DEFINITION OF A FREE (LABOR) MARKET

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Alicia Howard
7 years ago
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1 DEFINITION OF A FREE (LABOR) MARKET A market in which buyers and sellers are at liberty to trade without restriction as to prices or quantities, and in which there is no compulsion to either buy or sell. In a labor market, the buyers are companies and the sellers are workers. Economists consider a labor market free when wages are set by the forces of supply and demand, and not by non-market factors (such as minimum wage laws, pressure from unions, and so on).

In a labor market, the buyers are companies and the sellers are workers.

2 The Free Market in Major League Sports In major league sports, the market for labor is considered to be free. This is because wages are (largely) determined by the forces of supply and demand. But this situation only came about through the exercise of worker power against owner power. For, prior to free agency, player wages were kept artificially low through the collusive practices of the owners. It is only when players/workers organized and exercised power collectively that the forces of supply and demand were allowed to operate.

But this situation only came about through the exercise of worker power against owner power.

3 STRUCTURAL POWER DEFINITION Structural power as Susan Strange defines it, confers the power to decide how things shall be done, the power to shape frameworks within which states relate to one another, relate to people, or relate to corporate enterprises.

done, the power to shape frameworks within which states relate

4 GENERAL ELEMENTS OF STRUCTURAL POWER First, frameworks of power subject all actors to the same system of constraints and opportunities Second, structural power is context-dependent. Third, structural power is reciprocal, which means that power can never be absolute. Taken together, these three elements of structural power can help us develop a deeper, more realistic understanding of IPE.

Third, structural power is reciprocal, which means that power can never be absolute.

5 IMPORTANT IMPLICATION OF STRUCTURAL POWER The structural nature of power allows us to understand change: without an understanding of the structural nature of power, it would be very difficult to explain how changes ever occur in the political economy. After all, if those who lack (coercive) power also lack the capacity to challenge those with power, how do unequal relations of power change once established? How did the United States emerge as an international weakling to become the most dominant power on earth? Why did Great Britain lose its hegemonic position? Can China replace the United States? These questions are all related to CHANGE.

After all, if those who lack (coercive) power also lack the capacity to challenge those with power, how do unequal relations of power change once established?

6 DIMENSIONS OF STRUCTURAL POWER Structural power as existing in a number of separate, but inter-related dimensions: 1. Security 2. Production 3. Finance 4. Knowledge

7 Security power: The power to provide protection from external or internal threats Key points 1. First point: Those who are able effectively provide protection acquire a certain kind of power, which lets them determine, and often limit, the range of choices available to others. 2. Second point: By exercising power in SS, the providers of security may incidentally, but not insignificantly, acquire for themselves special advantages in the production, or consumption of wealth, as well as in other parts of the social structure. 3. Third point: Security is one of the most basic of human needs. After all, if someone kills you or if you die, you immediately have no further needs. KEY POINT. W can never ignore the question of security in any analysis of human/social affairs, including in economic affairs.

Second point: By exercising power in SS, the providers of security may incidentally, but not insignificantly, acquire for themselves special advantages in the production, or consumption of wealth, as

8 Productive power: The power to decide what shall be produced, by whom, by what means, and with what combination of land, labor, capital, and technology, and also how each shall be rewarded. In capitalist societies, productive power resides primarily with those who own the factories, the land, capital, etc. In globalized economy, many argue, this productive power has taken on much greater significance. Key Point: When considering power in the production structure, it is important to differentiate between the creation of wealth versus wealth itself.

In capitalist societies, productive power resides primarily with those who own the factories, the land, capital, etc.

9 Finance power: The power to create credit. This implies the power to allow or to deny other people the possibility of spending today and paying back tomorrow, the power to let them exercise purchasing power and thus influence markets for production, and also the power to manage or mismanage the currency in which credit is denominated, thus affecting rates of exchange with credit denominated in other currencies. Knowledge power: The ability to develop or acquire and to deny the access of others to a kind of knowledge respected and sought by others; in the past, this was the domain of priests and sages, but now it is the domain of experts and scientists.

and thus influence markets for production, and also the power to manage or mismanage the currency in which credit is denominated, thus affecting rates of exchange

III. INTERNATIONAL TRADE

III. INTERNATIONAL TRADE A. Gains from Trade -- a history of thought approach 1. The idea of mercantilism (15-175) argued that a country s well-being is directly tied to the accumulation of gold and silver.