CHAPTER X.

THE ECONOMY OF HIGH WAGES.

Sec. 1. _The Economy of Low Wages._

Sec. 2. _Modifications of the Early Doctrine--Sir T. Brassey's

Evidence from Heavy Manual Work._

Sec. 3. _Wages, Hours, and Product in Machine-industry._

Sec. 4. _A General Application of the Economy of High Wages and

Short Hours inadmissible._

Sec. 5. _Mutual Determination of Conditions of Employment and

Productivity._

Sec. 6. _Compressibility of Labour and Intensification of Effort._

Sec. 7. _Effective Consumption dependent upon Spare Energy of the

Worker._

Sec. 8. _Growth of Machinery in relation to Standard of Comfort._

Sec. 9. _Economy of High Wages dependent upon Consumption._

Sec. 1. The theory of a "natural" rate of wages fixed at the bare

subsistence-point which was first clearly formulated in the writings

of Quesnay and the so-called "physiocratic" school was little more

than a rough generalisation of the facts of labour in France. But

these facts, summed up in the phrase, "Il ne gagne que sa vie," and

elevated to the position of a natural law, implied the general belief

that a higher rate of wage would not result in a correspondent

increase of the product of labour, that it would not pay an employer

to give wages above the point of bare sustenance and reproduction.

This dogma of the economy of cheap labour, taught in a slightly

modified form by many of the leading English economists of the first

half of the nineteenth century, has dominated the thought and

indirectly influenced the practice of the business world. It is true

that Adam Smith in a well-known passage had given powerful utterance

to a different view of the relation between work and wages:--"The

liberal reward of labour as it encourages the propagation so it

encourages the industry of the common people. The wages of labour are

the encouragement of industry, which, like every other human quality,

improves in proportion to the encouragement it receives."[225] But the

teaching of Ricardo, and the writers who most closely followed him in

his conception of the industrial system, leaned heavily in favour of

low wages as the sound basis of industrial progress.

The doctrine of the economy of low wages in England scarcely needed

the formal support of the scientific economist. It was already

strongly implanted in the mind of the eighteenth century "business

man," who moralised upon the excesses resulting from high wages much

in the tone of the business man of to-day. It would be scarcely

possible to parody the following line of reflection:--

"The poor in the manufacturing counties will never work any

more time in general than is necessary just to live and

support their weekly debauches. Upon the whole we may fairly

aver that a reduction of wages in the woollen manufactures

would be a national blessing and advantage and no real injury

to the poor. By this means we might keep our trade, uphold our

rents, and reform the people into the bargain." (Smith's

_Memoirs of Wool_, vol. ii. p. 308.)

Compare with this Arthur Young's frequent suggestion that rents should

be raised in order to improve farming.[226] So Dr. Ure, half a century

later, notwithstanding that his main argument is for the "economy of

high wages," both on the ground that it evokes the best quality of

work and because it keeps the workman contented, is unable to avoid

flatly contradicting himself as follows:--

"High wages, instead of leading to thankfulness of temper and

improvement of mind, have, in too many cases, cherished pride

and supplied funds for supporting refractory spirits in

strikes wantonly inflicted upon one set of mill-owners after

another throughout the several districts of Lancashire for the

purpose of degrading them into a state of servitude."

(_Philosophy of Manufactures_, p. 366.)

So again (p. 298):--"In fact, it was their high wages which enabled

them to maintain a stipendary committee in affluence, and to pamper

themselves into nervous ailments by a diet too rich and exciting for

their indoor occupation."

The experiments of Robert Owen in raising wages and shortening

hours in his New Lanark mills failed utterly to convince his

fellow-manufacturers that a high standard of comfort among the workers

would bring a correspondent rise in working efficiency.

The history of the early factory system, under which rapid fortunes

were built out of the excessive toil of children and low-skilled adult

workers paid at rates which were, in many instances, far below true

"subsistence wages," furnished to the commercial mind a convincing

argument in favour of "cheap labour," and set political economy for

half a century at war with the rising sentiments of humanity.[227]

Even now, the fear frequently expressed in the New World regarding the

"competition of cheap labour" attests a strong survival of this

theory, which held it to be the first principle of "good business" to

pay as low wages as possible.

Sec. 2. The trend of more recent thought has been in the direction of a

progressive modification of the doctrine of the "economy of low

wages." The common maxim that "if you want a thing well done you must

expect to pay for it" implies some general belief in a certain

correspondence of work and wages. The clearer formulation of this idea

has been in large measure the work of economic thinkers who have set

themselves to the close study of comparative statistics. The work in

which Mr. Brassey, the great railway contractor, was engaged gave him

an opportunity of making accurate comparison of the work and wages of

workmen of various nationalities, and his son, Sir Thomas Brassey,

collected and published a number of facts bearing upon the subject

which, as regards certain kinds of work, established a new relation

between work and wages. He found that English navvies employed upon

the Grand Trunk Railway in Canada, and receiving from 5s. to 6s. a

day, did a greater amount of work for the money than French-Canadians

paid at 3s. 6d. a day; that it was more profitable to employ

Englishmen at 3s. to 3s. 6d. upon making Irish railways than Irishmen

at 1s. 6d. to 1s. 8d.; that "in India, although the cost of dark

labour ranges from 4-1/2d. to 6d. a day, mile for mile the cost of

railway work is about the same as in England;" that in quarry work,

"in which Frenchmen, Irishmen, and Englishmen were employed side by

side, the Frenchman received three, the Irishman four, and the

Englishman six francs a day. At those different rates the Englishman

was found to be the most advantageous workman of the three." Extending

his inquiries to the building trades, to mining, and to various

departments of manufactures, he found a general consensus of opinion

among employers and other men of practical experience making for a

similar conclusion. In France, Germany, and Belgium, where wages and

the standard of living were considerably lower than in England, the

cost of turning out a given product was not less, but greater. In the

United States and in a few trades of Holland, where the standard of

comfort was as high or higher than in the corresponding English

industries, more or better work was done. In short, the efficiency of

labour was found to vary with tolerable accuracy in accordance with

the standard of comfort or real wages.

