Although Karl Marx adopted and formulated in his own terms the theory

that value is determined by labour, he did not thence deduce the

conclusion that labour has a right to the whole product.[233] Being a

materialist, he consistently rejected conceptions of abstract justice

or injustice, rights or wrongs. In opposition to the methods of his

predecessors, he endeavoured to discover the historical and positive

forces which determined the actual distribution, and to derive

therefrom the laws that were necessarily preparing the way for a new

social order. While he contended that rent receivers and interest

receivers appropriated the surplus value created by labour, he

refrained from stigmatising this process as morally wrong. It was

merely a necessary element of the capitalist system. To call it unjust

was in Marx' view to use language without meaning. As well might one

speak of the injustice of a hurricane or an avalanche. Not the

preaching of abstract justice, but the inevitable transformation of

the capitalist into the collectivist organisation of industry, would

enable labour to obtain its full product.

Nevertheless, it is probably true that a majority of the followers of

Marx have drawn from his labour theory of value the inference that all

the value of the product belongs by a moral right to the labourer. So

deeply fixed in the human conscience is the conception of justice, and

so general is the conviction of the labourer's right to his product,

that most Socialists have not been able to maintain a position of

consistent economic materialism. Indeed, Marx himself did not always

succeed in evading the influence and the terminology of idealistic

conceptions. He frequently thought and spoke of the Socialist régime

as not only inevitable but as morally right, and of the capitalist

system as morally wrong. Despite his rigid, materialistic theorising,

his writings abound in passionate denunciation of existing industrial

evils, and in many sorts of "unscientific" ethical judgments.[234]

In so far as the right to the whole product of labour has been based

upon the labour theory of value, it may be summarily dismissed from

consideration. The value of products is neither created nor adequately

measured by labour; it is determined by utility and scarcity. Labour

does, indeed, affect value, inasmuch as it increases utility and

diminishes scarcity, but it is not the only factor that influences

these categories. Natural resources, the desires and the purchasing

power of consumers determine value quite as fundamentally as does

labour, and cause it to vary out of proportion to the labour expended

upon a commodity.

To-day there are probably not many adherents of the

right-to-the-whole-product doctrine who attempt to base it upon any

theory of value. The majority appeal to the simple and obvious fact

that the labourers, together with the active directors of industry,

are the only human beings who expend energy in the productive process.

The only labour that the capitalist and the landowner perform in

return for the interest and rent that they respectively receive,

consists in choosing the particular goods in which their money is to

be invested. As capitalist and landowner, they do not participate in

the turning out of products. They are owners but not operators of the

factors of production. In the sense, therefore, of active agents the

labourers and the business men are the only producers. Whether land

and capital should be called _productive_, whether the product should

be regarded as _produced_ by land and capital as well as by labour and

undertaking activity, is mostly a matter of terminology. Inasmuch as

they are instrumental in bringing forth the product, land and capital

may properly be designated as productive, but not in the same sense as

labour and business energy. The former are passive factors and

instrumental causes of the product, while the latter are active

factors and original causes. Moreover, the former are non-rational

entities, while the latter are attributes of human beings.

As we have seen in former chapters, it is impossible to prove that

mere ownership of a productive thing, such as a cow, a piece of land,

or a machine, necessarily creates a right to either the concrete or

the conventional product. The formula, "_res fructificat domino_," is

not a self evident proposition. Nor are there any premises available

from which the formula can be logically and necessarily deduced. On

the other hand, we cannot prove conclusively that ownership of

productive property does _not_ give a right to the product. Whence it

follows that the owners of land and capital have at least a

presumptive claim to take rent and interest from their possessions.

Moreover, those owners of capital who would not have saved money

without the hope of interest have a just claim thereto on account of

their sacrifices in saving.

Would the State be justified in abolishing rent and interest, and thus

enabling labour to obtain the whole product? Conceivably this result

might be brought about under the present system of private ownership,

or through the substitution of collectivism. Were the change made by

the former method land and capital would no longer be sought or have

value on account of their annual revenues, but only as receptacles of

saving. They would be desired solely as means of accumulating stores

of goods which might be exchanged for articles of consumption some

time in the future. While we cannot estimate even approximately the

decline that would thus occur in the value of land and capital, we may

safely assert that it would be considerable. Unless the proprietors

received adequate compensation for this loss, they would be compelled

to suffer obvious and grave injustice. Any attempt, however, to carry

out such a scheme, either with or without compensation, would

inevitably fail. Rent might be terminated through the Single Tax, but

interest could not be abolished by any mere legal prohibition. Nor

does Socialism afford a way out; for, as we have seen in a former

chapter, it is an impracticable system. Consequently the theory of the

right to the whole product of labour is confronted by the final

objection that its realisation would involve greater evils and

injustices than those which it seeks to abolish.

Finally, the theory is radically incomplete. It professes to describe

the requirements of justice as between the landowners and capitalists

on the one side, and the wage earners on the other; but it provides no

rule for determining distributive justice as between different classes

of labour. In none of its forms does it provide any comprehensive rule

or principle to ascertain the difference between the products of

different labourers, and to decide how the product belonging to any

group of men as a whole should be divided among the individual

members. Does the locomotive engineer produce more than the section

hand, the bookkeeper more than the salesman, the ditch digger more

than the teamster? These and countless similar questions are, from the

nature of the productive process, unanswerable. Even if it were

ethically acceptable, the doctrine of the right to the whole product

is hopelessly inadequate.

As intimated above, the notion that if the labourer receives

compensation according to his product he receives just compensation,

is one of the most prevalent and fundamental concepts in the

controversy about wage justice. Hence we find it in certain theories

which reject the doctrine of the right to the whole product. According

to these theories, not only the labourer but all the agents of

production should be rewarded in proportion to their productive

contributions. Instead of the whole product, the worker ought to

receive that portion of it which corresponds to his specific

productivity, that is, that portion of the product which represents

his productive influence as compared with the productive efficacy of

land, capital, and business energy.

_Clark's Theory of Specific Productivity_

One of the theories referred to in the last paragraph is that which

has been elaborated in great detail and with great ingenuity by

Professor John Bates Clark. As stated by himself in the opening

sentence of the preface to his "Distribution of Wealth," its main

tenet is, "that the distribution of the income of society is

controlled by a natural law, and that this law, if it worked without

friction, would give to every agent of production the amount of wealth

which that agent creates." In a régime of perfect competition,

therefore, the labourer would get, not the whole product of industry,

but the whole product due to his own exertions.

It is impossible, and indeed unnecessary, to enter upon an extended

examination of this contention. It will be sufficient to state in a

summary way the most obvious and cogent objections. Without making any

examination of Professor Clark's theory, we should expect to find it

unconvincing. For the productive process is by analogy an organic

process, in which every factor requires the co-operation of every

other factor in order to turn out even the smallest portion of the

product. Each factor is in its own order the cause of the whole

product. Consequently no physical portion of the product can be set

aside and designated as wholly due to any one factor. Can we not,

however, distinguish the _proportionate productive influence_ exerted

by each factor, and the proportion of the product which represents

such productive influence? This is the question to which Professor

Clark addresses himself with much ingenuity, subtlety, and labour, and

to which he returns an affirmative answer.[235]

He contends that the amount of product added by the presence of the

least productive labourer in a group or establishment describes the

productivity of that and every other labourer for whom the man in

question can be substituted. Nevertheless this marginal labourer had

the use of _some_ capital, no matter how little or how poor;

consequently the increment of product which follows his activity is

partly due to capital. It represents something other than his own

productive power. If his wage equals the value of this increment of

product, he is receiving something more than his specific product.

In the second place, Professor Clark maintains that the difference

between what a labourer produces when he uses the whole of a certain

supply of capital and what he produces when he has shared that capital

with another labourer, represents the specific productivity of the

relinquished capital. Let us assume that in a given case the

difference is ten units of product. When the first man had the whole

capital to himself, the product was one hundred units; when he shares

the use of it with another, the total product is one hundred and

eighty units. As the two men are assumed to be equally productive,

each has to his credit ninety units of product. Working with half the

capital, the first man finds that the resulting product is ten units

less than when he was using the whole capital. Hence these ten units

represent the portion that the relinquished capital contributed to the

product; and if the productivity of half the capital is ten units,

that of the whole capital must be twenty units. Nevertheless, the ten

units by which the product was enlarged when the man had the whole

capital, did not come into being without his co-operation; hence they

cannot be entirely attributed to the one-half share of the capital. In

other words, the productivity of the relinquished capital seems to be

less than ten units. It also seems to be more than ten units; for we

may assume that if each man were to use one-half the capital

independently of the other, the resulting total product would be less

than one hundred and eighty units, or less than ninety units for each.

Consequently the difference between the product resulting from the

first man's use of the whole capital and that resulting from his use

of half the capital would be more than ten units; and this difference

is specifically attributable to half the capital. Who can say which of

these calculations is correct, or whether either of them is correct?

The method of ascertaining specific productivity which has been

described in the last paragraph is thought by Professor Clark to

receive confirmation from the fact that it leads to the same

conclusion as the first and more direct method; namely, that the

specific productivity of labour is expressed in the product of the

marginal labourer. As a matter of fact, this conclusion is yielded by

both methods; for the specific productivity of the first labourer

appeared as eighty units, which was also the specific productivity of

the second labourer, who was the marginal labourer. As we saw in the

second last paragraph, however, the marginal product is not due to

labour alone; hence the verification provided by the second method is

in reality a refutation.

Apparently the majority of economists do not accept Professor Clark's

theory; for of the nine who discussed certain applications of it at

the nineteenth annual meeting of the American Economic Association

only one approved it, three were non-committal, and five expressed

their dissent.[236]

Even if the theory were true its hypothetical character would deprive

it of any practical value. It assumes a régime of perfect competition,

but this assumption is so seldom realised that no rule based upon it

can throw much light on the question of the productivity of present

day labourers.

Even if it were exactly applicable to existing conditions, that is, if

labourers were actually getting their specific products, the theory

would not provide us with a doctrine of just wages. As we have seen in

former chapters, productivity is neither the only nor the highest canon

of justice, whether as regards the comparative claims of capital and

labour, or as regards the claims of different labourers. The contention

that capital ought to command interest because it aids in bringing

forth the product, is neither self evident nor demonstrable by any

process of reasoning. Even if we should concede that the capitalist has

a right to interest by virtue of the productivity of his capital, we

should not therefore conclude that this right is as cogent as the

corresponding right of the labourer. In the former case the productive

agency is not human nor active, but only material and passive; and the

recipient of the product performs no labour as capitalist, but is left

free to get a livelihood by personal activity. The productivity of

labour differs in all these respects, and the difference is ethically

sufficient to justify the claim that the labourer may sometimes have a

right to a part of the specific product of capital. To sum up the

matter in the words of Professor Wicker: "To have proved that the

capitalist gets in interest what his capital produces is not to have

proved that the capitalist gets what he has earned. To have proved that

the landlord gets what his land produces is not to have proved that the

landlord earns his distributive share.... Economics is not ethics;

explanation is not justification."[237]

Indeed, Professor Clark nowhere explicitly asserts that productivity

is an adequate rule of justice. "We might raise the question," he

says, "whether a rule that gives to a man his product is in the

highest sense just."[238] Scattered throughout his volume, however,

are many expressions which might fairly be interpreted as answering

this question in the affirmative. The statements that distribution

according to product is a "natural law," and that if the labourer does

not get his full specific product he is "despoiled," suggest if they

do not imply that wages according to productivity is not merely the

economic but the ethical norm. At any rate, the assumption of

productivity as the adequate canon of wage justice, is very widely

adopted, and is frequently brought forward to give sanction to

insufficient rates of remuneration. Hence it has been thought well to

show that the economic basis of the assumption, i.e., that the

labourer gets what he produces, is unproved and unprovable.

