The Wages Question: A Treatise on Wages and the Wages Class
ALL the questions of Political Economy may, both conveniently and appropriately, be grouped under four titles, namely, the Production, the Distribution, the Exchange, and the Consumption of Wealth. All wealth has, of course, to be produced, in the first place; and, moreover, it is produced to be consumed, and for this end alone. Production and Consumption, therefore, are concerned with the entire sum of wealth.
All wealth, however, is not exchanged*1; nor is all wealth distributed. Exchange and Distribution, therefore, have not to deal with the entire sum of wealth. Nor is that part of wealth which is excluded from Exchange identical with that which is excluded from Distribution. Vast amounts of wealth are exchanged which are not distributed; vast amounts are distributed which are not exchanged.
The term Production of Wealth does not need, for our present purposes, to be defined.
Consumption, in the economical sense, is the use of wealth. The actual destruction of wealth thereby may be total or partial, rapid or slow, according to the nature of the material and the object to which it is directed. The Consumption begins when the use begins.
"That almost all that is produced is destroyed, is true; but we can not admit that it is produced for the purpose of being destroyed. It is produced for the purpose of being made use of. Its destruction is an incident to its use; not only not intended, but, as far as possible, avoided."*2
Wealth is exchanged, in the meaning of the political economist, when the producer and the consumer of it are different persons; and this, whether different persons have united in the production of it or not.
On the other hand, wealth must be distributed when different persons (having separate legal interests) unite in production; and this, whether the product is to be exchanged or not.
In illustration of the latter case, let us suppose that a dozen persons unite in a fishing venture, on equal or unequal shares. Upon their return the product is distributed—that is, divided into shares—among them. It may be that each of the producers will desire all the fish thus falling to his share for his own immediate consumption, or to be salted down for winter use: then none of the product will be exchanged, though all of it has been subject to distribution. Or, again, some of the fishermen may desire to sell the whole, others portions only, of their fish, in order to purchase articles more adapted to their necessities: then we should have a product distributed wholly and exchanged in part.
In illustration of the former case, let us take a small farmer, in the American sense of that term,*3 a peasant proprietor in the phrase of Europe, cultivating his land by his own labor and that of his minor children, and perhaps of his wife as well. The product here is not distributed, because it is all his,*4 the children and, for that matter, the wife, having no separate interests legally, and the avails of their labor going entire to the father and husband. The product, therefore, not being divisible into shares representing the claims of different producers, Distribution is not concerned at all with it; yet a part of it, or the whole, may be exchanged. If the farm were situated in one of our North-eastern States, and the product were chiefly pork, corn, potatoes, and garden vegetables, the greater part would presumably go to the support of the family, and but little would be exchanged for other articles. If, on the other hand, it were situated in one of the Southern seaboard States, and the product were cotton, the whole of it, though not distributed, would be exchanged, being sold to purchase breadstuffs, clothing, West-India goods, etc.
Both the Exchange and the Distribution of Wealth may be, according to subject and circumstance, either simple and obvious, or effected through most complicated and roundabout processes. Thus, Exchange may take place in the form of direct barter between two neighbors, each giving some of what he has for some of what he wants; or it may involve the services of railroad, steamship, and ocean telegraph, with the mediation of importers, jobbers, wholesalers, and retailers.
In like manner, Distribution may take the form of a simple division of a product into two or three equal shares; or it may involve the partition of the annual avails of a factory among five hundred persons having claims upon the product, in shares varying from that of the nine-year-old "half-timer," working under the Factory acts, to that of the employer or the owner of the mill.
The distinction which I have sought here to illustrate between the Exchange and the Distribution of Wealth is not of importance in the general theory of political economy only, but it is of immediate application to the problem of Wages. I shall seek to show*5 that the fact that a large portion of the wealth produced is not distributed, while yet it is exchanged, may have a powerful influence on the condition of those classes who produce distributed wealth. In my opinion, one can no more explain all the phenomena of distribution without reference to the fact of a vast undistributed product, than one could explain the movement of the Gulf Stream without reference to the colder waters through which and over which it flows.