In his introduction to his work on _Foreign Work and English Wages_,

Sir Thomas Brassey gives countenance to a theory of wages which has

frequently been attributed to him, and has sometimes been accepted as

a final statement of the relation of work and wages--viz., that "the

cost of work, as distinguished from the daily wage of the labourer,

was approximately the same in all countries." In other words, it is

held that, for a given class of work, there is a fixed and uniform

relation between wages and efficiency of labour for different lands

and different races.

Now, to the acceptance of this judgment, considered as a foundation of

a theory of comparative wages, there are certain obvious objections.

In the first place, in the statement of most of the cases which are

adduced to support the theory reference is made exclusively to money

wages, no account being taken of differences of purchasing power in

different countries. In order to establish any rational basis, the

relation must be between real wages or standard of living and

efficiency. Now, though it must be admitted as inherently probable

that some definite relation should subsist between wages and work, or,

in other words, between the standard of consumption and the standard

of production, it is not _a priori_ reasonable to expect this relation

should be uniform as between two such countries as England and India,

so that it should be a matter of economic indifference whether a piece

of work is done by cheap and relatively inefficient Indian labour or

by expensive and efficient English labour. Such a supposition could

only stand upon one of two assumptions.

The first assumption would be that of a direct arithmetical

progression in the relation of wage and work such as would require

every difference in quantity of food, etc., consumed by labourers to

be reflected in an exactly correspondent difference of output of

productive energy--an assumption which needs no refutation, for no one

would maintain that the standard of comfort furnished by wages is the

sole determinant of efficiency, and that race, climate, and social

environment play no part in economic production. The alternative

assumption would be that of an absolute fluidity of capital and

labour, which should reduce to a uniform level throughout the world

the net industrial advantages, so that everywhere there was an exact

quantitative relation between work and wage, production, and

consumption. Though what is called a "tendency" to such uniformity may

be admitted, no one acquainted with facts will be so rash as to

maintain that this uniformity is even approximately reached.

Sec. 3. There is, then, no reason to suppose that wages, either nominal

or real, bear any exact, or even a closely approximate, relation to

the output of efficient work, quantity and quality being both taken

into consideration. But, in truth, the evidence afforded by Sir T.

Brassey does not justify a serious investigation of this theory of

indifference or equivalence of work and wages. For, in the great

majority of instances which he adduces, the advantage is clearly shown

to rest with the labour which is most highly remunerated. The theory

suggested by his evidence is, in fact, a theory of "the economy of

high wages."

This theory, which has been advancing by rapid strides in recent

years, and is now supported by a great quantity of carefully-collected

evidence, requires more serious consideration. The evidence of Sir T.

Brassey was chiefly, though by no means wholly, derived from branches

of industry where muscular strength was an important element, as in

road-making, railway-making, and mining; or from the building trades

where machinery does not play a chief part in directing the pace and

character of productive effort. It would not be unreasonable to expect

that the quantitative relation between work and wages might be closer

in industries where freely expended muscular labour played a more

prominent part than in industries where machinery was a dominating

factor, and where most of the work consisted in tending machinery. It

might well be the case that it would pay to provide a high standard of

physical consumption to navvies, but that it would not pay to the same

extent to give high wages to factory operatives, or even to other

classes of workers less subject to the strain of heavy muscular work.

In so far as the tendency of modern production is to relieve man more

and more of this rough muscular work, it might happen that the true

economy favoured high wages only in those kinds of work which were

tending to occupy a subordinate place in the industry of the future.

The earlier facts, which associated high wages with high productivity,

low wages with low productivity, in textile factories and ironworks,

were of a fragmentary character, and, considered as evidence of a

causal connection between high wages and high productivity, were

vitiated by the wide differences in the development of machinery and

industrial method in the cases compared. In recent years the labours

of many trained economists, some of them with close practical

knowledge of the industrial arts, have collected and tabulated a vast

amount of evidence upon the subject. A large number of American

economists, among them General F.A. Walker, Mr. Gunton, Mr. Schoenhof,

Mr. Gould, Mr. E. Atkinson, have made close researches into the

relation between work and wages in America and in the chief industrial

countries of Europe. A too patent advocacy of tariff reform or a

shorter working day has in some cases prevented the statistics

collected from receiving adequate attention, but there is no reason to

doubt the substantial accuracy of the research.

The most carefully-conducted investigation has been that of Professor

Schulze-Gaevernitz, who, basing his arguments upon a close study of

the cotton industry, has related his conclusion most clearly to the

evolution of modern machine-production. The earlier evidence merely

established the fact of a co-existence between high wages and good

work, low wages and bad work, without attempting scientifically to

explain the connection. Dr. Schulze-Gaevernitz, by his analysis of

cotton spinning and weaving, successfully formulates the observed

relations between wages and product. He compares not only the present

condition of the cotton industry in England and in Germany and other

continental countries, but the conditions of work and wages in the

English cotton industry at various times during the last seventy

years, thus correcting any personal equation of national life which

might to some extent vitiate conclusions based only upon international

comparison. This double method of comparison yields certain definite

results, which Dr. Schulze-Gaevernitz sums up in the following

words:--"Where the cost of labour (_i.e._ piece wages) is lowest the

conditions of labour are most favourable, the working day is shortest,

and the weekly wages of the operatives are highest" (p. 133). The

evolution of improved spinning and weaving machinery in England is

found to be attended by a continuous increase in the product for each

worker, a fall in piece wages reflected in prices of foods, a

shortening of the hours of labour, and a rise in weekly wages. The

following tables, compiled by Dr. Schulze-Gaevernitz, give an accurate

statement of the relations of the different movements, taking the

spinning and weaving industries as wholes in England:--

SPINNING.

