The Common Sense of Political Economy
By Philip H. Wicksteed
Philip H. Wicksteed (1844-1927) wrote the
The Common Sense of Political Economy, Including a Study of the Human Basis of Economic Law (Macmillan and Co., Limited, St. Martin’s Street, London) in 1910.The edition presented here is the first edition, which was widely used as an economics textbook in classrooms in the United Kingdom and the United States, and probably elsewhere as well.A few corrections of obvious typos were made for this website edition. We also added occasional parentheses or square brackets to mathematical expressions for clarity [this was necessary in cases where the requirements of browsers to print fractions with a solidus (“/”) causes potential confusion when the entire fraction is to be multiplied by a subsequent factor:
e.g., to distinguish (1/2
x) versus (1/2)
x]. However, because the original edition was so internally consistent and carefully proofread, we have erred on the side of caution, allowing some typos to remain lest someone doing academic research wishes to follow up. We have changed some small caps to full caps for ease of using search engines.Editor
Library of Economics and Liberty
First Pub. Date
London: Macmillan and Co.
The text of this edition is in the public domain.
The market of services or efforts follows the general law of the market. The flow of services of every kind determines the point down to which the desire for them is satisfied, higher or lower on the collective scale according as the stream is narrower or broader. The market in human effort is characterised by the fact that effort cannot be stored (except in a secondary sense and to a limited degree) unless embodied in some material thing, animate or inanimate; and therefore it runs to waste if not used as the capacity for it rises. Further, in many cases it is impossible for the holders to maintain an effective reserve price. And again it is impossible to detach it (unless embodied) from its source. Under these restrictions the law of the market dominates the exchange of human efforts with each other and with commodities. But the markets are often imperfect. The supply of each separate market of human effort constitutes a demand on the general market, and whereas its flow into the several markets is to a large extent dominated by economic forces, the original supply or production of human raw material is to be regarded almost entirely as incidental to expenditure of resources and expression of impulses, and scarcely at all as produced in response to a demand. Economic forces tend to secure to every one in the market as much as his effort is worth to any one else at the margin. It does not follow either that he has no claims beyond this, or that his marginal worth might not be increased; but seeing that the better society is supplied with the thing he makes the lower will be its place on the collective scale, it follows that each group of workers has an interest in society being rich in all things else but poor in what it itself supplies. Hence the lump-of-labour economics and much misdirected sympathy with anti-social action. A full recognition of the hardships involved in the uneven advance and the fluctuations of industry is a necessary condition of successfully combating anti-social ways of attempting to remove them.
We have now dealt with markets of commodities under various aspects, and have seen how the same underlying principle may be traced through the whole range. No economic consideration ever urges a man to give more for any commodity than it is marginally worth to him, and every economic consideration urges him to give as much, rather than go without it. In so far as there is free communication and independence of action, economic considerations will tend to produce a uniform market price for any commodity at any given time, which price will coincide with the marginal place of the commodity on the collective scale. We have further seen that every commodity has its own market, and that, wherever the nature of a commodity allows of its being stored, or secured, for a lengthened period in advance, a class of considerations will affect its place on the scales of the consumers (and therefore on those of speculative holders) which could not affect rapidly perishable articles. And this last consideration has led us on from the consideration of speculative “holding” to an examination of the whole system of hiring, loaning, and “advancing,” whether of specific articles or of general command of things in the circle of exchange. And further, we have seen how we may treat the supply of any market as itself constituting a demand upon some other market, until we ascend at last to the least differentiated material sources of our wealth.
We must now expressly note that not only commodities but services are in the circle of exchange. This fact has entered implicitly into all our investigations into the market of commodities. The supply of tables and bookshelves is a demand not only on the market of timber, but also on the market of services, for the skill and effort of the carpenter is as essential as the supply of wood to the production of these commodities; and to the consideration of the markets of human effort, or service, we will now turn.
It is obvious, to begin with, that we have been justified in assuming throughout our investigations that services as well as commodities do actually enter into the circle of exchange. A man may be paid for speaking, writing, singing, performing antics for others to look at, conducting ceremonies or rites which are believed favourably to affect our relations with the spiritual world, or delivering exhortations which will be conducive to our inward harmony. All these services, then, are in the circle of exchange. Moreover material commodities have received the form or have been brought into the place in which they can satisfy human wants by the exercise of human energies. Many writers have pointed out that man’s share in all the processes of manufacture and agriculture, in all “making” or “producing” of material things, consists merely in changing the places of things. The direct activity of man appears indeed to be confined to this; but sometimes his object in placing things together is to initiate transformations effected by nature, upon which he has to wait. He has placed the seed in prepared ground and must await the transformations in the laboratory of nature, by which the constituents of the soil and atmosphere are transformed into things he wants to eat, or which he will manipulate by manufacture into the things he needs. In such cases the action of man is disguised and falls into the background. It hardly leaves a visible trace on the resulting possession, and we think most of the action of nature. In other cases, as in the whole class of manufacturing operations, man is anxious that things should not be transformed by nature after he has placed them, but should retain as long as possible the form and relations which his direct action has given them; and in these cases the record of human effort is stamped in clearer and more permanent form upon the thing itself. Or again, the visible movement may be that of his own organs only, as is the case with speech, causing vibrations on the atmosphere which raise valued sensations, conceptions, or states of mind. In such cases the traceable physical record of man’s activity is in the highest degree transient. Or a man may move the fiddle-bow over the strings, in which case the physically traceable effect is equally transient, though produced with the aid of an external instrument that remains. Or he may move his brushes to his paints and his paints to his canvas, in which case the physical modifications produced have a high degree of permanence, but the mechanical energy expended sinks into insignificance in comparison with the rarer qualities that direct it. These examples will suffice to illustrate the indefinite varieties and combinations that may be traced in the qualities of mind, of muscle, of ear, and of eye, that direct and render effective any output of human energy; and the like varieties in the effects involved, whether as to the permanence of the modifications in visible physical structures that directly follow, and in the relations of these direct results to the natural processes initiated by them. But there is apparently no kind of effort, or output of energy, that can enter directly or indirectly into the circle of exchange which does not involve some degree of intelligent thought and some degree of physical movement, and which does not produce some more or less permanent modification in material things. In the case of the singer or musician, it is impossible to preserve the modified material, viz. vibrations in the air (except indeed as far as the invention of the phonograph may be held to qualify this statement), so that if I wish to enjoy the results of the musician’s output of energy I must command his services directly; and if when he sings or plays there is no one there at the moment to hear him, then all enjoyment except his own is lost. Whereas if a carpenter has made a table, the results of his effort are more permanently embodied, and even if no one has any use for these embodied results to-day, some one may have use for them to-morrow, or this day twelve months.
The fundamental conditions for the exchange of services for services, or of services for commodities, obviously exist. The wants that services can supply have their places on the individual and on the collective scales, in and out amongst those which commodities can supply. Moreover the persons in a position to render services can often produce something with them that takes a higher relative place on the collective scale than anything that they could produce for themselves occupies on their own. Again, the power to please me with a song has a primary value; whereas the value of skill to draw fish out of the ocean is derived from the value of the fish when safely landed; that is to say, the one skill can be directly, the other only indirectly, applied to the satisfaction of human desires or tastes, but in either case we find that services, like commodities, have their declining marginal value. Whether, for instance, I prefer so much food to so much music depends on the breadth of the stream of the supply of each which I already enjoy. And the manufacturer who has a large supply of material and plenty of orders on his books, may be willing to pay higher for appropriate services and lower for more material than he would be if he had “hands” enough to work through his orders as rapidly as he received them, but was short of raw material.
The conditions for the formation of markets in human effort, therefore, are present; and just as every commodity has its own market and its own market price, so we may expect every kind of human effort to form its own market, in which earnings will appear as market prices. Human effort that derives its significance from more or less permanent modifications of material things, becomes merged, as soon as exerted, in commodities, and its concrete and material result is dealt with in the market of commodities, so that when we speak of the market of services we must be understood to have primarily in view transactions in which a price is paid to a man in consideration of his putting forth some effort, not in consideration of the result. This includes such speculative transactions as undertaking to pay a doctor for his advice and attendance, not for any actual change in the habit of my bodily functions or tissues which he may produce; paying a lawyer for undertaking to conduct my case, not for conducting it successfully; giving a commission to a painter to arrange certain materials in such a way as to produce the counterfeit presentment of such and such a face, not for the actual material arrangement; or a promise to pay a gardener or a carpenter who undertakes to put forth effort to effect certain physical transfers, juxtapositions, unions, and severances.
