Distribution of Products and the Share of Labour in the Proceeds of Production
Labour, like capital, has a necessary rate of remuneration towards which it gravitates under the impulse of competition—the rate-current for service. The first element in this rate is the sum of the cost of producing this agent of production—costs of upbringing, education, &c. These costs must be made good if the labour of successive generations is to be continuously available for the service of production. The cost of maintaining the worker has next to be added, and the rates of both costs vary with the nature of the work to be performed. The second element is the rate of remuneration required to induce the possessor of productive forces to devote those services to the cause of production. But if this inducement is indispensable in the case of workers possessing enough resources to be able to exist without labour, it is not so for the majority of mankind which depends upon the product of labour for the bare necessaries of existence. Only those individuals who possess an independent subsistence, or such resources as allow of their awaiting, or choosing, the opportunity or manner of their labour, can command a premium over and above the necessary wage of production.
We now face a problem whose importance has never been sufficiently insisted upon. The same agencies which reduce the necessary payment for capital, increase the necessary payment for labour. This effect of the progressive transformation of industry can be observed in the two grand natural categories, dividing labour as applied to production. These are the labour of those who direct the hierarchy of officials and the many varieties of salaried employés, and the actual labour of the workman. As every extension of markets and improvement in machinery increases the scale of industrial enterprises, the functions of the worker—the man who directs, no less than the actual labourer—demand a greater amount of intellectual and moral ability, and a less equipment of physical faculties or powers.
The conduct of a large undertaking requires more intelligence and character than a small one; there is greater responsibility on every member of the directing hierarchy, every error and every misconduct entails more considerable penalties or losses. This law applies equally to the mere workman. The consequences of a mistake on the part of an engine-driver or a points-man may be far more serious to life and property than a similar error by the driver of a coach. The labourer in charge of several mechanical processes in a textile factory uses less physical force than an old-time hand-spinner or weaver, but his mind is subject to a far greater strain. He is continually concentrating his attention upon the action of his machines, and the more rapid their motion the greater the call on his intelligence. Where the workman is less capable of proper attention, the speed of his machine must be reduced, and the cost of production correspondingly advanced. Finally, every lapse on the part of an overseer of machinery entails a loss proportionate to the scale of the operation or the power of the machinery with which he is occupied.
Every improvement in the quality of labour entails increased costs of production, and the common argument that a higher standard of life has caused the higher wages which prevail to-day is therefore stating an effect as the cause. The rate of remuneration rises in countries where improved machinery of production requires a superior class of labour to that which sufficed under the old order.Hence a gradual rise to the necessary rate of remuneration, and consequently a higher standard of life among the labouring classes. The standard of life will continue to rise and will reach its highest point when the machinery used for purposes of production achieves the highest attainable degree of efficiency and economy. Then, also, the gulf which now separates the worker who directs from the worker who merely toils will be lessened and the differences between the two classes of labour will be reduced, even in some degree abolished. For this difference has existed on account of the disparity between the powers of brain required by the director and the purely physical powers of the labourer.
The cost of production, which includes the necessary interest or profit, is merely a theoretical point towards which competition impels the actual and current price of labour, no less than that of all other kinds of merchandise. But the case of labour presents a peculiar obstacle to this action of the competitive principle, one that affects no other kind of merchandise, or only in a very minor degree. This is the inequality between the position and resources of the employer and his man, the seller and purchaser of labour. At the time when the worker became owner of his own labour there were few cases in which his command of time and space were not far inferior to that of which the employer disposed. The employer could afford to wait for his labour, but the labourer could not wait for employment. He was also, for lack of information and resources, to mention no more of the obstacles which impeded his movements, compelled to seek his wages in a more restricted market than was commanded by the employer's demand. Moreover, laws forbidding remedial association on the part of the workers augmented and affirmed this inferior position. Thus enabled to increase the hours of work and reduce wages at will, the employer too often paid far less than the necessary rate, and a continuance of the system must have reduced the productive faculties of the worker until their final extinction involved both classes in common ruin. But developments supervened until this disparity in the command of time and space as between the two classes tends to disappear and the current and necessary price of labour to coincide.
Labour has gained this better position by association and by establishing a common fund which enables the individual to wait, to gain time—a device of obvious value, even if it has led to abuses. The offer of labour, on account of the inferior command of time which it possessed, has been less extended than the demand for it. Restated in terms, the supply has exceeded demand by the sum of this variation. The formation of campaign-funds reduces this variation, and, if sufficiently ample, these funds may even remove it altogether. The labourer's command of time and space remains inferior, but since this no longer enables the employer to tamper with the proper rates of remuneration wages depend on the actual relation of supply and demand, of the number of workers seeking employment and the number of men that the employers seek to hire. Over-supply inevitably reduces wages and a deficient supply as inevitably raises them; neither process will take place for any other reason than a real rearrangement of the relative proportions of these two factors.
Competition provides the remedy on either side. A glut or failure in supply is remedied in the labour market by the same means which regulate all other markets. Rising wages immediately induce an influx from other quarters, and a fall diverts the surplus into new channels. Both effects proceed by geometrical progression, the labour market differing from others, in this respect, only in the greater need for absolute mobility within it. Under present conditions the capital and produce markets are hampered by such restriction, but the freedom of labour is even less assured since, besides natural obstacles of distance and racial prejudice, it encounters the artificial obstacles of protection and prohibition, inspired by the spirit of monopoly, and finally our ignorance of the real state of the markets. The ordinary action of competition is, however, already working towards the removal of all these disabilities, co-ordinating the command of time and space possessed by either side, and so assuring the final possession by the inferior of his just share in the proceeds of production.
From the point at which we have now arrived in our consideration of the stimulating and regulative action of competition we may begin to form an idea of the future organisation of society under a State of Peace and Liberty. Peace will be be assured by the collective guarantee of civilisation; vast systems of intercommunication, already in process of construction, will girdle the earth with a coat as of chain-mail; restrictions upon the liberty of labour, on association and exchange, will be removed. Production will then be free to organise, subject only to a liability for the charges necessary to assure individual liberty and property, and nothing will stand in the way of the creation and development of organisations ensuring the proper distribution of products and a right partition between the various agents of production. In place of the present limited markets for products, capital and labour, three general markets will be formed:—
| A Universal Market for Products. |
| A Universal Market for Capital. |
| A Universal Market for Labour. |
In these three free markets, subject to no regulative agency but competition, production and consumption, supply and demand, will find their proper equilibrium at the level of that price which constitutes the necessary rate.
We have seen how improved machinery and industrial processes diminish the necessary rate on products and capital, but increase it on labour. Progress, on the other hand, reduces the proportion of labour to capital engaged in any industry, so that, whatever the rise in the necessary rate on labour, there is an economy in the costs of production. One question, however, still demands solution. Granting that it is possible to exactly adjust the supply of capital and production to the demand of consumption, can labour be similarly controlled? This question restated may read thus—"Is it possible to adjust the production of labourers to the demand of the employer?"