----------+-----------+-------------+---------+---------+------------

| Product | Number of | Product | Cost of | Average

| of yarn | workers | per | labour | yearly

| in | in spinning | worker | per lb. | wages.

| 1000 lbs. | mills. | in lbs. | |

----------+-----------+-------------+---------+---------+------------

| | | | s. d. | L s. d.

1819-21 | 106,500 | 111,000 | 968 | 6 4 | 26 13 0

1829-31 | 216,500 | 140,000 | 1546 | 4 2 | 27 6 0

1844-46 | 523,300 | 190,000 | 2754 | 2 3 | 28 12 0

1859-61 | 910,000 | 248,000 | 3671 | 2 1 | 32 10 0

1880-82 | 1,324,000 | 240,000 | 5520 | 1 9 | 44 4 0[228]

----------+-----------+-------------+---------+---------+------------

WEAVING.

--------+------------+-----------+------------+---------+------------

| Products | Number of | Product | Cost of | Average

| in | workers. | per worker | labour | yearly

| 1000 lbs. | | in lbs. | per lb. | income.

--------+------------+-----------+------------+---------+------------

| | | | s. d. | L s. d.

1819-21 | 80,620 | 250,000 | 322 | 15 5 | 20 18 0

1829-31 | 143,200 | 275,000 | 521 | 9 0 | 19 18 0[229]

1844-46 | 348,110 | 210,000 | 1658 | 3 5 | 24 10 0

1859-61 | 650,870 | 203,000 | 3206 | 2 9 | 30 15 0

1880-82 | 993,540 | 246,000 | 4039 | 2 3 | 39 0 0

--------+------------+-----------+------------+---------+------------

The same holds good of the growth of the cotton-weaving industry in

America, as the following table shows:--

+------+-------------+-----------+-------------+

| | Yearly | Cost of | Yearly |

| | product | labour | earnings |

| | per worker. | per yard. | per worker. |

+------+-------------+-----------+-------------+

| | Yards. | Cents. | Dollars. |

| 1830 | 4,321 | 1.9 | 164 |

| 1850 | 12,164 | 1.55 | 190 |

| 1870 | 19,293 | 1.24 | 240 |

| 1884 | 28,032 | 1.07 | 290 |

+------+-------------+-----------+-------------+

Of Germany and Switzerland the same holds. Every improvement of

machinery increasing the number of spindles or looms a worker can

tend, or increasing the pace of the machinery and thus enlarging the

output per worker, is attended by a higher weekly wage, and in general

by a shortening of the hours of labour.

A detailed comparison of England, the United States, and the

Continent, as regards the present condition of the cotton industry,

yields the same general results. A comparison between England and the

United States shows that in weaving, where wages are much higher in

America, the labour is so much more efficient as to make the cost of

production considerably lower than in England; in spinning, where

English wages are about as highly paid, the cost of production is

lower than in America (p. 156). A comparison between Switzerland and

Germany, England, and America, as regards weaving, yields the

following results (p. 151):--

---------------------+-------------+-----------+----------+--------

| Weekly | | |

| product | Cost | Hours of | Weekly

| per worker. | per yard. | labour. | wage.

---------------------+-------------+-----------+----------+--------

| Yards. | | | s. d.

Switzerland and | | | |

Germany | 466 | 0.303 | 12 | 11 8

England | 706 | 0.275 | 9 | 16 3

America | 1200 | 0.2 | 10 | 20 3

---------------------+-------------+-----------+----------+--------

The low-paid, long-houred labourers of the Italian factories are

easily undersold by the higher paid and more effective labour of

England or America. So also a comparison between Mulhausen and the

factories of the Vosges valleys shows that the more highly-paid labour

of the former is the more productive.

In Russia the better-paid labour in the factories near Petersburg and

in Esthland can outcompete the lower paid labour of the central

governments of Vladimir and Moscow.

Schulze-Gaevernitz goes so far as to maintain that under existing

conditions of low wages and long hours, the Indian factories cannot

undersell their Lancashire competitors, and maintains that the

stringent factory laws which are demanded for India are likely to

injure Lancashire,[230] instead of giving her an advantage. The most

vital points of the subject are thus summarised, after an elaborate

comparison of the cotton-spinning of England and of those parts of

Germany which use English machinery:--

"In England the worker tends nearly twice as much machinery as

in Germany; the machines work more quickly; the loss as

compared with the theoretic output (_i.e._, waste of time and

material) is smaller. Finally, there comes the consideration

that in England the taking-off and putting-on from the

spindles occupies a shorter time; there is less breaking of

threads, and the piecing of broken threads requires less time.

The result is that the cost of labour per pound of

yarn--especially when the work of supervision is taken into

account--is decidedly smaller in England than in Germany. So

the wages of the English spinners are nearly twice as high as

in Germany, while the working day occupies a little over 9

hours as compared with 11 to 11-1/2 in Germany." (P. 136.)