Here, as elsewhere, it is practically impossible to draw an exact line, and unprofitable to attempt to do so. Time wages, for example, are technically payment for services; but if the work is easily tested the employer knows exactly what he is paying for, and since his bargain is renewed day by day or week by week, it would be mere pedantry to insist that he is paying speculatively for the output of energy, and not for its ascertained result, embodied in commodities. Human energy, then, may minister directly to human desires or needs, or it may effect relatively permanent modifications in material things; and in the latter case a bargain may be struck either for its output or for the transfer of the thing in which it has been embodied. In this last case we cease to bargain for services and bargain for commodities. Thus the general conception of services and the payment for them, as distinct from commodities, is clear enough, but the two may easily pass into each other. We shall generally speak of “earnings” in connection with the output of human effort, as we speak of “prices” in connection with the transfer of commodities, but it may be well to point out that the term “earnings” does not exactly cover the conception of “payment for services” as we have now conceived it; for if a man puts his effort into a material thing and sells the commodity, we speak of him as “earning” the price he receives just as much as if he bargains for the output of the effort itself. The term “wages,” on the other hand, while subject, though in a lesser degree, to the same ambiguity, is much too narrow in its scope for our purpose, since it does not include payments made to the artist or to the professional man.
The popular instinct of language, then, has not recognised a distinct category of speculative payment for services as distinguished from payment for their embodied results, and has provided us with no convenient word for it, but it is important that we should give some special attention to it. Since the power of rendering services flows to waste as fast as it accrues unless it is directly applied, or embodied in material commodities, it follows that the market in services has its nearest analogues in markets of the most swiftly and irrevocably perishable commodities. But any commodity, to be marketed at all, must have a certain degree of permanence, whereas the power to make effective effort perishes as it rises; and if the power generated as the moments pass is not exerted as the moments pass, it cannot be held in store and utilised at a later moment. We must therefore conceive of the supply of available human effort of any kind as perpetually flowing to waste if not utilised the moment it rises. On the other hand, the supply of many commodities is replenished intermittently, perhaps as the seasons of the year come round, perhaps as chance determines the discovery of ores or deposits; whereas the power to put forth human effort is (with the qualifications presently dwelt on) continuously renascent. Now we saw, in considering personal expenditure, that stocks must be reduced to terms of “rate of supply” in order to be accurately treated, because wants, to which they have to be related, are either continuous or recurrent. The supply we are now considering presents itself at once in the form of a stream, and we can have no difficulty in perceiving that in an open and competitive market the theoretical price of services, like that of commodities,will be determined by the breadth of this stream of supply (that is to say, the rate at which the services become available), and the composition of the collective scale of preferences. But in this case the rate of supply can only be adjusted to irregularities of demand within very narrow limits. It cannot be stored, and so, if there is anything intermittent or irregular in the occurrence of the wants which a particular service would satisfy, it will be impossible to accommodate the stream of supply to the stream of demand; for the stream cannot be narrowed down to a trickle for a time, and then swelled to a broad volume by pouring in the accumulations from the reservoir. Commercially, no doubt, a contractor may broaden or narrow the stream he controls by taking on or dismissing men, but it is not this stream of which we are speaking. We are speaking of the stream of continuously renascent power of work, and in the case of a man who has not been employed that power has run to waste. The contractor might talk of drawing upon the reserve of unemployed labourers, but the power of work which has not been used up to this moment is not in a reservoir. It has perished.
It is true that this statement is subject to certain qualifications. No man is capable of continuous effort for a lengthened period; and during times of sleep or rest he may be said to be accumulating power, to be discharged in the times of waking energy. And this fact, which is obvious in its application to the alternations of the twenty-four hours, is also true, in a lesser degree, of longer periods. A man may prepare himself by a holiday for putting out a larger amount of a special kind of effort during a given period than he would otherwise have been able to generate in the time. He may even keep up a strain through a series of years on the strength of energy which he has stored up during some previous period. And yet again, a period of training or technical study is a storing of energy to be realised at a later period. But when all these qualifications have been considered, the perishability upon which we have insisted remains the marked characteristic of the exertion of human power, as distinct from the transference of commodities. Relatively speaking, the one is a stream which perpetually flows past us irrevocably; the other is a store which remains with us for a longer or a shorter period, to be used up at our convenience.
In close connection with this continuous perishability of human powers as they rise is their inseparability from their source. Milk can be transported to London while the cow that gave it remains in Berkshire, but the power of work of a man (or of a horse for that matter) cannot be separated from the being that puts it forth. Hence human power cannot be massed locally, except to a limited degree. The amount of any kind of effort available at any moment in a given community cannot, as a rule, be brought under survey at a special place, as the week’s supply of plums or potatoes available for the district may. It must be ascertained through more or less indirect methods.
The characteristic of perishability further prevents the possibility of speculatively holding back effort in order to apply it at some more favourable moment in the future. In so far as a man can apply his own efforts to his own purposes, he has a reserve price in bargaining with others; for unless they will do better for him in return for his effort than he can do with it for himself, he has no economic reason for dealing with them. If he has both a stock of wood and the skill of a craftsman, he may choose between selling his wood and making a bargain with some one else for the application of his skill, or applying his skill to his own material, and putting the resultant articles into the market. Or more generally, whatever opportunities, possessions, and faculties any one commands, he may choose between all the possible distributions of his own faculties amongst his own opportunities (whether for the direct serving of his own purposes or the satisfying of those of others), and the linking of his faculties to the opportunities commanded by others, and the opportunities he commands to the faculties possessed by others. As long as these varied courses remain open to him, the advantages of one determine a reserve price below which he will not consent to devote his resources to the other. But if his own faculties and opportunities can make no fertile combinations, then they are thrown into the market with no reserve price, and will sell for what they are worth at the margin to others. The man, for example, who has a small piece of land, the tools for cultivating it, and enough in hand to buy seeds and await the maturing of crops for his own consumption, has a reserve price for the exercise of his skill. If it is of no use to any one else it is of some use to himself, and he need not sell it except for something more than it is worth to himself. Again, the man who has the faculties and the materials necessary for producing things which he could not directly live upon himself (the case, perhaps, of our man who has a stock of wood and craftsman’s skill as well), will also have a reserve price for the application of his services to the materials supplied by others, though it is based not on his ability directly to supply his own wants, but on his ability to enter another market than that of mere services. The case would be the same with the cultivator of the plot of land if he were producing choice fruit for the market instead of wheat and potatoes for his own use. But in all cases alike we shall find that in an open competitive market the price of services, like the price of commodities, will be determined by the rate at which the supply becomes available and the collective scale of preferences.
Naturally every different kind of energy has its own market, but a man of varied faculty need not sell effort of one kind at any price lower than that commanded by effort of another kind which he is capable of making; nor need he turn the same effort into one channel on lower terms than it would command if directed down another. His energy is in the condition of undifferentiated material, and just as the same wood can be made indifferently into washstands or tables, so the same skill can be applied indifferently to effecting either transformation. Untrained faculty may be regarded as analogous to raw material at a still earlier and less differentiated stage, since it can be trained into any one of many different faculties, and there will always be a tendency to turn it into the direction in which it is anticipated that it will minister to the wants highest on the collective scale.
There is another aspect of this question that must be considered. If the effort in question is irksome the man will, so far, have a reserve price. He will not put forth the painful effort except for an adequate return; and what return he will consider as adequate will depend upon the extent to which he is already provided with the things he desires. The only reserve price to the man who is totally without resources is the price that will enable him to keep alive with just enough vitality to enable him to do the work. He might not refuse to accept even less, but he would not be able to offer his wares continuously unless he received so much. The ampler his provision the less pain will he be willing to encounter to increase it by any given unit, and the higher will be the reserve price he puts upon his efforts. Now we have seen that division of labour has brought about a state of things in which hardly any man can apply his own powers to the direct satisfaction of his own most immediate and importunate wants, and it follows that any man who has no independent provision, but relies upon his own efforts, must throw a great part of them upon the market without any reserve price. Moment by moment his power is generated and perishes. If he can make no direct use of it for himself he must dispose of it at its present marginal value to others. He cannot hold it back till a more urgent demand arises.
What he can do, however, and very frequently does, is to let some of his powers run to waste, as far as immediate and direct results go, in order that he may transport himself to another place in which the powers that accrue to him in a future period may be exercised to more advantage; or, in order that he may bring some kind of pressure to bear on his correspondent (as in strikes), to improve the terms of bargains for the future. This last point leads us to another characteristic of the market in efforts which complicates and qualifies all those we have already noted. It rises from the circumstance that human effort is constantly and directly under the control of the human will. So, of course, are damsons and potatoes, for all bargaining and exchange is an exercise of human option; but the damsons and potatoes have, at any rate, no will of their own, and the man who has once got possession of them, though he may be much troubled by proceedings on their part (such as sagging or sprouting—proceedings which he is sometimes tempted to regard as arbitrary), at any rate has not to reckon with any theory on their part as to market prices and its corresponding reactions upon their behaviour. These general characteristics of the market in human effort constitute a sufficiently formidable and intricate subject for economic speculation. But we must return to the fundamental fact that all dealings in human effort are subject to the primary forces which dominate markets in commodities. Every man will secure what he desires on any terms which give it him for less than he thinks it is worth to him, and will refuse to give more for it than he thinks it is worth to him. And its worth is affected by the breadth of his supply of it.
