Iron law of wages
Iron Law of Wages is the doctrine according to which "the price of ... labor is equal to its cost of production," that is "the means of subsistence that he [the worker] requires for his maintenance, and for the propagation of his race." [Quotations from the Communist Manifesto, Part I]
The Iron Law of Wages is an extension to the field of labor of the idea that the value of anything is found in its cost of production or reproduction. This alleged law holds that under capitalism, there is a natural law of wages toward which wage rates must constantly tend to return. This "natural" rate is that which provides a "subsistence level" for workers, wives and the raising to maturity of sufficient children to maintain the number of workers needed for the state of production. It is held that higher wages will result in raising more children to maturity, and lower wages in fewer, so that eventually the competition of more, or fewer, workers must drive wages back in line with the natural rate needed to sustain a sufficient number of workers. Founded on the writings of David Ricardo, the Iron Law of Wages was adopted by the German socialist, Ferdinand Lassalle, as well as his rival, Karl Marx. They used it as an argument to prove there was no hope for the workers under capitalism.
- Percy L. Greaves, Jr. "Mises Made Easier ", 1974. Referenced 2014-07-18.