The Impact of Reduced Working Hours on the Economy: A Free Market Analysis
In a free market economic system guided by the principles of laissez-faire capitalism, the relationship between the number of hours worked per day by workers and the overall productivity, production, supply, and real wage rates is governed by the natural laws of the market.
When everything else is equal, a reduction in the number of hours worked per day by workers would lead to a decrease in aggregate productivity. This is because workers' output is directly correlated with the time and effort they put into their labor. [1] [2] Fewer hours worked would result in less total output produced, thereby reducing aggregate productivity.
The decrease in aggregate productivity would then translate to a decline in aggregate production. With fewer goods and services being produced, the overall supply in the market would decrease. [3] [4] This reduction in aggregate supply would then drive up the average price index, as the same or higher level of demand would be chasing a smaller quantity of available goods and services.
As a result of the increase in the average price index, the average real wage rates for the workers would decrease. This is because the nominal wages would not be able to keep pace with the rising prices, leading to a lower purchasing power for the workers. [5] [6] Consequently, the standard of living for the average worker would decline.
In a free market system, these economic adjustments would occur naturally through the interplay of supply and demand, without the need for government intervention. The market would self-correct to find a new equilibrium that reflects the altered labor dynamics, allowing the economy to operate at its optimal efficiency.
Sources:
(1) Human Action, Third Revised Edition by Ludwig Von Mises
(2) Man, Economy, and State with Power and Market, Scholar's Edition, by Murray
Rothbard
(3) Capitalism by George Reisman
(4) Classical Economics by Murry Rothbard
(5) A Theory of Socialism and Capitalism by Hans-Hermann Hoppe
(6) Economic Thought Before Adam Smith by Murry Rothbard
No comments:
Post a Comment