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The Wages Question: A Treatise on Wages and the Wages Class; Walker, Francis A.
13 paragraphs found.
Part II, Chapter 10
II.X.3

But even the wage-fund doctrine aside, the economists of the Manchester School have not been disposed to regard the problem of distribution, the question of rent excepted, as one of much urgency or difficulty. They have been of the opinion expressed by Chevalier, thirty-five years ago, that this department of political economy is inferior in interest and importance to that of production. *3 This has not been from a disposition to disregard the effects on human happiness, and the strength and stability of the state, wrought by a good or an ill distribution of the products of industry; but from a belief in the absolute sufficiency of economical forces, in a state of industrial freedom, to diffuse all burdens and all benefits alike, to the highest advantage of the industrial community. Laissez faire: let these principles work unhindered, has hence come to contain pretty much the whole theory of distribution as held by the writers of this school. To such it can only be a matter of curious interest, so far as they are concerned as political economists, what are the facts of the distribution of wealth at any given time, or what the moral and social condition of any single class of the community. If things are wrong, they need only to be let to work themselves right, under the impulsion of purely economical forces; and such forces are constantly operating for the redress of grievances, and the repair of inequalities. If aught is wrong at present, it is simply because the free play of economic forces has been hindered by arbitrary enactment, or illegal violence in the past: the one thing required to bring about industrial relief is industrial freedom. So completely satisfied are the writers of this school with the sufficiency of the force they invoke to secure a right distribution, that they refuse to make political freedom a condition, *4 necessary or even important, for the successful operation of that force. The question of wages is no different in the United States from what it is in Russia, by reason of differences in the political institutions of those countries. It differs nothing in Austria from what it is in Prussia, by reason of the wide difference in popular intelligence existing between those countries. The ballot can do nothing to enhance wages: social opportunities can do nothing, except as they operate in restraint of population; sympathy and respect for labor can do nothing. The economical force is all-sufficient, granted only a state of industrial freedom.

II.X.10

I should rather define the Manchester school to consist of those free traders who carry into the department of Distribution, that assumption of the economical sufficiency of competition which the whole body of free-traders accept when dealing with the questions of Exchange; who fail to recognize any differences between services and commodities, between men and merchandise, which require them to modify their doctrine of laissez faire, looking on a Manchester spinner as possessing the same mobility economically, as being under the same complete subjection to the impulses of pecuniary interest, as a bale of Manchester cottons on the wharf, free to go to India or Iceland as the difference of a penny in the price offered may determine; free-traders, who, to come down to single practical questions, object to laws against truck *10 as an interference with the freedom of contract; who oppose exceptional legislation respecting *11 the employment of women under ground in mines and at factory labor during pregnancy and for the period immediately succeeding confinement, on the ground that such matters should be regulated by the interest of the parties thereto; who, while perhaps approving, on social considerations, laws regulating the employment of children in mines and factories, *12 yet deny that such regulations have any economical justification, holding that self-interest is here, again, a sufficient guide; who object to laws of compulsory rules respecting apprenticeship, or admission to the professions, to the governmental regulation or inspection of industrial operations, and to any and all acts of the state directed to the promotion of prudence and frugality on the part of the working classes. It was to the effects of such teaching that Prof. Cairnes referred when he said: "Laissez faire, freedom of contract, and phrases of like import, have of late become somewhat of bugbears, with a large number of people. It is enough to mention them to discredit by anticipation the most useful practical scheme." *13

II.X.11

But it may be here asked, are not the Manchester economists merely more consistent and thorough than those who stop short in their advocacy of freedom from legal restraints when they leave the department of exchange; does it not amount to this, that the Manchesterians stick to their principles, while others do not? It is to be in a position to meet this question that I have stated the theory of competition so much at length; and I now answer, no question of principle is involved, but only a question of fact. No one will deny that if competition be perfect, a right distribution will be effected by its agency, but on the other hand no one can claim that any such assurance exists if competition be seriously impaired. If laborers and employers do not in fact, *14 whatever the cause, resort to the best market, then injuries may be inflicted on labor or on capital, and no economical principle whatever will operate to secure redress. The entire justification for laissez faire is found in an assumed sufficiency of the individual motive-force to reach the best market. With immobility, total or partial, there is no certainty, or probability, of an equalization of burdens and benefits, or of the propagation, without delay or loss, of any economical impulse whatever.