These brief remarks upon the scope of the four departments of Political Economy will be sufficiently connected with the special topic of this work by the remark that the question of Wages is a question in the Distribution of Wealth.
Now it is clear that in treating of the Production of Wealth we need to distinguish industrial functions; and this the systematic writers have done with great success, and we have the laws of production developed early in the history of economical investigation with great completeness, little being left to be added by later writers.
But is it not equally clear that in treating of the Distribution of Wealth, we need to distinguish industrial classes, recognizing industrial functions only as they serve to characterize such classes? This the systematic writers in economics have generally failed to do; and I venture to think there is in this the explanation of the little progress made towards the settlement of the important questions in this department of the science.
Thus the political economist, having shown, by careful analysis and apt illustration, the parts taken in production by labor and by capital, carries the same classification forward into Distribution, and speaks of the shares of the product received by labor and by capital respectively. Now it does not follow at all, as a matter of course, that because labor and capital perform parts which can be clearly distinguished in production, they will receive separate shares in the distribution of the product. That will depend on whether these functions are or are not united in the same persons. In the distribution of wealth, shares go to persons, who may be grouped in larger or smaller classes, having less or more in common. So far as the function performed in production may serve to characterize the industrial class, so far the function may be recognized in treating the questions of Distribution, but only so far. Beyond this it becomes as idle to refer in distribution to functions performed in production as it would be to seek to identify the members of the body engaged in a certain kind of labor, and undertake to show the parts of the produce which go severally to the hand, the eye, and the foot. It is true that we find men laboring, generally at reduced wages, who have lost one or both hands, one or both eyes, one or both feet; and the economist may, by judicious inquiry, satisfy himself how much these unfortunate persons lose in wages by their several infirmities. But this would not be held to justify the extension of such an analysis or dissection to the vastly greater number of sound laborers, and the erection of a system of distribution based on the respective contributions of the several parts of the undivided body to the work of production.
Now, as matter of fact, although labor is a function in production which is always separable in idea from the work of capital, the instances where capital is furnished by one person and labor performed wholly by a different person are, if we look over the world, fewer*6 by far than those in which capital is furnished more or less by those who perform the labor, and in which labor is performed more or less by those who furnish the capital. In other words, it is not the rule, but the exception, that one or the other industrial function shall characterize the industrial person or class, just as, notwithstanding all the effects of malicious and accidental injury, the number of those who preserve all their organs and members exceeds the number of the maimed, the halt, and the blind.
Yet the great body of systematic writers in political economy have carried the classification which resulted from their analysis of the processes of production over, without change, into the discussion of the questions of distribution; and having found labor and capital the two agents in production, have proceeded to speak of the remuneration of labor and the remuneration of capital, as if labor and capital did in fact receive shares always distinct in the distribution of wealth.
Now it is easy to show that the term Labor, according to this use of it, includes the part in industry of five classes of persons clearly separable in economical idea, and generally to be distinguished clearly in life, namely: 1st, the class who work for themselves, by themselves, either on their own land (the "peasant proprietor" of Europe, and the American "farmer") or in mechanical trades. This class may consume their own products entire,*7 or exchange them in a greater or less degree, but in either case there is no distribution. 2d, the tenant occupier of land, like the cottar of Ireland or the ryot of India, who receives the whole produce, subject only to the deduction of rent for the natural powers of the soil. 3d, the class of persons working for hire (e.g., domestic servants, soldiers, clergymen) who are paid out of the revenue of their employers, and are not employed with any reference to the profits of production. 4th, the class of persons working for hire, whether in agriculture, in trade, or in mechanical pursuits, who are paid out of the product of their industry, and are employed with reference to the profits of production. 5th, the employers themselves, in so far as they personally conduct and control business operations, their remuneration being styled the "wages of supervision and management."