We may now glance at a few illustrations of the way in which the general characteristics of the market in human effort manifest themselves, and the attempts that are made to deal with them and to remove some of their inconveniences. Let us begin with a single individual. He may be a singer, a lecturer, a physician, a university coach, or a novelist. He may, or may not, be bound or hampered by traditional customs which prevent his conforming to the economic conditions of his case. For instance, custom may dictate that he shall not charge less than a certain fee, and this fee may prevent his getting work which he would be willing to take and able to secure at a lower fee; and some portion of his time may flow off unused in consequence. Or custom may prohibit his raising his fee above a certain point; and he may consequently work harder and earn less than he could do if he were able to limit the number of his clients by raising his fee. In these cases his market is partly dominated by other than economic forces, that is to say, by other considerations than the place on the collective scale occupied by the want to which he can minister, and the place occupied on his own scale by things in the circle of exchange. If, on the other hand, his market is dominated by purely economic forces, what are the elements which compose it? What corresponds to the “amount of commodity in the market”? Obviously the daily renascent flow of possible exertion on his part. To some extent the thing he supplies can be supplied by others also; to some extent it is peculiar to himself. Just so any commodity in the market supplies wants for which partial but not complete substitutes may be found in other commodities. The analogue of the amount of the commodity is the daily accruing capacity to put forth the effort in question. And the place which it occupies on the collective scale is determined by the corresponding stream of wants that it can supply. This stream, as we have seen, may be very irregular. The season, or the term, or the session may bring an access of requirements which periodically raise the place of this particular want on the collective scale. Individual wants or accidental estimates of the significance of the special services in question on the part of conspicuous persons may suddenly raise the demand, or a brilliant achievement of any kind on the part of the man himself may have a like effect, of a more or less transient nature. Now, to the limited extent to which the man can store his energy, that is to say, recoup himself by previous or subsequent relaxation for an extra strain during a certain period, he can adapt himself to these irregularities as they rise. But this possibility is closely limited. It may deal with the ripples, but it cannot deal with the ground swell of change. Many an intellectual and artistic workman has died in poverty who could have made ample provision for his whole life during the few years when he was the vogue, had it been possible for him to concentrate the working hours of his life into that short period, reserving only his leisure hours for the long period of the world’s indifference.
Apart from these fluctuations, the individual workman, regarding the thing that he can do as the special commodity that he brings to market, would, if untrammelled by tradition, proceed economically on such lines as the following:—He would be, to a certain limited extent, a monopolist; and if he found that he could command as much work as he chose to take on certain terms, he might consider either of two problems. In the first place, he may consider how much work he will take on those terms. And here the principle of the reserve price comes into play. He will not sell at a given price any effort which he could more fruitfully devote to the direct securing of the things he would otherwise have to draw out of the circle of exchange; and even if he can secure none of these things on advantageous terms by the direct exercise of his capacity, yet he may be able to enjoy it for its own sake when he exerts it in directions that have no economic significance; and it is manifest that at a certain point effort will become so painful that it will not be worth while to encounter it for the sake of further command of things in the circle of exchange.
*31 To put it broadly, both the need of rest and aversion to irksome effort, and all that free command of powers and resources, and application of them to the securing of things that do not enter into the circle of exchange, which we embrace in the term “leisure,” will put a reserve price on his wares. He will say, for example, “At 7s. 6d. an hour, or at 300 guineas an operation, I will only undertake so much and no more for the public.” But, in the second place, he may raise his terms and say to himself, “I consider it worth the risk to take silk, or to raise my fees. That will limit my ministrations to a range of wants higher on the communal scale. It will subject me to the risk of encountering periods during which the stream of demand, at this high level, is narrower than the stream of the supply of energies which I should be willing to devote to its satisfaction. And I may find time upon my hands, not because of my own mental reserve price in time, but because my announced reserve price in money determines a margin nearer the origin than I had contemplated.” Custom, convenience, the difficulty of rapidly forming lines of communication, and the fear of future complications will prevent him in such periods from putting a larger amount of his energy upon the market, and taking the lower price that it will fetch.
Another difficulty in markets of effort may rise from the uncertainty that often exists as to what the service bargained for will really effect. Markets of effort are often highly speculative. It may be easy enough to estimate the quality of bricklaying or type-setting, for instance, and when one man employs another he may, in many cases, be able to define with some closeness the character of the services he stipulates for, and to ascertain what quantity and quality has been actually rendered. But if the service required is the exercise of a general vigilance over the conduct of a business, avoiding waste, keeping the persons employed in good temper and harmony, watching over scientific and industrial developments which make economies possible, gaining access to fresh customers, regulating mechanical details, and so forth, it may be very difficult to know beforehand exactly what a man will be capable of doing in all these particulars, or to make sure afterwards exactly what he has done. And therefore a man with a very high degree of capacity for business management may have the utmost difficulty in commanding the ideal market value for his services, that is to say, in getting remuneration corresponding to the marginal significance of the services he can render to a great business firm; for he may have no means of convincing any one that he possesses these faculties, and even if he is exercising them on behalf of a single firm, and their value is fully understood there, other firms may not be in a position exactly to estimate the services he would be able to render them. Again, if he can find no opportunity of setting up on his own account, he may have no personal reserve price; and consequently he may be compelled to accept remuneration which he knows, and which those who pay it know, to be far below the marginal significance of his services on the collective scale. This is because there is no effectively organised market for such services, so that the people concerned do not know of the existence of his faculty. The same is perhaps still truer in the case of authors. The taste of the public is exceedingly difficult to gauge, and the history of literature is full of instances in which the men whose profession it is to know what books will sell and what books will not, have been very far out in their reckoning. An author may long be unable to convince any publisher of the high place on the collective scale which his services would occupy if his faculty had a chance of making itself known. Reverse instances are perhaps more frequent, though they are less often heard of. Both business managers and authors often have the money value of their services over-estimated, and receive remuneration more than corresponding to the marginal significance in the market of their output of energy. We see, then, that some markets of human energy are capable of more systematic and precise organisation than others, but the underlying principle of markets in human effort and markets in commodities is precisely identical.
We have dealt hitherto with cases of effort in which the specific quality of each individual’s faculty is of importance. If we now turn to cases in which the same service can be rendered, almost indifferently by a great number of individuals we shall find the same general principles at work. In an area over which general communications spread, any man who estimates the output of a particular kind of effort as having a higher marginal value to him than is represented by its present earnings from some one else, will have an economic interest in diverting it to his own purposes by offering a higher remuneration. And as this service flows to him and its marginal significance decreases to him, it will rise to the man whom it is leaving and whose supply is contracting. This will bring about equilibrium; and the point at which the equilibrium is reached will vary with the supply of the special kind of power in question, and the ultimate reserve price of those who possess it, and the rise and fall on the communal scale of the wants to which it ministers. This last item may be a very unstable one. For instance, there are fluctuations from week to week, from day to day, and even from hour to hour, in the urgency of the want which the skill of the agricultural labourer can supply. If the fluctuations of the natural market were closely followed, the wage of the agricultural labourer would be in a constant state of flux. But even apart from custom and tradition the inherent difficulties of ascertaining the true conditions of the market at any moment, and the manifest waste and inconvenience of constant attempts to do so, would in any case lead to certain “poolings,” that is to say, contracts spreading over a certain period, during which, presumably, the labourer’s marginal effort for the day will sometimes be more than worth his wage and sometimes less. But when the wage has thus been fixed by a general calculation and by custom, there will be an expanding and contracting fringe of casual labour. At the moments when the permanent staff are really earning more than they are receiving, the farmer will be anxious to have more labour on the same terms, and, if he can, he will secure it, until his increased command of the commodity lowers its marginal significance to the level of the fixed price. And at periods when they are earning less than they are receiving, he may be particularly inclined to find fault with their work, and let them know that he could do very well without them. And the reverse attitude of mind will more or less pronouncedly characterise the men at the respective seasons.
