Front Page Titles (by Subject) Section I.—: On the Definition of the Wages of Labour, and their Dependance upon Supply and Demand. - Principles of Political Economy
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Section I.—: On the Definition of the Wages of Labour, and their Dependance upon Supply and Demand. - Thomas Robert Malthus, Principles of Political Economy 
Principles of Political Economy (London: W. Pickering, 1836).
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On the Definition of the Wages of Labour, and their Dependance upon Supply and Demand.
The wages of labour are the remuneration to the labourer for his exertions.
They may be divided into nominal and real.
The nominal wages of labour consist of money; for it is in money that the labourer is generally paid in civilized countries.
The real wages of labour consist of the necessaries, conveniences, and luxuries of life, which the money wages of the labourer enable him to purchase.
It has been shown in the fifth section of the second chapter of this work, that the average wages of a given number of common agricultural labourers, or what has been called standard wages, are always of the same value, that is, they are always obtained in each country, and at all times, at the same elementary cost. But it is well known that the quantity of money, of corn, or of the necessaries and conveniences of life, which is awarded to the labourer, is subject to great variations, all dependant upon the demand and supply of these objects compared with the demand and supply of labour.
If the society can purchase a given quantity of money by commodities which require a smaller sacrifice of labour, profits, &c. to obtain them than is necessary to purchase or obtain the labour for which that money has before been usually exchanged, the money price of labour will rise. If either from the scarcity of money, or the plenty of labour,* a greater sacrifice must be made to obtain the given quantity of money, the money price of labour will fall. And whatever may be the state of the effectual demand for labour, it is obvious that the money price of labour must, on an average, be so proportioned to the price of the funds for its maintenance, as to effectuate the desired supply. It is as the condition of the supply, that the prices of the necessaries of life have so important an influence on the price of labour. A certain portion of these necessaries is required to enable the labourer to maintain a stationary population, a greater portion to maintain an increasing one; and consequently, whatever may be the prices of the necessaries of life, the money wages of the labourer must be such as to enable him to purchase these portions, or the supply cannot take place in the quantity required.
The corn wages of labour are still more strikingly determined by the state of the demand and supply than money wages, on account of the variations in the quantity of corn being much greater in short periods than in the quantity of money. The great variations in the prices of corn in different seasons, while the money price of labour remains the same, are universally observed and acknowledged; but the variations of a more permanent kind in corn wages are sometimes not much less considerable. When the last land taken into cultivation in any country is fertile, and yet worked with some skill, there will be a large produce to divide between profits and wages, and it will depend upon the abundance of this produce and the manner in which it is divided, but chiefly on the former, whether the average corn wages are high or low. In the United States of America, for instance, the plenty and fertility of the land are such as to enable the farmers to pay to their labourers as much as 18 or 20 quarters of wheat in the year, above double the quantity usually paid in the greatest part of Europe, and yet to retain good profits. But it is known that the labouring classes of a country can more than keep up their numbers when paid only 8 or 9 quarters in the year. The question therefore whether the labourer shall be paid, on an average, 8 or 18 quarters, or any intermediate quantity, must depend upon the demand and supply of corn compared with the demand and supply of labour; and it is obvious that the labourer could not, for many years together, receive the larger quantity in any country where corn was not essentially of low value, that is obtained with a small quantity of labour.
If instead of corn wages, or wages estimated in the prime necessary of life, we consider wages as consisting of the general necessaries and conveniences in which the money earnings of the labouring classes are usually spent, then if we suppose the agricultural labourer to be paid in the first instance in corn, his wages in necessaries and conveniences will depend partly upon the quantity of corn which he earns, and partly upon the value of that corn in exchange for the other necessaries of which he stands in need, such as clothing, housing, firing, soap, candles, leather, &c.; the one depending on the varying supply of corn to labour, and the other on the varying supply of corn to the other commodities wanted. Usually wages estimated in general necessaries and conveniences are more steady than corn wages; because most of the articles besides corn, of which they are composed, are less affected by the seasons, and consequently more regular in their supply than corn; but if these articles are compared directly with labour instead of corn, the quantity of them which shall be given to the labourer will still depend not only upon the varying powers of labour in their production, but upon that ordinary state of the demand for them compared with the supply which, in any given condition of the productive powers of labour, determines the proportion of such necessaries which is awarded to the labourer.
Adam Smith is practically quite correct, when he says, that, “the money price of labour is necessarily regulated by two circumstances; the demand for labour; and the price of the necessaries and conveniences of life.”* But it is of great importance to a thorough understanding of the subject, to keep constantly under our view the causes which determine the relative prices of labour and commodities, and to see clearly and distinctly the constant and predominant action of the principle of supply and demand on both.