_Carver's Modified Version of Productivity_

Professor Carver makes no attempt to ascertain or state the exact

physical productivity of labour as compared with that of capital, but

confines his attention to what he calls the "economic" productivity of

a given unit of labour in a given productive process.[239] "Find out

accurately how much the community produces with his [the labourer's]

help, over and above what it produces without his help, and you have

an exact measure of his productivity."[240] By this rule we can

determine a man's productivity not only as compared with his

inactivity in relation to a given industry or establishment, but as

compared with the productivity of some other man who might be

substituted for him. Thus understood, productivity expresses the

economic value of a man to the industrial process in which he

participates. It "determines how much a man is worth, and

consequently, according to our criterion of justice, how much a man

ought to have as a reward for his work."[241]

While this conception of productivity is relatively simple, and the

canon of justice based upon it is somewhat plausible, neither is

adequate. To many situations the productivity test is substantially

inapplicable. The removal from industry of the man who works alone;

for example, the independent shoemaker, blacksmith, tailor, or farmer,

would result not in a certain diminution, but in the entire

non-appearance of the product; and the removal of the capital or tools

would have precisely the same effect. According to the former method,

the labourer is to be credited with the whole product, and capital

with nothing; according to the latter method, capital produces

everything, and labour nothing. Even when several labourers are

employed in an establishment, the test is inapplicable to those who

are engaged upon indispensable tasks; for example, the engineer in the

boiler room of a small factory, and the bookkeeper in a small store.

Remove them, and you have no product at all; hence a rigid enforcement

of Professor Carver's test would award them the whole product. To be

sure, we can get some measure of the productivity of these men by

observing the effect on the product when inferior men are put in their

places; but this merely enables us to tell how much more they are

worth than other men, not their total worth. Moreover, even the

substitution test is not always practicable. The attempt to ascertain

the productivity of a workman of high technical skill by putting in

his place an utterly unskilled labourer, would not yield very

satisfactory results, either to the inquiry or to the industry. In the

majority of such cases, the difference in the resulting product would

probably far exceed the difference in the existing wage rates of the

two men, thus showing that the skilled worker is getting considerably

less than he is "economically worth."

In the field to which it is applicable, namely, that of more or less

unspecialised labour in large establishments, Professor Carver's

theory violates some of the most fundamental conceptions of justice

and humanity. He admits that it takes no account of the labourer's

efforts, sacrifices, or needs, and that when unskilled labour becomes

too plentiful, the value of the product may fall below the cost of

supporting a decent standard of living. While he looks with some

sympathy upon the demand for a minimum wage of two dollars per day, he

contends that unless the labourer really _earns_ that amount, some

other man will be paid less than he earns, "which would be unjust." To

"earn" two dollars a day means, in Professor Carver's terminology, to

add that much value to the product of the establishment in which the

labourer is employed; for this is the measure of the labourer's

productivity. If all the men who are now getting less than two dollars

a day are receiving the full value of their product, and if all the

other workers are likewise given the full value of their product, an

increase in the remuneration of the former will mean a deduction from

the compensation of the latter.

These conclusions of ethical pessimism are extremely vulnerable. As we

have shown in chapter xvi, efforts, sacrifices, and needs are superior

to productivity as claims to reward, and must be given due

consideration in any just scheme of distribution. Professor Carver

would leave them out of account entirely. In the second place, it is

not always nor necessarily ever true that to raise the wages of the

poorest paid labourers will mean to lower the remuneration of those

who are better paid. Many workers, particularly women, are now

receiving less than the measure of their "productivity," less than

they "earn," less than their worth to the employer, less than he would

be willing to pay rather than go without their services. Professor

Carver would, of course, not deny that the wages of all such labourers

could be raised without affecting the remuneration of other workers.

Even when the poorest paid class is receiving all that its members are

at present worth to the employer, an increase in their compensation

would not necessarily come out of the fund available for the better

paid. It could be deducted from excessive profits and interest; for we

know well that in many industries competition does not automatically

keep down these shares to the minimum necessary to retain the services

of business ability and capital. It could be provided to some extent

out of the enlarged product that would result from improvements in the

productive process, and from the increased efficiency of those workers

whose wages had been raised. Finally, the increased remuneration could

be derived from increased prices. When we speak of the unskilled

labourer as getting all that he produces, or all that he earns, we

refer not to his concrete product, but to the value of that product,

to the selling price of the product. Neither this price, nor any other

existing price, has anything about it that is either economically or

ethically sacred. In a competitive market current prices are fixed by

the forces of supply and demand, which often involve the exploitation

of the weak; in a monopoly market they are set by the desires of the

monopolist, which are likewise destitute of moral validity. Hence a

minimum wage law which would raise the price and value of the product

sufficiently to provide living wages for the unskilled workers, thus

increasing their "productivity" and enabling them to "earn" the legal

wage, would neither violate the principles of justice, nor necessarily

diminish the compensation of any other labouring group. To be sure,

the increased prices might be followed by such a lessening of demand

for the product as to diminish employment; but this is another matter

which has no direct bearing on either the economic or the ethical

phases of productivity and earning power. And the disadvantages

involved in the supposition of a reduced volume of employment may

possibly be not so formidable socially as those which accompany a

large volume of insufficiently paid occupations. This question will

receive further consideration in a later chapter.

In the meantime, we conclude that Professor Carver's theory or rule is

inapplicable to a large part of the industrial field, and that where

it does apply it frequently runs counter to some of the fundamental

principles of distributive justice.

FOOTNOTES:

[213] Page 47.

[214] _The Chicago Daily Tribune_, July 17, 1915.

[215] Article on "Political Economy and Ethics," in Palgrave's

Dictionary of Political Economy.

[216] "Property and Contract," II, 603.

[217] Cf. "L'Idée du Juste Salaire," by Léon Polier, ch. iii. Paris;

1903.

[218] Polier, op. cit., pp. 33, sq.; Ryan, "A Living Wage," pp. 26,

sq.

[219] "Ethica," lib. 5, tr. 2, cap. 5.

[220] "Comment. ad Eth.," XXI, 172.

[221] Cf. Polier, op. cit., pp. 66-75; Ryan, op. cit, pp. 93, 94.

[222] Cf. Polier, op. cit., pp. 92-95.

[223] "Cours d'Économie Sociale," pp. 598, sq.

[224] Polier, op. cit., pp. 219-359; Menger, "The Right to the Whole

Produce of Labour"; English Translation. London; 1899.

[225] "Enquiry Concerning Political Justice."

[226] "On the Effects of Civilisation on the People of European

States."

[227] "An Inquiry Into the Principles of the Distribution of Wealth

Most Conducive to Human Happiness."

[228] Menger, op. cit., p. 56.

[229] Op. cit., p. 51.

[230] Cf. Menger, op. cit., pp. 62-73.

[231] "Qu' est-ce que la propriété ou recherches sur la principe du

droit et du gouvernment." 1840.

[232] "Zur Erkentniss unserer staatswirthschaftlichen Zustande," 1842.

[233] "Das Kapital," 1867.

[234] Cf. Polier, op. cit., pp. 352, sq.

[235] Cf. especially chap. xxi, "The Theory of Economic Causation."

[236] "Proceedings," pp. 23-54.

[237] "Proceedings of the 22d Annual Meeting of the American Economic

Association," pp. 160, 161.

[238] Op. cit., p. 8.

[239] "Essays in Social Justice"; especially ch. vii.

[240] Op. cit., pp. 187, 188.

[241] Op. cit., p. 201.

CHAPTER XXIII

THE MINIMUM OF JUSTICE: A LIVING WAGE

Although the principle of needs is somewhat prominent among the

theories of wage justice, it received only incidental mention in the

last chapter. Considered as a comprehensive rule, this principle has

been defended with less energy and definiteness than most of the other

canons. Considered as a partial rule, it is sound and fundamental, and

therefore could not have been classed among theories that are

unacceptable.

_The Principle of Needs_

Many of the early French Socialists of the Utopian school advanced

this formula of distribution: "From each according to his powers; to

each according to his needs." It was also put forward by the German

Socialists in the Gotha Program in 1875. While they have not given to

this standard formal recognition in their more recent platforms,

Socialists generally regard it as the ideal rule for the distant

future.[242] The difficulties confronting it are so great and so

obvious that they would defer the introduction of it to a time when

the operation of their system will, they hope, have eradicated the

historical human qualities of laziness and selfishness. To adopt needs

as the sole rule of distribution would mean, of course, that each

person should be rewarded in proportion to his wants and desires,

regardless of his efforts or of the amount that he had produced. The

mere statement of the proposal is sufficient to refute it as regards

the men and women of whom we have any knowledge. In addition to this

objection, there is the insuperable difficulty of measuring fairly or

accurately the relative needs of any group composed of men, women, and

children. Were the members' own estimates of their needs accepted by

the distributing authority, the social product would no doubt fall far

short of supplying all. If the measurement were made by some official

person or persons, "the prospect of jobbery and tyranny opened up must

give the most fanatical pause." Indeed, the standard of needs should

be regarded as a canon of Communism rather than of Socialism; for it

implies a large measure of common life as well as of common ownership,

and paternalistic supervision of consumption as well as collectivist

management of production.

While the formula of needs must be flatly rejected as complete rule of

distributive justice, or of wage justice, it is valid and

indispensable as a partial standard. It is a partial measure of

justice in two senses: first, inasmuch as it is consistent with the

admission and operation of other principles, such as productivity and

sacrifice; second, inasmuch as it can be restricted to certain

fundamental requisites of life, instead of being applied to all

possible human needs. It can be made to safeguard the minimum demands

of reasonable life, and therefore to function as a minimum standard of

wage justice.

Human needs constitute the primary title or claim to material goods.

None of the other recognised titles, such as productivity, effort,

sacrifice, purchase, gift, inheritance, or first occupancy, is a

fundamental reason or justification of either rewards or possessions.