When harvest comes, the fluctuation is too pronounced to be met in this way. It is universally recognised, in one shape or another, that wages must be higher at harvest-time than at other seasons. This is but natural. For a considerable period the marginal significance of agricultural labour is markedly higher than it is during the rest of the year, so much so as to make it worth while to divert to harvest work the energies of many who have usually some more eligible alternative. Such a marked change in the conditions of the natural market must find its expression. The convenience of fixity and uniformity of wage is not strong enough to suppress it. But in different seasons, in different weeks of the same season, on different days, even at different times on the same day, there may be pronounced fluctuations in the marginal significance of agricultural labour. A highly instructive method of recognising this still survives in many parts of Wales, and perhaps elsewhere. It is the institution known as “cross-wages.” In the market-place of a town, early in the morning, the labourers who are in no regular employ gather, and the farmers who want extra work gather also; and there, in consideration of the weather, the state of the crops, the amount of labour available and so forth, the bargain is made for the day. On one day the wage may be fixed at twice or thrice as much as on another day of the same week. The terms so arranged are the cross-wages for the district, and they often regulate the wages paid by farmers, and to labourers, who have not been at the cross, and have had no direct share in fixing the cross-wages. As the conditions will be roughly the same over the whole district, the farmers and labourers may agree beforehand to accept the cross-wages during a certain period without knowing what they will be, being satisfied that they will roughly represent the market value for each day; but of course it must necessarily be the case that if, on a certain day, the farmer had known exactly what the cross-wages he has promised to give would be, he would have taken on an extra man whose services he had declined, or would have declined an extra man whose services he had accepted. And, on the other hand, the man who turned from his own little plot and worked for a neighbouring farmer, on the surmise that cross-wages for that day would be 6s., may wish that he had stayed at home when he finds that they are only 5s. or 4s. 6d. Within the week the cross-wages may have been as low as 3s., but in such a case neither labourer nor farmer, who has the same means of judging of the general situation as those who fix the cross-wages, would have expected them to be as high as 6s., or would have made his bargain on such a supposition.
We shall touch in another part of this work upon other methods which are taken to adapt the actual to the natural market, or, on the other hand, to avert the inconveniences of its fluctuations, or to resist, by voluntary combination, the pressure of its laws.
*32 But we have already said enough for general illustration of these points, and have seen how the underlying considerations that affect the terms on which effort is remunerated are identical with those that determine the price of commodities.
We will pass on to some considerations as to the supply of effort. In the market of commodities we saw that the supply of one market constitutes a demand upon another. Is there anything analogous to this in the market in efforts? Wherever there are many directions in which the same man can turn his energies and capacities, the different applications in question compete in the market for his energy. His power is the analogue of the timber, which may be made either into tables or into washstands, but which when made into one cannot be transformed into the other. A man may be put on one job when it would have been better husbandry to put him on another; but when he has put forth his effort, it is the result that survives, for what it is worth, and not the effort. We have already seen that urgency of agricultural operations may draw a man from other employments at harvest time. This may be seen everywhere, but in a primitive community it is very conspicuous; for not only the carpenter and the shoemaker, but the schoolmaster and the catechist will devote himself to harvest work during the season. Yet there is a limit to the possibility of these changes of function, and a highly specialised skill cannot be acquired in a day or a week. Some simple forms of harvest work might, indeed, at a pinch, be undertaken by workers in the building trades, unless custom or prejudice forbade; but the building trades could hardly be recruited to any considerable extent from the ranks of the agricultural labourers, and a bricklayer could probably neither thatch nor plough. In artistic and intellectual work the versatility of a Michael Angelo or a Leonardo is rare. This want of fluidity of human capacity confines most men to a very limited market. Prejudices and mistaken customs tend to intensify rather than to mitigate the difficulty, and the solution of the grave economic problem which we shall encounter at the close of this chapter is rendered more difficult thereby; but it must always remain true that, in an age of specialising and of division of labour, manual and intellectual, development of any particular capacity constitutes a demand upon the general store of undifferentiated human power that is perpetually poured into the world in the form of fresh human lives, and limits the amount available in other directions.
The various specialisings of capacity which are perpetually being accomplished are acts of administration of the collective resources of human capacity. What are the forces that control this administration? Obviously there is at present no comprehensive and deliberate scheme in accordance with which it takes place. Individual or domestic resources in the shape of personal energy and capacity are directed with more or less intelligence to the individual or domestic purposes, and their administration constitutes a branch of individual or domestic “economy”; but “political” in the sense of communal resources, in the shape of personal energy and capacity, are, in the main, not collectively directed to any communal purpose at all. Such communal ideals as exist must, for the most part, depend upon the play of individual interests and aspirations for their realisation. It is clear, no doubt, that the position on the relative scale of any desire for service on the part of any member of a community will exercise an influence upon the training and specialising of the faculties of other members of it; for any man who is administering his own energies will consider how he can turn them to the direct accomplishment of his purposes, and how far he can make them more efficacious for those purposes by the indirect means of applying them to the procuring of what others want and will pay for. The prospect of economic advantage, then, will determine a drift towards the supply of the want that stands higher, rather than of that which stands lower on the collective scale. But we have constantly to remind ourselves that this tendency can by no means be equated, off-hand, with a spontaneous movement in the direction of the general good. Even on an individual scale a want stands relatively high not because it ministers to relative worthiness but because it ministers to relative urgency; and we can place no antecedent limit on the urgency of the demands which vice or vanity may prompt. But the place which a want takes on the collective scale does not even coincide with its urgency in any vital sense whatever; for a feeble desire on the part of a man in command of superfluities may rank above the deepest craving of the man who is near the point of total destitution. Only if we acquiesce entirely in the law “to him that hath shall be given,” and only if we are further content to accept each man’s purposes as worthy to be accomplished in proportion to his eagerness to accomplish them, can we hold optimistic views of the social significance of this spontaneous tendency.
Even if we take it for what it is worth only, this apparently social tendency of individual choice is subject to noteworthy limitations. Perhaps the majority of men and women have had little to say as to the special training of their capacities until it has been to a great extent irrevocably determined. The parents or others who decided for them may have considered their own economic advantage more than that of the immature lives they were directing. It is only on the supposition that they fully identify themselves with the tastes and interests of their children that we can suppose the economic forces to tell in their full strength in determining the flow of undifferentiated human talent in the direction which would best minister to the want highest on the collective scale. Under existing circumstances, a want may remain high on that scale, because most of those who can now direct their own course have already had their training specialised in other directions, and have irrevocably lost the opportunity of acquiring the highest degree of requisite skill, whereas those whose development is directed by the will of parents and guardians may only in a few cases be put within reach of a training of which it is they that will reap the advantages, while others have borne the sacrifices involved. In cases of an expensive special training these sacrifices would not only be greater than many parents are willing to make, but would be greater than most parents can make, for they would presuppose resources positively in excess of the total that they can command. Thus, those occupations which require an elaborate and expensive preparation will, so long as present conditions remain, always be recruited from a small section of society; and the talent which exists in the great mass of the people will be either undetected or left untrained.
It is impossible to guess how much of such unrecognised or untrained talent for highly remunerated services exists. Some incipient attempts are already being made in connection with our system of national education for its detection and utilising, and there is no limit to the range which social speculation may allow itself in this direction. It is possible to conceive an educational system, which should be not a burlesque of the technical education of a professional man, but an instrument for the detection and development of every conceivable kind of human capacity, a great sorting machine for adjusting opportunities to capacities throughout the whole population. The result of such a system, if in any degree successful, would naturally be to determine a flow from the less pleasant and less highly remunerated occupations to the pleasanter and more highly remunerated ones, with the result of lowering the marginal significance, and therefore the remuneration, of each individual in the latter, and raising it in the former. There seems no reason in the abstract why the result should not approach the utopian ideal of a higher payment for the more monotonous services rendered to society by the manual worker, than for the more varied and pleasant ones rendered by the exercise of the artistic and intellectual powers. It is sometimes spoken of as scandalous that a butler should receive higher remuneration than a clergyman. Documents in Siena shew that there was no great difference between the daily payment made to Duccio when he was painting his great picture of the Virgin, and the fee paid to an executioner for his services in burning the alchemist Capocchio to death. Suppose there were a very large number of persons whose talents and opportunities enabled them to choose between the careers of a butler and a clergyman, or an executioner and an artist, an equality of wage in either case would indicate that the two careers were regarded by a large number of qualified persons as equally eligible in themselves. If the wages of the executioner were higher than those of the competent artist, it would shew that, on its own merits, the career of the artist was preferred by all those exercising it who were competent to take the other, so that the extra command of things in the circle of exchange attached to the latter did not sufficiently attract any one of them to induce him to embrace it. One does not see exactly why this state of things, if it ever came about, should be regarded as scandalous.
