A reader recently asked us if everyone would be paid the same under socialism. And if so, what incentive would there be to work hard or study?
No, everyone would not be paid the same under socialism.
This is a common myth spread to confuse people and suggest that skilled or ambitious people would be better off under capitalism. Nothing could be further from the truth.
The first point to make is that the question presupposes that under capitalism, smart people and those that work hard are paid the most. This is not the case.
We have university-qualified people who can only get jobs in the gig economy, and people doing backbreaking labour who get poverty wages. At the same time, we have CEOs making 78 times more than an average worker!
The wealth of the capitalists and super-rich does not come from ‘hard work’ but from their ownership of the means of production, the factories, the offices, the infrastructure etc. Through this, they are able to exploit workers by only paying them a portion of the wealth they produce.
The idea that capitalists have worked harder than the average person is a fantasy. A large proportion of them inherited their wealth and have lived very cushy lives.
Saying all that, wages and remuneration would be very different under socialism. For example, wages would not be the only form of compensation for work.
Because we will remove the profit motive, billions of dollars will be freed up to provide things like free healthcare, education and housing. This would result in a big boost to living standards.
The first tasks of a socialist government would be to bring the key parts of the economy into public ownership and under democratic control. On that basis, a plan would be put in place to produce things based on need rather than profit.
Initially, scarcity would still exist and we would need to work hard to ensure that everyone had access to the basics. While we could immediately begin to offer a number of services free, certain items would still need to be exchanged for money. Therefore, wage payments would still be necessary.
But unlike under capitalism, people’s labour power would not be treated as just another commodity. Wages would not represent the struggle between the worker and employer over the wealth produced. Instead, wages would represent the relationship between the worker and society as a whole.
Working harder, smarter or faster would not mean that your boss increased their profits, as is the case now. Instead, the individual worker and broader society would benefit, because of the collectively owned economy. Higher efficiency for example would result in shorter working hours.
Remuneration under socialism would be based on the amount, and the quality, of each person’s work. Differentiation in payments would exist because there are differences between highly skilled work and unskilled labour, not to mention light duties and strenuous work.
That said, a socialist society would immediately introduce ‘equal pay for work of equal value’ as a rule, doing away with the gender pay gap and youth wages.
People would be rewarded for extra study that improved their skills, and for hard work and innovation, but we would not see the extreme differences in wages that we see today.
For example, after the Russian revolution, the ratio between the highest and lowest paid was 1 to 4, but even this could be reduced the more efficient the socialist economy became.
While there would be differences in remuneration levels, there would be equal opportunities. With guaranteed jobs and free education, everyone would have the chance to explore their aptitudes and put their skills to good use.
Individual incentive would exist primarily because we would want to improve efficiency and expand the socialised parts of the economy. High levels of productivity would help the economy grow and allow for further increases in remuneration, both wages and goods and services.
A key difference between wages under socialism compared to capitalism is that you would not be able to use your extra money as capital. That is you would not be able to buy key parts of the economy in order to put people to work and exploit them.
Instead, the wealth we create will be distributed in an equal and democratic way, which would allow us to raise living standards across the board.
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