The Principles of Economics Part 22

[Sidenote: Never the exclusive form of organization]

1. _The wage system is the organization of industry wherein some men, owning and directing capital, buy at their compet.i.tive value the services of men without capital._ The wage system is a method of organization never found completely realized. A community made up entirely of independent small farmers, living each on his little patch of ground, does not have any essential feature of the wage system. So long as they continue to be independent small farmers, owners of small capital, self-employing workers, the wage system does not exist in complete form. Some men with capital in every community are working for wages, while others, as independent producers, are their own employers.

Society is not sharply divided into two cla.s.ses, one controlling all the working capital, the other quite without resources. The wage system may be spoken of as prevailing to-day not as the exclusive, but as the typical, or dominant, form, while side by side or along with it is found independent production. It is clear that the wages here spoken of are contract wages. The wage system implies a money contract between employer and employed. The relation or bond between them is that of a wage payment.

The wage system cannot be judged properly apart from questions to be later considered, such as private property and the enterpriser's part in industry; but some consideration of the subject properly belongs here.

The wage system has become of recent years in America the dominant form of industry. The theory of wages is applied most frequently in the discussion of contract wages, and there are certain practical relations between the results of the wage system and the theory of wages.

[Sidenote: Workers subordinate in early societies]

2. _The wage system, historically considered, is seen not to have displaced a system of independent labor._ This question should be viewed in historical perspective. As far back as history can be traced, the ma.s.ses of workers have been subordinate. Civilization began with direction, with obedience to superiors on the part of the ma.s.s of men.

Within the family, in the rudest tribes, the women and children were subject to the will of the stronger, the head of the family. Among the Aryan races the family system was widened, and the patriarch of the tribe secured personal obedience and economic service from all members of the community. Chattel slavery, the typical form of industrial organization in early tropical civilization, seems to have been one of the necessary steps to progress from rude conditions; students to-day incline to view it as an essential stage in the history of the race. But as conditions changed with industrial development, chattel slavery became a hindrance to progress, a disadvantage to higher industry.

[Sidenote: Place of the workers in the Middle Ages]

3. _Serfdom for rural labor and many limitations on the workman's freedom in the towns, were the prevailing conditions in medieval Europe._ Serfdom was both a political and an economic relation. The serf was bound to the soil; the lord could command and control him; but the serf's obligations were pretty well defined. He had to give services, but in return for them he got something definite in the form of protection and the use of land. Between the lord and the serf continued a lifelong contract, which pa.s.sed by inheritance from father to son, in the case both of the master and of the serf. In the towns conditions were better for the skilled workmen, but many things bore heavily on the ma.s.s of the workers shut out from special privileges. There were strict rules of apprentices.h.i.+p; gild regulations forbidding the free choice of a trade or a residence; laws against immigration; settlement laws making it impossible for poor men to remove from one place to another; arbitrary regulation of wages, either by the gilds in the towns or by national councils and parliaments, forbidding the workmen to take the compet.i.tive wages that economic conditions forced the employers to pay; combination laws forbidding laborers to combine in their own interest.

It is not an attractive picture, but, as far as is possible in a few words, it is a truthful picture of the conditions that existed before the coming of the modern system.

[Sidenote: The wage system not the main cause of present evils]

4. _Many continuing limitations on the freedom of the worker are not the results of the wage system or a part of it, but are opposed to its complete workings._ The worker's ignorance is a limitation, preventing the choice of an occupation for which he might naturally be fitted.

Neglect of children by parents is a limitation, preventing industrial training and the development of qualities that would make it possible for the child to excel. The faults of human nature cannot be attributed to any "system"; and if they are remediable, it is by education and better social opportunity. Trade unions often forbid boys to become apprentices, and forbid the choice of a trade except under conditions so exacting that to many they are impossible. Such limitations are made by the privileged few in their own interest, but they are annoying and opposed to the interests of the many. The typical wage system would be one in which all such hindrances were lacking, in which there were no social or political limitations on free compet.i.tion except such as would help in educating and training the worker. The wage system should be judged by what it is, not by things directly opposed to its spirit.