They all assume the existence of needs as a prerequisite to their

validity. If men did not need goods they could not reasonably lay

claim to them by any of the specific titles just enumerated. First

comes the general claim or fact of needs; then the particular title

or method by which the needs may be conveniently supplied. While these

statements may seem elementary and platitudinous, their practical

value will be quite evident when we come to consider the conflicting

claims that sometimes arise out of the clash between needs and some of

the other titles. We shall see that needs are not merely a physical

reason or impulse toward acquisition and possession, but a moral title

which rationalises the claim to a certain amount of goods.[243]

_Three Fundamental Principles_

The validity of needs as a partial rule of wage justice rests

ultimately upon three fundamental principles regarding man's position

in the universe. The first is that God created the earth for the

sustenance of _all_ His children; therefore, that all persons are

equal in their inherent claims upon the bounty of nature. As it is

impossible to demonstrate that any class of persons is less important

than another in the eyes of God, it is logically impossible for any

believer in Divine Providence to reject this proposition. The man who

denies God or Providence can refuse assent to the second part of the

proposition only by refusing to acknowledge the personal dignity of

the human individual, and the equal dignity of all persons. Inasmuch

as the human person is intrinsically sacred and morally independent,

he is endowed with those inherent prerogatives, immunities, and claims

that we call rights. Every person is an end in himself; none is a mere

instrument to the convenience or welfare of any other human being. The

worth of a person is something intrinsic, derived from within, not

determined or measurable by reference to any earthly object or purpose

without. In this respect the human being differs infinitely from, is

infinitely superior to, a stone, a rose, or a horse. While these

statements help to illustrate what is meant by the dignity of

personality, by the intrinsic worth, importance, sacredness of the

human being, they do not prove the existence of this inherent

juridical quality. Proof in the strict sense is irrelevant and

impossible. If the intrinsic and equal moral worth of all persons be

not self evident to a man, it will not approve itself to him through

any process of argumentation. Whosoever denies it can also logically

deny men's equal claims of access to the bounty of the earth; but he

cannot escape the alternative conclusion that brute force, exercised

either by the State or by individuals, is the only proper determinant

of possessions and of property. Against this monstrous contention it

is not worth while to offer a formal argument.

The second fundamental principle is that the inherent right of access

to the earth is conditioned upon, and becomes actually valid through,

the expenditure of useful labour. Generally speaking the fruits and

potentialities of the earth do not become available to men without

previous exertion. "In the sweat of thy brow thou shalt eat thy

bread," is a physical no less than a moral commandment. There are,

indeed, exceptions: the very young, the infirm, and the possessors of

a sufficient amount of property. The two former classes have claims to

a livelihood through piety and charity, while the third group has at

least a presumptive claim of justice to rent and interest, and a

certain claim of justice to the money value of their goods.

Nevertheless, the general condition is that men must work in order to

live. "If a man will not work neither shall he eat." For those who

refuse to comply with this condition the inherent right of access to

the earth remains only hypothetical and suspended.

The two foregoing principles involve as a corollary a third principle;

the men who are in present control of the opportunities of the earth

are obliged to permit reasonable access to these opportunities by

persons who are willing to work. In other words, possessors must so

administer the common bounty of nature that non-owners will not find

it unreasonably difficult to get a livelihood. To put it still in

other terms, the right to subsist from the earth implies the right to

access thereto on reasonable terms. When any man who is willing to

work is denied the exercise of this right, he is no longer treated as

the moral and juridical equal of his fellows. He is regarded as

inherently inferior to them, as a mere instrument to their

convenience; and those who exclude him are virtually taking the

position that their rights to the common gifts of the Creator are

inherently superior to his birthright. Obviously this position cannot

be defended on grounds of reason. Possessors are no more justified in

excluding a man from reasonable access to the goods of the earth than

they would be in depriving him of the liberty to move from place to

place. The community that should arbitrarily shut a man up in prison

would not violate his rights more fundamentally than the community or

the proprietors who should shut him out from the opportunity of

getting a livelihood from the bounty of the earth. In both cases the

man demands and has a right to a common gift of God. His moral claim

is as valid to the one good as to the other, and it is as valid to

both goods as is the claim of any of his fellows.

_The Right to a Decent Livelihood_

Every man who is willing to work has, therefore, an inborn right to

sustenance from the earth on reasonable terms or conditions. This

cannot mean that all persons have a right to equal amounts of

sustenance or income; for we have seen on a preceding page that men's

needs, the primary title to property, are not equal, and that other

canons and factors of distribution have to be allowed some weight in

determining the division of goods and opportunities. Nevertheless,

there is a certain minimum of goods to which every worker is entitled

by reason of his inherent right of access to the earth. He has a right

to at least a _decent_ livelihood. That is; he has a right to so much

of the requisites of sustenance as will enable him to live in a manner

worthy of a human being. The elements of a decent livelihood may be

summarily described as: food, clothing, and housing sufficient in

quantity and quality to maintain the worker in normal health, in

elementary comfort, and in an environment suitable to the protection

of morality and religion; sufficient provision for the future to bring

elementary contentment, and security against sickness, accident, and

invalidity; and sufficient opportunities of recreation, social

intercourse, education, and church-membership to conserve health and

strength, and to render possible in some degree the exercise of the

higher faculties.

On what ground is it contended that a worker has a right to a decent

livelihood, as thus defined, rather than to a bare subsistence? On the

same ground that validates his right to life, marriage, or any of the

other fundamental goods of human existence. On the dignity of

personality. Why is it wrong and unjust to kill or maim an innocent

man? Because human life and the human person possess intrinsic worth;

because personality is sacred. But the intrinsic worth and sacredness

of personality imply something more than security of life and limb,

and the material means of bare existence. The man who is not provided

with the requisites of normal health, efficiency, and contentment

lives a maimed life, not a reasonable life. His physical condition is

not worthy of a human being. Furthermore, man's personal dignity

demands not merely the conditions of reasonable physical existence,

but the opportunity of pursuing self perfection through the harmonious

development of all his faculties. Unlike the brutes, he is endowed

with a rational soul, and the capacity of indefinite self

improvement. A due regard to these endowments requires that man shall

have the opportunity of becoming not only physically stronger, but

intellectually wiser, morally better, and spiritually nearer to God.

If he is deprived of these opportunities he cannot realise the

potentialities of his nature nor attain the divinely appointed end of

his nature. He remains on the plane of the lower animals. His

personality is violated quite as fundamentally as when his body is

injured or his life destroyed.

While it is impossible to define with mathematical precision the

degree of personal development that is necessary to satisfy the claims

of personal dignity, it is entirely practicable to state with

sufficient definiteness the minimum conditions of such development.

They are that quantity of goods and opportunities which fair-minded

men would regard as indispensable to humane, efficient, and reasonable

life. The summary description of a decent livelihood at the end of the

second last paragraph, would probably be accepted by all men who

really believe in the intrinsic worth of personality.

_The Claim to a Decent Livelihood from a Present Occupation_

The claim of a worker to a decent livelihood from the goods of the

earth does not always imply a strict right to a livelihood from one's

present occupation. To demand this would in some circumstances be to

demand a livelihood not on reasonable but on unreasonable terms; for

the persons in control of the sources could not reasonably be required

to provide a decent livelihood. Their failure to do so would not

constitute an unreasonable hindrance to the worker's access to the

earth in such circumstances. In chapter xvi we saw that not all

business men have a strict right to that minimum of profits which is

required to yield them a decent livelihood: first, because the

direction of industry is not generally the business man's only means

of getting a living; second, because the community, the consumers, do

not regard the presence and activity of all existing business men as

indispensable. Of course, the community is morally bound to pay such

prices for goods as will enable all the necessary business men,

whether manufacturers or traders, to obtain a decent livelihood in

return for their directive functions; but it is not obliged to provide

a livelihood for those business men whose presence is not required,

who could vanish from the field of industrial direction without

affecting either the supply or the price of goods, and whose

superfluous character is proved by the fact that they cannot make a

livelihood at the prevailing prices. They are in the position of

persons whom the community does not desire to employ as business men.

In refusing to pay prices sufficiently high to provide these

inefficient business men with a decent livelihood, the community is

not unreasonably hindering their access to the common goods of the

earth. Such men are really demanding a livelihood on unreasonable

terms.

_The Labourer's Right to a Living Wage_

On the other hand, the wage earner's claim to a decent livelihood is

valid, generally speaking, in his present occupation. In other words,

his right to a decent livelihood in the abstract means in the concrete

a right to a living wage. To present the matter in its simplest terms,

let us consider first the adult male labourer of average physical and

mental ability who is charged with the support of no one but himself,

and let us assume that the industrial resources are adequate to such a

wage for all the members of his class. Those who are in control of the

resources of the community are morally bound to give such a labourer a

living wage. If they fail to do so they are unreasonably hindering his

access to a livelihood on reasonable terms; and his right to a

livelihood on reasonable terms is violated. The central consideration

here is evidently the _reasonableness_ of the process. Unlike the

business man, the rent receiver, and the interest receiver, the

labourer has ordinarily no other means of livelihood than his wages.

If these do not furnish him with a decent subsistence he is deprived

of a decent subsistence. When he has performed an average day's work,

he has done all that is within his power to make good his claim to a

decent livelihood. On the other hand, the community is the beneficiary

of his labour, and desires his services. If, indeed, the community

would rather do without the services of an individual labourer than

pay him a living wage, it is morally free to choose the former

alternative, precisely as it is justified in refusing to pay a price

for groceries that will enable an inefficient grocer to obtain living

profits. Whatever concrete form the right of such persons to a decent

livelihood may take, it is not the right to living wages or living

profits from the occupations in question. Here, however, we are

discussing the labourer to whom the community would rather pay a

living wage than not employ him at all. To refuse such a one a living

wage merely because he can be constrained by economic pressure to work

for less, is to treat him unreasonably, is to deprive him of access to

a livelihood on reasonable terms. Such treatment regards the labourer

as inferior to his fellows in personal worth, as a mere instrument to

their convenience. It is an unreasonable distribution of the goods and

opportunities of the earth.

Obviously there is no formula by which such conduct can be

mathematically demonstrated as unreasonable; but the proposition is as

certain morally as any other proposition that is susceptible of

rational defence in the field of distribution. No man who accepts the

three fundamental principles stated some pages back, can deny the

right of the labourer to a living wage. The man who does not accept

them must hold that all property rights are the arbitrary creation of

the State, or that there is no such thing as a moral right to

material goods. In either supposition the distribution and possession

of the earth's bounty are subject entirely to the arbitrament of

might. There is nothing to be gained by a formal criticism of this

assumption.

What persons, or group, or authority is charged with the obligation

which corresponds to the right to a living wage? We have referred to

"the community" in this connection, but we do not mean the community

in its corporate capacity, i.e., the State. As regards private

employments, the State is not obliged to pay a living wage, nor any

other kind of wage, since it has not assumed the wage-paying function

with respect to these labourers. As protector of natural rights, and

as the fundamental determiner of industrial institutions, the State is

obliged to enact laws which will enable the labourer to obtain a

living wage; but the duty of actually providing this measure of

remuneration rests upon that class which has assumed the wage-paying

function. This is the employers. In our present industrial system, the

employer is society's paymaster. He, not the State, receives the

product out of which all the agents of production must be rewarded.

