Ans. The theory that wages depend on demand and supply is often referred to as the neo classical theory of wages. Treated as pure theory it is value free and does not involve moral judgements. It does not say whether the resulting distribution of income is fair or just.

In practice however the neo classical theory is often used in such a way as to imply moral judgements. It is a theory that tends to be associated with the political right and centre those who are generally in favour of markets and the capitalist system. Many on the political left are critical of its implied morality. They make the following points ;

• By treating labour as a factor of production, it demeans labour, labour is not the same as a piece of land or machine.  
• It somehow legitimise the capital system, where some people own land and capital whereas others have only there own labour, it seems to imply that people have a right to the incomes from their property even if that property is highy unequally distributed among the population.
• It implies that labour has no rights to the goods that it produces. These goods are entirely the property of employer, even though it is the workers who made them.

Karl Marx was highly critical of these values and the way that the capitalist system led to extremes of wealth and poverty. He argued that labour was the only true source of value. Afterall it is the labour that makes machine, labour that tills the land and makes it yield, labour that mines coal and other natural resources. Property is therfore a form of theft . When capitalists extract profits from their enterprises, they are stealing part of the value produced by labour.