4. Wages of Women, why Lower than those of Men.
Where men and women work at the same employment, if it be one for which
they are equally fitted in point of physical power, they are not always
unequally paid. Women in factories sometimes earn as much as men; and so
they do in hand-loom weaving, which, being paid by the piece, brings their
efficiency to a sure test. When the efficiency is equal, but the pay
unequal, the only explanation that can be given is custom. But the
principal question relates to the peculiar employments of women. The
remuneration of these is always, I believe, greatly below that of
employments of equal skill and equal disagreeableness carried on by men.
In some of these cases the explanation is evidently that already given: as
in the case of domestic servants, whose wages, speaking generally, are not
determined by competition, but are greatly in excess of the market value
of the labor, and in this excess, as in almost all things which are
regulated by custom, the male sex obtains by far the largest share. In the
occupations in which employers take full advantage of competition, the low
wages of women, as compared with the ordinary earnings of men, are a proof
that the employments are overstocked: that although so much smaller a
number of women than of men support themselves by wages, the occupations
which law and usage make accessible to them are comparatively so few that
the field of their employment is still more overcrowded.
Yet within the employments open to women, such as millinery and
dress-making, certain women are able to charge excessively high
prices for work, because, having obtained a reputation for
especial skill and taste, they can exact in the high prices of
their articles what is really their high wages. Within these
employments women are unable to earn a living not so much by the
lack of work, as by not bringing to their occupation that amount
of skill and those business qualities (owing, of course, to their
being brought up unaccustomed to business methods) which are
requisite for the success of any one, either man or woman.
It must be observed that, as matters now stand, a sufficient degree of
overcrowding may depress the wages of women to a much lower minimum than
those of men. The wages, at least of single women, must be equal to their
support, but need not be more than equal to it; the minimum, in their
case, is the pittance absolutely requisite for the sustenance of one human
being. Now the lowest point to which the most superabundant competition
can permanently depress the wages of a man is always somewhat more than
this. Where the wife of a laboring-man does not by general custom
contribute to his earnings, the man’s wages must be at least sufficient to
support himself, a wife, and a number of children adequate to keep up the
population, since, if it were less, the population would not be kept up.
§ 5. Differences of Wages Arising from Laws, Combinations, or Customs.
Thus far we have, throughout this discussion, proceeded on the supposition
that competition is free, so far as regards human interference; being
limited only by natural causes, or by the unintended effect of general
social circumstances. But law or custom may interfere to limit
competition. If apprentice laws, or the regulations of corporate bodies,
make the access to a particular employment slow, costly, or difficult, the
wages of that employment may be kept much above their natural proportion
to the wages of common labor. In some trades, however, and to some extent,
the combinations of workmen produce a similar effect. Those combinations
always fail to uphold wages at an artificial rate unless they also limit
the number of competitors. Putting aside the atrocities sometimes
committed by workmen in the way of personal outrage or intimidation, which
can not be too rigidly repressed, if the present state of the general
habits of the people were to remain forever unimproved, these partial
combinations, in so far as they do succeed in keeping up the wages of any
trade by limiting its numbers, might be looked upon as simply intrenching
round a particular spot against the inroads of over-population, and making
the wages of the class depend upon their own rate of increase, instead of
depending on that of a more reckless and improvident class than
themselves.
To conclude this subject, I must repeat an observation already made, that
there are kinds of labor of which the wages are fixed by custom, and not
by competition. Such are the fees or charges of professional persons—of
physicians, surgeons, barristers, and even attorneys.
Chapter V. Of Profits.
§ 1. Profits include Interest and Risk; but, correctly speaking, do not
include Wages of Superintendence.
Having treated of the laborer’s share of the produce, we next proceed to
the share of the capitalist; the profits of capital or stock; the gains of
the person who advances the expenses of production—who, from funds in his
possession, pays the wages of the laborers, or supports them during the
work; who supplies the requisite buildings, materials, and tools or
machinery; and to whom, by the usual terms of the contract, the produce
belongs, to be disposed of at his pleasure. After indemnifying him for his
outlay, there commonly remains a surplus, which is his profit; the net
income from his capital [and skill]; the amount which he can afford to
expend in necessaries or pleasures, or from which by further saving he can
add to his wealth.
As the wages of the laborer are the remuneration of labor, so [a part of]
the profits of the capitalist are properly, according to Mr. Senior’s
well-chosen expression, the remuneration of abstinence. They are what he
gains by forbearing to consume his capital for his own uses, and allowing
it to be consumed by productive laborers for their uses. For this
forbearance he requires a recompense.
