How much a footballer - or a cleaner - is paid is none of the Government's business whatever Polly Toynbee and the BBC might say.

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In recent weeks I’ve written about the nonsense that is the labour theory of value including this observation:

In the final analysis something is worth what it’s worth – the value is determined by consumption not by production.

And, in order to demonstrate how allowing a guild system to dominate, I have observed that people (in the UK, at least, but probably everywhere else too) become doctors because it’s a very well-paid job. I know there are people who talk of their altruistic motives in donning the white coat – but would they do it without being in the top 1% of earners?

The BBC – in their leftie manner – has been asking about the matter of pay (and in the round levels of taxation). On the radio we got the delightful Polly – millionairess, ex-public schoolgirl, villa-owning champion of the poor and downtrodden. I note that she has not – in the manner of Dave Nellist – given away all her earnings so as to live on a ‘worker’s wage’. But that’s most socialists for you – do as I say not as I do.

I am however fascinated by the manner in which the debate about pay is couched. There are – it appears – three primary populist measures: the pay of the prime minister; how much premiership football players get in wages; and bankers’ bonuses. All other considerations – including the sensible and proper analysis of income levels and their impact on society – have to be seen through the prism of these measures.

Thus the wages of a local council chief executive are compared to the PM’s pay – not to a more fair comparison of the heads of the civil service (all of whom earn more than the prime minister). The proper comparison with the PM is what a council leader is paid not what the chief executive is paid – and here, whatever we might think about the remuneration of councillors, the PM comes out pretty favourably.

At the same time we have to go through the ritual about footballers – how their pay is ‘obscene’, how it is ‘destroying the game’ and often how the government should intervene. Again, we fail to ask whether the world-wide popularity of English football is the real reason for high wages. And why we should, in fact, welcome the fact that most of the cash we pay to watch, listen to and read about football ends up in the bank accounts of players (and through that in the coffers of the taxman).

The BBC reports were added to by an egregious poll conducted by ComRes – nothing wrong with the manner of the poll’s conduct or the professionalism of that company – but asking the public – without context – how much they think different folk should be paid is both economically illiterates and monumentally immoral. How much you or I – or rich folk like David Beckham or Tony Benn for that matter – earn should not be a matter that is the subject of social control. But heaven knows about the public’s value system anyhow!

The bosses of Britain's top 100 companies should be paid about £118,000 a year, a BBC survey suggests. Those questioned also put the pay of Premier League footballers and financial bond traders at £365,000 and £58,000 respectively.

And when the poll reports that lower paid folk should be paid more this is done without the obvious value statement – how happy will you, dear respondent, be to pay higher taxes, higher prices and have less choice? Not happy – well shut up saying what other folk should be earning then.

In the end we’re paid what we’re worth – or, in the case of doctors, teachers, bankers and lawyers, what we can screw from a market that the stupid government has given us control over. Yet the terms of the debate are conducted on the assumption that there is some morally justified public policy intervention in levels of pay – and especially pay of senior and successful people. There isn't.

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Work, 'Big Society' and the labour theory of value

In his Living with Rats blog, Julian Dobson provides a well-crafted piece on the ‘Big Society’ drawing on the ideas of Robert Owen and, crucially, on the concept that all value is intrinsic – something has value and that is it. The actions of man cannot alter that fact. This is the core tenet of socialism – so not surprisingly something to which the socialist mill-owner (don’t you just love that term – such oxymoronic delight), Robert Owen would subscribe.

This is how the labour theory of value works:

A worker in a factory is given $30 worth of material, and after working 3 hours producing a good, and using $10 worth of fuel to run a machine, he creates a product which is sold for $100. According the Marx, the labor and only the labor of the worker increased the value of the natural materials to $100. The worker is thus justly entitled to a $60 payment, or $20 per hour.

If the worker is employed by a factory owner who pays him only $15 per hour, according to Marx the $5 per hour the factory owner receives is simply a ripoff. The
factory owner has done nothing to earn the money and the $5 per hour he receives is "surplus value", representing exploitation of the worker. Even the tools which the factory owner provided were, according to Marx, necessarily produced by other workers.

All quite straightforward really. So, if Julian and the New Economics Foundation are right and value (however we define it) does derive from labour then we need to worry about this:

…'the unpaid labour that is crucial to keeping society and communities functioning - the time that is put into caring for older people, volunteering for the community, exercising democratic rights to protest, and raising children'.

All this voluntary activity is work: it is labour that produces a wealth of social goods that would otherwise default to the state, either as a provider of services or as the place where the buck stops when society falls apart. It must be seen as such, and the Big Society provides an ideal lens.

In a world where we accept the labour theory of value then all this activity should be paid. After all if it is work then it has intrinsic value and for this value not to be remunerated must mean that some one else – the husband, the brother, the neighbour – is profiting at your expense.

Except – as a moment's thought would tell us – the labour theory of value is nonsense. Something’s value isn’t determined solely by the labour involved in producing that something. We know that because we experience the truth of it every day (and not just from watching Antiques Roadshow). And you know, the ‘Big Society’ isn’t about ‘production’ or ‘work’ it’s about value. And just because we choose a non-traditional measure of value, doesn’t mean that we should pretend that ‘work equals value’.

However we choose to measure value (and I like money because everyone understands it and it, famously, stores that captured value) it isn’t created solely by labour – Julian speaks of wasted work which can only be described as the creation of negative value. In the final analysis something is worth what it’s worth – the value is determined by consumption not by production. And volunteering – however ‘productive’ it may be – is an aspect of consumption made possible only by the value added through exchange. Which isn’t to belittle it – I for one do not work to produce. I work so I may consume. And part of that consumption is the pleasure I get from voluntary activity.

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