Between careers which are actually open to the same class of candidates, both as to means and as to talent, it may be presumed that such a law as we have indicated actually determines salaries. If a career in the army or the Church, for example, is embraced by men to whom the industrial or the professional world is open, with a prospect of higher remuneration, it must be because non-economic considerations tell in favour of it. How far there is a sufficiency of undeveloped talent to bring about any great and startling change in the relative remuneration secured in the several occupations of life, can at present be a matter of speculation only. But in so far as the numbers entering a profession are limited, not by preferences for other occupations or lack of opportunity for preparing for this, but by lack of the special talent it requires, the remuneration it commands will remain above the level which its eligibility would otherwise determine.
Behind all these questions of the distribution of undifferentiated human capacity amongst various occupations, lies the question of the supply of this undifferentiated human capacity itself; in other words, the population question. The supply of raw human material is determined largely, some have thought almost entirely, by non-economic considerations. Children are largely or exclusively brought into existence incidentally to the realisation of the purposes or the expression of the impulses of their parents, irrespective of their economic significance to themselves or to others. It is only under very exceptional circumstances that we can suppose free-born children to be bred with a view to the market, that is to say, produced in order that economic advantages may accrue to their producers. Forecasts as to the state of the markets into which children might be expected ultimately to enter no doubt exercise an influence on the marriage and birth rates in some strata of a community; but broadly speaking, the production of undifferentiated human capacity must be regarded as a branch of direct expenditure, regulated in its relation to other expenditures by prudence or recklessness, by abundance or paucity of total resources, by custom and tradition, by impulse ranging over the whole scale of the material and spiritual nature, by conviction, by deliberate resolve and calculation, in a word, by all the considerations that determine our general administration of resources; but it must in the main be regarded as “consumption” technically, not as production, that is to say, as a way in which people choose or allow themselves to expend their resources, not as something they undertake for the direct convenience of others in order to secure things they themselves desire in return. The whole question of the ultimate supply of human effort, therefore, carries us far beyond the limits of economic inquiry, though not beyond the range of those general laws that regulate the administration of resources in general, for these are no other than the laws of the psychology of choice. Given the supply of human material at any moment the economic law of the market, so far as the special circumstances allow the facts on which that law works to be ascertained, dominates the remuneration of every class of effort, and creates drifts, now towards this, and now towards that special training or special application of effort; and we may feel complete security in considering the remuneration of human effort as simply a form of “price,” approximating to a market price in proportion as the conditions of a market are realised.
The reader may have noticed that in all this discussion I have avoided the term “labour market,” and have preferred to speak of remuneration, or earnings, rather than wages. The reason is sufficiently obvious. It is true that writers on Political Economy often shew a tendency to stretch the term “wages” till it covers all remuneration for the output of human energy; but since the word will always carry certain limiting associations with it there is a manifest danger in wrenching its technical employment too far apart from current usage. Such specious attempts at simplification always avenge themselves. If we call all earnings wages we might, for instance, come to the conclusion that certain measures, movements, or institutions, would tend to “raise wages” at the expense of the revenue secured by the holding of property (whether in the form of accumulations or of command of the natural sources of wealth), and we might expect such a result to be welcomed by the “wage-earning” classes and their sympathisers; but there might be nothing in the argument to determine whether the “wages” that would rise were likely to be the wages of mechanics or the wages of lawyers, doctors, stockbrokers, or managers and directors of industrial enterprises. Similar reflections apply to the use of the term “labour market” to include the wider “market in human effort.” The conclusions that we have hitherto reached are quite general. They are simply these:—(1) that remuneration for human effort, so far as it is determined by economic forces, follows the law of the market, just as the price of commodities does; and therefore it is a matter of no theoretic importance to establish and observe a precise line of demarcation between them; (2) that as there is a different market for every commodity so there is a different market for every kind of human effort; (3) that as the economic forces tend to secure a price for every commodity corresponding to its marginal worth, so they tend to secure to every kind of human effort a remuneration corresponding to its marginal worth to any member of the community; and (4) that continuity of supply and extreme perishability characterise the market in human effort.
All this applies to what is commonly understood by “labour” as to all other direct output of human energy, but it applies to it in no exclusive way. Great social importance and interest, nevertheless, attach to any considerations that directly affect the labour market, even if they do not affect it alone; and we will pause for a moment to examine the feelings and sentiments that rouse this interest. The associations that the words “labour,” the “labour market,” and the “labour movement” wake are, in some respects, curiously illusory. For, in the first place, they at once suggest industry as against some kind of parasitical idleness, whereas, as we have seen, many highly paid persons whose claims are looked upon jealously enough by “labour” are undoubtedly industrious, and draw their remuneration solely in consideration of the exercise of their talents. And, in the next place, “labour” suggests the solid basis on which life is reared, and the power that carries on the serious work of sustaining the world from day to day; and doubtless “labour” is all this; but it is likewise the power on which all the luxuries and frivolities, all the material elegancies and all the artistic and literary enjoyments of life rest; for the type-setter, the oil and colour hand, the cabinet-maker, the gin-distiller, the silk-weaver, and the cigar-roller, are as much in the labour market as the agriculturist, the carpenter, or the builder; and “labour” decorates the palace just as truly as it builds the cottage. If, when confusions and false associations are cleared away, the “labour movement” commands reasoned and enlightened sympathy it must be because it is taken to represent an attempt to modify the distribution of wealth in the interests of the less-favoured and less-privileged members of society, as against the favoured and privileged.
We have now gained a very precise idea of the economic position of every worker, whether he belongs to the privileged or the unprivileged classes. However high his remuneration is, it cannot be fixed by the economic forces any higher than the estimated worth of his services at the margin; and, however low it may be, it cannot be held down by those economic forces any lower than that marginal worth. Hence, if we say that any kind of service is over- or underpaid in the open market, we must be speaking in accordance with some ideal conception; for instance, the idea of what is due to a man, as such, rather than what he commands in virtue of the significance to others of what he can do. If we say that men and women working at a starvation wage are getting “all they are worth,” it sounds harsh and inhuman and wakes an instant resentment. But that is because “worth” is a word of many applications, and carries with it many associations besides those of the market. We speak, for example, of the “infinite worth of a human soul,” and we sometimes say in contempt that such and such a man, or his fate, “is not worth a thought.” Whereas if we say that the economic forces tend to fix every man’s remuneration at the precise level of his marginal worth, we do not mean by “worth” any inherent qualities of the man himself, whether technical or broadly human; and still less do we mean the claim he has to the sympathetic care of his prosperous fellow-beings. The question is—What is the man’s output of energy economically worth at the margin? And that means—What is it worth while for some one else to give him, in return for his efforts, as an indirect means of furthering his own purposes? Ultimately we may have to evolve some special word, free from misleading associations, to express this idea concisely and clearly; but meanwhile we must do the best we can with our existing vocabulary. When we say that a man’s potatoes are “worth 2d. a pound,” we mean exactly that they are “worth to some one else, at the margin, the sacrifice of all the alternatives represented by 2d.” When we speak of what a man’s efforts are “worth” in the market, we use the word in the same sense.
In considering industrial questions it is of extreme importance that we should grasp the fact that if any person, or class of persons, is habitually “underpaid,” that is to say, habitually get less for what they do than it is worth to some one else at the margin, this must be due not to the economic forces but to some obstacle that stands in their way. It may no doubt be due to the working of economic forces that a man is worth as little as he is. For instance, he may have been underfed, and put early to exhausting and unskilled work by his parents, under pressure of want or greed; and so he may have feeble powers and poor training. And the economic conditions of a given society may be such as tend to produce these results. But the economic forces can not cause a man, such as he is, to receive a lower remuneration than represents the worth to others of his work; for the economic forces are always urging those others to purchase anything that they can get for less than it is worth to them, so that if there are any persons to whom the work of an individual (or a class of individuals) would be worth more than he is now receiving for it, the economic forces urge them to offer higher terms and so secure his services. In speaking of “underpayment,” therefore, we must be careful to distinguish between payment which is less than the payee is economically worth, to remedy which underpayment we may rely on the support of the economic forces; and payment which, though all that the payee is economically worth, is not as much as he “deserves,” because it is not his fault that he is worth so little; or is not as much as he “needs,” or not as much as he “ought to have,” because he can not live a decent life on it. For “underpayment” in this latter sense it is not fair to throw the blame on the employer; and any general movement that aims at improving the condition of the “underpaid” in this sense must aim either at giving them more than they earn,
i.e. more than their work is worth, or at making their work worth more.