Of the gains, however, which the possession of a capital enables a person
to make, (1) a part only is properly an equivalent for the use of the
capital itself; namely, as much as a solvent person would be willing to
pay for the loan of it. This, which as everybody knows is called interest,
is all that a person is enabled to get by merely abstaining from the
immediate consumption of his capital, and allowing it to be used for
productive purposes by others. The remuneration which is obtained in any
country for mere abstinence is measured by the current rate of interest on
the best security; such security as precludes any appreciable chance of
losing the principal. What a person expects to gain, who superintends the
employment of his own capital, is always more, and generally much more,
than this. The rate of profit greatly exceeds the rate of interest. (2.)
The surplus is partly compensation for risk. By lending his capital on
unexceptionable security he runs little or no risk. But if he embarks in
business on his own account, he always exposes his capital to some, and in
many cases to very great, danger of partial or total loss. For this danger
he must be compensated, otherwise he will not incur it. (3.) He must
likewise be remunerated for the devotion of his time and labor. The
control of the operations of industry usually belongs to the person who
supplies the whole or the greatest part of the funds by which they are
carried on, and who, according to the ordinary arrangement, is either
alone interested, or is the person most interested (at least directly), in
the result. To exercise this control with efficiency, if the concern is
large and complicated, requires great assiduity, and often no ordinary
skill. This assiduity and skill must be remunerated.
The gross profits from capital, the gains returned to those who supply the
funds for production, must suffice for these three purposes; and the three
parts into which profit may be considered as resolving itself may be
described respectively as interest, insurance, and wages of
superintendence.
Inasmuch as risk is the cause affecting the rate of interest, it
would be much simpler to consider the whole reward for abstinence
as interest, the rate of which is affected by the risk; and to
carefully exclude from the profits of capital the payment for
“assiduity and skill,” which is distinctly wages of labor. The
“wages of superintendence,” as every one on a moment’s reflection
must admit, have no necessary connection whatever with the
possession of capital. The thing with which the laborer is
occupied does not give the reason for associating his wages with
the name of that thing; because a highly-qualified manager
supervises the operations of capital, it does not follow that he
has capital, or should be regarded as being paid for the
possession of capital. The man who shovels ashes is not paid wages
of ashes, any more than a man who superintends other people’s
capital is paid the reward of capital. The payment for services,
in the one case as in the other, depends upon the skill of the
manager, just as it does with an ordinary mechanic, rising or
falling with his fitness for the peculiar work. Skill as a manager
is the cause; the amount of the remuneration is the consequence.
If so, then the wages of superintendence have no logical
connection, in the economic sense, with capital as the thing which
determines the amount of its reward, any more than it affects the
wages of any and all labor. The payment for the use of capital,
simply as capital, may be seen by the amount which a widow who is
not engaged in active business receives from her property invested
as trust funds. Moreover, it is less and less true that the
manager of the operations of industry is necessarily the
capitalist. To see this, mark the executive managers (called
“treasurers” by custom) of cotton and woolen mills, who receive a
remuneration entirely distinct from any capital they may have
invested in the shares of the corporation; and the officials of
the great mutual insurance companies, who receive the wages of
managers, but for managing the capital of others. A large—by far
the largest—part of what is usually called profit, therefore,
should be treated as wages, and the forces which govern its amount
are the same as those affecting the amounts of all other kinds of
wages, such as are discussed in the preceding chapter. The
acknowledgment of this distinction is of extreme importance, and
affects, in a profound way, the whole question of distribution. To
include “wages of superintendence” in profits of capital is to
unnecessarily complicate one of the most serious economic
questions—namely, the relations of capital and labor.
§ 2. The Minimum of Profits; what produces Variations in the Amount of
Profits.
The lowest rate of profit that can permanently exist is that which is
barely adequate, at the given place and time, to afford an equivalent for
the abstinence, risk, and exertion implied in the employment of capital.
From the gross profit has first to be deducted as much as will form a fund
sufficient on the average to cover all losses incident to the employment.
Next, it must afford such an equivalent to the owner of the capital for
forbearing to consume it as is then and there a sufficient motive to him
to persist in his abstinence. How much will be required to form this
equivalent depends on the comparative value placed, in the given society,
upon the present and the future (in the words formerly used): on the
strength of the effective desire of accumulation. Further, after covering
all losses, and remunerating the owner for forbearing to consume, there
must be something left to recompense the labor and skill of the person who
devotes his time to the business.