-- II. THE WAGE SYSTEM AS IT IS

[Sidenote: Merits and faults of the definite wage payment]

1. _Under the wage contract the worker gets in a definite sum at once the market value of his services._ Under the wage contract the employer takes the risk as to the future selling price of the product. That he is the one best prepared to a.s.sume the risk will be made clearer in the discussion of the employer's function. Wage payment, therefore, is a form of insurance to the workingman; he gets something definite instead of taking chances he is ill prepared to take. Wage payment is a form of credit to the laborer whose labor has not yet produced the distant gratification. The employer advances to the workman the value of the future gratification, discounting it at the prevailing rate of interest.

The darker side of the wage bargain is that the "cash nexus," as Carlyle expressed it, is too often the only bond between the parties. When the wages are paid, the employer considers his obligations discharged. There is a lack of fellows.h.i.+p and sympathy in it all. Work should be a bond of communion between men, but as it is, the laborers in some great factories and their employers live in entirely different worlds. The great inequality of their condition makes mutual understanding difficult. They are master and man, "boss" and hireling, not co-workers, each with a worthy part in the n.o.ble tasks of industry.

[Sidenote: Strength and weakness of the worker in compet.i.tion]

2. _The wage-earner gets the compet.i.tive value of his services, securing in most cases much more than a bare subsistence._ At the present time compet.i.tion is in a large measure active among employed as well as among employers. A believer in the subsistence theory of wages must, under these conditions, expect wages to fall to the starvation level. But according to the law of wages here presented, it is to be expected that wages can and will remain indefinitely above that level, falling or rising as conditions change. The increase in material wealth of itself tends to increase the wages of the workman. The laborer, though without resources and even though not contributing to the increase of capital by saving, thus shares in the benefit of increasing capital. It is true that under some conditions the workman is at a disadvantage in making the wage contract; labor must be applied from day to day or it is lost, and the laborer must work to live. While this does not determine the rate of wages in the long run in any occupation nor to any great extent except among the lowest grades of labor, it does give an advantage for the moment to the employer, and enables him to exercise at times a harsh power over the workmen in his immediate neighborhood. A single workman is thus very often at a disadvantage, but it must not be overlooked that in a large degree the compet.i.tion for good workmen is effective between employers in different trades and in distant localities.

[Sidenote: Wages as affecting the ambition of the worker]

3. _Increase of efficiency due to the sacrifice of parents or to personal exertion, goes to the individual worker._ The most essential practical feature in any industrial system is the appeal to the ambition of each man. This appeal is made where a premium is placed on increasing efficiency, by insuring to it a higher return. This result is possible and in large measure is attained under the wage system. Little less important is the appeal to family affection to make possible by its sacrifices each worker's best preparation.

An offsetting disadvantage appears in the loss to the laborer in the decline of his powers. As he gains in wages if he increases in efficiency, so he loses if his strength fails from accident or in the course of years. This loss falls upon him, not, as is sometimes said to have been the case under serfdom or slavery, upon his owner (as if that secured to the slave immunity from suffering). It is true that in general under the wage system the worker has no guarantee against loss of work or, what is equally important, against sudden changes in industry. He may be, and often is, a victim of invention and of changes in machinery or industrial processes, by which the ma.s.ses of men are the gainers.

[Sidenote: Large liberty of the wage-worker]

4. _Liberty of the worker in his choice of work and outside of working hours makes for happiness, character, and progress._ Opinion is almost a unit as to the truth of this statement. The present wage system is the freest condition for the ma.s.s of men that ever has existed. Their religious, political, and personal convictions, are for the most part inviolate. There is a true but much misused maxim that liberty has its dangers. Freedom means freedom to make mistakes. Intelligence and strong industrial virtues are required to exercise properly a freedom newly acquired. Thus it is the lowest cla.s.s of labor that reaps the smallest advantage from free conditions, and that suffers most from their misuse.