Sec. 4. From the evidence adduced by Schulze-Gaevernitz, modern

industrial progress is expressed, so far as its effects on labour are

concerned, in seven results: (_a_) Shorter hours of labour. (_b_)

Higher weekly wage. (_c_) Lower piece-wage. (_d_) Cheaper product.

(_e_) Increased product per worker. (_f_) Increased speed of

machinery. (_g_) Increased number and size of machines to the worker.

All these factors must be taken into consideration before a full

judgment of the net results of machinery upon the worker can be

formed. The evidence above recorded, conclusive as it is regarding the

existence of some causal connection between a high standard of living

and high productivity of labour, does not necessarily justify the

conclusion that a business, or a federation of employers, may go ahead

increasing wages and shortening hours of labour _ad libitum_ in sure

and certain expectation of a corresponding increase in the net

productivity of labour.

Before such a conclusion is warranted, we must grasp more clearly the

nature of the causal relation between high standard of living and

efficiency. How far are we entitled to regard high wages and other

good conditions of employment as the cause, how far as the effect of

efficiency of labour? The evidence adduced simply proves that _a_ _b_

_c_, certain phenomena relating to efficiency--as size of product,

speed of workmanship, quantity of machines tended--vary directly with

_d_ _e_ _f_, certain other phenomena relating to wages, hours of

labour, and other conditions of employment. So far as such evidence

goes, we are only able to assert that the two sets of phenomena are

causally related, and cannot surely determine whether variations in

_a_ _b_ _c_ are causes, or effects of concomitant variations in _d_

_e_ _f_, or whether both sets of phenomena are or are not governed by

some third set, the variations of which affect simultaneously and

proportionately the other two.

The moral which writers like Mr. Gunton and Mr. Schoenhof have sought

to extract, and which has been accepted by not a few leaders in the

"labour movement," is that every rise of wages and every shortening of

hours will necessarily be followed by an equivalent or a more than

equivalent rise in the efficiency of labour. In seeking to establish

this position, special stress is laid upon the evidence of the

comparative statistics of textile industries. But, in the first place,

it must be pointed out that the evidence adduced does not support any

such sweeping generalisation. The statistics of Mr. Gould and Mr.

Schoenhof, for instance, show many cases where higher money and real

wages of American operatives are not accompanied by a correspondingly

larger productivity. In such cases the "cheap" labour of England is

really cheap.

Again, in other cases where the higher wages of American workers are

accompanied by an equivalent, or more than equivalent, increase of

product, that increased product is not due entirely or chiefly to

greater intensity or efficiency of labour, but to the use of more

highly elaborated labour-saving machinery. The difference between the

labour-cost of making and maintaining this improved machinery, and

that of making and maintaining the inferior machinery it has

displaced, ought clearly to be added in, where a comparison is made

between the relation of net labour-cost to product in different

countries, or in different stages of industrial development in the

same country. The omission of this invalidates much of the reasoning

of Schulze-Gaevernitz, Brentano, Rae, and other prophets of "the

economy of high wages." The direct labour-cost of each commodity may

be as little, or even less, than in England, but the total cost of

production[231] and the selling price may be higher. Lastly, in that

comparison between England and America, which is in many respects the

most serviceable, because the two countries are nearest in their

development of industrial methods as well as in the character of their

labourers, the difference of money and of real wage is not commonly

accompanied by a difference in hours of labour.

The evidence we possess does not warrant any universal or even general

application of the theory of the economy of high wages. If it was

generally true that by increasing wages and by shortening working

hours the daily product of each labourer could be increased or even

maintained, the social problem, so far as it relates to the

alleviation of the poverty and misery of the lower grades of workers,

would admit of an easy solution. But though it will be generally

admitted that a rise of wages or of the general standard of comfort of

most classes of workers will be followed by increased efficiency of

labour, and that a shortening of hours will not be followed by a

corresponding diminution in output, it by no means follows that it

will be profitable to increase wages and shorten hours indefinitely.

Just as it is admitted that the result of an equal shortening of hours

will be different in every trade, so will the result of a given rise

in standard of comfort be different. In some cases highly-paid labour

and short hours will pay, in other cases cheaper labour and longer

hours. It is not possible by dwelling upon the concomitance of high

wages and good work, low wages and bad work, in many of the most

highly-developed industries to appeal to the enlightened self-interest

of employers for the adoption of a general rise in wages and a general

shortening of hours. Because the most profitable business may often be

conducted on a system which involves high wages for short intense work

with highly evolved machinery, it by no means follows that other

businesses may not be more profitably conducted by employing low-paid

workers for long hours with simpler machinery. We are not at liberty

to conclude that the early Lancashire mill-owners adopted a

short-sighted policy in employing children and feeble adult labour at

starvation wages.

The evidence, in particular, of Schulze-Gaevernitz certainly shows

that the economy of high wages and short hours is closely linked with

the development of machinery, and that when machinery is complex and

capable of being worked at high pressure a net economy of high wages

and short hours emerges. In this light modern machinery is seen as the

direct cause of high wages and short hours. For though the object of

introducing machinery is to substitute machine-tenders at low wages

for skilled handicraftsmen, and though the tireless machine could be

profitably worked continuously, when due regard is had to human nature

it is found more profitable to work at high pressure for shorter hours

and to purchase such intense work at a higher price. It must, of

course, be kept in mind that high wages are often the direct cause of

the introduction of improved machinery, and are an ever-present

incentive to fresh mechanical inventions. This was clearly recognised

half a century ago by Dr. Ure, who names the lengthened mules, the

invention of the self-acting mule, and some of the early improvements

in calico-printing as directly attributable to this cause.[232]

But, admitting these tendencies in certain machine industries, we are

not justified in relying confidently upon the ability of a rise of

wages, obtained by organisation of labour or otherwise, to bring about

such improvements of industrial methods as will enable the higher

wages to be paid without injuring the trade, or reducing the profits

below the minimum socially required for the maintenance of a privately

conducted industry.

