Distributive Justice: The Right and Wrong of Our Present Distribution of Wealth

by John A. Ryan

III. Productivity Theories

The productivity concept of wage justice appears in a great variety of forms. The first of them that we shall consider is advocated mainly by the Socialists, and is usually referred to as the theory of the "right to the whole product of labour."[224]

Labour's Right to the Whole Product

We have seen that Adam Smith's belief in the normality and beneficence of free competition would have logically led him to the conclusion that competitive wages were just; and we know that this doctrine is implicit in his writings. On the other hand, his theory that all value is determined by labour would seem to involve the inference that all the value of the product belongs to the labourer. As a matter of fact, Smith restricted this conclusion to primitive and pre-capitalist societies. Apparently he, and his disciples in an even larger degree, was more interested in describing the supposed beneficence of competition than in justifying the distribution that resulted from the competitive process.

The early English Socialists were more consistent. In 1793 William Godwin, whom Anton Menger calls "the first scientific Socialist of modern times," laid down in substance the doctrine that the labourer has a right to the whole product.[225] In 1805 Charles Hall formulated and defended the doctrine with greater precision and consistency.[226] In 1824 the doctrine was stated more fundamentally, systematically, and completely by William Thompson.[227] He accepted the labour theory of value laid down by Adam Smith, and formally derived therefrom the ethical conclusion that the labourer has a right to the whole product. "Thompson and his followers are only original in so far as they consider rent and interest to be unjust deductions, which violate the right of the labourer to the whole product of his labour."[228] He denounced the laws which empowered the land owner and the capitalist to appropriate value not created by them, and gave to the value thus appropriated the name, "surplus value." In the use of this term he anticipated Karl Marx by several years. His doctrines were adopted and defended by many other English Socialist writers, and were introduced into France by the followers of Saint-Simon. "From his works," says Menger, "the later Socialists, the Saint-Simonians, Proudhon, and above all, Marx and Rodbertus, have directly or indirectly drawn their opinions."[229]

Although Saint-Simon never accepted the doctrine of the labourer's right to the whole product, his disciples, particularly Enfantin and Bazard, taught it implicitly. In a just social state, they maintained, every one would be expected to labour according to his capacity, and would be rewarded according to his product.[230]

Perhaps the most theoretical and extreme statement of the theory that we are considering is found in the writings of P. J. Proudhon.[231] He maintained that the real value of products was determined by labour time, and that all kinds of labour should be regarded as equally effective in the value-creating process, and he advocated therefore equality of wages and salaries. For the realisation of this ideal he drew the outlines of a semi-anarchic social order, of which the main feature was gratuitous public credit. Neither his theories nor his proposals ever obtained any considerable number of adherents.

A milder and better reasoned form of the theory was set forth by Karl J. Rodbertus.[232] Professor Wagner calls him, "the first, the most original, and the boldest representative of scientific Socialism in Germany." Yet, as Menger points out, Rodbertus derived many of his doctrines from Proudhon and the Saint-Simonians. He admitted that in a capitalist society the value of commodities does not always correspond to the labour embodied in them, and that different kinds of labour are productive in different degrees. Therefore, he had recourse to the concept of a normal, or average, day's labour in any group, and would have the various members of the group remunerated with reference to this standard. This was to be brought about by a centralised organisation of industry in which the whole product would ultimately go to labour, and the share of the individual worker would be determined by his contribution of socially necessary labour.

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.

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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.

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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.

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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]

The legal minimum wage has been carried into effect in only four states of our own country. It covers practically all the industries employing women and minors in Oregon and Washington, all the working women and girls of Utah, and the women and minors of a few trades in Massachusetts. The rates established for experienced women vary from $7.50 per week in Utah to ten dollars a week for some classes in Washington. As the first wage determinations were put into effect only in 1913, American experience has been too short as well as too narrow to warrant certain conclusions. So far as it has been applied, however, the legal minimum wage has been as successful in the United States as in Australasia or Great Britain. All competent witnesses agree that it has brought a considerable increase in wages to a considerable proportion of the women and minors in the industries in which it is operative, and that it has neither thrown any important number of workers out of employment nor forced any important concern out of business. Speaking of the three leading industries in which minimum wages were first established in Washington, the Industrial Welfare Commission of that state testifies: "Seldom has any piece of legislation, in prospect, engendered so much discussion and so much criticism, as did the minimum wage law, with the intricacies of its ramifications touching almost every industry in the state, large or small, and the family of nearly every wage earner; seldom, too, has any law, in actuality, been so well received, its application been accomplished with so little open opposition, and, for a law of this character, has been attended with so little industrial disturbance as that same minimum wage law. None of the dire predictions made prior to the passage of the law have come about to an extent that questions the general efficiency of the law. There has been no wholesale discharge of women employés, no wholesale levelling of wages, no wholesale replacing of higher paid workers by cheaper help, no tendency to make the minimum the maximum, while the employers of the state in general have been following the letter and spirit of the law, and aiding greatly in its application.... The law, in other words, has advanced the wages of practically sixty per cent. of the workers in these industries, and has done it without serious opposition at a time when business conditions were none too good."[253] The Bureau of Labour Statistics of the United States investigated the operation of the minimum wage in the mercantile establishments of Oregon at the end of the first year. The conclusions of the investigators were in brief that both the number and the proportion of women getting the legal minimum ($9.25 per week) for adults had increased, that the proportion obtaining more than this rate had likewise increased, that those who had received a rise in remuneration did not show any decline in efficiency, that women had not been displaced by men, and that the average increase in the labour cost resulting from the advance in wages was only three mills on each dollar of sales.[254] The effects of the Utah law during the first year of its operation were summarised by the Labour Commissioner, Mr. H. T. Haines, as follows: a rise in the wages of a "number of women and girls who most needed the additional sums of money"; increased efficiency of female workers admitted by most employers; but few cases of women or girls utterly deprived of employment by the law; none of the higher paid women suffered a reduction in wages; and ninety per cent. of the employers are satisfied with the minimum wage statute.[255] So far as the law has been applied in Massachusetts, it seems to be relatively as successful as in the other three states.[256]