[Sidenote: Limits to the worker's liberty]

The main evil in the wage system is certainly not that the liberty of the worker is too great, but that it is too small. The sale of labor involves the obeying of orders during certain hours specified in the contract. Here again the evil is greatest in the lowest grades of work, while the great majority of wage-earners are left a large measure of choice in the time and manner of their work. Where labor is severe and without joy to the worker, it appears to be little better than a form of slavery. Contrast the condition of the section hand, cursed and beaten by a brutal foreman, with that of the wage-earner in the locomotive-cab, self-respecting, self-directing, and trusted with the safety of property and lives. The wage system is manifold, it is adaptable. If it holds a portion of the laborers with a harsh hand, it gives to all a wide measure of opportunity, and to most a great degree of independence in their lives. A hasty resort to indiscriminating a.n.a.logy, as in calling wage-work "slavery," does not further truth or social justice.

-- III. PROGRESS OF THE Ma.s.sES UNDER THE WAGE SYSTEM

[Sidenote: The rise of money wages]

1. _The nineteenth century was a period of great progress for the ma.s.ses in America, England, and throughout Europe._ There are differences of opinion as to the extent of this progress, the way in which it is to be measured, and the degree to which it is an occasion for congratulation.

There is no longer any dispute as to the actual fact that it has taken place. Many lines of evidence converge to confirm this one conclusion.

The average money wages in the United States may be represented in 1840 by 87.7, in 1860 by 100, and in 1891 by 161.2. This was the high mark for a time and a decline followed. Again wages rose from 1897 on, and in 1899 had reached 163.2. They have continued to rise since and in 1903 attained the highest point in the history of our country and therefore in the history of the world. Another temporary decline undoubtedly will occur when industrial conditions become less prosperous.

[Sidenote: Changes in real wages]

Real wages, also, the power to purchase goods with labor, are greater than ever before so far as this can be measured in the price of leading commodities. The offsetting loss of the free health-giving pleasures of country life cannot easily be expressed. In England likewise the rise in money wages has been great. In 1860 it is represented by 100, in 1870 by 113, in 1880 by 125, in 1891 by 140, in the intervals some decline occurring. For a century in all civilized lands wages have moved in an ever-rising series of waves. The purchasing power of wages in England increased ninety per cent, in the thirty years between 1860 and 1891.

Throughout Europe the same general change is seen, going always hand in hand with new industrial methods and the displacing of the old agricultural system by the wage system. As the hours of labor have at the same time been shortened, the workers have gained doubly.

[Sidenote: Need of a broad explanation of rising wages]

2. _This progress is mainly due to the opening up of rich natural resources and to the development of industrial processes._ Recognized in some measure by every one, this progress is attributed by different observers to different causes: in America, by many to the protective tariff; in England, by many to the freer trade introduced about 1840; throughout the continent of Europe, to the spread of const.i.tutional government and free inst.i.tutions; by trade-unions everywhere, to the organization of labor. There is, doubtless, under certain conditions, some portion of truth in each of these claims. But, either separately or altogether, they fall short of a broad, reasonable, and sufficient explanation. The two-fold proposition just presented, the justification for which has been given in preceding chapters, points to a general and adequate cause.

[Sidenote: The gloomy view as to the wage system was mistaken]

Seventy-five years ago it was thought that, with the increase of machinery, of factories, of the concentrated control of wealth, and especially with the wage system, there must go a steady depression in the welfare of the workingman. This idea was connected with the iron law of wages. It was believed by some that, whatever the causes of advancing social income might be, the wage system would rob the wage-earners of all share in progress. In view of the facts, if it cannot now be a.s.serted positively that the wage system is the cause of all the gain, it can be a.s.serted negatively that it is not inconsistent with great progress on the part of the laboring cla.s.ses. It might be possible to go further and to maintain that the organization of industry, under the wage system and compet.i.tive conditions, by its encouragement of enterprise, energy, and economy, has been an indispensable condition in the industrial progress which has in turn made possible the rising wages of labor.

