Iron Law of Wages

a theory on wage payments to labor under capitalism developed by such bourgeois economists as

A. R. J. Turgot, D. Ricardo and T. R. Malthus and widely promoted by opportunists in the labor movement such as F. Lassalle. The theory was taken as the basis for the Program of the Socialist Labor Party of Germany (the Gotha program), adopted in Gotha on May 25, 1875. Marx emphasized the nonscientific and opportunist character of the program and wrote that it is a “thoroughly objectionable program that demoralizes the party” (K. Marx and F. Engels, SOCh, 2nd ed., vol. 19, p. 11).

According to the “iron law” theory, wage levels tend to fluctuate around the minimum necessary for providing the means of existence, influenced by the natural changes in the work force: as the birth rate among the workers rises, the supply of labor begins to exceed the demand for it, which leads to a decline in wage rates to the necessary minimum and even below it. The decline in the number of the working population resulting from this leads to a reduced supply of labor and thereby to a rise in wage levels. Thus, the theory is closely tied with Malthus’ population theory; it presents it-self, in fact, as a kind of unalterable economic and biological law. In effect the advocates of the theory try to relieve the capitalists of responsibility for the low standard of living of the proletariat. They preach passivity to the labor movement, suggesting that it cannot overcome this “natural” law of wages. In fact, wages under capitalism are not a natural phenomenon but a socioeconomic one (the monetary form taken by the value of labor power, its price). Historically this socioeconomic phenomen has a transitory nature and is governed by the economic laws of the capitalist mode of production.

The concept of the iron law of wages, constituting one of the varieties of petit bourgeois socialism, runs counter to the theory of scientific socialism and inhibits the revolutionary workers’ movement. This opportunist concept, which denies the importance that economic struggle plays in uniting and revolutionizing the working class, is widely promoted by the left extremist theoreticians who have penetrated the labor movement in the contemporary period. Present-day bourgeois economists such as P. Samuelson, W. Rostow, J. Strachey, and E. Browder, in their efforts to discredit Marxist-Leninist theory, equate Marx’ theory of wages with the concept of the iron law, although in fact Marx’ theory has nothing in common with that concept.