Where the labourer is engaged in rendering personal services to his

employer, the latter is the only beneficiary of the labourer's

activity. In either case the employer is the only person upon whom the

obligation of paying a living wage can primarily fall.

If the State were in receipt of the product of industry, the

wage-paying fund, it would naturally be charged with the obligation

that now rests immediately upon the employer. If any other class in

the community were the owners of the product that class would be under

this specific obligation. As things are, the employer is in possession

of the product, and discharges the function of wage payer;

consequently he is the person who is required to perform this function

in a reasonable manner.

_When the Employer Is Unable to Pay a Living Wage_

Evidently the employer who cannot pay a living wage is not obliged to

do so, since moral duties suppose a corresponding physical capacity.

In such circumstances the labourer's right to a living wage becomes

suspended and hypothetical, just as the claim of a creditor when the

debtor becomes insolvent. Let us see, however, precisely what meaning

should reasonably be given to the phrase, "inability to pay a living

wage."

An employer is not obliged to pay a full living wage to all his

employés so long as that action would deprive himself and his family

of a decent livelihood. As active director of a business, the employer

has quite as good a right as the labourer to a decent livelihood from

the product, and in case of conflict between the two rights, the

employer may take advantage of that principle of charity which permits

a man to prefer himself to his neighbour, when the choice refers to

goods of the same order of importance. Moreover, the employer is

justified in taking from the product sufficient to support a somewhat

higher scale of living than generally prevails among his employés; for

he has become accustomed to this higher standard, and would suffer a

considerable hardship if compelled to fall notably below it. It is

reasonable, therefore, that he should have the means of maintaining

himself and family in moderate conformity with their customary

standard of living; but it is unreasonable that they should indulge in

anything like luxurious expenditure, so long as any of the employés

fail to receive living wages.

Suppose that an employer cannot pay all his employés living wages and

at the same time provide the normal rate of interest on the capital in

the business. So far as the borrowed capital is concerned, the

business man has no choice; he must pay the stipulated rate of

interest, even though it prevents him from giving a living wage to

all his employés. Nor can it be reasonably contended that the loan

capitalist in that case is obliged to forego the interest due him. He

cannot be certain that this interest payment, or any part of it, is

really necessary to make up what is wanting to a complete scale of

living wages. The employer would be under great temptation to defraud

the loan capitalist on the pretext of doing justice to the labourer,

or to conduct his business inefficiently at the expense of the loan

capitalist. Anyhow, the latter is under no obligation to leave his

money in a concern that is unable to pay him interest regularly. The

general rule, then, would seem to be that the loan capitalist is not

obliged to refrain from taking interest in order that the employés may

have living wages.

Is the employer justified in withholding the full living wage from his

employés to provide himself with the normal rate of interest on the

capital that he has invested in the enterprise? Speaking generally, he

is not. In the first place, the right to any interest at all, except

as a return for genuine sacrifices in saving, is not certain but only

presumptive.[244] Consequently it has no such firm and definite basis

as the right to a living wage. In the second place, the right to

interest, be it ever so definite and certain, is greatly inferior in

force and urgency. It is an axiom of ethics that when two rights

conflict, the less important must give way to the more important.

Since all property rights are but means to the satisfaction of human

needs, their relative importance is determined by the relative

importance of the ends that they serve; that is, by the relative

importance of the dependent needs. Now the needs that are supplied

through interest on the employer's capital are slight and not

essential to his welfare; the needs that are supplied through a living

wage are essential to a reasonable life for the labourer. On the

assumption that the employer has already taken from the product

sufficient to provide a decent livelihood, interest on his capital

will be expended for luxuries or converted into new investments; a

living wage for the labourer will all be required for the fundamental

goods of life, physical, mental, or moral. Evidently, then, the right

to interest is inferior to the right to a living wage. To proceed on

the contrary theory is to reverse the order of nature and reason, and

to subordinate essential needs and welfare to unessential needs and

welfare.

Nor can it be maintained that the capitalist-employer's claim to

interest is a claim upon the product prior to and independent of the

claim of the labourer to a living wage. That would be begging the

question. The product is in a fundamental sense the common property of

employer and employés. Both parties have co-operated in turning it

out, and they have equal claims upon it, in so far as it is necessary

to yield them a decent livelihood. Having taken therefrom the

requisites of a decent livelihood for himself, the employer who

appropriates interest at the expense of a decent livelihood for his

employés, in effect treats their claims upon the common and joint

product as essentially inferior to his own. If this assumption were

correct it would mean that the primary and essential needs of the

employés are of less intrinsic importance than the superficial needs

of the employer, and that the employés themselves are a lower order of

being than the employer. The incontestable fact is that such an

employer deprives the labourers of access to the goods of the earth on

reasonable terms, and gives himself an access thereto that is

unreasonable.

Suppose that all employers who found themselves unable to pay full

living wages and obtain the normal rate of interest, should dispose of

their businesses and become mere loan capitalists, would the condition

of the underpaid workers be improved? Two effects would be certain: an

increase in the supply of loan capital relatively to the demand, and

a decrease in the number of active business men. The first would

probably lead to a decline in the rate of interest, while the second

might or might not result in a diminution of the volume of products.

If the rate of interest were lowered the employing business men would

be able to raise wages; if the prices of products rose a further

increase of wages would become possible. However, it is not certain

that prices would rise; for the business men who remained would be the

more efficient in their respective classes, and might well be capable

of producing all the goods that had been previously supplied by their

eliminated competitors. Owing to their superior efficiency and their

larger output, the existing business men would be able to pay

considerably higher wages than those who had disappeared from the

field of industrial direction. As things are to-day, it is the less

efficient business men who are unable to pay living wages and at the

same time obtain the prevailing rate of interest on their capital. The

ultimate result, therefore, of the withdrawal from business of those

who could not pay a living wage, would probably be the universal

establishment of a living wage.

Of course, this supposition is purely fanciful. Only a small minority

of the business men of to-day are likely to be driven by their

consciences either to pay a living wage at the cost of interest on

their capital, or to withdraw from business when they are confronted

with such a situation. Is this small minority under moral obligation

to adopt either of these alternatives, when the effect of such action

upon the great mass of the underpaid workers is likely to be very

slight? The question would seem to demand an answer in the

affirmative. Those employers who paid a living wage at the expense of

interest would confer a concrete benefit of great value upon a group

of human beings. Those who shrank from this sacrifice, and preferred

to go out of business, would at least have ceased to co-operate in an

unjust distribution of wealth, and their example would not be

entirely without effect upon the views of their fellow employers.

_An Objection and Some Difficulties_

Against the foregoing argument it may be objected that the employer

does his full duty when he pays the labourer the full value of the

product or service. Labour is a commodity of which wages are the

price; and the price is just if it is the fair equivalent of the

labour. Like any other onerous contract, the sale of labour is

governed by the requirements of commutative justice; and these are

satisfied when labour is sold for its moral equivalent. What the

employer is interested in and pays for, is the labourer's activity.

There is no reason why he should take into account such an extrinsic

consideration as the labourer's livelihood.

Most of these assertions are correct, platitudinously correct, but

they yield us no specific guidance because they use language vaguely

and even ambiguously. The contention underlying them was adequately

refuted in the last chapter, under the heads of theories of value and

theories of exchange equivalence. At present it will be sufficient to

repeat summarily the following points: if the value of labour is to be

understood in a purely economic sense it means market value, which is

obviously not a universal measure of justice; if by the value of

labour we mean its ethical value we cannot determine it in any

particular case merely by comparing labour and compensation; we are

compelled to have recourse to some extrinsic ethical principle; such

an extrinsic principle is found in the proposition that the personal

dignity of the labourer entitles him to a wage adequate to a decent

livelihood; therefore, the ethical value of labour is always

equivalent to at least a living wage, and the employer is morally

bound to give this much remuneration.

Moreover, the habit of looking at the wage contract as a matter of

commutative justice in the mere sense of contractual justice, is

radically defective. The transaction between employé and employer

involves other questions of justice than that which arises immediately

out of the relation between the things exchanged. When a borrower

repays a loan of ten dollars, he fulfils the obligation of justice

because he returns the full equivalent of the article that he

received. Nothing else is pertinent to the question of justice in this

transaction. Neither the wealth nor the poverty, the goodness nor the

badness, nor any other quality of either lender or borrower, has a

bearing on the justice of the act of repayment. In the wage contract,

and in every other contract that involves the distribution of the

common bounty of nature, or of the social product, the juridical

situation is vitally different from the transaction that we have just

considered. The employer has obligations of justice, not merely as the

receiver of a valuable thing through an onerous contract, but as the

_distributor_ of the common heritage of nature. His duty is not merely

contractual, but social. He fulfils not only an individual contract,

but a social function. Unless he performs this social and distributive

function in accordance with justice, he does not adequately discharge

the obligation of the wage contract. For the product out of which he

pays wages is not his in the same sense as the personal income out of

which he repays a loan. His claim upon the product is subject to the

obligation of just distribution; the obligation of so distributing the

product that the labourers who have contributed to the product shall

not be denied their right to a decent livelihood on reasonable terms

from the bounty of the earth. On the other hand, the activity of the

labourer is not a mere commodity, as money or pork; it is the output

of a _person_, and a person who has no other means of realising his

inherent right to a livelihood. Consequently, both terms of the

contract, the labour and the compensation, involve other elements of

justice than that which arises out of their assumed mutual

equivalence.

In a word, justice requires the employer not merely to give an

equivalent for labour (an equivalent which is determined by some

arbitrary, conventional, fantastic, or impossible attempt to compare

work and pay) but to fulfil his obligation of justly distributing that

part of the common bounty of the earth which comes into his hands by

virtue of his social function in the industrial process. How futile,

then, to endeavour by word juggling to describe the employer's

obligation in terms of mere equivalence and contractual justice!

Some difficulties occur in connection with the wage rights of adult

males whose ability is below the average, and female and child

workers. Since the dignity and the needs of personality constitute the

moral basis of the claim to a decent livelihood, it would seem that

the inefficient worker who does his best is entitled to a living wage.