Our evidence leads to the conclusion that, while a rise of wages is

nearly always attended by a rise of efficiency of labour and of the

product, the proportion which the increased productivity will bear to

the rise of wage will differ in every employment. Hence it is not

possible to make a general declaration in favour of a policy of high

wages or of low wages.

Sec. 5. The economically profitable wages and hours will vary in

accordance with many conditions, among the most important being the

development of machinery, the strain upon muscles and nerves imposed

by the work, the indoor and sedentary character of the work, the

various hygienic conditions which attend it, the age, sex, race, and

class of the workers.

In cotton-weaving in America it pays better to employ women at high

wages to tend six, seven, or even eight looms for short hours, than to

pay lower wages to inferior workers such as are found in Germany,

Switzerland, or even in Lancashire. But in coal-mining it appears that

the American wages are economically too high--that is to say, the

difference between American and English wages is not compensated by an

equivalent difference of output. The gross number of tons mined by

United States miners working at wages of $326 per annum is 377,

yielding a cost of 86-1/2 cents per ton, as compared with 79 cents per

ton, the cost of North Staffordshire coal produced by miners earning

$253, and turning out 322 tons per head.[233] So also a ton of

Bessemer pig iron costs in labour about 50 cents more in America than

in England, the American wages being about 40 per cent. higher.[234]

It is, indeed, evident from the aggregate of evidence that no

determinable relation exists between cost in labour and wages for any

single group of commodities.

Just as little can a general acceptance be given to the opposite

contention that it is the increased efficiency of labour which causes

the high wages. This is commonly the view of those business men and

those economists who start from the assumption that there is some law

of competition in accordance with whose operation every worker

necessarily receives as much as he is worth, the full value of the

product of his labour. Only by the increased efficiency of labour can

wages rise, argue these people; where wages are high the efficiency of

labour is found to be high, and _vice versa_; therefore efficiency

determines wages. Just as the advocates of the economy of high-wages

theory seek by means of trade-unionism, legislation, and public

opinion to raise wages and shorten hours, trusting that the increased

efficiency which ensues will justify such conduct, so the others

insist that technical education and an elevation of the moral and

industrial character of the workers must precede and justify any rise

of wages or shortening of hours, by increasing the efficiency of

labour. Setting aside the assumption here involved that the share of

the workers in the joint product of capital and labour is a fixed and

immovable proportion, this view rests upon a mere denial of the effect

which it is alleged that high wages and a rise in standard of comfort

have in increasing efficiency.

The relation between wages and other conditions of employment, on the

one hand, and efficiency of labour or size of product on the other, is

clearly one of mutual determination. Every rise in wages, leisure, and

in general standard of comfort will increase the efficiency of labour;

every increased efficiency, whether due directly to these or to other

causes, will enable higher wages to be paid and shorter hours to be

worked.

Sec. 6. One further point emerges from the evidence relating to

efficiency and high wages. According to Schulze-Gaevernitz's formula,

every fall in piece wages is attended by a rise in weekly wages. But

it should be kept in mind that a rise in time wages does not

necessarily mean that the price of labour measured in terms of effort

has been raised. Intenser labour undergone for a shorter time may

obtain a higher money wage per unit of time, but the price per unit of

effort may be lower. It has been recognised that a general tendency of

the later evolution of machinery has been to compress and intensify

labour. In certain classes of textile labour the amount of muscular or

manual labour given out in a day is larger than formerly. This is the

case with the work of children employed as piecers. In Ure's day

(1830) he was able to claim that during three-fourths of the time

spent by children in the factory they had nothing to do. The increased

quantity of spindles and the increased speed have made their labour

more continuous. The same is true of the mule spinners, whose labour,

even within the last few years, has been intensified by increased size

of the mule. Though as a rule machinery tends to take over the heavier

forms of muscular work, it also tends to multiply the minor calls upon

the muscles, until the total strain is not much less than before. What

relief is obtained from muscular effort is compensated by a growing

strain upon the nerves and upon the attention. Moreover, as the

machinery grows more complex, numerous, and costly, the responsibility

of the machine-tender is increased. To some considerable extent the

new effort imposed upon the worker is of a more refined order than the

heavy muscular work it has replaced. But its tax upon the physique is

an ever-growing one. "A hand-loom weaver can work thirteen hours a

day, but to get a six-loom weaver to work thirteen hours is a physical

impossibility."[235] The complexity of modern machinery and the

superhuman celerity of which it is capable suggest continually an

increased compression of human labour, an increased output of effort

per unit of time. This has been rendered possible by acquired skill

and improved physique ensuing on a higher standard of living. But it

is evident that, where it appears that each rise in the standard of

living and each shortening of the working-day has been accompanied by

a severer strain either upon muscles, nerves, or mental energy during

the shorter working day, we are not entitled to regard the higher

wages and shorter hours as clear gain for the worker. Some limits are

necessarily imposed upon this compressibility of working effort. It

would clearly be impossible by a number of rapid reductions of the

working day and increases of time wages to force the effectiveness of

an hour's labour beyond a certain limit for the workers. Human nature

must place limits upon the compression. Though it may be better for a

weaver to tend four looms during the English factory day for the

moderate wage of 16s. a week than to earn 11s. 8d. by tending two

looms in Germany for twelve hours a day, it does not follow that it is

better to earn 20s. 3d. in America by tending six, seven, or even

eight looms for a ten-hours day,[236] or that the American's condition

would be improved if the eight-hours day was purchased at the expense

of adding another loom for each worker.

