Too often, however, union rhetoric perpetuates the fallacious notion that our current standard of living is due to the great effort of the "working man." No doubt laborers do work hard and labor is a productive virtue, however labor effort is not what explains our prosperity. Workers in Bangladesh and Barundi most likely work as hard as American workers do with a lot less to show for it. The difference maker is capital.
As Ludwig von Mises points out in his essay "Wages, Unemployment, and Inflation" originally published in Christian Economics and reprinted in Planning for Freedom; and Twelve Other Essays, workers receive higher real wages and enjoy high standards of living, not from working harder per se, but because they have access to more and better capital goods.
The buyers do not pay for the toil and trouble the worker took nor for the length of time he spent in working. They pay for the products. The better the tools are which the worker uses in his job, the more he can perform in an hour, the higher is, consequently, his remuneration. What makes wages rise and renders the material conditions of the wage earners more satisfactory is improvement in the technological equipment. American wages are higher than wages in other countries because the capital invested per head of the worker is greater and the plants are thereby in the position to use the most efficient tools and machines. What is called the American way of life is the result of the fact that the United States has put fewer obstacles in the way of saving and capital accumulation than other nations. The economic backwardness of such countries as India consists precisely in the fact that their policies hinder both the accumulation of domestic capital and the investment of foreign capital. As the capital required is lacking, the Indian enterprises are prevented from employing sufficient quantities.of modern equipment, are therefore producing much less per man-hour and can only afford to pay wage rates which, compared with American wage rates, appear as shockingly low.
There is only one way that leads to an improvement of the standard of living for the wage-earning masses, viz., the increase in the amount of capital invested. All other methods, however popular they may be, are not only futile, but are actually detrimental to the well-being of those they allegedly want to benefit.
In light of the contribution of capitalists to the well-being of all of us, including laborers, it is high time to consider establishing Capital Day. Until then perhaps we should all take a little time during our celebration of labor to acknowledge the contributions of capital.