Proceedings of the Open Scientific Conference in Rome, August 2022

Abstract:

This paper deals with the problem of effectiveness of enforcement of the just wage. The author makes use of the standard models of the product market, labor market and isoquant-isocost analysis to capture the effect of the decision to pay the just wage. In a discussion about the type of justice which governs the wage relation, the author proves that this relation does not fall within the category of distributive justice, on the grounds of (un)willingness of the owners of the factors of production to share the loss. On the contrary, arguments are being presented why the wage relation is being governed by the principles of commutative and social justice. In the aspect of commutative justice, a personal component and a family component of the just wage are being distinguished. The author justifies the concept of the personal component of the just wage by an analogy with renting a capital good. The empiricist objection of arbitrariness of any quantification of the just wage is being settled by a reference to the distinction of necessary and accidental signs. The author draws the conclusion that it is the owners of the firm who hold the key to the just wage. The author concludes that there is no way to force the owner of the firm to start paying the just wage if he does not want to. Any externally enforced increase in the wage is counter-productive, in the end. The threat of external sanctions has no effect. The only sanction which is effective is the internal sanction, i. e. the employer’s own conscience. To the objection of inefficiency brought about by internal sanctions, the author answers that the employment of labor not needed by the employer is a gift and the employer is not obliged to pay the just wage in this case.

Keywords: just wage, profit maximization, commutative justice, distributive justice, social justice, Catholic social teaching

DOI: 10.52950/OSC.2022.1.006

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