Undoubtedly he has such a right if it can be effectuated in the

existing industrial organisation. As already noted, the right of the

workman of average ability to a living wage does not become actual

until he finds an employer who would rather give him that much pay

than do without his services. Since the obligation of paying a living

wage is not an obligation to employ any particular worker, an employer

may refrain from hiring or may discharge any labourer who does not add

to the product sufficient value to provide his wages. For the employer

cannot reasonably be expected to employ any one at a positive loss to

himself. Whence it follows that he may pay less than living wages to

any worker whose services he would rather dispense with than

remunerate at that figure.[245]

Women and young persons who regularly perform a full day's work, have

a right to compensation adequate to a decent livelihood. In the case

of minors, this means living at home, since this is the normal

condition of all, and the actual condition of almost all. Adult

females have a right to a wage sufficient to maintain them away from

home, because a considerable proportion of them live in this

condition. If employers were morally free to pay home-dwelling women

less than those adrift, they would endeavour to employ only the

former. This would create a very undesirable social situation. The

number of women away from home who are forced to earn their own living

is sufficiently large (20 to 25 per cent. of the whole) to make it

reasonable that for their sakes the wage of all working women should

be determined by the cost of living outside the parental precincts.

This is one of the social obligations that reasonably falls upon the

employer on account of his function in the present industrial system.

In all the American minimum wage laws, the standard of payment is

determined by the cost of living away from home. Besides, the

difference between the living costs of women in the two conditions is

not nearly as great as is commonly assumed. Probably it never amounts

to a dollar a week.

_The Family Living Wage_

Up to the present we have been considering the right of the labourer

to a wage adequate to a decent livelihood for himself as an

individual. In the case of an adult male, however, this is not

sufficient for normal life, nor for the reasonable development of

personality. The great majority of men cannot live well balanced

lives, cannot attain a reasonable degree of self development outside

the married state. Therefore, family life is among the essential

needs of a normal and reasonable existence. It is not, indeed, so

vitally necessary as the primary requisites of individual life, such

as food, clothing, and shelter, but it is second only to these.

Outside the family man cannot, as a rule, command that degree of

contentment, moral strength, and moral safety which are necessary for

reasonable and efficient living. It is unnecessary to labour this

point further, as very few would assert that the average man can live

a normal and complete human life without marriage.

Now, the support of the family falls properly upon the husband and

father, not upon the wife and mother. The obligation of the father to

provide a livelihood for the wife and young children is quite as

definite as his obligation to maintain himself. If he has not the

means to discharge this obligation he is not justified in getting

married. Yet, as we have just seen, marriage is essential to normal

life for the great majority of men. Therefore, the material requisites

of normal life for the average adult male, include provision for his

family. In other words, his decent livelihood means a family

livelihood. Consequently, he has a right to obtain such a livelihood

on reasonable terms from the bounty of the earth. In the case of the

wage earner, this right can be effectuated only through wages;

therefore, the adult male labourer has a right to a family living

wage. If he does not get this measure of remuneration his personal

dignity is violated, and he is deprived of access to the goods of the

earth, quite as certainly as when his wage is inadequate to personal

maintenance. The difference between family needs and personal needs is

a difference only of degree. The satisfaction of both is indispensable

to his reasonable life.

Just as the woman worker who lives with her parents has a right to a

wage sufficient to maintain her away from home, so the unmarried adult

male has a right to a family living wage. If only married men get the

latter wage they will be discriminated against in the matter of

employment. To prevent this obviously undesirable condition, it is

necessary that a family living wage be recognised as the right of all

adult male workers. No other arrangement is reasonable in our present

industrial system. In a competitive régime the standard wage for both

the married and the unmarried men is necessarily the same. It will be

determined by the living costs of either the one class or the other.

At present the wage of the unskilled is unfortunately adjusted to the

subsistence cost of the man who is not married. Since two prevailing

scales of wages are impossible, the remuneration of the unmarried must

in the interests of justice to the married be raised to the living

costs of the latter. Moreover, the unmarried labourer needs more than

an individual living wage in order to save sufficient money to enter

upon the responsibilities of matrimony.

Only two objections of any importance can be brought against the male

labourer's claim to a family living wage. The first is that just wages

are to be measured by the value of the labour performed, and not by

such an extrinsic consideration as the needs of a family. It has

already been answered in this and the preceding chapters. Not the

economic but the ethical value of the service rendered, is the proper

determinant of justice in the matter of wages; and this ethical value

is always the equivalent of at least a decent livelihood for the

labourer and his family. According to the second objection, the

members of the labourer's family have no claim upon the employer,

since they do not participate in the work that is remunerated. This

contention is valid, but it is also irrelevant. The claim of the

labourer's family to sustenance is directly upon him, not upon his

employer; but the labourer has a just claim upon the employer for the

means of meeting the claims of his family. His right to this amount of

remuneration is directly based neither upon the needs nor the rights

of his family, but upon his own needs, upon the fact that family

conditions are indispensable to his own normal life. If the wife and

young children were self supporting, or were maintained by the State,

the wage rights of the father would not include provision for the

family. Since, however, family life involves support by the father,

the labourer's right to such a life necessarily includes the right to

a wage adequate to family support.

_Other Arguments in Favour of a Living Wage_

Thus far, the argument has been based upon individual natural rights.

If we give up the doctrine of natural rights, and assume that all the

rights of the individual come to him from the State, we must admit

that the State has the power to withhold and withdraw all rights from

any and all persons. Its grant of rights will be determined solely by

considerations of social utility. In the concrete this means that some

citizens may be regarded as essentially inferior to other citizens,

that some may properly be treated as mere instruments to the

convenience of others. Or it means that all citizens may be completely

subordinated to the aggrandisement of an abstract entity, called the

State. Neither of these positions is logically defensible. No group of

persons has less intrinsic worth than another; and the State has no

rational significance apart from its component individuals.

Nevertheless, a valid argument for the living wage can be set up on

grounds of social welfare. A careful and comprehensive examination of

the evil consequences to society and the State from the under-payment

of any group of labourers, would show that a universal living wage is

the only sound social policy. Among competent social students, this

proposition has become a commonplace. It will not be denied by any

intelligent person who considers seriously the influence of low wages

in diminishing the efficiency, physical, mental, and moral, of the

workers; in increasing the volume of crime, and the social cost of

meeting it; in the immense social outlay for the relief of unnecessary

poverty, sickness, and other forms of distress; and in the formation

of a large and discontented proletariat.[246]

The living wage doctrine also receives strong support from various

kinds of authority. Of these the most important and best known is the

famous encyclical, "On the Condition of Labour," May 15, 1891, by Pope

Leo XIII. "Let it then be granted that workman and employer should, as

a rule, make free agreements, and in particular should agree freely as

to wages; nevertheless, there is a dictate of natural justice more

imperious and ancient than any bargain between man and man; namely,

that the remuneration should be sufficient to maintain the wage earner

and reasonable and frugal comfort." Although the Pope refrained from

specifying whether the living wage that he had in mind was one

adequate merely to an individual livelihood, or sufficient to support

a family, other passages in the Encyclical leave no room for doubt

that he regarded the latter as the normal and equitable measure of

remuneration. Within a dozen lines of the sentence quoted above, he

made this statement: "If the workman's wages be sufficient to maintain

himself, his wife, and his children in reasonable comfort, he will not

find it difficult, if he be a sensible man, to practise thrift; and he

will not fail, by cutting down expenses, to put by some little savings

and thus secure a small income."

All lesser Catholic authorities hold that the adult male labourer has

some kind of moral claim to a family living wage. In all probability

the majority of them regard this claim as one of strict justice, while

the minority would put it under the head of legal justice, or natural

equity, or charity. The differences between their views are not as

important as the agreements; for all the Catholic writers maintain

that the worker's claim is strictly moral in its nature, and that the

corresponding obligation upon the employer is likewise of a moral

character.

The Federal Council of the Churches of Christ in America, representing

the principal Protestant denominations, has formally declared in

favour of "a living wage as a minimum in every industry."

Public opinion likewise accepts the principle of a living wage as the

irreducible minimum of fair treatment for all workers. Indeed, it

would be difficult to find any important person in any walk of life

to-day who would have the temerity to deny that the labourer is

entitled to a wage sufficient for reasonable family life. Among

employers the opinion is fairly general that the narrow margin of

profit in competitive industries renders the burden of paying a family

living wage to all adult males unfairly heavy; but the assertion that

the wage contract is merely an economic transaction, having no

relation to justice, is scarcely ever uttered publicly.

_The Money Measure of a Living Wage_

For self-supporting women a living wage is not less than eight dollars

per week in any city of the United States, and in some of our larger

cities it is from one to two dollars above this figure. The state

minimum wage commissions that have acted in the matter, have fixed the

rates not lower than eight nor higher than ten dollars per week.[247]

These determinations are in substantial agreement with a large number

of other estimates, both official and unofficial.

When the present writer was making an estimate of the cost of decent

living for a family about eleven years ago, he came to the conclusion

that six hundred dollars per year was the lowest amount that would

maintain a man and wife and four or five small children in any American

city, and that this sum was insufficient in some of the larger

cities.[248] Since that time retail prices seem to have risen at least

twenty-five and possibly forty-five per cent.[249] If the six hundred

dollar minimum were correct in 1905 it should, therefore, be increased

to seven hundred and fifty dollars to meet the present range of prices.

That this estimate is too low for some of the more populous cities, has

been fully proved by several recent investigations. In 1915 the Bureau

of Standards put the minimum cost of living for a family of five in New

York City at $840.18. About the same time the New York Factory

Investigating Commission gave the estimate of $876.43 for New York

City, and $772.43 for Buffalo. In 1908, when the cost of living was

from ten to thirty per cent. cheaper than to-day, the United States

Bureau of Labour found that, "according to the customs prevailing in

the communities selected for study," a fair standard of living for a

family of five persons among mill workers, was $600.74 in the South,

and from $690.60 to $731.64 in Fall River, Massachusetts.[250]

According to the "Manly Report" of the Federal Commission on

Industrial Relations, between two-thirds and three-fourths of the

adult male labourers of the United States receive less than $750.00 a

year, and the same proportion of women workers are paid under eight

dollars a week. A considerable majority, therefore, of both male and

female labourers fail to obtain living wages. We are still very far

from having actualised even the minimum measure of wage justice.

FOOTNOTES:

[242] Cf. Skelton, "Socialism: A Critical Analysis," p. 202; Menger,

"The Right to the Whole Produce of Labour," pp. 8, sq.

[243] All the questions treated in this chapter are discussed at much

greater length in the author's work, "A Living Wage"; Macmillan; 1906.

[244] See chapters xii and xiii.

[245] While the statement in the text applies to _all_ labourers of

less than average ability, it obviously is applicable only to

individual cases among those who are up to the average. These are the

workers at the "margin" of the labour force in an establishment, those

who could be discharged without causing the industry to shut down. If

an employer would rather go out of business than pay a living wage to

all his necessary labourers of average ability, he is morally free to

do so; but he may not employ them at less than living wages in order

to obtain interest on his capital.

[246] One of the best statements of the evil social results of low

wages will be found in Webb's "Industrial Democracy," vol. II, pp.

749-766.

[247] See reports of these commissions in Oregon, Washington,

Massachusetts, Minnesota, and California.

[248] "A Living Wage," p. 150.

[249] See Bulletins of the Federal Bureau of Labour Statistics on

"Retail Prices"; and Nearing, "Reducing the Cost of Living."