In all those cases which Adam Smith has so happily explained and illustrated, where an apparent irregularity takes place in the wages of different kinds of labour, it will be found, universally, that the causes to which he justly attributes them, are causes of a nature to influence the supply of labour in the particular departments in question, and to determine such wages by the demand compared with the supply of the kind of labour required. The five principal circumstances, which, according to him, make up for a small pecuniary gain in some employments, and counterbalance a great one in others, namely; 1. The agreeableness or disagreeableness of the employments themselves. 2. The easiness and cheapness, or the difficulty and expense of learning them. 3. The constancy or inconstancy of employment in them. 4. The small or great trust which must be reposed in those who exercise them; and 5. The probability or improbability of success in them,* are all obviously of this description; and in many of the cases stated, it would not be easy to account for their effects on the price of the different kinds of labour, upon any other principle. One hardly sees, for instance, why the cost of producing a poacher should be less than that of a common labourer, or the cost of producing a coal-heaver much greater; yet they are paid very differently. It is not easier to resolve the effects on wages of the small or great trust which must be reposed in a workman, or, the probability or improbability of success in his trade, into the quantity of labour, profits, &c. which has been employed to bring him into the market. Adam Smith satisfactorily shews, that the whole body of lawyers is not remunerated sufficiently to pay the expenses which the education of the whole body has cost;† and it is obvious that particular skill, both in trades and professions, is paid high, with but little reference to the labour employed in acquiring it, which, owing to superior talent, is often less than that which is frequently applied to the acquisition of inferior proficiency. But all these cases are accounted for in the easiest and most natural manner, upon the principle of supply and demand. Superior artists are paid high on account of the scanty supply of such skill, whether occasioned by unusual labour or uncommon genius, or both. Lawyers, as a body, are not well remunerated, because the prevalence of other motives, besides mere gain, crowds the profession with candidates, and the supply is not regulated by the cost of the education; and in all those instances, where disadvantages or difficulties of any kind accompany particular employments, it is obvious that they must be paid comparatively high, because if the additional remuneration were not sufficient to balance such disadvantages, the supply of labour in these departments would be deficient, as, cæteris paribus, every person would choose to engage in the most agreeable, the least difficult, and the least uncertain occupations. The deficiency so occasioned, whenever it occurs, will naturally raise the price of labour; and the advance of price, after some little oscillation, will rest at the point where it is just sufficient to occasion a supply suited to the effectual demand.
Adam Smith has in general referred to the principle of supply and demand in cases of this kind, but he has occasionally forgotten it:—“If one species of labour,” he says, “requires an uncommon degree of dexterity and ingenuity, the esteem which men have for such talents will give a value to their produce, superior to what would be due to the time employed about it.”* And in another place, speaking of China, he remarks, “That if in such a country, (that is, a country with stationary resources,) wages had ever been more than sufficient to maintain the labourer, and enable him to bring up a family; the competition of the labourers and the interest of the masters, would soon reduce them to the lowest rate which is consistent with common humanity.”† The reader will be aware, from what has been already said, that in the first case here noticed, it is not simply the esteem for the dexterity and ingenuity referred to, or a disinterested wish to reward such skill, which raises the price of the commodity, but their scarcity, and the consequent scarcity of the articles produced by them, compared with the demand. And in the latter case, it is not common humanity which interferes to prevent the price of labour from falling still lower. If humanity could have successfully interfered, it ought to have interfered long before, and prevented any premature mortality from being occasioned by bad or insufficient food. But unfortunately, common humanity cannot alter the funds for the maintenance of labour. While these are stationary, and the habits of the lower classes prompt them to supply a stationary population cheaply, the wages of labour will be scanty; but still they cannot fall below what is necessary, under the actual habits of the people, to keep up a stationary population; because, by the supposition, the funds for the maintenance of labour are stationary, not increasing or declining; and consequently the principle of demand and supply would always interfere to prevent such wages as would either occasion an increase or diminution of people.
[* ] It must always be recollected, that a plenty of labour, if that labour be employed, always tends to increase the competition for money, and raise its value.
[* ] Wealth of Nations, Book i. ch. viii. p. 130, 6th edit.
[* ] Wealth of Nations, B. i. ch. x. part i. p. 152, 6th edit.
[† ] Id. p. 161.
[* ] Wealth of Nations, B. i. ch. vi. p. 71, 6th edit.
[† ] Id. ch. vii. p. 108.