chapter  7
23 Pages

Wage policy and the path towards democracy

In the preceding pages, we have seen that wage policy has gone through several different permutations, with each permutation being driven by economic change. As the economy developed from a pre-commercial to an industrial economy, wage policy was recognized to be an essential component of that development. And when the economy developed further from industrial to post-industrial, wage policy was again recognized to be an essential component of that development too. Wage policy has become an essential ingredient in balancing out economic transformations that have resulted in lower wages. When wage policy was more active there tended to be greater wage equality, and when wage policy deteriorated, wage inequality only increased. In this final chapter, I argue that wage policy is not only consistent with democratic theory, but is an essential component in the maintenance of democratic society. And to the extent that wage policy is the outcome of the collective aspirations of the public as expressed through the democratic process, it is consistent with democratic ideals. However, I am not arguing wage policy as a matter of public preference, but of public need. Consequently, to understand the relationship between wage policies and democratic theory, it needs to be understood that the same economic transformations that necessitated wage policy also pose a challenge to democratic theory. Wage policy, then, not only creates the conditions that will enable democracy to survive, but to also thrive. Wage policy is critical to the ends of democracy for the following reasons: First, through the additional security it affords workers through higher wages, especially at the bottom of the distribution, it enhances personal autonomy, and enhanced personal autonomy can allow for greater participation in the public sphere. Individuals who earn enough to live above the poverty line feel better about themselves and are more inclined to become more productive. They are more productive by virtue of their ability to better maintain themselves. Second, to the extent that wage policy reduces income inequality, it results in less strife and threats to democratic society. Third, wage policy is part and parcel of economic development. Through the increased purchasing power it affords, individuals are able to demand more goods and services, which in time may fuel investment and economic expansion. Economic development is central because it is the basis of a broad middle class, which, in and of itself, militates against a

dual distribution comprised of those at the very top and those at the very bottom. Maintenance of the middle class is often considered to be an essential ingredient in the maintenance of democratic society. But economic development is also about developing and enhancing individual autonomy. As Sen (1999) has observed, it is the process by which the freedoms that people enjoy are improved, and individuals can only be free in a democratic society. My argument throughout has been that wage policy furthers these basic criteria. As much as each stands on its own, they are also inextricably linked. In the pages that follow, I organize the chapter around the central theme of inequality. First, I discuss the importance of equality to democratic theory by discussing just how inequality represents a challenge. Second, I discuss the importance of personal autonomy and the capacity of wage policy in various forms to enhance that autonomy to democratic theory. Finally, I discuss the significance of development to the further enhancement of personal autonomy and how that development is essential to democratic society. Moreover, wage policy must be seen as an indispensable tool in that development. Therefore, I intend to argue that democracy requires the type of development that allows for individuals to expand their freedom, which is about autonomy. Wage policy, as I have been arguing is, and has been, a key feature in that development. That is, part and parcel of the economic transformations that market economies in the United States and Europe have been going through has been development, and that development has been reflected in the trajectory of wage policy’s own evolution. And while inequality may not necessarily hinder development, too much of it could represent a threat. The key point about too much economic inequality is that through the widening gap between the top and bottom and the outcome that may result, it may serve to erect barriers to freedom. The reason for why all these issues are related to inequality is because inequality deriving from these transformations impacts on autonomy and the meaning of personal freedom. Moreover, inequality might also be the trigger for the type of development that will serve to sustain democratic society.