Wages

§ 4. The great vitality of the common belief that wages could be raised generally by merely making labour scarce.

To begin with, it is difficult to realize how different, and often even opposed, are the immediate and permanent effects of a change. People see that when there are competent men waiting for work outside the offices of a tramway company, those already at work think more of keeping their posts than of striving for a rise of wages; and that if these men were away, the employers could not resist a demand for higher wages. They dwell on the fact that, if tramway men work short hours, and there is no diminution in the number of miles run by the cars on existing lines, then more men must be employed; probably at higher wages per hour, and possibly at higher wages per day. They see that when an enterprise is on foot, as for instance the building of a house, or a ship, it must be finished at any cost, since there is nothing to be gained by stopping half way: and the larger the slices of work on it done by any one man, the fewer slices of work on it will be left for other people.

But there are other consequences more important, though less obtrusive, which need to be considered. For instance, if tram workers and building operatives stint their labour artificially, tramway extensions will be checked; fewer men will be employed in making and working tramways; many work-people and others will walk into town, who might have ridden; many will live closely packed in the cities who might have had gardens and fresher air in the suburbs; the working classes, among others, will be unable to pay for as good housing accommodation as they would otherwise have had; and there will be less building to be done.

In short the argument that wages can be raised permanently by stinting labour rests on the assumption that there is a permanent fixed work-fund, i.e. a certain amount of work which has to be done, whatever the price of labour. And for this assumption there is no foundation. On the contrary, the demand for work comes from the national dividend; that is, it comes from work. The less work there is of one kind, the less demand there is for work of other kinds; and if labour were scarce, fewer enterprises would be undertaken. Again, constancy of employment is dependent on the organization of industry and trade, and on the success with which those who arrange supply are able to forecast coming movements of demand and of price, and to adjust their actions accordingly.

But this would not be better done with a short day’s work than with a long one; and indeed the adoption of a short day, not accompanied by double shifts, would discourage the use of that expensive plant, the presence of which makes employers very unwilling to close their works. Almost every artificial stinting of work involves friction, and therefore tends, not to lessen, but to increase the inconstancy of employment.

It is true that, if plasterers or shoemakers could exclude external competition, they would have a fair chance of raising their wages by a mere diminution of the amount of work done by each, whether by shortening the hours of labour or in any other way; but these gains can be got only at the cost of a greater aggregate loss to other sharers in the national dividend; which is the source of wages and profits in all industries in the country. This conclusion is emphasized by the fact, to which experience testifies and which analysis explains, that the strongest instances of a rise in wages attained by trade union strategy are found in branches of industry, the demand for whose labour is not direct, but “derived” from the demand for a product in making which many branches of industry co-operate: for any one branch, which is strong in strategy, can absorb to itself some share of the price of the ultimate product, which might have gone to other branches158 .

§ 5. We now come to a second cause of the vitality of the belief that wages can be raised generally and permanently by checking the supply of labour. This cause is an underestimate of the effects of such a change on the supply of capital. It is a fact—and, so far as it goes, an important fact—that some share of the loss resulting from the lessening of output by (say) plasterers or shoemakers, will fall on those who do not belong to the working classes. Part of it will no doubt fall on employers and capitalists, whose personal and material capital is sunk in building or shoemaking; and part on well-to-do users, or consumers, of houses or shoes. And further if there were a general attempt by all of the working classes to obtain high wages by restricting the effective supply of their labour, a considerable part of the burden resulting from the shrinkage of the national dividend would doubtless be thrown on other classes of the nation, and especially on the capitalists, for a time: but only for a time. For a considerable diminution in the net return to investments of capital would speedily drive new supplies of it abroad. In regard to this danger it is indeed sometimes urged that the railways, and factories of the country cannot be exported. But nearly all of the materials, and a large part of the appliances of production are consumed, or worn out, or become obsolete every year; and they need to be replaced. And a reduction in the scale of this replacement, combined with the exportation of some of the capital thus set free, might probably so lessen the effective demand for labour in the country in a few years, that in the reaction wages generally would be reduced much below their present level159 .

But though the emigration of capital would not in any case be attended by much difficulty, owners of capital have good business reasons as well as a sentimental preference in favour of investing it at home. And therefore a rise in the standard of life, which makes a country more attractive to live in, is sure to counteract to some extent the tendency of a fall in the net return on investments to cause capital to be exported. On the other hand an attempt to raise wages by anti-social contrivances for stinting output, is certain to drive abroad well-to-do people in general; and especially just that class of capitalists whose enterprise and delight in conquering difficulties is of the most importance to the working classes. For their ceaseless initiative makes for national leadership and enables man’s work to raise real wages; while promoting an increased supply of those appliances which make for efficiency, and thus sustain the growth of the national dividend.

It is true also that a general rise in wages however attained, if spread over the whole world, could not cause capital to migrate from any one part of it to another. And it is to be hoped that in time the wages of manual labour will rise all over the world, mainly through increased production; but partly also in consequence of a general fall in the rate of interest, and of a relative—if not absolute—diminution of incomes larger than are necessary to supply the means of efficient work and culture even in the highest and broadest senses of these terms. But methods of raising wages, which make for a higher standard of comfort by means that lessen rather than promote efficiency, are so anti-social and shortsighted as to invoke a speedy retribution; and there is perhaps little chance of their being adopted over any great part of the world. If several countries adopted such methods, the others going straight for raising the standards of life and of efficiency, would speedily attract to themselves much of the capital and of the best vital force away from those who followed an ignoble restrictive policy.

§ 6. In this discussion it has been necessary to adhere to general reasoning: for a direct appeal to experience is difficult; and, if made lightly, it can but mislead. Whether we watch the statistics of wages and production immediately after the change or for a long period following it, the prominent facts are likely to be due chiefly to causes other than that which we are wishing to study.