The gain which accrues from high wages and a larger amount of leisure,

over which the higher consumption shall be spread, may be more than

counteracted by an undue strain upon the nerves or muscles during the

shorter day. This difficulty, as we have seen, is not adequately met

by assigning the heavier muscular work more and more to machinery, if

the possible activity of this same machinery is made a pretext for

forcing the pace of such work as devolves upon machine-tenders.

In many kinds of work, though by no means in all, an increase of the

amount of work packed into an hour could be obtained by a reduction of

the working-day; but two considerations should act in determining the

progressive movement in this direction: first, the objective economic

question of the quantitative relation between the successive

decrements of the working-day and the increments of labour put into

each hour; second, the subjective economic question of the effect of

the more compressed labour upon the worker considered both as worker

and as consumer.

There is not wanting evidence to show that increased leisure and

higher wages can be bought too dear.

In drawing attention to this consideration it must not, however, be

assumed that the increase of real wages and shortening of hours traced

in progressive industries are necessarily accompanied by a

corresponding increase in the compression of labour. In the textile

and iron industries, for example, it is evident (_pace_ Karl Marx)

that the operatives had obtained some portion of the increased

productivity of improved machinery in a rise of wages. Even where more

machinery is tended we are not entitled to assume a correspondent

increase in felt effort or strain upon the worker. A real growth of

skill or efficiency will enable an increased amount of machinery to be

tended with no greater subjective effort than a smaller amount

formerly required. But while allowance should be made for this, the

history of the factory system, both in England and in other countries,

clearly indicates that factory labour is more intense than formerly,

not, perhaps, in its tax upon the muscles, but in the growing strain

it imposes upon the nervous system of the operatives.

The importance of this point is frequently ignored alike by advocates

of a shorter working-day and by those who insist that the chief aim of

workers should be to make their labour more productive. So far as the

higher efficiency simply means more skill and involves no increased

effort it is pure gain, but where increased effort is required the

question is one requiring close and detailed consideration.

Sec. 7. Another effect of over-compressed labour deserves a word.

The close relation between higher wages and shorter hours is generally

acknowledged. A rise of money wages which affects the standard of

living by introducing such changes in consumption as require for their

full yield of benefit or satisfaction an increase of consuming-time

can only be made effective by a diminution in the producing time or

hours of labour. When, for example, the new wants, whose satisfaction

would be naturally sought from a rise of the standard living, are of

an intellectual order, involving not merely the purchase of books,

etc., but the time to read such books, this benefit requires that the

higher wages should be supplemented by a diminution in the hours of

labour in cases where the latter are unduly long. But it is not so

clearly recognised that such questions cannot be determined without

reference to the question of intensity of labour. Yet it is evident

that an eight-hours day of more compressed labour might be of a more

exhausting character than a ten-hours day of less intense labour and

disqualify a worker from receiving the benefits of the opportunities

of education open to him more than the longer hours of less intense

labour. The advantage of the addition of two hours of leisure might be

outweighed by the diminished value attached to each leisure hour. In

other words, the excess of intense work might be worse in its effects

than the excess of more extended work. This possibility is often

overlooked in the arguments of those who support the movement towards

a shorter working-day by maintaining that each unit of labour-time

will be more productive. When the argument concerns itself merely with

alleging the influence of higher wages, without shorter hours, upon

the efficiency of labour, this neglect of the consideration of intense

labour has a more urgent importance. It may be gravely doubted whether

the benefit of the higher wages of the Massachusetts weavers is not

overbalanced by the increased effort of tending so large a number of

looms for hours which are longer than the English factory day. The

exhausting character of such labour is likely to leave its mark in

diminishing the real utility or satisfaction of the nominally higher

standard of living which the high wages render possible. Where the

increased productivity of labour is largely due to the improved

machinery or methods of production which are stimulated by high wages

without a corresponding intensification of the labour itself, the gain

to labour is clear. But the possibility that short hours and high

wages may stimulate an injurious compression of the output of

productive effort is one which must not be overlooked in considering

the influence of new industrial methods upon labour.

Sec. 8. Duration of labour, intensity of labour, and wages, in their

mutual relations, must be studied together in any attempt to estimate

the tendencies of capitalist production. Nor can we expect their

relations to be the same in any two industries. Where labour is

thinly extended over an inordinately long working-day, as in the

Indian mills, it is probable that such improvements of organisation as

might shorten the hours to those of an ordinary English factory day,

and intensify the labour, would be a benefit, and the rise of wages

which might follow would bring a double gain to the workers. But any

endeavour to further shorten and intensify the working-day might

injure the workers, even though their output were increased. Such an

instance, however, may serve well to bring home the relativity which

is involved in all such questions. The net benefit derived from a

particular quantitative relation between hours of labour, intensity,

and earnings would probably be widely different for English and for

Indian textile workers. It would, _a priori_, be unreasonable to

expect that the working-day which would bring the greatest net

advantage to both should be of the same duration. So also it may well

be possible that the more energetic nervous temperament of the

American operative may qualify him or her for a shorter and intenser

working-day than would suit the Lancashire operative. It is the

inseparable relation of the three factors--duration, intensity, and

earnings--which is the important point. But in considering earnings,

not merely the money wage, nor even the purchasing power of the money,

but the net advantage which can be obtained by consuming what is

purchased must be understood, if we are to take a scientific view of

the question.