Such, then, is the minimum of profits: but that minimum is exceedingly
variable, and at some times and places extremely low, on account of the
great variableness of two out of its three elements. That the rate of
necessary remuneration for abstinence, or in other words the effective
desire of accumulation, differs widely in different states of society and
civilization, has been seen in a former chapter. There is a still wider
difference in the element which consists in compensation for risk.
The remuneration of capital in different employments, much more than the
remuneration of labor, varies according to the circumstances which render
one employment more attractive or more repulsive than another. The
profits, for example, of retail trade, in proportion to the capital
employed, exceed those of wholesale dealers or manufacturers, for this
reason among others, that there is less consideration attached to the
employment. The greatest, however, of these differences, is that caused by
difference of risk. The profits of a gunpowder-manufacturer must be
considerably greater than the average, to make up for the peculiar risks
to which he and his property are constantly exposed. When, however, as in
the case of marine adventure, the peculiar risks are capable of being, and
commonly are, commuted for a fixed payment, the premium of insurance takes
its regular place among the charges of production, and the compensation
which the owner of the ship or cargo receives for that payment does not
appear in the estimate of his profits, but is included in the replacement
of his capital.
The minimum of profits can not properly include wages of
superintendence, nor is it so included, practically, in Mr. Mill’s
discussions on the minimum of profits in a later part of this
volume. The operation of the various elements in changing the
amount of profits might be expressed as follows: As between
different countries and communities, who have a different
effective desire of accumulation, profits may vary with the
element of interest and risk; within the same district, where
interest is generally the same on the same security, profits may
vary with the risk attached to different industries; and, within
the same occupations, interest and risk being given, the wages of
superintendence may make a greater variation than either of the
other two causes—since a skillful manager may make a large return,
a poor one none at all. Or between two employments, interest and
risk remaining the same, wages of superintendence sometimes
produce a wide difference.
The portion, too, of the gross profit, which forms the remuneration for
the labor and skill of the dealer or producer, is very different in
different employments. This is the explanation always given of the
extraordinary rate of apothecaries’ profit. There are cases, again, in
which a considerable amount of labor and skill is required to conduct a
business necessarily of limited extent. In such cases a higher than common
rate of profit is necessary to yield only the common rate of remuneration.
All the natural monopolies (meaning thereby those which are created by
circumstances, and not by law) which produce or aggravate the disparities
in the remuneration of different kinds of labor, operate similarly between
different employments of capital.
In this passage Mr. Mill points out distinctly that the movement
up and down in the wages of a manager are governed by the same
laws as those which regulate differences in the different rewards
of labor, but yet he connects it improperly with capital. It will
be seen that Mr. Mill uses the term “gross profit” on the next
page in order to avoid the difficulty, which rises unconsciously
in his mind, of the anomalous presence of the wages of the manager
in the question of profit.
§ 3. General Tendency of Profits to an Equality.
After due allowance is made for these various causes of inequality,
namely, difference in the risk or agreeableness of different employments,
and natural or artificial monopolies [which give greater or less wages of
superintendence], the rate of profit on capital in all employments tends
to an equality. That portion of profit which is properly interest, and
which forms the real remuneration for abstinence, is strictly the same at
the same time and place, whatever be the employment. The rate of interest,
on equally good security, does not vary according to the destination of
the principal, though it does vary from time to time very much, according
to the circumstances of the market.
It is far otherwise with gross profit, which, though (as will presently be
seen) it does not vary much from employment to employment, varies very
greatly from individual to individual, and can scarcely be in any two
cases the same. It depends on the knowledge, talents, economy, and energy
of the capitalist himself, or of the agents whom he employs; on the
accidents of personal connection; and even on chance. Hardly any two
dealers in the same trade, even if their commodities are equally good and
equally cheap, carry on their business at the same expense, or turn over
their capital in the same time. That equal capitals give equal profits, as
a general maxim of trade, would be as false as that equal age or size
gives equal bodily strength, or that equal reading or experience gives
equal knowledge. The effect depends as much upon twenty other things as
upon the single cause specified. On an average (whatever may be the
occasional fluctuations) the various employments of capital are on such a
footing as to hold out, not equal profits, but equal expectations of
profit, to persons of average abilities and advantages. By equal, I mean
after making compensation for any inferiority in the agreeableness or
safety of an employment. If the case were not so; if there were,
evidently, and to common experience, more favorable chances of pecuniary
success in one business than in others, more persons would engage their
capital in the business. If, on the contrary, a business is not considered
thriving; if the chances of profit in it are thought to be inferior to
those in other employments; capital gradually leaves it, or at least new
capital is not attracted to it; and by this change in the distribution of
capital between the less profitable and the more profitable employments, a
sort of balance is restored.
