Summary
Nominal or money wages are distinguished from real wages, and relative wages.
Bourgeois economics sees wages as the market price of “labour”, and consequently the price to be paid for a given quantity of such labour, i.e. the hourly wage, weekly wage etc.
Marx showed that wages are the market price of labour-power, not labour.
Labour-power is sold as a commodity, like hats, and its value is determined as with any other commodity, by the labour-time required for its reproduction, i.e. the current reproduction cost of the labourer.
Nominal or money wages are the money equivalent of the value of labour-power, i.e. the money equivalent of the value of all of the commodities – food, shelter, clothing, education, healthcare etc. - required to reproduce the worker.
As with any other commodity, the market price of labour-power diverges above or below that value, as a result of the interaction of supply and demand for the commodity.
Nominal wages may rise, whilst real wages fall, as a result of inflation, i.e. the value of the money commodity/standard of prices falls, causing all commodity prices to rise, even if values remain constant. If money wages rise by less than other commodity prices, they no longer buy the same quantity of wage goods, required to reproduce labour-power.
Nominal wages may remain constant, but real wages rise, as a result of a rise in social productivity, i.e. the value of wage goods falls, so that a given amount of money wages, now buys a greater quantity of those wage goods. However, relative wages may fall, because real wages do not rise in the same proportion as the rise in productivity. Workers obtain a larger portion of output, but a smaller proportion of output.
Social-democracy, at the start of the last century utilised this so as to create money illusion, in relation to wages. Rising social productivity made possible rising real wages, but capital requires falling relative wages, i.e. wage share/necessary labour falls relative to profit share/surplus labour. Money wages, and money illusion arising from inflation of commodity prices, engineered by central banks, enables that, as workers see both rising money wages and real wages, but do not see the falling relative wages.
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