It’s market competition that raises the workers’ wages

As Karl Marx so rightly pointed out it’s competition that raises the workers’ wages. That’s why monopoly capitalism - by which he meant our new word, monopsony, or a single buyer - that keeps the workers poor.

Saudi Arabia’s new luxury airline Riyadh Air is fuelling a war for talent in the aviation industry as it poaches British pilots.

The British Airline Pilots’ Association (Balpa) said the impact of a recruitment drive by Riyadh Air, together with Emirates, Qatar Airways and Etihad, was being felt at carriers including British Airways, Virgin Atlantic and easyJet.

Large numbers of pilots retired during Covid, forcing airlines worldwide into a battle to retain captains and first officers.

Amy Leversidge, the Balpa general secretary, told The Telegraph that wealthy Gulf carriers were making it harder for British carriers to retain staff by offering generous salaries and benefits.

Capitalists can make money by employing workers. Or, in the airline industry, capitalists think they can do so. That there are many who so think means that there are many possible buyers of the labour of those workers. Therefore the price paid to the workers goes up. So does capitalist competition for labour drive up wages.

The only time this doesn’t happen is when there’s the single and one buyer of that labour. In that case the capitalist doesn’t have to raise wages for the labour dhe’s then going to exploit. As happened in the Soviet Union of course, Stalin deliberately suppressed wages in order to fatten profit margins so as to pay for his industrialisation projects.

That is, it’s only in market economies that wages track increases in labour productivity. Given the fashion for believing Marx we do think it would be helpful if more paid attention to one of the very few bits he got right.

Tim Worstall