[Illustration: Parallel vertical lines AB and GD, with horizontal lines EG
and FC joining them.]
This may be easily shown by a diagram in which the capital in one
employment is represented by _A B_, and which exceeds _C D_, that
in another employment, by the amount of _A F_. It is not necessary
that the whole of the excess, _A F_ should be transferred to _C D_
to make the two capitals equal, but only _A E_, which, added to _C
D_, brings _C D_ to an equality with _E B_.
This equalizing process, commonly described as the transfer of capital
from one employment to another, is not necessarily the onerous, slow, and
almost impracticable operation which it is very often represented to be.
In the first place, it does not always imply the actual removal of capital
already embarked in an employment. In a rapidly progressive state of
capital, the adjustment often takes place by means of the new
accumulations of each year, which direct themselves in preference toward
the more thriving trades. Even when a real transfer of capital is
necessary, it is by no means implied that any of those who are engaged in
the unprofitable employment relinquish business and break up their
establishments. The numerous and multifarious channels of credit through
which, in commercial nations, unemployed capital diffuses itself over the
field of employment, flowing over in greater abundance to the lower
levels, are the means by which the equalization is accomplished. The
process consists in a limitation by one class of dealers or producers and
an extension by the other of that portion of their business which is
carried on with borrowed capital.
“Political economists say that capital sets toward the most
profitable trades, and that it rapidly leaves the less profitable
and non-paying trades. But in ordinary countries this is a slow
process, and some persons, who want to have ocular demonstrations
of abstract truths, have been inclined to doubt it because they
could not see it. The process would be visible enough if you could
only see the books of the bill-brokers and the bankers. If the
iron-trade ceases to be as profitable as usual, less iron is sold;
the fewer the sales the fewer the bills; and in consequence the
number of iron bills [at the banks] is diminished. On the other
hand, if, in consequence of a bad harvest, the corn trade becomes
on a sudden profitable, immediately ‘corn bills’ are created in
large numbers, and, if good, are discounted [at the banks]. Thus
capital runs as surely and instantly where it is most wanted, and
where there is most to be made of it, as water runs to find its
level.”(177)
In the case of an altogether declining trade, in which it is necessary
that the production should be, not occasionally varied, but greatly and
permanently diminished, or perhaps stopped altogether, the process of
extricating the capital is, no doubt, tardy and difficult, and almost
always attended with considerable loss; much of the capital fixed in
machinery, buildings, permanent works, etc., being either not applicable
to any other purpose, or only applicable after expensive alterations; and
time being seldom given for effecting the change in the mode in which it
would be effected with least loss, namely, by not replacing the fixed
capital as it wears out. There is besides, in totally changing the
destination of a capital, so great a sacrifice of established connection,
and of acquired skill and experience, that people are always very slow in
resolving upon it, and hardly ever do so until long after a change of
fortune has become hopeless.
In general, then, although profits are very different to different
individuals, and to the same individual in different years, there can not
be much diversity at the same time and place in the average profits of
different employments (other than the standing differences necessary to
compensate for difference of attractiveness), except for short periods, or
when some great permanent revulsion has overtaken a particular trade. It
is true that, to persons with the same amount of original means, there is
more chance of making a large fortune in some employments than in others.
But it would be found that in those same employments bankruptcies also are
more frequent, and that the chance of greater success is balanced by a
greater probability of complete failure.
§ 4. The Cause of the Existence of any Profit; the Advances of Capitalists
consist of Wages of Labor.
The preceding remarks have, I hope, sufficiently elucidated what is meant
by the common phrase, “the ordinary rate of profit,” and the sense in
which, and the limitations under which, this ordinary rate has a real
existence. It now remains to consider what causes determine its amount.
The cause of profit is, that labor produces more than is required for its
support; the reason why capital yields a profit is, because food,
clothing, materials, and tools last longer than the time which is required
to produce them; so that if a capitalist supplies a party of laborers with
these things, on condition of receiving all they produce, they will, in
addition to reproducing their own necessaries and instruments, have a
portion of their time remaining, to work for the capitalist. We thus see
that profit arises, not from the incident of exchange, but from the
productive power of labor; and the general profit of the country is always
what the productive power of labor makes it, whether any exchange takes
place or not. I proceed, in expansion of the considerations thus briefly
indicated, to exhibit more minutely the mode in which the rate of profit
is determined.