There is nothing outrageous in the demand that the unfortunate, the feeble, and the economically unsuccessful generally, should receive more than any efforts they can put forth are worth. Children, old people, the sick, and the deficient must receive such excess or die; and the present trend of feeling is in the direction of attempting, by old age pensions and a more humane poor law, for instance, to mitigate the terrors of failure in the industrial struggle; whereas the principle of a graduated income tax, so far as it applies to earnings, recognises the obligation of success to bear an increased proportion of public burdens. But there is far more than this. We have seen that a man’s economic position depends not only on his powers but on his possessions. Those possessions may embody the fresh output of current effort, or they may be accumulations, or they may consist in the control, secured by law, of the prime sources of all material wealth. The differentiation between the taxation of earned and unearned income reminds us that there is a vast revenue that some one is receiving though no one is earning it. Thus it is clear that if no one receives less than his current effort is worth, many receive a great deal more. There seems, then, to be nothing intrinsically monstrous in the idea of looking into this matter. If there are sources from which, apparently, any one or every one might receive more than he earns, or is worth to others, no proposal need be condemned simply because it contemplates certain classes receiving more than their output of effort is worth, as certain other classes obviously do at present. Proposals for land nationalisation, or for the collective control of the instruments of production, are dictated by the belief that we are in possession of a common patrimony which is not being administered in the common interest. But we should distinguish very clearly in our own minds between saying that a person is “underpaid for his work,” and saying that he has a claim to something more than “mere payment for his work at its worth.”
There is nothing mysterious in this excess of revenue over aggregate earnings. We shall perhaps see deeper into the matter later on in this work, but an illustration may serve meantime to remove any cloudiness that may have risen in the reader’s mind. Suppose two men discovered a mineral spring or inherited the possession of a factory. They might find that each of them, working it alone, could make £1000 a year out of it, and that if they both worked they could make £1500 a year. If they are both working, then, the withdrawal of either of them would reduce the total earnings by £500 a year. £1000, then, represents the sum of the worth to the concern of the efforts of the two men (taken severally) when backed by the joint control of the accumulated apparatus of the factory, or the natural resources of the spring. But their total revenue is £1500, which is £500 in excess of the sum of what each of them is worth to the other. If the spring or factory were in possession of a third party who did not work at all, and if the two workers did not combine, the owner might pay each what he was worth at the margin (£500) and would have a balance of £500 which he received but which no one had “earned.” Can the earners, or any groups of them, by combining, get control of this unearned revenue, or any of it, in addition to the earnings which they are marginally worth to its possessors?
But we must not fail to observe that if the natural opportunities or accumulated instruments produce nothing without work, neither can work produce anything without them; and if work has a marginal value to the possessor of tools and opportunities, so likewise have tools and opportunities a marginal value to the worker. Add or withdraw a little work and you increase or diminish the output of commodities; but make a small addition to or subtraction from the apparatus commanded by the worker, and you likewise increase or diminish the output. Therefore the accumulations we speak of as capital, by making work more fertile, make the worker worth more, and it is only in virtue of that fact that their owners can enforce their claim to a share in the product. And since, like the worker himself, the owner of apparatus can only exchange or let it out at its marginal significance, it follows that the worker, like the purchaser of any continuous commodity, receives a benefit from it in excess of what he pays for it. This will become clearer in the next chapter, but we can already see that whereas the worker may very well desire and attempt to get apparatus and access to natural sources of wealth on better terms than he now enjoys, he is on a wrong tack if he thinks that he is not already getting them on advantageous terms. He is not paying more for them than, or even as much as, they are worth to him, and he would be worse, not better off without them. He benefits by accumulations, though he may reasonably desire to benefit more than he does by them; and since we have seen that accumulation becomes automatic under some conditions, and can only be accomplished by severe self-control under others, it is clear that in any scheme for diverting the share in the product that now flows to accumulations, due precaution must be taken not to check the process of accumulation itself. The problem may turn out to be a very difficult and delicate one.
Again, if in the open market a man is not likely to receive in return for his effort more than it is worth to some one else at the margin, we must reflect that where there is any kind of patronage, or any system of fixed salaries for elective posts, it is extremely possible that a man may be receiving in payment for his work more than it is worth to any one. And if, as in all public and official posts, those who determine how much a man is to be paid are not those who ultimately pay him, we escape, to an undefined extent, the controlling action of the economic forces. If I am to decide how much a man is worth to me for my purposes, and am then to pay him, I have a more direct interest in determining his worth than if I am to decide how much he is worth to some one else, and how much he is therefore to receive from him. Theoretically as long as there are any open markets no man need accept less than he is worth in them; but under any system of patronage or election he may easily receive more.
No doubt, then, there is a large number of persons who are receiving from various public bodies, under the name of salary, more than their efforts are worth. Proposals for a minimum wage, coupled with provision for state employment, whenever that wage cannot be earned in the open market, would constitute a method of securing more than they are worth, to a large number of other persons; and though we have just shewn that there is no abstract reason why every worker should not receive more than he is worth (and every non-worker something), it is obvious that the grounds on which his claim to it is admitted and regulated demand very severe examination, and that it involves a confusion of ideas to say that he has a right to a minimum “wage” from the state (when the market will not secure it to him) not as a citizen or as a man, but as a worker.
We have now glanced at some aspects of the problem how to secure to the less-favoured members of society more than the economic worth of their efforts. It is not an inherently chimerical attempt, but it is by no means simple of execution, nor free from dangers. It remains to consider projects for making these same unprivileged individuals worth more than they are. Here we might expect to find ourselves upon firmer ground. If it is a fact that the most miserable earners of starvation wages are getting all their work is worth, the lamentable fact of the existence of a vast population worth so very little must, when once recognised, force us to face the question how we can make them worth more. The indignation that their miserable condition excites will become more enlightened when we understand that we are not to look out for and denounce some wicked person who is paying them shamefully low wages, but are to understand that as far as the vigilance of commercial instincts and motives can secure any end, we may assume that they are already getting as much as their work is worth, and that our problem is partly perhaps to see that they get (not from their employers and customers but from communal funds) something more than they are worth, but very certainly to see whether they cannot be made worth more.
But there are two main ways of making people worth more. One is breeding, rearing, training, and educating them from the beginning, so that they shall possess the vigour, the habits, and the particular skill which are likely to make them worth most. All this might involve national education—moral, intellectual, and technical—in the most extended sense of the term. And, as we have already seen, that would probably mean some approximation to an equalising of the worth, and therefore the earnings, of the rank and file of the workers in occupations that at present receive widely different remuneration.
The other is to shift them to places and conditions in which they will be worth more than where they are. If you gave some of the workers in an “underpaid” industry the opportunity to migrate into one better paid, you would have put them where they were worth more; and further, since the margin would recede in the industry they had left, you would also raise the marginal significance and therefore the pay of their late companions. But you would also lower the marginal significance of a worker in the ranks which they had joined; and this observation brings us to the very root of the troubles with which industrial society is afflicted, and may almost be regarded (in the fashionable language of the day) as enabling us to identify the bacillus of the disease of civilisation. Objectively (and we can have no other test) society is enriched by the change. The comparatively low worth of the work dropped, is replaced by the comparatively high worth of the work taken up. The total revenue of the community, then, is raised. And, moreover, the persons in the most deplorable condition have been relieved; and therefore whoever has suffered the redistribution of wealth has been socially justifiable. But the persons whose marginal significance has been reduced will not see the thing in this light.
We have already glanced at some of the more obvious evils attendant on that great principle of division of labour, on which all material and much intellectual progress seems to depend.
*36But in connection with the market of human efforts, we encounter this prime agent in civilisation and progress once again, and detect its most intimate workings on the fabric of society. The principle of the division of labour differentiates the position, the functions, the opportunities and the capacities of men in such a way that each one is dependent for the supply of all his wants on the co-operation of countless individuals scattered all over the world. Even the wage-earner who lives a relatively simple life, commands a number and variety of services which fascinate and baffle the imagination. In the picturesque language of Henry George, “the miner who, two thousand feet underground in the heart of the Comstock, is digging out silver ore, is, in effect, by virtue of a thousand exchanges, harvesting crops in valleys five thousand feet nearer the earth’s centre; chasing the whale through Arctic icefields; plucking tobacco leaves in Virginia; picking coffee berries in Honduras; cutting sugar-cane on the Hawaiian Islands; gathering cotton in Georgia or weaving it in Manchester or Lowell; making quaint wooden toys for his children in the Hartz Mountains; or plucking amid the green and gold of Los Angeles orchards the oranges which, when his shift is relieved, he will take home to his sick wife.” But together with this increased command of multifarious resources comes a cutting off of the individual from any direct means of supplying himself with even the simplest things he requires. The miner in the Black Country, or the artisan in the heart of London, can command the varied conveniences and comforts of civilisation just enumerated. But cut him out of economic relations, set him by his own effort, applied to the materials and opportunities to which he has direct and unchallenged access, to make his own direct bargain with nature, and he will not even be able to secure the conditions of life commanded by the most sordid state of savagery. He has, therefore, no reserve price. He can live only as a portion of a vast organism, and if his organic relations with the whole are seriously disturbed he cannot live at all. The cell that is part of my frame, or the white corpuscle that lives an apparently independent life as a constituent organism in my blood, cannot start the life of an amœba on its own account. It must live as part of a higher organism or die. Now the economic pull that I have upon society (to wit, the other cells or corpuscles of the body politic) consists in my power to do or give something that they want. That is to say, the existence of still unsatisfied wants of others to which I can minister supplies the only economic means by which I can insist on any of my own wants whatever being attended to. If others were completely satisfied as to the thing I can supply, I should either die, or live upon what others did for me on their own impulse; for I should be their pensioner, not their valued fellow-worker.
