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Christian Economics in One Lesson, Chapter 20

Written by Gary North on August 15, 2015

“Enough to Buy Back the Product”

It is naught, it is naught, saith the buyer: but when he is gone his way, then he boasteth (Proverbs 20:14).

Once again, Hazlitt returned to the issue of government price fixing. In Chapters 13, 15, 16, 18, and 19, price fixing was in the form of price floors. It is in this chapter, too.

In this variation on the same theme — price floors — Hazlitt invoked a slogan which is rarely heard any longer: “Workers must be able to buy back their product.” It was never widely heard. He said that there were two sources of this slogan: Marxists and labor union leaders. Today, Marxism is dead, and most labor unions are, too. So, we no longer hear the argument.

Hazlitt did not say what the defenders of this idea proposed as a solution. Is the government supposed to raise the wages of workers by decree? All workers? Just some workers? By what percentage? The promoters of this idea never said what they meant. This is one reason why it never caught on.

Hazlitt argued that this argument was a variant of the just price doctrine of the medieval world. Wages had to be just, the theologians said, meaning ethically righteous, meaning fair. But what is fair? The serious theologians of the Middle Ages, including Thomas Aquinas, recognized this problem, and they generally argued that market prices are just, most of the time.

Orthodox Marxist theorists never argued for economic justice. Marx argued that all morality is simply window dressing for class economic interests. The orthodox Marxists did not think that any tinkering with market prices by the state could solve the inherent economic problems of capitalism; only proletarian revolution would. They never talked about how prices would be set in the world beyond the proletarian revolution. Neither did Marx.

This left labor union spokesmen as the promoters of this idea. The best statement of this idea was made by Walter Reuther, the head of the United Auto Workers Union. He also was the head of the Congress of Industrial Organizations (CIO), the more militant of the two major American labor unions, the other being the AFL: American Federation of Labor. Reuther said this years after Hazlitt wrote the book. At a meeting at the Ford Motor Company in 1954, this exchange supposedly took place. It was published in 1955.

CIO President Walter Reuther was being shown through the Ford Motor plant in Cleveland recently.

A company official proudly pointed to some new automatically controlled machines and asked Reuther: “How are you going to collect union dues from these guys?”

Reuther replied: “How are you going to get them to buy Fords?”

(For the rest of the chapter, click the link.)

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