I assume, throughout, the state of things which, where the laborers and
capitalists are separate classes, prevails, with few exceptions,
universally; namely, that the capitalist advances the whole expenses,
including the entire remuneration of the laborer. That he should do so is
not a matter of inherent necessity; the laborer might wait until the
production is complete for all that part of his wages which exceeds mere
necessaries, and even for the whole, if he has funds in hand sufficient
for his temporary support. But in the latter case the laborer is to that
extent really a capitalist, investing capital in the concern, by supplying
a portion of the funds necessary for carrying it on; and even in the
former case he may be looked upon in the same light, since, contributing
his labor at less than the market price, he may be regarded as lending the
difference to his employer, and receiving it back with interest (on
whatever principle computed) from the proceeds of the enterprise.
The capitalist, then, may be assumed to make all the advances and receive
all the produce. His profit consists of the excess of the produce above
the advances; his _rate_ of profit is the ratio which that excess bears to
the amount advanced.
For example, if A advances 8,000 bushels of corn to laborers in
return for 10,000 yards of cloth (and if one bushel of corn sells
for the same sum as one yard of cloth), his profit consists of
2,000 yards of cloth. The ratio of the excess, 2,000, to 8,000,
the outlay, or 25 per cent, is the _rate_ of profit. It is not the
ratio of 2,000 to 10,000.
But what do the advances consist of? It is, for the present, necessary to
suppose that the capitalist does not pay any rent; has not to purchase the
use of any appropriated natural agent. The nature of rent, however, we
have not yet taken into consideration; and it will hereafter appear that
no practical error, on the question we are now examining, is produced by
disregarding it.
If, then, leaving rent out of the question, we inquire in what it is that
the advances of the capitalist, for purposes of production, consist, we
shall find that they consist of wages of labor.
A large portion of the expenditure of every capitalist consists in the
direct payment of wages. What does not consist of this is composed of
materials and implements, including buildings. But materials and
implements are produced by labor; and as our supposed capitalist is not
meant to represent a single employment, but to be a type of the productive
industry of the whole country, we may suppose that he makes his own tools
and raises his own materials. He does this by means of previous advances,
which, again, consist wholly of wages. If we suppose him to buy the
materials and tools instead of producing them, the case is not altered: he
then repays to a previous producer the wages which that previous producer
has paid. It is true he repays it to him with a profit; and, if he had
produced the things himself, he himself must have had that profit on this
part of his outlay as well as on every other part. The fact, however,
remains, that in the whole process of production, beginning with the
materials and tools and ending with the finished product, all the advances
have consisted of nothing but wages, except that certain of the
capitalists concerned have, for the sake of general convenience, had their
share of profit paid to them before the operation was completed.
This idea may be more clear, perhaps, if we imagine a large
corporation, not only making woolen cloth, but owning
sheep-ranches, where the raw materials are produced; the shops
where all machinery is made; and who even produce on their own
property all the food, clothing, shelter, and consumption of the
laborers employed by them. A line of division may be passed
through the returns in all these branches of the industry,
separating what is wages from what is profit. Then it can be
easily imagined that all the returns on one side, representing
profits, go to capitalists, no matter whether they are thousands
in number, or only one capitalist typifying the rest, or a single
corporation acting for many small capitalists.
§ 5. The Rate of Profit depends on the Cost of Labor.
It thus appears that the two elements on which, and which alone, the gains
of the capitalists depend, are, first, the magnitude of the produce, in
other words, the productive power of labor; and secondly, the proportion
of that produce obtained by the laborers themselves; the ratio which the
remuneration of the laborers bears to the amount they produce.
We thus arrive at the conclusion of Ricardo and others, that the rate of
profits depends upon wages; rising as wages fall, and falling as wages
rise. In adopting, however, this doctrine, I must insist upon making a
most necessary alteration in its wording. Instead of saying that profits
depend on wages, let us say (what Ricardo really meant) that they depend
on the _cost of labor_.
This is an entirely different question from that concerning the
rate of wages before discussed (Book II, Chap. II). That had to do
with the amount of the capital which each laborer, on an average,
received as real wages, and this average rate was affected by the
number of competitors for labor, as compared with the existing
capital, taking into account the nature of the industries in a
country. An increase of population, bringing more laborers to
compete for employment, will lower the average amount of real
wages received by each one; and a decrease of population will
bring about the reverse. The rate of wages, however, now that we
are considering the matter from the point of view of the
capitalist, is but one of the things to be considered affecting
_cost of labor_. The former question was one as to the
distribution of capital; the latter is one as to the amount by
which the total production is greater than the total capital
advanced. Since all capital consists of advances to labor, the
present inquiry is one in regard to the quantity of advances
compared with the quantity returned; that is, the relation of the
total capital to the total production arising from the use of that
capital. In the diagram before used (p. 179) the question is not
how the contents of circle B are to be distributed, but the
relative size of circle B to circle A. In order to produce circle
A, it is necessary to advance what is represented by circle B.