II.X.13

Free traders, therefore, who decline to carry the rule of laissez faire into the department of distribution, are not dodging their principles. They deny that the condition which alone justifies that rule, exists in this department. With respect to merchandise, destitute alike of sympathies and antipathies, competition is so far perfect that it may be reasoned upon as if no obstruction to exchange existed. The one additional penny of profit will send the bale of goods east or west, north or south, to kinsman or to stranger, to black man or white, with absolute indifference. But with that strange bundle of "apathies, sympathies and antipathies" *15 called man, bound by manifold strong attachments to place and scene, to home and friends, weighted with daily burdens, almost or quite to the limit of his strength, beset with reasonable and with superstitious fears, a prompt resort to the best market must so evidently be a matter of great uncertainty, that no economist can justly be accused of abandoning his principles who refuses to trust wholly to the individual impulse for the right distribution of the products of industry. The question of a competition sufficient or insufficient to this end, is a question of fact. And it is important to be borne in mind that the obstructions to competition which defeat a right distribution, are not physical merely, or mainly, but moral; ignorance, superstition, timidity, procrastination, mental inertia, love of country, love of home, love of friends. So much for the obstructions to competition, on the side of the working classes. But it is equally important to note that a further effect prejudicial to them may be produced by the greed of employers counteracting a true regard for their own self-interest. The theory of competition assumes that the employer in seeking his own interests will become the conservator of the interests of the laborer, there being a true harmony of interests between them. This may be so, as Prof. Cairnes has noted, with interests as they really exist, and as they would be seen by an enlightened eye. But it does not follow that the employer's interest, as he may regard it, coincides with the interests of those dependent on him for employment. "This chasm in the argument of the laissez faire school has never been bridged. The advocates of the doctrine shut their eyes and leap over it." *16


II.X.19

Just how much force, on purely economical principles, has the objection urged against many proposed measures, that they are in violation of the freedom of contract? Let us candidly but searchingly consider this question. What is the authority of laissez faire *20 when levelled against a factory act, or a proposition to restrain truck? Laws in restraint of trade, or interfering with the times and methods of employment, with wages and prices, are not mischievous because they violate a theoretical self-sufficiency of labor, but because they effect a certain actual result. What is that result? They diminish mobility, which, as we have seen, is the prime condition of competition, while competition affords the only security the laborer can have that he will get the utmost possible for his service. The mischief of such laws is simply and solely that they are obstructive. Here, then, and not in the shibboleth, laissez faire, laissez passer, we have the true test of the expediency of a proposed regulation of industry or trade. Does it practically obstruct movement? But is it said: every restriction or regulation is in some degree, obstructive? Right and wrong, at once. Restriction and regulation are obstructive as against a pre-existing condition of perfect practical freedom. But perfect freedom obtains in nothing human. There are obstructions on every hand, not physical only, but also intellectual and moral. May not a regulative act well conceived to remove certain moral and intellectual obstacles to free action, have the effect to promote, not retard, industrial movement?

Note:
"It is one thing to repudiate the scientific authority of laissez faire, freedom of contract, and so forth: it is a totally different thing to set up the opposite principle of state control, the doctrine of paternal government. For my part, I accept neither one doctrine nor the other, and, as a practical rule, I hold laissez faire to be incomparably the safer guide. Only let us remember that it is a practical rule, and not a doctrine of science; a rule in the main sound, but, like most other sound practical rules, liable to numerous exceptions; above all, a rule which must never for a moment be allowed to stand in the way of the candid consideration of any promising proposal of social or industrial reform."—J. E. Cairnes' Essays in Pol. Econ., p. 251.

Part II, Chapter XI

Part II, Chapter 17
II.XVII.54

To the appeals of the working classes for legislation abolishing these systems, the economists of the Manchester school have replied with the doctrine of laissez faire. Asserting, as they did in their contest for free trade, the self-sufficiency of capital, they felt bound to vindicate their consistency by asserting the self-sufficiency of labor. To them truck and frame-rents were a mode of ascertaining the wages of labor; and they deemed the hours and methods of labor and the amount and kind of wages matters to be left to employers and employed, *93 subject only to the "law of supply and demand." By the operation of this law, they claimed, the employer gets the laborer's services for the least sum possible under the conditions of supply; and on the other, the laborer secures the greatest sum for his services consistent with the existing demand. The employer's least price and the laborer's greatest price are therefore the same, and no injustice can be done so long as both parties are left free by law.

