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A CRITIQUE OF WAGES THEORIES.

I.

"LABOR, like all things which are purchased and sold, and which may be increased or decreased in quantity, has its natural and its market price." In these words, Mr. Ricardo indicates the existence of two distinct questions as to the rate of wages.

The question of wages, the question, that is to say, of the value or price of labor, is but a special instance of the general law of value, and is to be solved by applying the general principle to the particular circumstances of the individual case. Now the fundamental law of value is that supply and demand are made equal by the action of price upon them; the problem is to find what price will do this in each case. But what that price shall be depends on the nature of the demand and the supply themselves.

Sometimes it is the nature of the supply of a commodity which decides what its price shall be, and it is sometimes the nature of the demand. This difference marks the first great distinction between the particular laws of the values of different things.

Demand is always affected by price. Corresponding to every possible price for every possible thing, there is a certain amount of that thing which is wanted at that price, and the amount differs for every different price. If this amount can be had the demand will be satisfied, and not otherwise.

Supply is sometimes affected by the price, and sometimes it is not. Where it can be increased and decreased at will it responds to the influence of price, and price naturally

gravitates to the cost of production. That is to say, the various circumstances under which the supply is brought forth regulate the price in this case, fixing it almost independently of what the demand may be. Demand accommodates itself to the price so fixed, and only influences price in so far as it affects the cost of production by influencing the amount produced.

Where the supply is fixed, the demand and the supply must still be equal, and they are made so by the influence of price upon demand. The problem now is, to find at what price the demand will be such as just to absorb the supply; and this depends upon the nature of the human desires which occasion the demand for the particular article in question.

From the foregoing considerations there arise two laws of value, one for commodities which may at will be increased or decreased in quantity, and another for those which cannot.

Besides, however, those commodities whose supply can be increased or decreased at will, and those others whose supply cannot be increased or decreased at all, there are others whose supply can indeed be increased or decreased in quantity, but at so slow a rate, that for moderate periods of time any such changes may be disregarded.

Labor is such a commodity. It is capable of indefinite increase and its supply is potently affected by price, so that economists speak sometimes of its cost of production as its natural price. Such a law of natural price would be decisive of the rate of wages in a stationary state of society, and would at all times serve as a declaration of the ultimate tendency of the principle of population. But the price to be gotten for labor is not the motive for producing laborers. Labor is not produced as other commodities are, on purpose to sell. Economic motives may restrain men's desire to bring children into the world, but they seldom stimulate a passion which is quite strong enough in itself. But, except in a stationary industrial state, any tendency

of price to conform to the cost of production would remain unfulfilled, for the reason that labor, of all things, varies most slowly in supply. During moderate periods of time, it may be considered as stationary, and, in a progressive state of society, a thousand changing circumstances intervene before a fresh supply can be brought to market to influence price. If, therefore, we wish to learn the laws of the actual price of labor, we must treat the supply as, for the time being, a fixed quantity, and must inquire at what price the demand will just equal it. This we may call the market price; and the foundation on which a true theory of market price must rest is a correct knowledge of the nature of the demand. The errors of economists in their theories about wages are largely due to their failure to comply with this condition.

Ricardo spoke of the market price of labor as fixed by supply and demand; but, as we shall see, he failed to prosecute the analysis of demand to its proper conclusion.

II.

Of "the Natural Price of Labor," Ricardo says that it "is that price which is necessary to enable the laborers, one with another, to subsist and to perpetuate their race, without either increase or diminution." Thus defined, the natural price of labor is a definite amount of certain commodities, chiefly food, clothing and shelter, and such comforts as may be necessary to the continuance of the race. Unlike the market price of labor, which is a variable quantity, this natural price is a practically permanent amount, fixed by the circumstances under which the supply is produced; or in other words, by the physical requirements of the laborers.

Economists prior to Mr. Ricardo had mainly concerned themselves with this law of natural wages. Practically the same doctrine as that of Ricardo is found in The Wealth

of Nations, whence it was copied and amplified by succeeding writers. Adam Smith had taught that wages tend to a minimum, and that they can never rise above this minimum, except by reason of a constant progress going on in the national wealth. Ricardo did but formulate this doctrine with greater precision. Smith was no less positive than Ricardo, that in a stationary state "the competition of the laborers and the interest of the masters would soon reduce them (i. e., wages) to this lowest rate which is consistent with common humanity";-a rate which he elsewhere explains to be that which would maintain the laborer and enable him to bring up a sufficient family to perpetuate the race of workmen.

The successors of Adam Smith followed closely in his footsteps. Among his early followers, J. B. Say is easily first, whether we consider the popular influence of his works, or their scientific merit. After him none, perhaps, is more conspicuous than Storch, the instructor of the Czar Nicholas. Both of these writers reiterate Smith's doctrine of the tendency of wages to a minimum, and repeat his opinion that if the laborer ever gets more than this, it is only because the wealth of society happens at that time to be increasing. They repeatedly state that it is not the actual amount of wealth, but its constant progression, which assures to him any greater degree of comfort.

Underlying this teaching is, of course, the assumption of some active force, which impels population to overtake the means of subsistence, so that it is after all but another aspect of the famous Theory of Population which, some years before the date of Ricardo's writings, was proclaimed by Malthus, and which has since been known by his name. Malthusianism is, however, much older than Malthus, and its teachings had long before his time been among the commonplaces of social philosophy; nor were they ever disputed until after he had made them current, and had, by exhibiting their consequences in detail, made

of a neglected historical fact a burning social question. Malthus, himself, opens his treatise with an appeal to the authority of Dr. Franklin, and it was Dr. Johnson, who, as Thornton says, states the quintessence of Malthusianism in the saying, that "A man is poor; he thinks he cannot be worse; so 'I'll e'en take Peggy.'"

But, if Malthus did not first promulgate the doctrine which bears his name, he first recognized and first compelled attention to the cruel consequences which the principle of population engenders, and he first sought and pointed out a way of escape. When the painful consequences of the pressure of population upon subsistence were depicted in detail, there arose a reluctance to acknowledge them, and Malthus was denounced as an enemy of his kind. This was partly due to the shock produced by the impressive picture which he drew of seemingly inevitable human misery. In natural revolt from so repugnant an idea, people attributed to Malthus a feeling of indifference to or of pleasure in the woe of his fellow-men.

It must be admitted that this impression, though false, was yet, in some measure, justified by the way in which his views were first made public. The first edition of his Essay was intended to refute a current scheme of Utopian reform, by showing that misery has its roots in the physiology of plants and animals, and is therefore out of the reach of political remedies. He showed no way of escape, because the occasion did not immediately suggest inquiring for one. It was not his purpose to enter on a sociological investigation, but to answer a revolutionary political theory. The scope of his work was, however, soon seen to reach far beyond the ephemeral controversy which called it forth. But not, perhaps, until after the criticism which his first edition had aroused, did Malthus himself realize the widespread consequences of the facts which he, for the first time, had marshalled in their full force. his second edition he takes a broader view. In it, he seeks, by demonstrating the causes of misery, to indicate the way

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