Wage Labor and the Free Society

I was thinking:

Grant that there is a free market society. There are zero restrictions to entry into the marketplace. This makes it easier for people to be self-employed. Owning a small business becomes increasingly common (lowered cost of living, leading to increased savings). More people keep more of the fruits of their labor. Running your own business becomes a more viable option. Does this not then act as an upward pressure on wage labor? Employers of wage laborers would have to compete with the prospect of self-employment and have to bid up the price of labor, meaning that the market prices of various types of labor are higher in a free market than in a restricted one. I came across this idea in:

Markets Not Capitalism, Chartier & Johnson. Essay: The Individualist and the Communist A Dialogue, Slobodinsky.

http://radgeek.com/gt/2011/10/Markets-Not-Capitalism-2011-Chartier-and-Johnson.pdf

It might not be the end of 'wage slavery' but it seems that it would drive the price of labor upwards, towards the value of the product created. Thoughts?

"Restrictions" is a very broad term.  When you talk in the sense of "zero restrictions" due to a "free market society", one is led to believe you're talking about a lack of regulatory restrictions from the lack of a state.  That is only one kind of "restriction".  And it is certainly not the only reason everyone isn't self-employed.

You're operating under the assumption that if you eliminate state-imposed business restrictions, all of a sudden nearly everyone is going to see self-employment as a viable option.

I find this to be a stretch.

But if we assume your premise, yes, technically more competition does affect price...if everyone all of a sudden has the option of working for themselves, that would in effect increase the supply of employers relative to the supply of labor...thus making labor more scarce, which, yes, ceteris paribus would raise wages.  But I think you're ignoring or at least simplifying too many things.

 

I don't mean that everyone will be able to start a business but definitely more people. Less busts, less inflation, less taxation, no restrictions, less paperwork, after a decade of an economy under those conditions, anyone in the middle class could open up a food truck or something bigger perhaps. In addition to the fiscal barriers being lessened, I think just the psychological factor of running a business becoming as simple as having only to worry about selling your product (and not worrying about registration) would usher in lots of people to self-employment.

Not nearly everyone, but a significant amount. If I had to quantify what I'm talking about: maybe 1/5 of the upper/middle class. The reason that most people who would be self-employed aren't is because of the high risk/reward and high work/reward of starting a business. Much of that risk comes from diminishing savings and slanted regulations. Much of that work comes from government paperwork.

I think this is a great point.  If anecdotal evidence may be accepted, I know that I for one have looked into certain entrepreneurial ventures only to believe that it's really not worth it vs. being employed by someone else, largely due to all the extra costs (both in money and time) imposed by the state.  It's also something that can be brought up to the 'wage slavery' crowd (if any of them should be open to an economic analysis their arguments), to show that the state perhaps increases the percentage of those working for wages (and this particular argument is only one factor in that).

This is a real phenomenon, every hole in the wall business that serves a market and employs a handful of people is evidence. Because when that business goes under because of, for example, osha fines, then those 5 employees are now competing for jobs in a market...that has 1 less employer that is hiring people.

this is not academic if you work for, use the services of, or own a small business.