Economists often assume as almost self-evident that Karl Marx's prediction of ever increasing misery for the workers under capitalism refers to a decline in the amount of goods and services they will receive. Some writers have implied that only the intellectually dishonest could deny this view. It is readily inferred that the interpretation of Marx to mean a decline in labor's relative share is only an afterthought of latterday Marxists seeking to salvage something from the ruins of the prediction. While labor's relative share has not declined, this at least has the dignity of a plausible prediction which went unfulfilled, while a theory of absolute misery would be thoroughly discredited by history. …
It will be argued here that relative misery was precisely what Marx's prediction referred to, in so far as it was concerned with the purely economic aspect of the workers' condition. It will be further argued that Marx was not solely concerned with this aspect.
A standard argument against the relative-misery interpretation is that while "some passages in Marx ... bear interpretation in this sense, this clearly violates the meaning of most"
Conventional economic theory has long made a distinction between the amount of money which the worker receives as wages, and the amount of goods and services which this money will buy. Adam Smith spoke of "real wages" and "nominal wages" in this sense. David Ricardo, from whom much of Marx's economic apparatus is derived, also used the terms "real wages" and "nominal wages," but because of the nature of his system, they meant something very different. What Adam Smith and other economists called "real wages" was included under "nominal wages" by Ricardo. Real wages, in Ricardo's terminology, meant the value of wages, that is, the amount of labor contained in the commodities which the worker received. Ricardian real wages measured the degree to which the workers shared in total output, not the absolute amount of goods and services which they received. If, due to increased productivity, the workers should receive a greater quantity of goods representing a smaller share of output, then-in Ricardian terms-wages would have fallen.
..Marx saw the peculiarity of the Ricardian conception of wages and deliberately made it his own, not simply as an accidental by-product of using Ricardo's so-called "labor theory of value," but because he, Marx, felt that there was a valid social philosophy implicit in this conception:
The value of wages has to be reckoned not on the basis of the quantity of necessaries which the worker receives, but on the basis of the quantity of labour which these necessaries cost-actually the proportion of the working day which he appropriates for himself... It is possible that, reckoned in use value (quantity of commodities or money), his wages may rise as productivity increases, and yet reckoned in value they may fall ..[Marx, “Theories of Surplus Value”, New York 1952, p.320]
Marx seemed particularly concerned to emphasize the relative-share approach because of the economic prerequisites of increased wages under capitalism:
A noticeable increase in wages presupposes a rapid growth of productive capital. The rapid growth of productive capital brings about an equally rapid growth of wealth, luxury, social needs, social enjoyments. Thus, although the enjoyments of the worker have risen, the social satisfaction that they give has fallen in comparison with the state of development of society in general. Our needs and enjoyments spring from society; we measure them, therefore, by society and not by the objects which serve for their satisfaction. Because they are of a social nature, they are of a relative nature. [Marx, “Wage Labpr and Capital”, Moscow 1947, Sec. IV, p.37]
… this does not dispose of the possibility that he may have, in addition, felt that real wages in the conventional sense would also fall over time under capitalism. And in fact, the evidence seems to indicate that at an early period in his writings, probably up through the time of the Communist Manifesto in 1848, he did in fact believe that absolute impoverishment would be the lot of the working class under capitalism.
… German socialists and communists put forth the so-called "iron law of wages," which declared that wages could not rise under capitalism. Some latter-day critics have attempted to associate Marx with this "iron law" but in fact Marx heaped scorn and ridicule on it in his Critique of the Gotha Programme in 1875. Significantly, he characterized it as a view that was now outmoded and constituted an "outrageous retrogression".
… Lassalle's iron law represented not merely a false statement but, more importantly, a false issue. It was the exploitation of the worker that was the central issue to Marx, who declared that this exploitation must grow worse, regardless of whether wages go up or down.
The idea that increasing misery accompanies the growth of capitalism "whether the worker receives better or worse payment" occurs also in Capital, where Marx declares that "in proportion as capital accumulates, the lot of the labourer, be his payment high or low, must grow worse" [Marx, Das Kapital, Vol.I. Chicago 1906 pp. 708-9].
Marx's subsistence has sometimes been regarded as being minimum physical subsistence, or something very close to it-or, at least, something fixed at a definite level. Some writers have extended this idea to mean that Marx assumes a subsistence level toward which wages might tend to fall over time. But this particular theory is entirely absent from Marx. There is not a secular tendency for wages to fall to subsistence; rather, workers tend to be at subsistence, but the content of this subsistence changes, consisting as it does of both "natural wants" and "so-called necessary wants" which are "the product of historical development" Marx’s picture of the worker at subsistence, therefore, does not preclude increases in real wages in the conventional sense. Once a new higher standard of living becomes established, it too becomes subsistence, and represents the new value of labor-power, i.e., the real-wage level. Marx does not have a determinate theory of wages; how labor shares in the increasing productivity is a matter of bargaining power: it "depends on the relative weight, which the pressure of capital on the one side, and the resistance of the labourer on the other, throws into the scale" [Marx, Das Kapital, Vol.I. Chicago 1906, pp. 572-73]. The Ricardian-Marxian conception is here manifested in the word "resistance." The worker is resisting a fall in wages, although Marx declares that the "lowest limit" of this fall is a wage which will purchase the former sum of commodities. If wages fall to any point above "the lowest possible point consistent with its new value," then despite this fall, "this lower price would represent an increased mass of necessaries". Marx credits Ricardo with the original formulation of this law. Far from being a law of increasing misery in the conventional sense, it represents a law of a customary floor under wages, which would prevent such an occurrence.
Although Marx seems to have a purely "bargaining power" theory of wages, the possible range of wages is limited by the customary standard of living as a floor, and by a ceiling representing wages high enough to threaten the existence of capitalism itself..
The noneconomic aspect of increasing misery rests on Marx's philosophical approach and his underlying conception of man.
Work is not a mere disutility to be endured for the sake of satisfying material human wants-in which case material production would then be the measure of (absolute or relative) well-being. On the contrary, work is itself "life's prime want" because it contributes to the development of the individual. …Marx was annoyed at economists like Adam Smith who treated the expenditure of labor time "as the mere sacrifice of rest, freedom and happiness, not as [at] the same time the normal activity of living beings “.
Under capitalism, Marx argues, work no longer fulfills its vital role in the lives of the people. The division of labor under capitalism "attacks the individual at the very roots of his life". It converts the worker into "a crippled monstrosity" by developing his manual dexterity in a narrow detail "at the expense of a world of productive capabilities and instincts”.