Wages and the cost of labor; what labor brings in to the laborer and what
it costs to the capitalist are ideas quite distinct, and which it is of
the utmost importance to keep so. For this purpose it is essential not to
designate them, as is almost always done, by the same name. Wages, in
public discussions, both oral and printed, being looked upon from the same
point of view of the payers, much oftener than from that of the receivers,
nothing is more common than to say that wages are high or low, meaning
only that the cost of labor [to the capitalist] is high or low. The
reverse of this would be oftener the truth: the cost of labor is
frequently at its highest where wages are lowest. This may arise from two
causes. (1.) In the first place, the labor, though cheap, may be
inefficient.
The facts presented by Mr. Brassey(178) very fully illustrate this
principle. Although French workmen in their ship-yards receive
less wages for the same kind of work than the English workmen in
English yards, yet it costs less per ton to build ships in England
than in France. The same correspondence between high wages and
efficient work was found to be true of railway construction in
different parts of the world. With different character, varying
amounts of industrial energy, varying intelligence, and endurance,
different people do not have the same efficiency of labor. It is
ascertained that inefficiency is, as a rule, accompanied by low
wages. Even though wages paid for ordinary labor in constructing
railways were in India only from nine to twelve cents a day, and
in England from seventy-five to eighty-seven cents a day, yet it
cost as much to build a mile of railway in India as in England.
The English laborer gave a full equivalent for his higher wages.
Moreover, while an English weaver tends from two to three times as
many looms as his Russian competitor, the workman in the United
States, it is said, will tend even more than the Englishman. In
American sailing-vessels, also, a less number of sailors,
relatively to the tonnage, is required than in English
sailing-ships. Mr. Brassey, besides, came to the conclusion that
the working power, or efficiency, of ordinary English laborers was
to the French as five to three.
(2.) The other cause which renders wages and the cost of labor no real
criteria of one another is the varying costliness of the articles which
the laborer consumes. If these are cheap, wages, in the sense which is of
importance to the laborer, may be high, and yet the cost of labor may be
low; if dear, the laborer may be wretchedly off, though his labor may cost
much to the capitalist. This last is the condition of a country
over-peopled in relation to its land; in which, food being dear, the
poorness of the laborer’s real reward does not prevent labor from costing
much to the purchaser, and low wages and low profits coexist. The opposite
case is exemplified in the United States of America. The laborer there
enjoys a greater abundance of comforts than in any other country of the
world, except some of the newest colonies; but owing to the cheap price at
which these comforts can be obtained (combined with the great efficiency
of the labor), the cost of labor to the capitalist is considerably lower
than in Europe. It must be so, since the rate of profit is higher; as
indicated by the rate of interest, which is six per cent at New York when
it is three or three and a quarter per cent in London.
The cost of labor, then, is, in the language of mathematics, a function of
three variables: (1) the efficiency of labor; (2) the wages of labor
(meaning thereby the real reward [or real wages] of the laborer); and (3)
the greater or less cost(179) at which the articles composing that real
reward can be produced or purchased. It is plain that the cost of labor to
the capitalist must be influenced by each of these three circumstances,
and by no others. These, therefore, are also the circumstances which
determine the rate of profit; and it can not be in any way affected except
through one or other of them.
The efficiency of labor, in this connection, is highly important
in its practical aspects, and as affecting the labor question,
because as a function of cost of labor, that is, as an element
affecting the quantity of things advanced to the laborers in
comparison with the quantity of things returned to the employer,
it includes the whole influence of machinery, labor-saving
devices, and the results of invention. The quantity of produce
depends, for a given advance, on the kind of machinery, the speed
with which it is run, and on the general state of the arts and
industrial inventions. The extent to which the productive capacity
of a single laborer has been increased in the United States has
been almost incredible. Instead of weaving cloth by hand, as was
done a hundred years ago, “one operative in Lowell, working one
year, can produce the cotton fabric needed for the year’s supply
of 1,500 to 1,800 Chinese.” Moreover, there is no question as to
the fact that no nation in the world compares with ours in the
power to invent, construct, and manage the most ingenious and
complicated machinery. The inventive faculty belongs to every
class in our country; and, in studying cost of labor, it must be
well borne in mind that the efficiency of American labor,
particularly as combined with mechanical appliances, is one of the
great causes of our enormous production. The result of this, for
instance, has been that, without lowering profits, although the
price of cloth has been greatly reduced, employers have been able
to raise the wages of operatives, and shorten their hours of
labor, because machinery has so vastly increased the production
for a given outlay. As one of a few facts showing this tendency in
the last fifty years, note the following table, taken from the
books of the Namquit cotton-mill in Bristol, Rhode Island:
Kind Of Labor. 1841. 1884.
