Work and Welfare: The Social Cost of Labor in the History of Economic Thought.

Author:Champlin, Dell
 
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This book surveys the concept of the social cost of labor in economic thought from Adam Smith to Ronald Coase. The social costs of labor refer to "the economic actions of employers with regard to wages and working conditions" that "have consequences for society as a whole" [p. 4]. For the most part, the author concentrates on the level of wages and poverty, since these issues have been the primary focus of economists. Stabile performs a valuable service in discussing an important topic that has not received sufficient attention among historians of economic thought. His approach is broad rather than deep, however, and I look forward to a second volume that explores certain issues in more depth. The book is very readable and would be accessible to undergraduates in a course on history of economic thought or social policy.

The author's approach is to distinguish between two approaches to the social costs of labor: the social obligations view and the social insurance method. The first approach is holistic. Society is greater than the sum of its parts, and individuals have a responsibility to avoid actions that may adversely impact society's growth and survival. An example of this approach is Adam Smith's notion of the natural wage. The author quotes Jeffrey Young's argument that the natural price incorporates community and moral values, since it is a "consensus price which individuals and the spectator will view as fair in the sense of not causing injury to any party" [p. 21]. In stark contrast to the notion of social responsibility and obligation is the social insurance view. Economists writing in this tradition acknowledge that work carries certain social costs, but the appropriate response is not to identify duties and obligations, but to perform a benefit cost calculation. For example, Thomas Robert Malthus deplored the low wages and poor working conditions in cotton mills and was in favor of government actions to improve the lot of mill workers, especially children. However, Malthus began a long line of economists who worry about the effects of government programs on individual behavior.

A major theme of this book is that the economics profession has come a long way from "the just wage" to the marginal product of labor. The whole notion of social obligation has been expunged from most economic thinking. In many cases, the whole concept of a social cost of labor has also disappeared. This leads to a third category of economists who take...

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