At the conclusion of a study of this character we are inevitably led
to summarize our conclusions and to try to answer the question as to
what the lessons of the past have taught us. In what direction are the
forces of economic life taking us? The conclusion of this text is that
they are making for economic progress, and it will be worth while to
justify as far as possible this belief. It is, however, impossible 173
to do this except in very general terms, for definite data for
measuring this improvement do not exist, and economic progress itself
is a somewhat vague conception. Even such comparatively simple facts
as the rate of wages or the hours of labor can be stated only very
generally. But both of these show a decided improvement in the
condition of the working class. A careful investigation for Great
Britain by Mr. A. L. Bowley[50] shows that if wages for the decade
1890-1900 be represented as 100 then the course of wages during the
nineteenth century would have run somewhat as follows:
=========+================++===========+===============
Decade | Relative Wages || Decade | Relative Wages
---------+----------------++-----------+---------------
1800-10 | 55-65 || 1850-60 | 65
1810-20 | 65-70 || 1860-70 | 75
1820-30 | 65 || 1870-80 | 95
1830-40 | 60 || 1880-90 | 90
1840-50 | 60 || 1890-1900 | 100
---------+----------------++-----------+---------------
Without investigating the validity of the figures too closely, it may
safely be affirmed that the movement of wages has been distinctly
upward, and that the rise was certainly not less than 50 per cent. For
the United States the increase has not been so great, probably because
wages started at a higher level. According to the Aldrich report, if
wages and prices in 1860 in the United States be taken as 100,
relative wages in 1840 were 82.5 and relative prices 98.5; in 1880,
they were respectively 143 and 103.4; in 1903, they were 187 and 103.
That is to say, relative wages showed a marked advance and real wages,
owing to the fact that general prices remained almost stationary, an
even greater improvement. So, too, the hours of labor appear to have
been shortened in Great Britain about two hours a day (from 10 to 14
hours to 8 to 12), and in the United States probably as much, the
average length of the working day in certain employments decreasing 174
from 10.3 hours in 1880 to 9.6 hours in 1903.
In the field of production the most dramatic and striking advances
have been achieved. The application of steam and more recently of
electricity as the motive power for the newly invented and constantly
improved machinery has permitted an enormous expansion of production,
which has been made still greater by the opening up of new mines and
new lands and improvements in the machinery of transportation and
exchange and in the organization of business. Especially in the United
States where the natural resources were especially rich and the people
energetic and ingenious, has the growth of wealth been marvelous. And
yet almost a century after the beginning of the Industrial Revolution
in England, Mill alleged that labor-saving inventions had not
lightened the toil of any human being; they have only enabled a
greater number to live the same life of drudgery and imprisonment.
What answer can we make to this indictment today? Why is it that the
working class still has so little of this vast increase of wealth and
still lives so close to the border line of poverty?
To answer this question thoroughly would require an analysis of the
subject of distribution, but a few reasons may be briefly
suggested.[51] While the social income has been greatly increased by
these improvements the amount paid in rent to owners of land, water
powers, etc., has also grown. If we approve of private property in
land as best adapted to stimulate its use for society, then we must
admit the justice of rent, and of its payment to present land owners.
Similarly, too, the payment of interest to the owners of capital has
absorbed a large part of the increased income of society, though the
proportion going to this factor is probably growing smaller owing to
the fall in the rate of interest. But as we have seen, modern industry
is essentially capitalistic, that is, it depends upon the use of 175
capital for its operations. Since we allow private property in capital
and believe that to be the best method yet devised for securing its
accumulation, we must justify interest. Profits in general are fairly
earned by industrial organizers and others who manage our businesses,
and are necessary to enlist their services. Probably in most cases
society does not overpay these leaders of industry. But some forms of
profit, as those derived solely from monopoly, especially from the
monopoly of limited natural resources, are both too large and socially
unearned. These society should clearly control and absorb.
One reason then why labor has not profited more by the great increase
in wealth is that the other factors in production have laid claim to
their shares also. There is good reason for believing, however, that
the share of labor has been steadily growing greater all the time, and
that it today gets a larger proportion of the social income than ever
before. This fact is obscured by the great growth in population, which
has more than doubled in the last hundred years in Europe and has
shown a twentyfold increase in the United States. The larger income is
divided among more people, and though each today gets more than his
grandfather, there is not yet enough produced to make all rich.
Indeed, if the wealth of the United States were divided equally, it
would not provide a competence for anybody. The difficulty is not
merely that there is inequality in distribution, but that the need of
a much greater production of wealth must also be met. Inequalities may
be adjusted by such measures as progressive inheritance taxes, but
resort to this or similar methods must not be so severe as to weaken
the motives for the accumulation of capital. That must form one of the
strongest reasons for rejecting the drastic proposals of socialism.
Improvements in production have, however, not merely increased the
total output; they have greatly reduced the cost of many articles 176
and have brought within the reach of the poorest consumers others
which a century ago would have been unattainable. Improvements in
transportation have served to bring an ever-increasing variety of
products to market. The material progress of a people can be gaged
fairly well by their consumption of certain semi-luxuries, such as
tea, coffee, sugar, tobacco, beer, etc.; these show a steady increase
during the past century. “Thus in the United States between 1871 and
1903 inclusive, the per capita consumption of coffee increased from
7.91 to 10.79 pounds, that of sugar from 36.2 pounds to 71.1 pounds,
that of malt liquors from 6.1 gallons to 18.04 gallons, that of wheat
and flour from 4.69 bushels to 5.81 bushels.”[52] A similar
investigation for Great Britain shows an average increase in a
considerably larger list of the same character of 40 per cent between
1860-64 and 1895-96. It must be admitted that there is much lack of
economy in present consumption; there is often wasteful and positively
injurious consumption, an illustration of which would be found by many
persons in the increased consumption of malt liquors cited above. From
a purely economic standpoint the enormous waste of war and the
burdensome cost of military and naval armament must also be condemned.
