BS (Social Sciences & Liberal Arts)
Faculty / School
Faculty of Business Administration (FBA)
Department of Social Sciences & Liberal Arts
Date of Award
Date of Submission
Dr. Laila Sohail Farooq, Assistant Professor, Department of Social Sciences and Liberal Arts, IBA, Karachi.
Dr. Ali Gibran Siddiqui, Assistant Professor, Department of Social Sciences and Liberal Arts, IBA, Karachi.
SSLA Culminating Experience
Capitalism, Econometrics, Economic History, Income Distribution, Labor Unions, Labor and Employment Law, Labor Economics, Law and Economics, Political Economy
Abstract / Summary
Stubborn labour, galvanized by trade unions, may push employers to look for ways of either weakening labour or reducing the wage bill. The solution to both of these rests in heightened capital intensity. This relationship is the subject of this paper. According to Marx, increasing capital intensity causes the profit rate to fall. Furthermore, stronger labour tends to push firms towards increasing capital intensity. Consequently, one would expect stronger labour to spur faster capitalization, and a faster fall in the profit rate, than when labour is weak.
The strength of labour can ostensibly be equated to the size of any labour constituency. However, in this paper, I will use union density (the number of union members as a percentage of the total workforce) as an approximation for the relative strength of labour. The size of the labour force means little in the way of strength if this workforce is neither united nor organized. Unions tend to allay these problems since union membership implies that members are united in the pursuit of the union’s goals. Organized labour has greater lobbying and bargaining power. Thereby, union membership is an apposite index for the strength of labour. However, this presumes that all unions share the goal of raising their members’ real wages and living standards. Introducing labour struggles will not only alter common understandings of wages, profits, capital, and their relationship, it will also concretize economic theory.
Mansuri, R. (2020). Unions, investment, and dilemmas (Unpublished undergraduate project). Institute of Business Administration, Pakistan. Retrieved from https://ir.iba.edu.pk/ugrad-projects/49
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