford plant should receive enough to buy Fords and the men in the
Cadillac plant enough to buy Cadillacs.
It is instructive to recall, however, that the unions in the automo-
bile industry, at a time when most of their members were already in
the upper third of the country’s income receivers, and when their
weekly wage, according to government figures, was already 20 percent
higher than the average wage paid in factories and nearly twice as great
as the average paid in retail trade, were demanding a 30 percent
increase so that they might, according to one of their spokesmen,
“bolster our fast-shrinking ability to absorb the goods which we have
the capacity to produce.”
What, then, of the average factory worker and the average retail
worker? If, under such circumstances, the automobile workers needed a
30 percent increase to keep the economy from collapsing, would a mere
30 percent have been enough for the others? Or would they have
required increases of 55 to 160 percent to give them as much per capita
purchasing power as the automobile workers? (We may be sure, if the
history of wage bargaining even 
within individual unions
is any guide, that
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the automobile workers, if this last proposal had been made, would
have insisted on the maintenance of their existing differentials; for the
passion for economic equality, among union members as among the
rest of us, is, with the exception of a few rare philanthropists and
saints, a passion for getting as much as those above us in the economic
scale already get rather than a passion for giving those below us as
much as we ourselves already get. But it is with the logic and sound-
ness of a particular economic theory, rather than with these distressing
weaknesses of human nature, that we are at present concerned.)
2
The argument that labor should receive enough to buy back the
product is merely a special form of the general “purchasing power”
argument. The workers’ wages, it is correctly enough contended, are
the workers’ purchasing power. But it is just as true that everyone’s
income—the grocer’s, the landlord’s, the employer’s—is his purchas-
ing power for buying what others have to sell. And one of the most
important things for which others have to find purchasers is their
labor services.
All this, moreover, has its reverse side.