Card-room help, per week $3.28 $5.40
Card-strippers, per week 4.98 6.00
Weavers, per week 4.75 6.00
Carding-room overseer, per week 7.00 13.50
The hours per week have decreased in the same time from 84 to 66,
while the product of the mill in pounds has increased 25 per cent.
It may be unnecessary, perhaps, to say that these figures
represent the current wages in other mills at the same periods;
and that these facts can be sustained by the records of other
mills.
In its economic effect we must also consider, under efficiency,
the whole question of natural advantages of soil, climate, and
natural resources. Laborers of the same skill, paid the same real
wages, of the same cost, will produce a vastly greater amount of
wheat in Dakota than in Vermont or England. This is the chief
reason why profits are so high in the United States. In many
industries we have very marked natural advantages, which permits a
high reward to labor, and yet yields a high profit to the
capitalist. This applies not merely to agriculture, but to all the
extractive industries, such as the production of petroleum, wood,
copper, etc.
In short, the whole matter of ease and difficulty of production,
of high or low cost of production, taking it in the sense of great
or little sacrifice (compare carefully Book III, Chap. II, § 4),
comes in under the element of efficiency, in cost of labor. The
reader can not be too strongly urged to connect different parts of
the economic system together. And the questions of Cost of Labor
and Cost of Production are of paramount importance to a proper
understanding of political economy.
If labor generally became more efficient, without being more highly
rewarded; if, without its becoming less efficient, its remuneration fell,
no increase taking place in the cost of the articles composing that
remuneration; or if those articles became less costly, without the
laborers obtaining more of them; in any one of these three cases, profits
would rise. If, on the contrary, labor became less efficient (as it might
do from diminished bodily vigor in the people, destruction of fixed
capital, or deteriorated education); or if the laborer obtained a higher
remuneration, without any increased cheapness in the things composing it;
or if, without his obtaining more, that which he did obtain became more
costly; profits, in all these cases, would suffer a diminution. And there
is no other combination of circumstances in which the general rate of
profit of a country, in all employments indifferently, can either fall or
rise.
The connection of profit with the three constituents of cost of
labor may probably be better seen by aid of the following
illustration; it being premised that as yet money is not used, and
that the laborers are paid in the articles which their money wages
would have bought had money been used. For simplicity we will
suppose that all articles of the laborer’s consumption are
represented by corn. Imagine a large woolen-mill employing 500
men, and paying them in corn; and suppose that one yard of woolen
cloth exchanges for one bushel of corn in the open market. In the
beginning, with a given condition of efficiency, suppose that each
man produces on an average 1,200 yards of cloth, for which he is
paid 1,000 bushels of corn:
500 men, each producing 1,200 yards, give a total product of
600,000 yards.
500 men, each paid 1,000 bushels, cause an outlay of 500,000
yards.
Profit: 100,000 yards.
(1.) Now suppose a change increasing the efficiency of labor to
such an extent that each laborer produces 1,300 instead of 1,200
yards, then the account will stand, if the other elements remain
unchanged:
500 men, each producing 1,300 yards, give a total product of
650,000 yards.
500 men, each paid 1,000 bushels, cause an outlay of 500,000
yards.
Profit: 150,000 yards.
(2.) If efficiency and the cost of producing food remain the same
as at first, suppose a change to occur which raises the quantity
of corn each laborer receives from 1,000 to 1,100, or, as it is
called, increases his real wages—then the account will be:
500 men, each producing 1,200 yards, give a total product of
600,000 yards.
500 men, each paid 1,100 bushels, cause an outlay of 550,000
yards.
Profit: 50,000 yards.
(3.) If efficiency and real wages remain the same, suppose such an
increase in the cost to the employers of obtaining corn that they
are obliged to give one and one tenth yard of their goods for one
bushel of corn (1,000 bushels of corn costing them 1,100 yards of
cloth), then the statement will read:
500 men, each producing 1,200 yards, give a total product of
600,000 yards.
500 men, each paid 1,000 bushels, cause an outlay of 550,000
yards.
Profit: 50,000 yards.