It should be clearly recognised that in the consideration of all

practical reforms affecting the conditions of labour, the "wages"

question cannot be dissociated from the "hours" question, nor both

from the "intensity of labour" question; and that any endeavour to

simplify discussion, or to facilitate "labour movements," by seeking a

separate solution for each is futile, because it is unscientific. When

any industrial change is contemplated, it should be regarded, from the

"labour" point of view, in its influence upon the net welfare of the

workers, due regard being given, not merely to its effect upon wage,

hours, and intensity, but to the complex and changing relations which

subsist in each trade, in each country, and in each stage of

industrial development between the three.

But although, when we bear in mind the effects of machinery in

imparting intensity and monotony to labour, in increasing the number

of workers engaged in sedentary indoor occupations, and in compelling

an ever larger proportion of the working population to live in crowded

and unhealthy towns, the net benefit of machinery to the working

classes may be questioned, the growth of machinery has been clearly

attended by an improved standard of material comfort among the

machine-workers, taking the objective measurement of comfort.

Whatever allowance may be made for the effects of increased intensity

of labour, and the indirect influences of machinery, the bulk of

evidence clearly indicates that machine-tenders are better fed,

clothed, and housed than the hand-workers whose place they take, and

that every increase in the efficiency and complexity of machinery is

attended by a rise in real wages. The best machinery requires for its

economical use a fair standard of living among the workers who

co-operate with it, and with the further development of machinery in

each industry we may anticipate a further rise of this standard,

though we are not entitled to assume that this natural and necessary

progress of comfort among machine-workers has no fixed limit, and that

it is equally applicable to all industries and all countries.

It might, therefore, appear that as one industry after another fell

under machine-production, the tendency of machine-development must

necessarily make for a general elevation of the standard of comfort

among the working classes. It may very well be the case that the net

influence of machinery is in this direction. But it must not be

forgotten that the increased spread of machine-production does not

appear to engage a larger proportion of the working population in

machine-tending. Indeed, if we may judge by the recent history of the

most highly-evolved textile industries, we are entitled to expect

that, when machinery has got firm hold of all those industries which

lend themselves easily to routine production, the proportion of the

whole working population engaged directly in machine-tending will

continually decrease, a larger and larger proportion being occupied in

those parts of the transport and distributing industries which do not

lend themselves conveniently to machinery, and in personal services.

If this is so, we cannot look upon the evolution of machinery, with

its demand for intenser and more efficient labour, as an adequate

guarantee of a necessary improvement in the standard of comfort of the

working classes as a whole. To put the matter shortly, we have no

evidence to show that a rise in the standard of material comfort of

shopmen, writing clerks, school-teachers, 'busmen, agents,

warehousemen, dockers, policemen, sandwich-men, and other classes of

labour whose proportion is increasing in our industrial society, will

be attended by so considerable a rise in the efficiency of their

labour as to stimulate a series of such rises. The automatic movement

which Schulze-Gaevernitz and others trace in the typical

machine-industries is not shown to apply to industry as a whole, and

if the tendency of machine-development is to absorb a larger

proportion of the work but a smaller proportion of the workers, it is

not possible to found large hopes for the future of the working

classes upon this movement of the earning of high wages in

machine-industry.

Sec. 9. But though the individual self-interest of the producer cannot be

relied upon to favour progressive wages, except in certain industries

and up to a certain point, the collective interest of consumers lends

stronger support to "the economy of high wages." We have seen that the

possession of an excessive proportion of "power to consume" by classes

who, because their normal healthy wants are already fully satisfied,

refuse to exert this power, and insist upon storing it in unneeded

forms of capital, is directly responsible for the slack employment of

capital and labour. If the operation of industrial forces throw an

increased proportion of the "power to consume" into the hands of the

working classes, who will use it not to postpone consumption but to

raise their standard of material and intellectual comfort, a fuller

and more regular employment of labour and capital must follow. If the

stronger organisation of labour is able to raise wages, and the higher

wages are used to demand more and better articles of consumption, a

direct stimulus to the efficiency of capital and labour is thus

applied. The true issue, however, must not be shirked. If the power of

purchase now "saved" by the wealthier classes passed into the hands of

the workers in higher money wages, and was not spent by them in

raising their standard of comfort, but was "invested" in various

forms of capital, no stimulus to industry would be afforded; the

"savings" of one class would have fallen into the hands of another

class, and their excess would operate to restrict industry precisely

as it now operates. Though we would gladly see in the possession of

the working classes an increased proportion of those forms of capital

which are socially useful, this simple act of transfer, however

brought about, would furnish no stimulus to the aggregate industry.

