On the timing of wage payments

Abstract

The problem of the timing of wage payments has been the subject of some dispute in recent discussions on the theory of capital and distribution. In particular, different positions have been taken on the question whether wages are to be viewed as paid at the start of production or after production is completed and, correspondingly, whether wages are part of the capital advanced to production or a payment out of the revenue product. On the one side, this is regarded as a purely formal problem, the particular manner of its theoretical treatment being viewed simply as a matter of convenience for the purpose of a particular analysis.1 On the other side, it is presented as a matter of substance, the treatment of which is supposed to establish a line of distinction between fundamentally different conceptions of the capitalist economy.2 In between these poles there are variations in the point of view adopted. The problem itself is not a new one. It goes as far back as the Physiocrats who had a definite concept of the wages of agricultural labour as 'annual advances' paid to support the workers over the production cycle from planting to harvest (Meek, 1962). This concept, generalised to the economy as a whole, was a key element in the much disputed Wages Fund Doctrine of the Classical Economists (Taussig, 1896). It was subsequently absorbed into the Austrian theory of capital as the representative case for explaining capitalist profit as a discount on the product of the worker which the capitalist gets for advancing the workers' means of subsistence (Bohm-Bawerk, 1891). Marx, on the other hand, attacked the 'absurdity of speaking of wages as an advance by the capitalist to the labourer' and ridiculed the attempt to explain profits on this basis (Mars, 1963, pp. 314— 321). It is evident from this brief sketch of its intellectual history that there are important theoretical issues embedded in this problem. That it is also a matter having real practical significance might have seemed obvious in the context of a predominantly agrarian society, owing to the discrete character of the production cycle in agriculture. But it is of no less significance in the context of modern industrial capitalism where, though produc tion activity goes on more or less continuously in a complex structure of time-phasing of production processes, it still remains the case that there is no synchronisation of wage payments and realisation of the finished product.