John Harris writes:

Perhaps those who reduce people's worries and fears [about immigration] to mere bigotry should go back to first principles, and consider whether, in such laissez-faire conditions, free movement has been of most benefit to capital or labour.

Let's do this. Here are some first principles:

- Factor price equalization. Foreign workers can bid down British wages through trade. Whether they come here or not, their effect on wages is much the same.

- Complementarities. Some foreign workers are complements for native ones, and so raise wages of the latter. For example, Polish roofers allow British plasterers and electricians to do more work.

- Adjustment. Insofar as immigrants do reduce wages, this will also reduce prices. This allows interest rates to fall, which boosts demand for labour and hence wages. Also, a drop in the price of labour relative to capital should lead to rising demand for labour relative to capital. On both counts, labour demand should increase, thus reversing the initial adverse impact of immigration.

These principles imply that free movement won't much tilt the balance between capital and labour.

In the unlikely event of anyone wanting empirical evidence, my chart provides some. It shows that the ratio of the wage share in GDP to the profit share hasn't much changed in the last 10 years even though the number of foreign-born workers has risen. In fact, the wage share is higher than it was in 1997, even though the number of foreign workers has almost doubled. This is consistent with our first principles.

Now, some people might be surprised by the stability of the wage share. If the wage share hasn't changed, how come real wages have fallen and so many workers are struggling?

Simple. Workers aren't suffering because the balance of class power has shifted to capital. There are (at least) three other things going on, on top of unnecessarily tight fiscal policy:

- Job polarization. The number of decent middling jobs is falling, relative to low-paid ones.

- Decorporatization. There's been a shift from the corporate sector to the self-employed. This has squeezed profits and - to the extent that they are in part a share of economic rents - wages too.

- Falling productivity. Output per worker-hour is lower now than it was in 1997 - in part, perhaps because of lousy management (pdf). A smaller pie means less for everyone.

Wages, then, are being squeezed not by immigrants, but by some fundamental trends in capitalism.

In this context, the "modern left" that Harris sneers at should be a lot angrier than it is. Those who seek to link immigration with falling living standards are guilty not just of (perhaps wilful) ignorance. They are trying to shift the blame from capitalism to some of the least powerful members of society. That's not just racist. It's fascist.