Thus if a reduction of hours resulted from a successful strike, the chances are that the occasion chosen for the strike was one when the strategical position of the workmen was good, and when the general conditions of trade would have enabled them to obtain a rise of wages, if there had been no change in the hours of labour: and therefore the immediate effects of the change on wages are likely to appear more favourable than they really were. And again many employers, having entered into contracts which they are bound to fulfil, may for the time offer higher wages for a short day than before for a long day. But this is a result of the suddenness of the change, and is a mere flash in the pan; and, as has just been observed, the immediate results of such a change are likely to be in the opposite direction to those which follow later, and are more enduring.

On the other hand, if men have been overworked, the shortening of the hours of labour will not at once make them strong: the physical and moral improvement of the condition of the workers, with its consequent increase of efficiency and therefore of wages, cannot show itself at once.

Further, the statistics of production and wages several years after the reduction of hours are likely to reflect changes in the prosperity of the country, and especially of the trade in question; of the methods of production; and of the purchasing power of money: and it may be as difficult to isolate the effects of reduction of the hours of labour as it is to isolate the effects on the waves of a noisy sea caused by throwing a stone among them160 .

We must then be careful not to confuse the two questions whether a cause tends to produce a certain effect and whether that cause is sure to be followed by that effect. Opening the sluice of a reservoir tends to lower the level of the water in it; but if meanwhile larger supplies of water are flowing in at the other end, the opening of the sluice may be followed by a rising of the level of the water in the cistern. And so although a shortening of the hours of labour would tend to diminish output in those trades which are not overworked, and in which there is no room for double shifts; yet it might very likely be accompanied by an increase of production arising from the general progress of wealth and knowledge. But in that case the rise of wages would have been obtained in spite of, and not in consequence of, a shortening of hours.

§ 7. In modern England nearly all movements of the kind which we have just been discussing are directed by trade unions. A full appreciation of their aims and results lies beyond the scope of the present volume: for it must be based on a study of combinations in general, of industrial fluctuations, and of foreign trade. But a few words may be said here on that part of their policy which is most closely connected with standards of life, and work, and wages161 .

The increasing changefulness and mobility of industry obscure the influences both for good and for evil which the earnings and industrial policy of any group of workers in one generation exert on the efficiency and earning power of the same group in a later generation162 . The family income, from which the expenses of rearing and training its younger members must be defrayed, seldom comes now from a single trade. The sons are less frequently found in their father’s occupation: the stronger and more strenuous of those to whose nurture the earnings of any occupation have contributed are likely to seek higher fortunes elsewhere; while the weak and the dissolute are likely to descend below it. It is therefore becoming increasingly difficult to bring the test of experience to bear on the question, whether the efforts, which any particular trade union has made to raise the wages of its members, have borne rich fruit in raising the standard of life and work of the generation reared by aid of those high wages. But some broad facts stand out clearly.

The original aims of British trade unions were almost as closely connected with the standard of life as with the rate of wages. They derived their first great impulse from the fact that the law, partly directly and partly indirectly, sustained combinations among employers to regulate wages in their own supposed interest; and prohibited under severe penalties similar combinations on the part of employees. This law depressed wages a little; but it depressed much more the strength and richness of character of the workman. His horizon was generally so limited that he could not be fully drawn out of himself by a keen and intelligent interest in national affairs: so he thought and cared little about any mundane matters, except the immediate concerns of himself, his family and his neighbours. Freedom to combine with others in his own occupation would have widened his horizon, and given him larger matters to think about: it would have raised his standard of social duty, even though this duty might have been tainted with a good deal of class selfishness. Thus the early struggle for the principle that workmen should be free to do in combination the counterpart of anything which employers were free to do in combination, was in effect an effort to obtain conditions of life consistent with true self-respect and broad social interests, as much as a struggle for higher wages.

On this side of the field victory has been complete. Trade unionism has enabled skilled artisans, and even many classes of unskilled workers, to enter into negotiations with their employers with the same gravity, self-restraint, dignity and forethought as are observed in the diplomacy of great nations. It has led them generally to recognize that a simply aggressive policy is a foolish policy, and that the chief use of military resources is to preserve an advantageous peace.

In many British industries Boards for the adjustment of wages work steadily, and smoothly, because there is a strong desire to avoid waste of energy on trifles. If an employee disputes the justice of any judgment passed by his employer or foreman on his work or his remuneration for it, the employer in the first instance calls in the trade union secretary as arbiter: his verdict is generally accepted by the employer; and of course it must be accepted by the operative. If beneath this particular personal dispute there is a question of principle on which no clear agreement has been reached by the Board, the matter may be referred for discussion to the secretaries of the employers' association and the trade union in conference: if they cannot agree, it may be passed on to the Board. At last, if the stake at issue is large enough, and neither side will give way, the issue is relegated by a strike or a lock-out to the decision of force. But even then the good services of several generations of organized trade unions are seen in the conduct of the contest; which generally differs in method from the contest waged between employers and employed a century ago, very much as honourable war between modern civilized peoples does from fierce guerilla war among wild peoples. Self-control and moderation of manner overlying resolute purpose distinguish the British delegates above others at an international labour conference.

But the very greatness of the services which trade unions have rendered imposes on them corresponding obligations. Noblesse oblige: and they are bound to look with suspicion on those who exaggerate their power of raising wages by particular devices, especially when such devices contain an anti-social element. There are indeed but few movements which are without reproach: some destructive influence lurks in nearly every great and good effort. But the evil should be stripped of all gloss, and carefully examined, so that it may be kept down.