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There is no way of keeping profits up but by keeping wages down -- David Ricardo On Protection to Agriculture 1820 This essay seeks to go one step further in the context of David Ricardos quote by arguing that totalitarian political systems offer a way of keeping profits up by keeping wages down and inversely in a democratic system wages will have a tendency to rise and thus profits will decline When looking at David Ricardos quote within the context of both totalitarian and democratic political systems two assumptions have been made Firstly wages are lower in totalitarian political systems then in democratic political systems simply due to the differences in political structure in stating the obvious workers may be denied a say in how they are governed in a totalitarian system to the benefit of governing individuals This is in contrast to a democratic system where politicians must garner voter support Workers would then have the ability to exercise their collective voting power and influence their wages through elected politicians that may garner support with worker-favourable governmental policy such as an increase in the minimum wage rate Secondly companies that operate in a totalitarian environment would experience higher profits due to low wages As Vernon 1966 has pointed out with the PLC if the major input into a production process is non-skilled labour the cost of that labour and wage differentials across national boundaries becomes a major location decision factor thus it is fair to reason that companies faced with rising wages would eventually seek out other lower wage locations regardless of the political system When testing these assumptions within an Asian context inter-country comparisons are fraught with difficulties including among other things cultural and psychographic differences that may have an apples and oranges comparison affect In the hope of overcoming such difficulties Indonesia has been selected as a model for comparison as both company and labour force actors can be
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