The idea that all the wants of a society should be completely satisfied is chimerical enough; but we have object lessons every day which make it only too easily and vividly realisable that the specific want in others to which my faculty or opportunity can minister may be so far satisfied, relatively to other wants, that I can obtain little or nothing in return for satisfying it still further. Were it not so, being “out of work” would be a meaningless phrase. It is not enough that I can give men something they need. I am “out of work” unless I can give them something of which they desire more than they will have if I do not help to keep up their supply. The thing most urgently necessary for sustaining life even for a few minutes is air to breathe; but if all I could offer, in exchange for the things I want, were a supply of atmospheric air at the surface of the earth, I should either starve to death or depend upon other than economic forces for my continued existence; because there is as much air at the surface of the earth as any one wants. If indeed I can bring a continuous stream of fresh air through the galleries of a coal-mine, or into a diving-bell, I am supplying air in places to which no natural process brings it in quantities sufficient to satisfy all requirements, and for doing this I may get a return. If any man could invent a simple process by which a stream of fresh air could be secured in such confined and restricted places as lecture-rooms, concert halls, theatres, and places of public meeting, he would be in a position to perform a valuable service for a number of his fellow-citizens. But when and where every one has enough, the economic forces will urge no one to give anything in return for more.
On the other hand, if we can stretch our imaginations to the conception of a syndicate gaining effective legal control of the whole volume of atmospheric air, and having power to regulate its flow and distribution over the face of the earth at their will, so that every one became dependent for vital breath upon the terms which they could make with the air syndicate, economic forces would urge the air-lords to arrest the supply of air at a point which would give it such a relative position on the collective scale as would secure the highest monopoly value for the whole supply issued. The rest of the inhabitants of the world would then have to devote a large portion of their energies, not to furthering their own and each other’s general purposes in life, but to furthering the purposes, whatever they might be, of the great syndicate of air-lords. Prominent amongst those purposes might very well be the addition of an effective control of water and land to their control of the air. But let that pass. Should anything occur to make air free once again, there would be an immense gain of material well-being to the world at large, but it would be accompanied by the destruction of the economic position of the air-lords, and they would regard it as a crushing disaster. Their strength, and the abundance of the supply of all producible things which they command, would depend upon the existence of a vast and imperative want on the part of other men, for a thing which they alone could supply. Let that want be supplied without their control and the increased wealth of the world at large would fatally undermine their economic position.
This extreme and fantastic illustration does but emphasise to the imagination what is the actual condition of things everywhere. Should any circumstances lead to the complete satisfaction of any human want, this general benefit would be accompanied by the undermining of the economic position, or means of “earning a livelihood,” of some body of persons; for a body of persons surely exists somewhere trained and specialised to meet that want, capable of earning a living by satisfying it, and dependent for that living on the fact of its not being completely satisfied. Inventions and discoveries of every kind are perpetually and continuously placing civilised humanity in more and more effective control of the natural forces and materials; that is to say, they are putting mankind collectively in a position to meet their material wants on easier terms and in fuller measure. But these advances take place irregularly along the line, and when any one want is satisfied in advance of the others, a disturbance takes place in the industrial position of those who live by supplying it. The general gain is their loss, and the more irrevocably specialised their faculties and opportunities are, the more heavily will the blow fall upon them.
And not only are the means of satisfying wants constantly changing by invention and discovery, but wants themselves as constantly shift. At one time vast countries are to be opened up by railway systems, and navvies and makers of steel rails can supply a want felt with a high relative keenness. At another time, a great country like the German Empire determines to adopt the gold in place of the silver standard for her currency, and the marginal significance of gold is shifted and raised on the collective scale of the nations by this new demand upon it. At another time there is a great war, and those whose faculty and opportunity enable them to make cordite and munitions of war, or to use them in the destruction of life and property, can supply a keenly felt and imperfectly gratified set of desires. This relative elevation of some desires involves a relative depression of others; and when the stress falls elsewhere the now elevated desires will in their turn become relatively depressed. And in any of these cases when the place on the collective scale of the thing I can do falls, the significance of my services and the abundance of the supplies they will secure me fall with it.
Hitherto our attention has been chiefly directed to the forces which perpetually tend, though it may be slowly and through obscure and intricate channels, to the establishment of equilibrium, and to the even distribution over the period of consumption of the uneven output of the forces of nature; but now we have encountered internal and often incalculable sources of disturbance, and we see that every such disturbance means more or less acute and widespread distress, arising from the fact that the wants which it is some one’s business to supply, and in return for which he gets all that he has, become disproportionately well supplied in comparison to other things. General abundance means his particular want.
If all the strains and stresses remained constant, and if discoveries affected the supply of all human wants and desires evenly, or if changes were so slow that specialising of faculties and applications of energy could adapt themselves continuously to them, then the increasing control of the powers of nature and the more ample return to human effort would give us an ever-increasing command of the things which (wisely or foolishly) we desire; the means of satisfaction, good or bad, would steadily increase, and no distress would be incidentally involved anywhere. The irregular and incalculable element in nature would be all that we should have to reckon with. But, as it is, irregularity is both initiated and accentuated by the other causes we have just referred to. Let us consider it once again. If apples are abundant and the stock of store potatoes is normal, the want for apples will be satisfied down to a lower place on the collective scale than usual, and the price of apples reckoned in potatoes will fall. The potato-grower and every one else will get more apples for the things they give and will be so much the richer; but the apple-growers will get less of other things for each pound of apples, and if the fall in value more than compensates the increase in amount, they will be poorer than they would have been, and that just because the crop is so good. But if the harvest of potatoes has also been exceptional, the public will have both their want for potatoes and their want for apples more abundantly satisfied than usual, and the price of apples in potatoes may remain the same. Both potato-growers and apple-growers may be poorer, but each can take the low price of the other’s product as a partial set-off against the low price of his own; whereas the rest of the public benefits by the low prices of both alike and has no loss to set against the gain. Thus every one benefits by a good crop in the things he does not grow, but may very well be injured by a good crop of what he does grow, and if his individual crop was for any reason only an average one, then his loss would be certain.
In general, if the want that I satisfy becomes less acute at the margin, because it is more abundantly supplied, and at the same time all other wants are more abundantly supplied in a suitable ratio also, then although the thing that I can do is less urgently needed, yet the things I want in return are less urgently needed also, and society may give me as much of these less-valued things for the same amount of my less-valued services as they gave me of the things that they valued more, for the services that they valued more also. The real trouble is not that my product is too abundant, but that other things are not abundant enough, and the remedy is to make them abundant too. That would give us all a larger volume of satisfaction. But if the thing that I supply becomes
relatively more abundant, and ministers to a relatively less urgent need, my command of what I want declines just because your command of what I give increases. Hence the paradoxical situation that the advance in well-being which we all desire and are all pursuing becomes an object of dread to each one of us in that particular department in which it is his business to promote it. That is to say, because it is my social function to supply the world as well as I can with a certain thing, therefore I dread the world’s being so well supplied with it that I shall be able to get little or nothing for supplying more.
It is impossible to exaggerate the importance of this consideration, or the penetrating and intimate nature of its bearing on every aspect of the social question. The extinction of any desire on the part of mankind, however vicious and destructive, the abolition of any established practice, however vile, will throw a certain number of men “out of work”; that is to say, will render the exercise of the faculty upon which they depend for the supply of all their wants economically impotent. And, in like manner, the more abundant supply of any desired thing, however wholesome the need which it meets, and however great the gain to the well-being of society in general which it secures, may plunge some members of the social organism into penury. If all the world is well supplied with tin, it may make life easier and pleasanter to millions, but it saps the industrial position of the Cornish miner. If all the world turned sober, it would indefinitely increase its well-being, but countless publicans, brewers, distillers, and hop and vine growers would be thrown out of employment. If universal peace were secured, and armaments were reduced to the vanishing point, there would be many an Othello to mourn that his occupation was gone. If a really successful unpuncturable tyre were put on the market, there would be a great increase in collective happiness, clerical and other appointments would be kept with notably increased regularity, profanity, at least in cultivated society, would tend to be more closely restricted to its natural preserves on the golf-links, but there would be a procession of unemployed assistants of bicycle repairers, and the production of “outfits” would be a “ruined industry.” If the sanitary habits of the public suddenly improved, there would be a slump in the business of the undertaker, and if no one committed murder, the hangman would be out of a job.