II.XVII.55

It is, however, fairly a question whether the writers and statesmen of this school, in their valorous disposition to stand by their principle in every case where issue on it might be joined, have not mistaken their ground in the matter of frame-rents and truck. Surely, freedom of contract, on which the Manchesterians insist so strongly, does not involve freedom to break contracts or to evade contracts; nor does the most advanced advocate of laissez faire propose that breach of contract shall be left to be punished by natural causes—that is, by the loss of business reputation, by the withdrawal of confidence, or by public reprobation. But if exactitude of performance may be enforced by law without any interference with industrial freedom, why, pray, may not precision in terms be required by the law, as the very first condition of a due and just enforcement of contracts? Precision in terms is, however, manifestly incompatible, in the very nature of the case, with truck; for if the employer says to the laborer, "I will pay you for your work twenty shillings a week, but you shall take it in commodities at my prices," he does not in fact agree how much he will pay the laborer; the use of the term twenty shillings becomes purely deceptive: it may mean more or less according as the employer chooses to fix his prices at the time; the laborer can not tell what his wages really are; the law can not tell, and therefore can not enforce the laborer's right if litigated. *94 Perhaps we can not say that precision in terms is incompatible with the very nature of the system of machine rents; but there is ample evidence to prove that it has been so in fact, and therefore the law, which is bound to enforce the contract, may justly demand that the contract shall not contain an element unsusceptible of exact determination. This is not interference with freedom of contract, but with looseness and uncertainty of contract, or with the power of one party to a contract to break, evade, or pervert its terms.

II.XVII.56

But I am not anxious to reconcile the prohibition of truck and machine rents with laissez faire. The authority accorded to that precept is not, in my opinion, to be justified on strictly economical principles.

II.XVII.58

Now, let us apply this principle to a proposed law in regulation or restraint of truck. It is, say Mr. Bright and Prof. Fawcett, an interference with freedom of contract and an obstruction to trade, and therefore mischievous— laissez faire, laissez passer. But is it really or only formally obstructive? There will not be absolute freedom of movement with it. Granted. But is there absolute freedom of movement without it? Assuredly not. Shall not, then, the question be, whether there will be more freedom with or without such a law?

Concluding Remarks
II.XX.12

This brings us face to face with the doctrine of Laissez faire, which teaches that the spontaneous action of individuals, each seeking his own interest on his own instance, guided and helped at most by the purely social forces of the community, will achieve the best possible industrial-results; and that the interference of government, operating by constraint and compulsion, under the sanction of law, can only be mischievous. Reasons have been shown for believing that Laissez faire, so long and loudly proclaimed a principle of universal application, is nothing but a rule of conduct (pp. 162-4) applicable in certain conditions; a rule very useful, indeed, when duly subordinated to higher considerations, but mischievous when allowed to bar the way to clear, practical opportunities for advancing the industrial condition of mankind; a rule, in short, which, like fire or water, is a good servant but a bad master.

II.XX.13

Yet, in reducing Laissez faire from the rank assigned it in most economical treatises, to its true grade of a practical rule, good in certain conditions only, we have not reached the result that State interference is therefore desirable at any and every point where the spontaneous action of individuals shall be seen to be inadequate to achieve the highest good of all classes. We have merely put the objection to paternal government on grounds which will bear examination. State interference, however well intended, however clear the occasion, is certain in some degree to miss its mark, and to work more or less of positive mischief in any attempt to remove the evils incident to individual action. Legislation is always more or less unwise; administration always falls in some degree short of its intent (pp. 172, 173). Certainly no one can entertain a stronger sense of the evils of the regulation by law of the industrial concerns of the people than the writer of this treatise. State interference with industry is only justified where the admitted mischiefs of restriction are heavily overborne by an urgent occasion for preventing the permanent degradation of the laboring classes through the operation of economical forces which the individual is powerless to resist.

II.XX.15

Each of these things is contrary to the doctrine of Laissez faire; yet I, for one, can not find room to doubt that, on purely economical grounds, the action of the State herein is not only justifiable but a matter of elementary duty. A little interference with the freedom of individual action here will save the necessity of a great deal of interference elsewhere. If the State will see to it that the whole body of the people can read and write and cipher; that the common air and common water, which no individual vigilance can protect, yet on which depends, in a degree which few even of intelligent persons comprehend, the public health and the laboring-power of a population, are kept pure; and that the first feeble efforts of the poor at bettering their condition and saving "for a rainy day" are guarded against official frauds and speculative risks, it may take its hands off at a hundred other points, and trust its citizens, in the main, to do and care for themselves. These things therefore are demanded by the true economy of State action.