The task of prophecy is usually a fruitless one, but at least it is
now possible for us to indicate some of the lines along which reform
is needed, and the goal towards which the future of progress will
probably move. The natural resources of the nation must be more
carefully conserved and reckless destruction prevented; at the same
time the monopolization of limited resources by private individuals or
corporations must be rigidly restricted. The growth of trusts seems
but the last step in a steady growth in size of the business unit and
may be accepted as an economical method of industrial organization,
but the evils of corporate financial management must be carefully
guarded against. The growth of labor organizations, on the other 177
hand, must be admitted to be equally logical and desirable. While they
often display monopolistic tendencies, yet our main reliance must be
placed upon these agencies to secure bargains for laborers on terms of
equality with their employers. But on behalf of wage-earners not
easily organized we must resort to state interference by means of
factory and labor legislation in order to secure equitable labor
contracts. Free competition which exposes women and children to the
greed of unscrupulous employers is defended by no one today, and it is
clearly recognized that legislation along these lines must be further
extended, as for instance in the direction of industrial insurance,
old age pensions, adequate care for the unemployable, etc.
Reforms in our banking and currency laws, an extension of banking
facilities to the working classes, the more careful regulation of
railroad rates, reforms in methods of taxation, and a reduction in the
tariff--all are called for by the development and readjustment of
industry. On the other hand, much remains to be done in the education
of the mass of the people to habits of rational living and enjoyment.
In the great cities housing conditions should be effectively
regulated, sweatshops suppressed, intemperance discouraged, and where
possible a love of art and outdoor life promoted. A more rational use
of income would increase the material well-being of the people
considerably. Problems of distribution are still more insistent. No
one who has the welfare of the laboring classes or of our democratic
society at heart can view with approval the existence of widely
separated classes, with disproportionate political and economic power.
Greater equality in fortunes--a leveling up of incomes--must certainly
be regarded as a sound social ideal. On the other hand, we have seen
reason to reject the drastic remedies of socialism as a cure for the
injustices of present methods of distribution or production.
Improvement must come by conservative reform along the lines of our 178
past development. In the last analysis all attempts to improve
conditions permanently depend upon the character and capacity of the
individual. Because of this fact education assumes great
importance--education not merely in the art of production but also in
that supreme art, the art of living.
[1] Tarr, Economic Geology of the U. S., pp. 7, 119.
[2] In Quarterly Journal of Economics, Vol. XIX, p. 3.
[3] McVey, Modern Industrialism, p. 145.
[4] The Truth About the Trusts, p. 469.
[5] Tetter, Principles of Economics, p. 321.
[6] Bogart, Economic History of the U. S., p. 412.
[7] XIX, 645.
[8] Seager, Introduction to Economics, 176.
[9] Evolution of Modern Capitalism, 35.
[10] Economics, 121.
[11] F. J. Stimson, Labor in its Relation to Law, 51.
[12] Bullock, Introduction to the Study of Economics, 428.
[13] Stimson, op. cit., 71.
[14] A. H. Ruegg, Law of Employer & Workman in England, 99.
[15] Rep. of U. S. Ind. Com., XVII. 1.
[16] Rep. Ind. Com., XVII, xlii.
[17] E. L. Bogart, The Chicago Building Trades Dispute, in Pol. Sci.
Quart., XVI., 134; also in Commons, Trade Unionism & Labor
Problems, p. 107.
[18] Bogart, op. cit., p. 137.
[19] Economics, 353.
[20] Political Economy, 381.
[21] Evolution of Modern Capitalism, 297.
[22] Wealth & Progress, 171.
[23] Report Industrial Commission, XIX, 926.
[24] Getting a Living, 475.
[25] Report Industrial Commission, XIX, 746.
[26] Ind. Com., Rep: XIX, 757.
[27] Bull. of U. S. Bur. of Lab., Sept., 1908, p. 418.
[28] Economics, 337.
[29] Industrial Evolution of the United States, ch. 28.
[30] Evol. of Mod. Cap., 229.
[31] The Effects of Machinery on Wages, 65.
[32] Principles of Economics, I, 315.
[33] Industrial Efficiency, II, 451.
[34] Schloss, Methods of Industrial Remuneration, 305.
[35] Report, VII, 644.
[36] Economics, 377.
[37] Political Economy, 344, 345.
[38] Economics, 133.
[39] Bliss, Encyclopedia of Social Reform, art. Distribution, p. 501.
[40] Economics, 360.
[41] Stated technically, its marginal productivity is small and
hence its reward is also small.
[42] More truly, the marginal productivity theory.
[43] J. R Commons, the Distribution of Wealth, 252.
[44] More, Wage-earners’ Budgets, 269.
[45] Today the loss is probably double this sum.
[46] Gide, Political Economy, Rev. Ed., 663.
[47] Seager, Introduction to Economics, 73.
[48] Bullock, Introduction to Study of Economics, 106.
[49] Socialism and Social Reform, 19.
[50] Wages in the United Kingdom in the Nineteenth Century.
[51] Acknowledgment should be made at this point of indebtedness
to the excellent final chapter in Prof. H. R. Seager’s
Introduction to Economics.
[52] Adams and Sumner, Labor Problems, 523.