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Ability to Pay

Bernard W. Dempsey
Review of Social Economy
Vol. 63, No. 3, The Best of the "Review of Social Economy": 1944-1999 (SEPTEMBER 2005), pp. 335-346
Published by: Taylor & Francis, Ltd.
Stable URL: http://www.jstor.org/stable/29770323
Page Count: 12
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Ability to Pay
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Abstract

Dempsey argues in this 1946 article that the ability to pay has two dimensions, one that is economic, one that is moral. The economic dimension refers to a company's ability to pay higher wages, while the moral dimension refers to its duty to pay higher wages. The central question is the ability to pay the fair wage and that in turn raises the question as to what is the fair wage. The fair wage is defined in terms of commutative (exchange) justice and social justice. Exchange justice imposes the dual requirement that the wages and labor services exchanged, along the burdens to render those services and to make proper wage payments, must be equal. Social justice sets the requirement that the wages paid must be sufficient to meet the basic needs of the worker and his dependents, including the usual needs of the body and the needs of the human spirit. Dempsey's article concludes that ability to pay is an "inadequate and capricious guide" and that only through social justice will we be able to resolve the conflict between socialism and its reliance on distributive justice and free-market capitalism and its reliance on exchange justice.

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