Now to the remuneration of each of these five classes the economists generally, as I have said, apply the term Wages, although only the third and fourth classes do in fact receive a remuneration for their services distinct from that which they receive for the use of their capital; being therefore the only classes which receive "wages" in the ordinary meaning of that word; and although, in the second place, classes 4 and 5 thus grouped have interests as strongly opposed as human interests can well become.
The explanation of such a classification would fairly seem to be that which has been indicated, namely, that economists have assumed as of course that the industrial functions which they distinguish in the production of wealth will necessarily characterize the industrial classes interested in the distribution of wealth. Otherwise it would scarcely be possible that a classification should be seriously proposed, for the solution of the problems of distribution, which groups together employer and employed; the peasant proprietor, the tenant occupier, and the hired agricultural hand; the navvy and the railroad king; the day-laborer and the domestic servant with a Stewart, an Astor, and a Rothschild.
It is true that labor, in a certain sense of that word, is common to these and all other classes in production; and this fact of itself ought to be enough to show that it is not labor which should be taken to distinguish classes in distribution. It is not what these classes have in common, but those things by which they differ from each other, which should be made the means of characterizing them as claimants to the product of industry.
It might fairly be expected that after insisting thus peremptorily that the question of Wages is a question in the Distribution of Wealth, and that, in distribution, not industrial functions, but industrial classes, should be considered, one would in a treatise on Wages at once proceed to state the problem of distribution, and to define the wages class as a party thereto. But, on the contrary, I shall be obliged to take up and explain with much particularity certain principles of Production and Population which can not safely be assumed for our present purposes, and also to deal at some length with a current theory respecting the remuneration of labor, which squarely blocks the way to a philosophy of Wages.
Notes for this chapter
Not only is not, but could not be. I say this to meet the suggestion that wealth, though actually not exchanged, is yet always subject to exchange in the sense that, if that particular form of wealth were to rise, or some possible substitute for it in use were to fall markedly in price, exchange would then take place, so that such wealth should still be regarded as within the domain of exchange. But the state of facts assumed is not real. No matter how much rice might advance, or other food decline in price, no human power could take all the crop out of India and bring back a food-substitute to the people, even were it Liebig's extract. The whole transportation system of India, reinforced by the revenues of the British Government, broke down under the effort, in 1873-4, to distribute to the people of certain districts of India an amount of rice equivalent to but a small portion of their usual crop. The railroads and water-courses of the United States could not take all the crops from the farms where they were raised.
N. W. Senior, Pol. Econ., p. 54.
"When we speak of an American farmer, we generally mean one who is the absolute owner of the land and every thing on it."—T. Sedgwick, Pol. Econ., p. 54.
It may be said that the father and husband is bound, both morally and legally, to support his wife and children out of the product; and that the subsistence thus derived by them constitutes, in effect, their wages. To this it will be sufficient to answer, first, that the amount and character of that subsistence are not determined by contract between the parties, as in the case of what may properly be called wages, but, within the limits of the mere support of life, are wholly at the will and discretion of the head of the family, having no relation to what other persons, rendering the same character and amount of service, may be receiving next door; and, second, which settles the question, that the head of the family is equally bound to supply subsistence whether the wife and children labor or not. In the case of children too young to labor, or of an invalid wife, the obligation of the head of the family, in respect to subsistence, is precisely the same.
Throughout the present discussion I shall waive all question of the amount derived by the government from taxation. Whether taxes be, as Professor Senior claims (Pol. Econ., p. 182-5), "a form o[???] expenditure," and hence only cognizable in the department of Consumption, it is not needful to decide here. Suffice it to say that even though government were to be regarded as, in a certain sense, a partner in the production of wealth, and a sharer in its distribution, yet, inasmuch as government always enters by force and carries away its part, determining for itself alike how much it will take and to what use it will apply what it takes, political economy can know nothing of it. As the laws are silent amid arms, economical science bows before the tax-gatherer. Whether government shall take much or little for its own purposes out of the wealth that has been produced is the business, not of the economist, but of the statesman. The methods and subjects of taxation do come within the field of political economy, but it is only because they affect the production of future wealth, its distribution, its exchange.
Part I, Chapter II
End of Notes
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