[Sidenote: More workers now in better-paid callings]

3. _The increased proportion of workers in the higher occupations means a further rise in the average condition of the ma.s.ses._ A smaller proportion of workers is now engaged in the low-paid industries than fifty years ago, and a correspondingly larger proportion is in the better, or highly paid, industries. Decade by decade the proportion s.h.i.+fts toward the upper part of the scale. Both in America and in England (doubtless also in other countries) more men are now engaged in the higher professions and skilled occupations, a smaller proportion in the lower occupations. This would raise the average of wages even if the wages of particular occupations had not risen.

[Sidenote: The ma.s.ses gain by general social advance]

4. _The diffused advantages of progress mean relatively more to the ma.s.ses than to the rich._ In the olden days the poor man was bound to the spot where he lived, the rich man had his carriage; to-day poor and rich ride side by side in the trolley car. The introduction of these cheap methods of enjoyment means relatively more to the poor. Better medical care, better sanitation, more abundant food, clothing, comfort, free schools, and libraries have all a part in this movement. The enormous possibilities in these lines are just beginning to be realized.

The achievements of the last twenty years read like a story from fairy-land. It tells the leveling up of the conditions enjoyed by the common man.

[Sidenote: Better social conditions must grow out of the wage system]

[Sidenote: Improvement in the wage system]

5. _Any sound method of improving social conditions must grow out of experience, not break with it._ Even if things were on the downward instead of the upward road there would be no excuse for wild speculation. The only rational way is to find what is good in what is, and build upon it. There can be no excuse for suggesting a method from imagination. Projects of social change must be tried by successful experiment, and gradually fitted to present needs. It is in this way that the higher forms of life have developed; it is in this way that social and political inst.i.tutions have come into being. Things that work successfully first in a small way are worthy of trial on a larger scale.

The wage system is a favorite object of attack for radical social reformers. It has many unlovely features and there are many individual cases of hards.h.i.+p. It may well be asked, What method shall be pursued to reform it? Its retention, however, is not inconsistent with very great changes in the present political and economic arrangements. The impersonal economic forces are working for improvement; but further, there is a growth of sentiment, an increase in sympathy, a feeling among men that the "cash nexus" is not the only bond that should unite different cla.s.ses, and this sympathy is becoming an economic force, softening and improving many of the most unlovely features of the modern wage system.

CHAPTER 26

MACHINERY AND LABOR

-- I. EXTENT OF THE USE OF MACHINERY

[Sidenote: Tools, machines, and power]

1. _A machine is a mechanical device by which power is applied in an automatically repeated manner, to change the place or form of things._ It is not easy, perhaps not important, to distinguish the machine from the tool in every case. Tools are portions of matter, such as bone, wood, iron, which man guides and directs in applying his energy to things. A machine may be used by the foot, but the hand is the great tool-using member. In many cases there is a clearly marked distinction between tool and machine. A simple, single piece that can be taken into the hand, as a spade, a hammer, a knife, is a tool; a combination of wheels, levers, pulleys, etc., is a machine. The simplest machine is but a slight adaptation of the tool, by which power may be applied in an automatically repeated manner. The drag develops into the cart, a simple machine. The spinning-stick, a tool used in ancient times, developed into the Saxon spinning-wheel of the sixteenth century, the form used when America was colonized. The use of power derived from nature, as that of wind and water and steam, while not the essential mark of machines, is the most characteristic feature of their modern development. Hand-machines, such as the hand-press and the type-writer, have had important industrial results, but it is the use of power leading to the concentration of industry and the owners.h.i.+p of machinery by the employers that has the greatest significance in the modern economic problem.