Chapter VI. Of Rent.
§ 1. Rent the Effect of a Natural Monopoly.
The requisites of production being labor, capital, and natural agents, the
only person, besides the laborer and the capitalist, whose consent is
necessary to production, and who can claim a share of the produce as the
price of that consent, is the person who, by the arrangements of society,
possesses exclusive power over some natural agent. The land is the
principal of the natural agents which are capable of being appropriated,
and the consideration paid for its use is called rent. Landed proprietors
are the only class, of any numbers or importance, who have a claim to a
share in the distribution of the produce, through their ownership of
something which neither they nor any one else have produced. If there be
any other cases of a similar nature, they will be easily understood, when
the nature and laws of rent are comprehended.
It is at once evident that rent is the effect of a monopoly. The reason
why land-owners are able to require rent for their land is, that it is a
commodity which many want, and which no one can obtain but from them. If
all the land of the country belonged to one person, he could fix the rent
at his pleasure. This case, however, is nowhere known to exist; and the
only remaining supposition is that of free competition; the land-owners
being supposed to be, as in fact they are, too numerous to combine.
The ratio of the land to the cultivators shows the limited
quantity of land. It is very desirable to keep the connection of
one part of the subject with another wherever possible.
“Agricultural rent, as it actually exists,” says Mr. Cairnes,(180)
truly, “is not a consequence of the _monopoly_ of the soil, but of
its diminishing productiveness.” The doctrine of rent depends upon
the law of diminishing returns; and it is only by the pressure of
population upon land that the lessened productiveness of land,
whether because of poorer qualities or poorer situations, is made
apparent. Or, to take things in their natural sequence, an
increase of population necessitates more food; and this implies a
resort to more expensive methods, or poorer soils, so soon as land
is pushed to the extent that it will not yield an increased crop
for the same application of labor and capital as formerly.
Different qualities of land, then, being in cultivation at the
same time, the better qualities must, of course, yield a greater
return than the poorer, and the conditions then exist under which
land pays rent. Those, therefore, who admit the law of diminishing
returns are inevitably led to the doctrine of rent.
§ 2. No Land can pay Rent except Land of such Quality or Situation as
exists in less Quantity than the Demand.
A thing which is limited in quantity, even though its possessors do not
act in concert, is still a monopolized article. But even when monopolized,
a thing which is the gift of nature, and requires no labor or outlay as
the condition of its existence, will, if there be competition among the
holders of it, command a price only if it exist in less quantity than the
demand.
If the whole land of a country were required for cultivation, all of it
might yield a rent. But in no country of any extent do the wants of the
population require that all the land, which is capable of cultivation,
should be cultivated. The food and other agricultural produce which the
people need, and which they are willing and able to pay for at a price
which remunerates the grower, may always be obtained without cultivating
all the land; sometimes without cultivating more than a small part of it;
the more fertile lands, or those in the more convenient situations, being
of course preferred. There is always, therefore, some land which can not,
in existing circumstances, pay any rent; and no land ever pays rent
unless, in point of fertility or situation, it belongs to those superior
kinds which exist in less quantity than the demand—which can not be made
to yield all the produce required for the community, unless on terms still
less advantageous than the resort to less favored soils. (1.) The worst
land which can be cultivated as a means of subsistence is that which will
just replace the seed and the food of the laborers employed on it,
together with what Dr. Chalmers calls their secondaries; that is, the
laborers required for supplying them with tools, and with the remaining
necessaries of life. Whether any given land is capable of doing more than
this is not a question of political economy, but of physical fact. The
supposition leaves nothing for profits, nor anything for the laborers
except necessaries: the land, therefore, can only be cultivated by the
laborers themselves, or else at a pecuniary loss; and, _a fortiori_, can
not in any contingency afford a rent. (2.) The worst land which can be
cultivated as an investment for capital is that which, after replacing the
seed, not only feeds the agricultural laborers and their secondaries, but
affords them the current rate of wages, which may extend to much more than
mere necessaries, and leaves, for those who have advanced the wages of
these two classes of laborers, a surplus equal to the profit they could
have expected from any other employment of their capital. (3.) Whether any
given land can do more than this is not merely a physical question, but
depends partly on the market value of agricultural produce. What the land
can do for the laborers and for the capitalist, beyond feeding all whom it
directly or indirectly employs, of course depends upon what the remainder of the produce can be sold for. The higher the market value of produce, the lower are the soils to which cultivation can descend, consistently with affording to the capital employed the ordinary rate of profit. |
|
댓글 없음:
댓글 쓰기