Thus every man who lives by supplying any want, dreads anything which tends either to dry up that want or to supply it more easily and abundantly. It is to his interest that scarcity should reign in the very thing which it is his function to make abundant, and that abundance should reign everywhere else. If the world is starved of the thing he can give, and abounds in the things he desires, then by doing little he can effect much. Now, this position of being able to make our efforts more largely efficient in accomplishing our purposes is what we all aim at. And each of us can attain it just in proportion as the world comes to be starved of the thing he can give it. This disaster to the world, then, is our treasure trove. The whole situation was admirably summed up, from one point of view, by the orator who cried, in all sincerity, “What the British workman wants is
more work—and less of it.” By “more work” he meant a greater and more urgent need of what the British workman can give relatively to what he wants,
i.e. scarcity of the thing it is his social function to supply, and abundance of the thing it is his individual (not necessarily selfish) desire to command. And by “less of it” he meant that under such conditions he would be able to get a higher price for his work, and therefore could secure a competence at a smaller cost in effort. At the end of his day’s work he would be both richer and less weary. The desire for relative scarcity in his own skill, or his own commodity, is, therefore, only too natural and intelligible in any man. It is the desire for the conditions that will secure to him what every one desires. Only these conditions must, by their nature, tend to exclude others from the privileges they secure to him.
Thus every man whose desires are uncontrolled by social considerations will welcome any disaster that raises the relative significance of the thing he has or can do. Where there is an open competitive market, this desire for scarcity may remain a pious (or impious) wish, to which those who entertain it can give little or no effect. It is said that early in the last century the favourite toast at farmers’ ordinaries was, “Here’s to a wet harvest and a bloody war”; the idea being, of course, that a war would prevent the importation of foreign wheat, and that a bad harvest would raise the price of English wheat more than in proportion to the fall in quantity. There could be no more terrible example of the principle I am trying to illustrate. It shews that the horrors of war and the horrors of famine may be welcomed, whether in sheer callous selfishness or in mere thoughtlessness, by any class to whom they would bring material advantage. It shews how men may grudge any benefit to the world, however great, if it deleteriously affects their own economic position in any degree, however small. But at the same time each farmer individually would try to make his own harvest as ample as possible, and so his own interest would make him act socially, though he prayed unsocially.
But when we pass from the individualism of the open competitive market to the deliberate and concerted action of organised trades, or legislative assemblies, or to the general atmosphere of social ideals and aspirations by which they are supported or prompted, we see at once how fatally perverse this whole way of looking at things must be. The gospel of scarcity cannot be “glad tidings of great joy” to the community at large, however gladly the people may hear it when whispered in the ear of each class in succession as a private promise made to it alone. And yet the average intelligence finds it so much easier to consider any question in fragments than as a whole, that this strange and paradoxical gospel of wealth (to me) by starvation (of you) may be openly preached, and will be openly applauded, by an assemblage, to each member of which 1 per cent of it means life and 99 per cent of it death. Each sees its concentrated truth, if applied only to scarcity in that by the supplying of which he lives, and overlooks its diffused falsity if applied all round.
Hence the “lump-of-labour” way of looking at things that so largely pervades working-class economic theories. “What the British workman wants is more work”; that is to say, “I desire that men should be, and should be kept, in relatively keen want of what I and my companions can give them. If any one else supplies them, he is a traitor or a sneak. He has stolen or filched away what is mine. He has taken ‘my work,’
i.e. he has made that abundant which I have an interest in keeping scarce.” If anything happens that makes the want less keen, or easier to meet, it is a disaster.
This point of view, though I have said that it pervades working-class economics, is not confined to them. It is said that when the Tariff Reform agitation began, commercial travellers as a class were in favour of it, but that presently they were converted because they thought that it would destroy their own industry. That is to say, they were converted from their faith in Tariff Reform, not because they believed the assertions of its opponents that it would cause political corruption, that it was an attempt “to make every one rich by making everything dear,” that it was a whispered promise in every man’s ear to mulct every one else for his benefit, and that it would ruin the foreign trade of the country, but because they believed the assertions of its advocates that it would put a check on the waste of socially unprofitable and devastating competition and rivalry.
The open and unscrupulous selfishness of any threatened “interest” is formidable enough, and its concentrated energy may give it vast social and political power. But it is with something more subtle and pervasive that we are now dealing. The “lump-of-labour” theory and its analogues guide the action and tinge the aspirations of countless disinterested workers, who veritably believe that it points the way to social salvation. And a mere demonstration of the blindness and mutual destructiveness of their methods will not suffice to convert them, if it be accompanied by no manifest zeal for their ends and sympathy with their feelings. “On ne détruit que ce qu’on remplace.” We have seen that diffused progress is almost normally accompanied by local depression, and often by local wreckage; and it is right and natural that this local wreckage should catch the eye and excite the sympathy. For, in point of fact, the gain, under such circumstances, must be ampler in volume than the loss in order to make it socially equivalent to it. When a diffused benefit is accompanied by a concentrated loss, the benefit extends the satisfaction of a great number of people, at a declining significance, to a slightly lower margin, but it cuts back deep, at a rising significance, into the supplies of the few whom the concentrated suffering strikes. A loss of 5s. a week to a hundred families, to whom it meant a reduction of 25 per cent in their resources, would be a loss of just 500s. and no more, but it would not be compensated by the gain of 1s. a week to 500 families, to whom it meant an increase of 5 per cent in their resources, though that also would be a gain of just 500s. A loss of 25 per cent is more than five times as significant as a gain of 5 per cent. So if any industry is threatened by a new discovery or invention by which the world will be enriched and a particular class of persons impoverished, not only do the persons whose industrial position is attacked dread it, and desire to disarm and thwart the step of industrial progress that brings it about, but they also find that they have the keen sympathy of the spectator, who is more struck by the concentrated loss, though he does not share it, than by the diffused gain in which he shares.
And this confirms the attitude of mind which looks at every question from the point of view of the person interested in the restriction rather than of the persons interested in the enlargement of the supply of all things that “soothe and heal and bless.” I have heard cheap reprints of the classics furiously denounced as “unfair” to living authors, who cannot expect people to pay them a living wage if they can get such noble literature for a few pence a volume. A man who should translate a great classic for nothing in order that it might be issued in a cheap form would not be praised as a benefactor of his country, but denounced as a traitor to his class. A girl of independent means who should teach her nieces, or nurse her mother without pay, would be “taking the bread out of the mouth” of some one less fortunate than herself. It is all a part of the lump-of-labour theory, and it is all in a confused and bewildered way benevolent and generous. It seeks salvation through the gospel of maintaining scarcity. The mischief is that this gospel is always privately true and always publicly false. And to press its public falsity will always be regarded as hard-hearted, until the private truth to which it points is tenderly considered. However much the general resources of the community increase, and however large any man’s share in that increase may be, it must always remain true that he personally would have been better off yet if, while all other wants were better supplied, the special want to which he ministers had remained as keen and unsatisfied as ever. That is to say, it is inherently impossible that general command of things in the circle of exchange should be increased by any action, invention, or discovery which does not leave some one worse off than he would have been had all else gone on the same, but had this particular action, invention, or discovery been cancelled. Hence the “lump-of-labour” theory, and the “taking-bread-out-of-his-mouth” reproach, taken as general principles, would absolutely paralyse all material and much intellectual, artistic, and spiritual progress; and there is a woeful waste of social enthusiasm where disinterested efforts and aspirations are directed into the channels these theories and sympathies have dug. Social enthusiasm seeks to resist and control all selfish and oppressive action, but in order that it may succeed it is of supreme importance that it should be enlightened as well as earnest. When we understand more exactly what we have to do, and the unescapable conditions under which we have to do it, we may hope to co-ordinate the truly progressive powers better. Mere demonstrations of the confused and suicidal nature of the “lump-of-labour” and “taking-bread-out-of-his-mouth” theories, however, will not avail. When we understand that local distress is incidental to general progress, we shall not indeed try to stay general progress in order to escape the local distress, but we shall try to mitigate the local distress by diverting to its relief some portion of the general access of wealth to which it is incidental. To mitigate the penalties of failure, without weakening the incitements to success, and to effect an insurance against the disasters incident to advance, without weakening the forces of advance themselves, is the problem which civilisation has not yet solved. No wonder, for it is only just beginning to understand what that problem is, and to recognise the “deeply inherent limits” within which it must be solved.