Is the Market Wage the Just Wage?

A Reassessment of Factor Pricing and Distributive Justice

  • Peter J. Boettke George Mason University
  • Rosolino Candela George Mason University
  • Kaitlyn Woltz George Mason University

Abstract

Do markets generate a “just” wage? The answer to this question will depend upon the particular theory of the market that the political economist employs. When comparing actual labor markets with the neoclassical theory of competitive equilibrium as its normative benchmark, Joseph Heath (2018) argues that factor pricing is orthogonal to normative issues such as distributive justice. We argue that Heath’s conclusion, though not invalid, follows from a similar normative benchmark of equilibrium, one that evaluates factor pricing without taking into account the institutional conditions within which factor prices emerge. Though indeed classical political economists and early neoclassical economists failed to deliver an explicit theory of distributive justice, what Heath overlooks is that implicit to their understanding of the market process was an institutional theory of distributive justice.

Author Biographies

Peter J. Boettke, George Mason University

Peter Boettke is University Professor of Economics and Philosophy at George Mason University and the Director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University.

Rosolino Candela, George Mason University

Rosolino Candela is an Associate Director of Academic and Student Programs and a Senior Fellow with the F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University. He has published in outlets such as Atlantic Economic Journal, Journal of Institutional Economics, Public Choice, and The Review of Austrian Economics. He is currently working on a book project (with Peter Boettke) entitled Price Theory as Prophylactic Against Popular Fallacies, under contract with Palgrave Macmillan.

Kaitlyn Woltz, George Mason University

Kaitlyn Woltz is a PhD Student in the Department of Economics at George Mason University. She is a PhD Fellow with the Mercatus Center and a Graduate Fellow with the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics. Kaitlyn’s research interests are in the fields of Austrian economics, institutional analysis, and the political economy of criminal justice. Her current project looks at the role that prison periodicals played in prison and the criminal justice system during the mid-twentieth century.

Published
2018-11-06