Hans Bayer, “Bestimmgründe der Lohnbildung und Lohngestaltung in der modernen gesellschaftlichen Wirtschaft” — Summary

This is a short, single-author theoretical article in labor economics and social policy. Bayer’s scope is not a technical wage-calculation model but a conceptual account of how wage determinants change as the economy moves from an approximately free market order to an organized, institutionally and monopolistically structured market economy. His opening premise is systemic:

Lohnbildung und Lohngestaltung sind mit dem Wirtschaftsablauf und der Wirtschaftsentwicklung eng verbunden.

English translation: Wage formation and wage structuring are closely bound up with the course of economic activity and with economic development.

The essay is organized in two main parts. The first reconstructs wage formation under the simplifying assumptions of roughly free competition: employers hold equal market positions, and employers and employees meet as equally strong “Sozialpartner.” In such a setting, wages can still be described through general price theory, and wage structure is “functional,” not shaped by differential profitability or market power.

Bei Annahme gleichstarker Marktposition vollzieht sich die Lohnbildung (mit einigen Ausnahmen) auf Grund der allgemeinen Preisgesetze.

English translation: On the assumption of market positions of equal strength, wage formation takes place (with some exceptions) on the basis of the general laws of price.

Here Bayer’s key point is that productivity gains need not appear as nominal wage increases. If competition forces cost reductions into price reductions, real wages can rise through cheaper goods rather than through higher money wages.

Auf diese Weise ergibt sich eine Reallohnsteigerung ohne Nominallohnerhöhung.

English translation: In this way a rise in real wages results without any increase in nominal wages.

The second and decisive part shifts to the organized market economy. Bayer characterizes modern capitalism by institutionalized firms, concentration, monopolies, and monopoly-like positions. This alters the determinants of wages: wage structures no longer reflect only function, qualification, or performance, but also the unequal market position of enterprises and branches.

Auf Grund der Monopol- und monopolartigen Stellungen von Unternehmen ergeben sich Tendenzen zu einer Lohnstruktur, die keineswegs ausschließlich funktionell, sondern sehr stark durch Marktpositionen bestimmt ist.

English translation: Owing to the monopolistic and quasi-monopolistic positions of firms, there arise tendencies toward a wage structure that is by no means exclusively functional but is very largely determined by market positions.

This is Bayer’s central analytical move. Profitability becomes wage-relevant not because it measures merit, but because firms with stronger market positions can absorb or pass on higher wages. In free competition, cost and price movements are tightly linked; in monopolistic competition, that link loosens, and wage increases may be shifted into prices. Thus the organized economy produces a wage structure partly detached from performance and partly anchored in power.

Bayer also refuses to treat collective bargaining as a mathematically determinate solution. Equal strength between social partners cannot arise naturally in the organized economy; it must be institutionally created through organization. Yet even organized bargaining does not yield an automatic wage level. The language of bilateral monopoly, he argues, names the problem more than it solves it.

Bei einem bilateralen Monopol ist die Lohnhöhe nicht eindeutig bestimmt.

English translation: In the case of a bilateral monopoly the level of wages is not unambiguously determined.

From this indeterminacy follows the article’s normative and policy turn. Bayer argues that when wage structures are shaped by market power, they no longer correspond to common ideas of just wages and may endanger medium-sized enterprises, even if technically efficient. Automation may intensify such distortions. Therefore the older notion of spontaneous wage formation must give way to conscious wage ordering.

An ihre Stelle tritt die Lohngestaltung, d. h. die bewußte Ordnung der Löhne nach bestimmten Zielsetzungen.

English translation: In its place appears wage structuring, that is, the deliberate ordering of wages according to specific objectives.

For Bayer, however, “Lohngestaltung” cannot be isolated wage engineering. Wage policy must be connected to competition policy and broader economic policy, because distorted wage structures ultimately arise from “Vermachtung” in the economy. His organic analogy—wages, prices, and money value are related, but only as one relation within a wider economic organism—serves to criticize narrow causal thinking.

The article’s continuing relevance lies in this synthesis of labor economics, market-structure analysis, and social responsibility. Bayer accepts the value of objectification and labor science but denies that wage finding can become pure calculation. The final emphasis is explicitly anti-technocratic: economic order requires judgment, not escape into machinery or formulas.

Die letzte Verantwortung nimmt uns niemand ab. Gerade darin kommt die Würde des Menschen im wirtschaftlich gesellschaftlichen Geschehen zum Ausdruck; gerade darin liegt eine Chance der Menschlichkeit.

English translation: No one relieves us of ultimate responsibility. It is precisely in this that the dignity of man in economic and social life finds expression; precisely in this lies a chance for humanity.