[250] "Summary of the Report on Condition of Woman and Child Wage

Earners in the United States," pp. 383, 384. The best intensive study

of family cost of living is that published in the volume edited by

Robert C. Chapin, "The Standard of Living Among Workingmen's Families

in New York City"; 1909. It led to the conclusion that anything less

than eight hundred dollars was insufficient for the yearly maintenance

of a husband and wife and three small children in Manhattan.

CHAPTER XXIV

THE PROBLEM OF COMPLETE WAGE JUSTICE

A living wage for all workers is merely the _minimum_ measure of just

remuneration. It is not in every case complete justice. Possibly it is

not the full measure of justice in any case. How much more than a

living wage is due to any or all of the various classes of labourers?

How much more may any group of workers demand without exposing itself

to the sin of extortion? By what principles shall these questions be

answered?

The problem of complete wage justice can be conveniently and logically

considered in four distinct relations, as regards: the respective

claims of the different classes of labourers to a given amount of

money available for wage payments; the claims of the whole body of

labourers, or any group thereof, to higher wages at the expense of

profits; at the expense of interest; and at the expense of the

consumer.

_Comparative Claims of Different Labour Groups_

In the division of a common wage fund, no section of the workers is

entitled to anything in excess of living wages until all the other

sections have received that amount of remuneration. The need of a

decent livelihood constitutes a more urgent claim than any other that

can be brought forward. Neither efforts, nor sacrifices, nor

productivity, nor scarcity can justify the payment of more than living

wages to any group, so long as any other group in the industry remains

below that level; for the extra compensation will supply the

nonessential needs of the former by denying the essential needs of

the latter. The two groups of men will be treated unequally in respect

of those qualities in which they are equal; namely, their personal

dignity and their claims to the minimum requisites of reasonable life

and self development. This is a violation of justice.

Let us suppose that all the workers among whom a given amount of

compensation is to be distributed, have already received living wages,

and that there remains a considerable surplus. On what principles

should the surplus be apportioned? For answer we turn to the canons of

distribution, as explained in chapter xvi. When the elementary needs

of life and development have been supplied, the next consideration

might seem to be the higher or nonessential needs and capacities.

Proportional justice would seem to suggest that the surplus ought to

be distributed in accordance with the varying needs and capacities of

men to develop their faculties beyond the minimum reasonable degree.

As we have already pointed out, this would undoubtedly be the proper

rule if it were susceptible of anything like accurate application, and

if the sum to be distributed were not produced by and dependent upon

those who were to participate in the distribution. However, we know

that the first condition is impracticable, while the second is

non-existent. Inasmuch as the sharers in the distribution have

produced and constantly determine the amount to be apportioned, the

distributive process must disregard nonessential needs, and govern

itself by other canons of justice.

The most urgent of these is the canon of efforts and sacrifices.

Superior effort, as measured by unusual will-exertion, is a

fundamental rule of justice, and a valid title to exceptional reward.

Men who strive harder than the majority of their fellows are ethically

deserving of extra compensation. At least, this is the pure theory of

the matter. In practice, the situation is complicated by the fact

that unusual effort cannot always be distinguished, and by the further

fact that some exceptional efforts do not fructify in correspondingly

useful results. Among men engaged at the same kind of work, superior

effort is to a great extent discernible in the unusually large

product. As such it actually receives an extra reward in accordance

with the canon of productivity. When men are employed at different

tasks, unusual efforts cannot generally be distinguished and

compensated. Hence the general principle is that superior efforts put

forth in the production of utilities, entitle men to something more

than living wages, but that the enforcement of this principle is

considerably hindered by the difficulty of discerning such efforts.

The unusual sacrifices that deserve extra compensation are connected

with the costs of industrial functions and the disagreeable character

of occupations. Under the first head are included the expense of

industrial training and the debilitating effects of the work. Not only

justice to the worker but a farsighted view of social welfare, dictate

that all unusual costs of preparation for an industrial craft or

profession should be repaid in the form of unusual compensation. This

means something more than a living wage. For the same reasons the

unusual hazards and disability resulting from industrial accidents and

diseases should be provided for by higher remuneration. In the absence

of such provision, these costs will have to be borne by parents, by

society in the form of charitable relief, or by the worker himself

through unnecessary suffering and incapacity. The industry that does

not provide for all these costs is a social parasite, the workers in

it are deprived of just compensation for their unusual sacrifices, and

society suffers a considerable loss through industrial friction and

diminished productive efficiency. In so far, however, as any of the

foregoing occupational costs are borne by society, as in the matter of

industrial education, or by the employer, as by the devices of

accident compensation or sickness insurance, they do not demand

provision in the form of extra wages.

Other unusual sacrifices that entitle the worker to more than living

wages, are inherent in disagreeable or despised occupations. The

scavenger and the bootblack ought to get more than the performers of

most other unskilled tasks. On the principles of comparative

individual desert, they should receive larger remuneration than many

persons who are engaged upon skilled but relatively pleasant kinds of

work. For if they were given the choice of expending the time and

money required to fit them for the latter tasks, or of taking up

immediately their present disagreeable labour, they would select the

more pleasant occupations, for the same or even a smaller

remuneration. And the majority of those who are now in the more

skilled occupations would make the same choice. Hence the sacrifices

inherent in disagreeable kinds of work are in many cases as great as

or greater than the sacrifices of preparation for the more pleasant

tasks; consequently the doers of the former are relatively underpaid.

If all wages were regulated by some supreme authority according to the

principles of complete justice, the workers in disagreeable

occupations would receive something more than living wages. Nor would

this determination of rewards be in any way contrary to social welfare

or the principle of maximum net results; for the superior

attractiveness of the other kinds of work would draw a sufficient

supply of labour to offset the advantage conferred by higher wages

upon the disagreeable occupations. The main reason why the latter kind

of labour is so poorly paid now is the fact that it is very plentiful,

a condition which is in turn due to the unequal division of industrial

opportunity. Were the opportunities of technical education and of

entrance to the higher crafts and professions more widely diffused,

the labourers offering themselves for the disagreeable tasks would be

scarcer and their remuneration correspondingly larger. This would be

not only more comfortable to the abstract principles of justice, but

more conducive to social efficiency.

To sum up the discussion concerning the canon of efforts and

sacrifices: Labourers have a just claim to more than living wages

whenever they put forth unusual efforts, and whenever their

occupations involve unusual sacrifices, either through costs of

preparation, exceptional hazards, or inherent disagreeableness. The

precise amount of extra compensation due under any of these heads can

be determined, as a rule, only approximately.

The next canon to be considered as a reason for more than living wages

is that of productivity. This offers little difficulty; for the

unusual product is always visible among men who are performing the

same kind of work, and the employer is always willing to give the

producer of it extra compensation. While superior productive power

which is based solely upon superior native ability has only

presumptive validity as a canon of justice, that is ethically

sufficient in our workaday world. Moreover, the canon of human welfare

demands that superior productivity receive superior rewards, so long

as these are necessary to evoke the maximum net product.

The canon of scarcity has exactly the same value as that of

productivity. Society and the employer are well advised and are

justified in giving extra compensation to scarce forms of labour when

the product is regarded as worth the corresponding price. This remains

true even when the scarcity is due to restricted opportunity of

preparation, rather than to sacrifices of any sort. In that case the

higher rewards are as fully justified as the superior remuneration of

that superior productivity which is based upon exceptional native

endowments. The amount of extra compensation which may properly be

given on account of scarcity is determined either by the degree of

sacrifice involved or by the ordinary operation of competition. When

men are scarce because they have made exceptional sacrifices of

preparation, they ought to be rewarded in full proportion to these

sacrifices. When they are scarce merely because of exceptional

opportunities, their extra compensation should not exceed the amount

that automatically comes to them through the interplay of supply and

demand.

The canon of human welfare has already received implicit application.

When due regard is given to efforts, sacrifices, productivity, and

scarcity, the demands of human welfare, both in its individual and its

social aspects, are sufficiently safeguarded.

In the foregoing pages the attempt has been made to describe the

proportions in which a given wage fund ought to be distributed among

the various classes of labourers who have claims upon the fund. The

first requisite of justice is that all should receive living wages. It

applies to all workers of average ability, even to those who have no

special qualifications of any sort. When this general claim has been

universally satisfied, those groups of workers who are in any wise

special, whose qualifications for any reason differentiate them from

and place them above the average, will have a right to something more

than living wages. They will have the first claim upon the surplus

that remains in the wage fund. Their claims will be based upon the

various canons of distribution explained in detail above; and the

amounts of extra remuneration to which they will be entitled, will be

determined by the extent to which their special qualifications

differentiate them from the average and unspecialised workers. If the

total available wage fund is merely sufficient to provide universal

living wages and the extra compensation due to the specialised groups,

no section of the labour force will be justified in exacting a larger

share. Even though the employer should withhold a part of the amount

due to some weaker group, a stronger group that is already getting its

proper proportion would have no right to demand the unjustly withheld

portion. For this belongs neither to the employer nor to the powerful

labour group, but to the weaker section of labourers.

This does not mean that a powerful body of workers who are already

receiving their due proportion as compared with other labour groups,

would not be justified in seeking any increase in remuneration

whatever. The increase might come out of profits, or interest, or the

consumer, and thus be in no sense detrimental to the rights of the

other sections of labourers. This problem will be considered a little

later. At present we confine our attention to the relative claims of

different labour groups to a definite wage fund.

Suppose, however, that after all workers have received living wages,

and all the exceptional groups have obtained those extra amounts which

are due them on account of efforts, sacrifices, productivity, and

scarcity, there remains a further surplus in the wage fund. In what

proportions should it be distributed? It should be equally divided

among all the labourers. The proportional justice which has been

already established can be maintained only by raising the present

rates of payment equally in all cases. All the average or

unspecialised groups would get something more than living wages, and

all the other groups would have their extra compensation augmented by

the same amount.

Of course, the wage-fund hypothesis which underlies the foregoing

discussion is not realised in actual life, any more than was the "wage

fund" of the classical economists. Better than any other device,

however, it enables us to describe and visualise the comparative

claims of different groups of labourers who have a right to unequal

amounts in excess of living wages.

_Wages Versus Profits_

Let us suppose that the wage fund is properly apportioned among the

different classes of labourers, according to the specified canons of

distribution. May not one or all of the labour groups demand an

increase in wages on the ground that the employer is retaining for

himself an undue share of the product?

