In recent years, the gap between the lowest and highest wages in major industrialized countries have risen sharply and range from a ratio of 20:1 in Japan (and lower in Scandinavian countries) to an oligarchic 292:1 in the United States. While ratios may be less than in Andrew Carnegies day (i.e., a 20,000-to-1 ratio of his untaxed income to the average wage) they remain evidence of inequity and the impotence of wage-labor. In attempts to deal with great disparity and the injustice it breeds, philosophers have long debated the idea of what constitutes a just wage and optimal wealth distributions. In The Laws, Plato figured his ideal ratio - of rich to poor - was no more than four-to-one. His disciple, Aristotle, thought five-to-one was more appropriate. As enclosure, slavery, imperialism and factor imbalance deformed society these ratios, both real and ideal, began to climb. As disenfranchisement increased, so did disparities. In?these troubled settings many have sought to define a natural ratio reflecting how society works - without, however, consideration of the impact of original appropriation, enclosure, imperialism, and factor imbalance upon a free market. In The Maximum Wage, for example, Sam Pizzigati surveyed the history of this societal, wage-ratio, concept. He noted how Henry Phelps Brown developed a Ten Times Rule based on income distribution from the lowest wage to the 85th percentile. Above that percentile, Brown felt income reflected not work but reward from property, rent, dividends, stocks, and speculation. In any case, from the 1st to 85th percentile, wages tended to reflect a ten-to-one climb - i.e., a supposedly constant ratio mirroring the natural order of economic life appearing in societies as diverse as the United States and the Soviet Union, Sweden and Peru. Also, Peter Drucker and John Kenneth Galbraith have argued that corporate vitality, equity, and efficiency demand a certain flattening of the hierarchy in terms of both compensation and control. Drucker advocated a 15-to-1 ratio - i.e., of highest to lowest wage - for small business and 25-to-1 for large enterprises. He noted a published corporate policy that fixes the maximum compensation of all corporate executives is the most radical, but also the most necessary, innovation.
Posted on: Thu, 13 Nov 2014 06:18:16 +0000
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