From the standpoint of the community nothing else than a rise in the

average standard of current consumption can stimulate industry. When

it is clearly grasped that a demand for commodities is the only demand

for the use of labour and of capital, and not merely determines in

what particular direction these requisites of production shall be

applied, the hope of the future of our industry is seen to rest

largely upon the confident belief that the working classes will use

their higher wages not to draw interest from investments (a

self-destructive policy) but to raise their standard of life by the

current satisfaction of all those wholesome desires of body and mind

which lie latent under an "economy of low wages." The satisfaction of

new good human desires, by endowing life with more hope and interest,

will render all intelligent exertion more effective, by distributing

demand over a larger variety of commodities will give a fuller

utilisation both of natural and human resources, and by redressing the

dislocated balance of production and consumption due to inequality of

purchasing power, will justify high wages by increased fulness and

regularity of work. But it must be clearly recognised that however

desirable "saving" may seem to be as a moral virtue of the working

classes, any large practice of saving undertaken before and in

preference to an elevation of current consumption, will necessarily

cancel the economic advantages just dwelt upon. Just as the wise

individual will see he cannot afford to "save" until he has made full

provision for the maintenance of his family in full physical

efficiency, so the wise working class will insist upon utilising

earlier accesses of wages in promoting the physical and intellectual

efficiency of themselves and their families before they endeavour to

"invest" any considerable portion of their increased wages. Mr. Gould

puts this point very plainly and convincingly: "Where economic gains

are small, savings mean a relatively low plane of social existence. A

parsimonious people are never progressive, neither are they, as a

rule, industrially efficient. It is the man with many wants--not

luxurious fancies, but real legitimate wants--who works hard to

satisfy his aspirations, and he it is who is worth hiring. Let

economists still teach the utility and the necessity of saving, but

let the sociologist as firmly insist that to so far practise economy

as to prevent in the nineteenth century a corresponding advance in

civilisation of the working with the other classes is morally

inequitable and industrially bad policy. I am not sorry that the

American does not save more. Neither am I sure but that if many

working-class communities I have visited on the Continent were

socially more ambitious, there would not be less danger from Radical

theories. One of the most intelligent manufacturers I ever met told me

a few years ago he would be only too glad to pay higher wages to his

working people, provided they would spend the excess legitimately and

not hoard it. He knew that in the end he should gain thereby, since

the ministering to new wants only begets others."[237] If there are

theoretic economists who still hold that "a demand for commodities is

not a demand for labour," they may be reminded that a paradox is not

necessarily true. In fact, this particular paradox is seen to be

sustained by a combination of slipshod reasoning and moral prejudice.

The growing opinion of economic students is veering round to register

in theory the firm empirical judgment from which the business world

has never swerved, that a high rate of consumption is the surest

guarantee of progressive trade. The surest support of the "economy of

high wages" is the conviction that it will operate as a stimulus to

industry through increased consumption. The working classes,

especially in the United States and in England, show a growing

tendency to employ their higher wages in progressive consumption. Upon

the steady operation of this tendency the economic future of the

working classes, and of industry in general, largely depends.

FOOTNOTES:

[225] _Wealth of Nations_, vol. i. p. 86.

[226] Cf. _Northern Tour_, vol. ii. p. 86.

[227] It is true that out-and-out defenders of the factories against

early legislation sometimes had the audacity to assert the "economy of

high wages," and to maintain that it governed the practice of early

mill-owners. So Ure, "The main reason why they (_i.e._ wages) are so

high is, that they form a small part of the value of the manufactured

article, so that if reduced too low by a sordid master, they would

render his operatives less careful, and thereby injure the quality of

their work more than could be compensated by his saving in wages. The

less proportion wages bear to the value of the goods, the higher,

generally speaking, is the recompense of labour. The prudent master of

a fine spinning-mill is most reluctant to tamper with the earnings of

his spinners, and never consents to reduce them till absolutely forced

to it by a want of remuneration for the capital and skill embarked in

his business" (_Philosophy of Manufactures_, p. 330). This does not,

however, prevent Dr. Ure from pointing out a little later the grave

danger into which trade-union endeavours to raise wages drive a trade

subject to the competition of "the more frugal and docile labour of

the Continent and United States" (p. 363). Nor do Dr. Ure's statements

regarding the high wages paid in cotton-mills, which he places at

three times the agricultural wages, tally with the statistics given in

the appendix of his own book (cf. p. 515). Male spinners alone

received the "high wages" he names, and out of them had to pay for the

labour of the assistants whom they hired to help them.

[228] _Der Grossbetrieb_, p. 132. In regarding the advance of recent

average wages it should be borne in mind that the later years contain

a larger proportion of adults. In considering the net yearly wages a

deduction for unemployment should be made from the sums named in the

table.

[229] Account must be taken of the depressed condition of hand-loom

weavers, who had not yet disappeared.

[230] Here Schulze-Gaevernitz appears to strain his argument. Though

official reports lay stress upon the silver question as an important

factor in the rise of Bombay mills, there seems no doubt of the

ability of Bombay cheap labour, independently of this, to undersell

English labour for low counts of cotton in Asiatic markets. Brentano

in his work, _Hours and Wages in Relation to Production_, supports

Schulze-Gaevernitz.

[231] Mr. Gould's general conclusion, from his comparison of American

and European production, is "that higher daily wages in America _do

not mean a correspondingly enhanced labour-cost to the manufacturers_"

(_Contemporary Review_, Jan. 1893). This he holds to be partly due to

superior mechanical agencies, which owe their existence to high wages,

partly to superior physical force in the workers. But Mr. Gould's

evidence and his conclusion here stated, taken as testimony to the

"economy of high wages," are insufficient, for they only show that

high wages are attended by increased output of labour, not by an

increase _correspondent_ to this higher wage.

[232] Ure's _Philosophy of Manufactures_, pp. 367-369. Dr. Ure

regarded mechanical inventions as the means whereby capital should

keep labour in subjection. In describing how the "self-acting mule"

came into use he adds triumphantly: "This invention comprises the

great doctrine already propounded, that when capital enlists science

in her service the refractory hand of labour will always be taught

docility" (p. 368).

[233] "No. 64 Consular Report" (quoted Schoenhof, p. 209).

[234] Schoenhof, p. 216.

[235] _Der Grossbetrieb_, p. 167.

[236] _Vide supra_, p. 269. These wages, however, are the average of

all the labour employed in the weaving-sheds, not of "weavers" alone.

[237] E.R.L. Gould, _Contemporary Review_, January 1893.

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