Reply To: Wages and MRP


But that’s just the point. Entrepreneurs cannot pay workers less than the DMRP. Such is the conclusion of economic theory. In an unhampered market, each factor of production earns its DMRP. Of course, there are constant adjustments that entrepreneurs must make to changing underlying conditions, but they are always acting to exploit value differences and by so doing they eliminate them. And entrepreneurs can make mistakes, but they are corrected by entrepreneurs with superior foresight. So there is no systematic deviation of wages from DMRPs.

The problem in arguing about this topic is that people use the term “exploitation” ambiguously. In economic theory it refers only to the narrow point about whether entrepreneurs can systematically pay workers less than their DMRP. To others, exploitation means not paying a “living wage” or manipulating workers psychologically and so on. In economic theory, the only meaning one can give to “exploitation” is the case of involuntary exchange. The criminal gains at the expense of his victim. But voluntary exchange is mutual beneficial and therefore, involves no exploitation.