As we have seen in the last chapter, the right of the labourers to

living wages is superior to the right of the employer or business man

to anything in excess of that amount of profits which will insure him

against risks, and afford him a decent livelihood in reasonable

conformity with his accustomed plane of expenditure. It is also

evident that those labourers who undergo more than average sacrifices

have a claim to extra compensation which is quite as valid as the

similarly based claim of the employer to more than living profits. In

case the business does not provide a sufficient amount to remunerate

both classes of sacrifices, the employer may prefer his own to those

of his employés, on the same principle that he may prefer his own

claim to a decent livelihood. The law of charity permits a man to

satisfy himself rather than his neighbour, when the needs in question

are of the same degree of urgency or importance. As to those labourers

who turn out larger products than the average, or whose ability is

unusually scarce, there is no practical difficulty; for the employer

will find it profitable to give them the corresponding extra

compensation. The precise question before us, then, is the claims of

the labourers upon profits for remuneration above universal living

wages and above the extra compensation due on account of unusual

efforts, sacrifices, productivity, and scarcity. Let us call the wage

that merely includes all these factors "the equitable minimum."

In competitive conditions this question becomes practical only with

reference to the exceptionally efficient and productive business men.

The great majority have no surplus available for wage payments in

excess of the "equitable minimum." Indeed, the majority do not now pay

the full "equitable minimum"; yet their profits do not provide them

more than a decent livelihood. The relatively small number of

establishments that show such a surplus as we are considering have

been brought to that condition of prosperity by the exceptional

ability of their directors, rather than by the unusual productivity of

their employés. In so far as this exceptional directive ability is due

to unusual efforts and sacrifices, the surplus returns which it

produces may be claimed with justice by the employer. In so far as the

surplus is the outcome of exceptional native endowments, it may still

be justly retained by him in accordance with the canon of

productivity. In other words, when the various groups of workers are

already receiving the "equitable minimum," they have no strict right

to any additional compensation out of those rare surplus profits which

come into existence in conditions of competition.

This conclusion is confirmed by reference to the canon of human

welfare. If exceptionally able business men were not permitted to

retain the surplus in question they would not exert themselves

sufficiently to produce it; labour would gain nothing; and the

community would be deprived of the larger product.

When the employer is a corporation instead of an individual or a

partnership, and when it is operating in competitive conditions, the

same principles are applicable, and the same conclusions justified.

The officers and the whole body of stockholders will have a right to

those surplus profits that remain after the "equitable minimum" has

been paid to the employés. Every consideration that urges such a

distribution in the case of the individual business holds good for the

corporation.

The corporation that is a monopoly will have the same right as the

competitive concern to retain for its owners those surplus profits

which are due to exceptional efficiency on the part of the managers of

the business. That part of the surplus which is derived from the

extortion of higher than competitive prices cannot be justly retained,

since it rests upon no definite moral title. As we saw in the chapter

on monopoly, the owners have no right to anything more than the

prevailing rate of interest, together with a fair return for their

labour and for any unusual efficiency that they may exercise. Should

the surplus in question be discontinued by lowering prices, or should

it be continued and distributed among the labourers? As a rule, the

former course would seem morally preferable. While the labourers, as

we shall see presently, are justified in contending for more than the

"equitable minimum" at the expense of the consumer, their right to do

so through the exercise of monopoly power is extremely doubtful.

Whether this power is exerted by themselves or by the employer on

their behalf, it remains a weapon which human nature seems incapable

of using justly.

_Wages Versus Interest_

Turning now to the claims of the labourers as against the capitalists,

or interest receivers, we perceive that the right to any interest at

all is morally inferior to the right of all the workers to the

"equitable minimum." As heretofore pointed out more than once, the

former right is only presumptive and hypothetical, and interest is

ordinarily utilised to meet less important needs than those supplied

by wages. Through his labour power the interest receiver can supply

all those fundamental needs which are satisfied by wages in the case

of the labourer. Therefore, it seems clear that the capitalist has no

right to interest until all labourers have received the "equitable

minimum." It must be borne in mind, however, that any claim of the

labourer against interest falls upon the owners of the productive

capital in a business, upon the undertaker-capitalist, not upon the

loan-capitalist.

When all the labourers in an industry are receiving the "equitable

minimum," have they a right to exact anything more at the expense of

interest? By interest we mean, of course, the prevailing or

competitive rate that is received on productive capital--five or six

per cent. Any return to the owners of capital in excess of this rate

is properly called profits rather than interest, and its relation to

the claims of the labourers has received consideration in the

immediately preceding section of this chapter. The question, then, is

whether the labourers who are already getting the "equitable minimum"

would act justly in demanding and using their economic power to obtain

a part or all of the pure interest. No conclusive reason is available

to justify a negative answer. The title of the capitalist is only

presumptive and hypothetical, not certain and unconditional. It is,

indeed, sufficient to justify him in retaining interest that comes to

him through the ordinary processes of competition and bargaining; but

it is not of such definite and compelling moral efficacy as to render

the labourers guilty of injustice when they employ their economic

power to divert further interest from the coffers of the capitalist to

their own pockets. The interest-share of the product is morally

debatable as to its ownership. It is a sort of no-man's property (like

the rent of land antecedently to its legal assignment through the

institution of private landownership) which properly goes to the first

occupant as determined by the processes of bargaining between

employers and employés. If the capitalists get the interest-share

through these processes it rightfully belongs to them; if the

labourers who are already in possession of the "equitable minimum"

develop sufficient economic strength to get this debatable share they

may justly retain it as their own.

The foregoing conclusion may seem to be a very unsatisfactory solution

of a problem of justice. However, it is the only one that is

practically defensible. If the capitalist's claim to interest were as

definite and certain as the labourer's right to a living wage, or as

the creditor's right to the money that he has loaned, the solution

would be very simple: the labourers that we are discussing would have

no right to strive for any of the interest. But the claim of the

capitalists is not of this clear and conclusive nature. It is

sufficient when combined with actual possession; it is not sufficient

when the question is of future possession. The title of first

occupancy as regards land is not valid until the land has been

actually occupied; and similarly the claim of the capitalist to

interest is not valid until the interest has been received. If the

economic forces which determine actual possession operate in such a

way as to divert the interest-share to the labourers, they, not the

capitalists, will have the valid moral title, just as Brown with his

automobile rather than Jones with his spavined nag will enjoy the

valid title of first occupancy to a piece of ownerless land which both

have coveted.

This conclusion is confirmed by reference to the rationally and

morally impossible situation that would follow from its rejection. If

we deny to the labourers the moral freedom to strive for higher wages

at the expense of the capitalist, we must also forbid them to follow

this course at the expense of the consumer. For the great majority of

consumers would stand to lose advantages to which they have as good a

moral claim as the capitalists have to interest. Practically this

would mean that the labourers have no right to seek remuneration in

excess of the "equitable minimum"; for such excess must in

substantially all cases come from either the consumer or the

capitalist. On what principle can we defend the proposition that the

great majority of labourers are forever restrained by the moral law

from seeking more than bare living wages, and the specialised

minority from demanding more than that extra compensation which

corresponds to unusual efforts, sacrifices, productivity, and

scarcity? Who has authorised us to shut against these classes the

doors of a more liberal standard of living, and a more ample measure

of self development?

_Wages Versus Prices_

The right of the labourers to the "equitable minimum" implies

obviously the right to impose adequate prices upon the consumers of

the labourer's products. This is the ultimate source of the rewards of

all the agents of production. Suppose that the labourers are already

receiving the "equitable minimum." Are they justified in seeking any

more at the cost of the consumer? If all the consumers were also

labourers the answer would be simple, at least in principle: rises in

wages and prices ought to be so adjusted as to bring equal gains to

all individuals. The "equitable minimum" is adjusted to the varying

moral claims of the different classes of labourers; therefore, any

rise in remuneration must be equally distributed in order to leave

this adjustment undisturbed. It is a fact, however, that a large part

of the consumers are not labourers; consequently they cannot look to

rises in wages as an offset to their losses through rises in prices.

Can they be justly required to undergo this inconvenience for the

benefit of labourers who are already getting the "equitable minimum"?

Let us consider first the case of higher wages versus lower prices. A

few progressive and efficient manufacturers of shoes find themselves

receiving large surplus profits which are likely to continue. So far

as the presumptions of strict justice are concerned, they may, owing

to their superior productivity, retain these profits for themselves.

Seized, however, with a feeling of benevolence, or a scruple of

conscience, they determine to divide future profits of this class

among either the labourers or the consumers. If they reduce prices the

labourers will gain something as users of shoes, but the other wearers

of shoes will also be beneficiaries. If the surplus profits are all

diverted to the labourers in the form of higher wages the other

consumers of shoes will gain nothing. Now there does not seem to be

any compelling reason, any certain moral basis, for requiring the shoe

manufacturers to take one course rather than the other. Either will be

correct morally. Possibly the most perfect plan would be to effect a

compromise by lowering prices somewhat and giving some rise in wages;

but there is no strict obligation to follow this course. To be sure,

since the manufacturers have a right to retain the surplus profits,

they have also a right to distribute them as they prefer. Let us get

rid of this complication by assuming that the manufacturers are

indifferent concerning the disposition of the surplus, leaving the

matter to be determined by the comparative economic strength of

labourers and consumers. In such a situation it is still clear that

either of the two classes would be justified in striving to secure any

or all of the surplus. No definite moral principle can be adduced to

the contrary. To put the case in more general terms: there exists no

sufficient reason for maintaining that the gains of cheaper production

should go to the consumer rather than to the labourer, or to the

labourer rather than to the consumer, so long as the labourer is

already in receipt of the "equitable minimum."

Turning now to the question of higher wages at the cost of higher

prices, we note that this would result in at least temporary hardship

to four classes of persons: the weaker groups of wage earners; all

self employing persons, such as farmers, merchants, and manufacturers;

the professional classes; and persons whose principal income was

derived from rent or interest. All these groups would have to pay more

for the necessaries, comforts, and luxuries of living, without being

immediately able to raise their own incomes correspondingly.

Nevertheless, the first three classes could in the course of time

force an increase in their revenues sufficient to offset at least the

more serious inconveniences of the increase in prices. So far as the

wage earners are concerned, it is understood that all these would have

a right to whatever advance in the money measure of the "equitable

minimum" was necessary to neutralise the higher cost of living

resulting from the success of the more powerful groups in obtaining

higher wages. The right of a group to the "equitable minimum" of

remuneration is obviously superior to the right of another group to

more than that amount. And a supreme wage-determining authority would

act on this principle. It cannot be shown, however, that in the

absence of any such authority empowered to protect the "equitable

minimum" of the weaker labourers, the more powerful groups are obliged

to refrain from demanding extra remuneration. The reason of this we

shall see presently. In the meantime we call attention to the fact

that, owing to the greater economic opportunity resulting from the

universal prevalence of the "equitable minimum" and of industrial

education, even the weaker groups of wage earners would be able to

obtain some increases in wages. In the long run the more powerful

groups would enjoy only those advantages which arise out of superior

productivity and exceptional scarcity. These two factors are

fundamental, and could not in any system of industry be prevented from

conferring advantages upon their possessors.

As regards the self employing classes, the remedy for any undue

hardship suffered through the higher prices of commodities would be

found in a discontinuance of their present functions until a

corresponding rise had occurred in the prices of their own products.

