The Online Library of Liberty

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• Preface.
• Lecture I.
• Lecture II.
• Lecture III.
• Lecture IV.
• Lecture V.
• Lecture VI.
• Lecture VII.
• Lecture VIII.
• Lecture IX.
• Lecture X.
• Lecture XI.
• Appendix.
• Note On Page 32.
• Page 37.
• Page 39.
• Page 57.
• Page 65.
• Page 133.
• Page 145.
• Page 149.
• Page 164.
• Page 175.
• Page 183.
• Page 203.
• Page 223.

Page 203.

The expense of supporting the labourer in that style which he has been accustomed to consider indispensable to his decent subsistence, has no effect in regulating the rate of his wages. The mode in which he usually lives is dependent upon the amount of the wages he usually receives, and not on the latter upon the former. The relation of the labourer to his income and expenses is the same as that of the landlord and capitalist to theirs. In all cases alike you may reasonably presume that the income of any class of men is large, if you observe them habitually incurring great expenses; but in all cases alike I conceive it to be plain, that the income of no class of men can be kept up or prevented from sinking by continuing the expenses in which they were accustomed to indulge in better times. This appears sufficiently evident without proof, or is best proved by the investigation which I have attempted to give of the source from which the income of each class is derived, and the circumstances by which the amount of it is regulated.

But it may not be useless to remark upon a few facts which appear to countenance the opinion that the wages of the labourer depend upon the price of the articles on which he expends them. The first is, that wages are generally high in great towns, where provisions are usually dear, and the expenses of living great. This, however, depends upon the principles which regulate the relative, not the absolute, wages of labourers. The expense of living in a large town is a disadvantage which must be compensated by increased wages, otherwise labourers would remove from the town to the country, until, from the scarcity of labourers, wages in town should rise to such an amount as to make up for the expense of living in town. But does the same argument apply to the case of a difference of price of provisions in different times. The labourers have not the power of adjourning their existence from one period of time to another, in the same manner as they can remove from town to country, if such removal will increase the amount of the necessaries of life which their wages can command. The cases are not analogous, therefore, since the cause which operates in one, does not exist in the other.

I may also remark, that the high wages of labourers in large towns arises, in part, from their superiority in skill, as the best workmen naturally flock to the place where employment is most easily procured, and where competition is greatest. Another cause why the rate of wages sometimes appears to be affected by the price of provisions is, that the price of provisions is in reality affected by the rate of wages and the wealth of the labourer. If the quantity of food bears the same proportion to the population in two different periods or countries, the price of provisions will be greatest in that period or country where the labourer can afford to pay the most for his food.

As no inference can be drawn from those facts, the doctrine must depend upon argument. The following is the argument usually used to prove that the wages of the labourer depend upon the expenses incident to his condition. If the wages of the labourer are more or less than a certain amount, proportioned to the expense of supporting a labourer according to the usual style of living among his class, the population will increase or diminish until wages rise or fall to that amount. I shall not now enter upon a full discussion of an argument involving the complicated question of population. The argument is fallacious, even if the facts upon which it is founded were true; but I believe no example was ever found where the population diminished or ceased to increase, while the labourers had the power of supporting their usual average families by giving up a portion of their usual comforts. They never will embrace that alternative which would affect the population. I said that the argument was fallacious, because it only goes to prove that the population would diminish, until at the expiration of a considerable period, wages would rise to their former amount. The intermediate time, being equal to at least one generation, would afford space and opportunities for a change of habits, feelings, and circumstances to arise among the labourers.

The doctrine is carried frequently much farther than any supporter of it attempts to push the proof. Miss Martineau, in her Tale entitled “French Wines and Politics,” lays down the doctrine, that in a season of scarcity the wages of labour will rise so as to preserve their usual proportion to the price of provisions, although no increase will, at the same time, take place in the price of commodities produced by labour. What is the inducement to employ a labourer, if his wages will cost more than the produce of his labour? Is it physically possible, in a time of scarcity, that every person can obtain his usual portion of provisions out of the deficient supply? Does experience shew that in a scarcity the wages of labour sustain any increase?

This opinion, which Miss Martineau is singular in supporting, is anticipated by Mr. Ricardo, and easily refuted.—(Principles of Political-Economy, page 177. See also the quotation in page 247.) Mr. Ricardo’s own opinion is not, however, more correct—“The price of labour will express, clearly, the wants of the society respecting population; it will be just sufficient to support the population, which at that time the state of the funds for the maintenance of labourers requires. If the labourer’s wages were before only adequate to supply the requisite population, they will, after the tax imposed upon wages, be inadequate to that supply, for he will not have the same funds to expend on his family. Labour will therefore rise, because the demand continues, and it is only by raising the price that the supply is not checked.”—(Ricardo, page 251.) I should say that the “wants of the society respecting population” are the number which the society can support in happiness and comfort. This depends, among other things, upon the institutions of the country, and it is possible that a bad law, by diminishing that number, may diminish the wants of the society respecting population. Mr. Ricardo argues thus:—The wages of labour indicate the wants of the society respecting population, because they enable the society to support that population. He assumes then, without reason, that a circumstance tending apparently to diminish those wages, will leave unaffected the wants of the society, which are measured by those wages, and that therefore the wages of labour will remain as before. Mr. Ricardo’s opinion is, that a tax upon wages falls entirely upon profits. I have shewn that a moderate tax upon wages would be sufficient to absorb profits if it fell upon them, and therefore a tax a little greater must partially fall upon wages, even if the capitalist were altogether to surrender his profit. The concluding paragraph which I have quoted from Mr. Ricardo, expresses clearly the great error respecting the nature of the operation of the cost of production, which pervades his entire work—“It is only by raising the price that the supply is not checked.” The true statement would be—It is only by checking or limiting the supply that the price is raised up to the cost of production. In a note upon tithes, I have shewn an instance of the operation of this error of Mr. Ricardo.

The next writer who has pushed to an extreme length the principle against which I am contending in this note, is Mr. Sadlier, one of the first of political economists, if he will permit himself to be ranked among them. He has the following passage: “I understand it to be a universally acknowledged axiom, that the wages of labour have a constant tendency to accommodate themselves to the actual average expenses of those rendering it. If there be the least truth in this, the proposal to the working classes that they should diminish their expenditure in order to save money, would only have the effect, if attended to universally, of decreasing the remuneration of their labour precisely in the same proportion as they had diminished their comforts.” Mr. Sadlier is not so inconsistent as to think that such a reduction would be brought about by an increase of population; but he thinks such economy would produce idleness, as men will only labour up to their necessity. I believe, however, that it is universally found to be true, that the principle of saving, when once it has taken possession of the mind, is a much stronger motive to exertion than the desire to spend.