They could do this partly by organisation, and partly by entering into

competition with the wage earners. Substantially the same recourse

would be open to the professional classes. In due course of time,

therefore, the remuneration of all workers, whether employés or self

employed or professional, would tend to be in harmony with the canons

of efforts, sacrifices, productivity, scarcity, and human welfare.

Since the level of rent is fixed by forces outside the control of

labourers, employers, or landowners, the receivers thereof would be

unable to offset its decreased purchasing power by increasing its

amount. However, this situation would not be inherently unjust, nor

even inequitable. Like interest, rent is a "workless" income, and has

only a presumptive and hypothetical justification. Therefore, the

moral claim of the rent receiver to be protected against a decrease in

the purchasing power of his income, is inferior to the moral claim of

the labourer to use his economic power for the purpose of improving

his condition beyond the limits of welfare fixed by the "equitable

minimum." What is true of the rent receiver in this respect applies

likewise to the case of the capitalist. As we saw a few pages back,

the wage earners are morally free to take this course at the expense

of interest. Evidently they may do the same thing when the consequence

is merely a diminution in its purchasing power. To be sure, if capital

owners should regard their sacrifices in saving as not sufficiently

rewarded, owing either to the low rate or the low purchasing power of

interest, they would be free to diminish or discontinue saving until

the reduced supply of capital had brought about a rise in the rate of

interest. Should they refrain from this course they would show that

they were satisfied with the existing situation. Hence they would

suffer no wrong at the hands of the labourers who forced up wages at

the expense of prices.

Two objections come readily to mind against the foregoing paragraphs.

The more skilled labour groups might organise themselves into a

monopoly, and raise their wages so high as to inflict the same degree

of extortion upon consumers as that accomplished by a monopoly of

capitalists. This is, indeed, possible. The remedy would be

intervention by the State to fix maximum wages. Just where the maximum

limit ought to be placed is a problem that could be solved only

through study of the circumstances of the case, on the basis of the

canons of efforts, sacrifices, productivity, scarcity, and human

welfare. The second objection calls attention to the fact that we have

already declared that the more powerful labour groups would not be

justified in exacting more than the "equitable minimum" out of a

common wage fund, so long as any weaker group was below that level;

yet this is virtually what would happen when the former caused prices

to rise to such an extent that the weaker workers would be forced

below the "equitable minimum" through the increased cost of living.

While this contingency is likewise possible, it is not a sufficient

reason for preventing any group of labourers from raising their

remuneration at the expense of prices. Not every rise in prices would

effect the expenditures of the weaker sections of the wage earners. In

some cases the burden would be substantially all borne by the better

paid workers and the self employing, professional, and propertied

classes. When it did fall to any extent upon the weaker labourers,

causing their real wages to fall below the "equitable minimum," it

could be removed within a reasonable time by organisation or by

legislation. Even if these measures were found ineffective, if some of

the weaker groups of workers should suffer through the establishment

of the higher prices, this arrangement would be preferable on the

whole to one in which no class of labourers was permitted to raise its

remuneration above the "equitable minimum" at the expense of prices. A

restriction of this sort, whether by the moral law or by civil

regulation, would tend to make wage labour a status with no hope of

pecuniary progress.

It is true that a universal and indefinite increase of wages at the

expense of prices might at length leave the great majority of the

labourers no better off than they were when they had merely the

"equitable minimum." Such would certainly be the result if the

national product were only sufficient to provide the "equitable

minimum" for all workers, and that volume of incomes for the other

agents of production which was required to evoke from them a fair

degree of productive efficiency. In that case the higher wages would

be an illusion. The gain in the amount of money would be offset by the

loss in its purchasing power. Even so, this condition would be greatly

superior to a régime in which the labourers were universally prevented

from making any effort to raise their wages above a fixed maximum.

_Concluding Remarks_

All the principles and conclusions defended in this chapter have been

stated with reference to the present distributive system, with its

free competition and its lack of legal regulation. Were all incomes

and rewards fixed by some supreme authority, the same canons of

justice would be applicable, and the application would have to be made

in substantially the same way, if the authority were desirous of

establishing the greatest possible measure of distributive justice.

The main exception to this statement would occur in relation to the

problem of raising wages above the "equitable minimum" at the expense

of prices. In making any such increase, the wage-fixing authority

would be obliged to take into account the effects upon the other

classes of labourers, and upon all the non-wage-earning classes.

Substantially the same difficulties would confront the government in a

collectivist organisation of industry. The effect that a rise in the

remuneration of any class would produce, through a rise in the prices

of commodities, upon the purchasing power of the incomes of other

classes, would have to be considered and as nearly as possible

ascertained. This would be no simple task. Simple or not, it would

have to be faced; and the guiding ethical principles would always

remain efforts, sacrifices, productivity, scarcity, and human welfare.

The greater part of the discussion carried on in this chapter has a

highly theoretical aspect. From the nature of the subject matter this

was inevitable. Nevertheless the principles that have been enunciated

and applied seem to be incontestable. In so far as they are enforcible

in actual life, they seem capable of bringing about a wider measure of

justice than any other ethical rules that are available.

Possibly the applications and conclusions have been laid down with too

much definiteness and dogmatism, and the whole matter has been made

too simple. On the other hand, neither honesty nor expediency is

furthered by an attitude of intellectual helplessness, academic

hyper-modesty, or practical agnosticism. If there exist moral rules

and rational principles applicable to the problem of wage justice, it

is our duty to state and apply them as fully as we can. Obviously we

shall make mistakes in the process; but until the attempt is made, and

a certain (and very large) number of mistakes are made, there will be

no progress. We have no right to expect that ready-made applications

of the principles will drop from Heaven.

For a long time to come, however, many of the questions discussed in

this chapter will be devoid of large practical interest. The problem

immediately confronting society is that of raising the remuneration

and strengthening generally the economic position of those labourers

who are now below the level, not merely of the "equitable minimum,"

but of a decent livelihood. This problem will be the subject of the

next chapter.

CHAPTER XXV

METHODS OF INCREASING WAGES

Proposals for the reform of social conditions are important in

proportion to the magnitude of the evils which they are designed to

remove, and are desirable in proportion to their probable efficacy.

Applying these principles to the labour situation, we find that among

the remedies proposed the primacy must be accorded to a minimum wage.

It is the most important project for improving the condition of labour

because it would increase the compensation of some two-thirds of the

wage earners, and because the needs of this group are greater and more

urgent than the needs of the better-paid one-third. The former are

below the level of reasonable living, while the latter are merely

deprived of the opportunities of a more ample and liberal scale of

living. Hence the degree of injustice suffered by the former is much

greater than in the case of the latter. A legal minimum wage is the

most desirable single measure of industrial reform because it promises

a more rapid and comprehensive increase in the wages of the underpaid

than any alternative device that is now available. The superior

importance of a legally established minimum wage is obvious; its

superior desirability will form the subject of the pages that are

immediately to follow.

_The Minimum Wage in Operation_

Happily the advocate of this measure is no longer required to meet the

objection that it is novel and utterly uncertain. For more than twenty

years it has been in operation in Australasia. It was implicit in the

compulsory arbitration act of New Zealand, passed in 1894; for the

wages which the arbitration boards enforce are necessarily the lowest

that the affected employers are permitted to pay; besides, the

district conciliation boards are empowered by the law to fix minimum

wages on complaint of any group of underpaid workers. The first formal

and explicit minimum wage law of modern times was enacted by the state

of Victoria in 1896. In the beginning it applied to only six trades,

but it has been extended at various legislative sessions, so that

to-day it protects substantially all the labourers of the state,

except those employed in agriculture. Since the year 1900 all the

other states of Australia have made provision for the establishment of

minimum wages. At present, therefore, the legal minimum wage in some

form prevails throughout the whole of Australasia.

In 1909 the Trade Boards Act authorised the application of this device

to four trades in Great Britain. In 1913 the provisions of the Act

were made applicable to four other trades, and in 1914 to a third

group of four industries. A special minimum wage law was in 1912

enacted to govern the entire coal mining industry of the country.

The first minimum wage law in the United States was passed in 1912 by

Massachusetts. It has been followed by similar legislation in ten

other states; namely, Arkansas, California, Colorado, Kansas,

Minnesota, Nebraska, Oregon, Utah, Washington, and Wisconsin.

California has adopted a constitutional amendment which specifically

authorises minimum wage legislation for women and minors, and Ohio

added a similar provision to her constitution which applies to men as

well.

The minimum wage statutes of Australasia and Great Britain cover all

classes of workers, but those of the United States are restricted to

minors and women. With the exception of the Utah act, all the

important laws on this subject in all three regions establish minimum

wages indirectly, by authorising commissions and wage boards to

determine the actual rates. In Australasia and Great Britain the

statutes do not attempt to specify any standard to which the wage

determinations of the boards must conform, but the tendency in the

former country in recent years has been to enforce a living wage as

the minimum; that is, wage rates sufficiently high to provide a decent

family livelihood for men, and a reasonable personal livelihood for

women and minors. All the laws in America but one require the

commissions to establish living wages. In Utah no commission is

provided for, as the law itself specifies in terms of money the

minimum rates of remuneration that the employers of women are

permitted to pay.

The effectiveness of the laws that have been put into operation is at

least as great as their friends had dared to hope. According to

Professor M. B. Hammond of Ohio, who investigated the situation on the

spot in the winter of 1911-1912, the people of Australasia have

accepted the minimum wage "as a permanent policy in the industrial

legislation of that part of the world." Professor Hammond's

observations, and the replies of the Chief Factory Inspector of

Melbourne to the New York Factory Investigating Commission, show the

main effects of minimum wage legislation to be as follows: sweating

and strikes have all but disappeared; the efficiency of the workers

has on the whole increased; the number of workers unable to earn the

legal minimum has not been as great as most persons had feared, and

almost all of them have obtained employment at lower remuneration

through special permits; the legal minimum has not only not become the

actual maximum, but is exceeded in the case of the majority of

workers; no evidence exists to show that any industry has been

crippled, or forced to move out of the country; with the exception of

a very few instances, the prices of commodities have not been raised

by the law.[251]

In the four trades of Great Britain which were first brought under the

operation of the Trade Boards Act, and which presented some of the

worst examples of economic oppression, the beneficial effects of the

minimum wage have been even more striking than in Australasia. Wages

have been considerably raised, in some cases as high as one hundred

per cent.; dispirited and helpless workers have gained courage, power,

and self-respect to such an extent as to increase considerably their

membership in trade unions, and to obtain in several instances further

increases in remuneration beyond the legal minimum; the compensation

of the better paid labourers has not been reduced to the level fixed

by the trade boards; the efficiency of both employés and productive

processes has been on the whole increased; the number of persons

forced out of employment by the law is negligible; no important rise

of prices is traceable to the law; and the number of business concerns

unable to pay the increase in wages is too small to deserve serious

consideration. All these results had been established before the

outbreak of the war.[252]