The Question of Constitutionality

The principal reason why the minimum wage laws on the statute books of the other seven states have not been carried into effect, is the uncertainty of the validity of minimum wage legislation in our constitutional system. In November, 1914, a district judge granted a writ of injunction, restraining the Minimum Wage Commission of Minnesota from enforcing their wage determinations, on the ground that the law attempted to delegate legislative power, and that its provisions violated that section of the fourteenth amendment to the United States Constitution which forbids any state to deprive a person of life, liberty, or property without due process of law. One of the courts of Arkansas has taken substantially the same position. The second objection urged by the Minnesota judge is probably much the more serious of the two, and is the one upon which chief emphasis has been laid in the briefs filed in various courts by the opponents of minimum wage legislation. As regards labour legislation, "due process of law" may be practically translated, "reasonable and necessary exercise of the State's police power." And the police power means that indefinite power of the State to legislate for the health, safety, morals, and welfare of the community.[257] Now it is obvious that a minimum wage law deprives both employer and employé of some liberty of contract, and also that it virtually deprives the former of some property, inasmuch as it generally increases his outlay for wages. On the other hand, this restriction of liberty and equivalent diminution of property seem to be carried out in harmony with due process of law, since they constitute an exercise of the police power of the State on behalf of the general welfare. Some months before the Minnesota judge granted the writ of injunction against the enforcement of the minimum wage law of that state, a lower court and the Supreme Court of Oregon had pronounced the Oregon statute constitutional, as a legitimate exercise of the police power. An appeal from this judgment was argued in the Supreme Court of the United States, Dec. 17, 1914, but no decision has yet (October, 1916) been rendered. Until the highest court has spoken on the question of constitutionality, no state is likely to take any further step toward establishing minimum wages. Should the decision of the Supreme Court be unfavourable valid minimum wage legislation will be impossible without an amendment of the United States Constitution.[258]

The Ethical and Political Aspects

Whether it be considered from the viewpoint of ethics, politics, or economics, the principle of the legal minimum wage is impregnable. The State has not only the moral right but the moral duty to enact legislation of this sort, whenever any important group of labourers are receiving less than living wages. One of the elementary functions and obligations of the State is to protect citizens in the enjoyment of their natural rights; and the claim to a living wage is, as we have seen, one of the natural rights of the person whose wages are his only means of livelihood. Therefore, the establishment of minimum living wages is not among the so-called "optional functions" of the State in our present industrial society. Whenever it can be successfully performed, it is a primary and necessary function. So far as political propriety is concerned, the State may as reasonably be expected to protect the citizen against the physical, mental, and moral injury resulting from an unjust wage contract, as to safeguard his money against the thief, his body against the bully, or his life against the assassin. In all four cases the essential welfare of the individual is injured or threatened through the abuse of superior force and cunning. Inasmuch as the legal minimum wage is ethically legitimate, the question of its enactment is, politically speaking, entirely a question of expediency.

The Economic Aspect

Now the question of expediency is mainly economic. A great deal of nonsense has been written and spoken about the alleged conflict between the legal minimum wage and "economic law." Economists have used no such language, indeed; for they know that economic laws are merely the expected uniformities of social action in given circumstances. The economists know that economic laws are no more opposed to a legal minimum wage than to a legal eight hour day, or legal regulations of safety and sanitation in work places. All three of these measures tend to increase the cost of production, and sometimes carry the tendency into reality. A minimum wage law is difficult to enforce, but not much more so than most other labour regulations. At any rate, the practical consideration is whether even a partial enforcement of it will not result in a marked benefit to great numbers of underpaid workers. It may throw some persons, the slower workers, out of employment; but here, again, the important question relates to the balance of good over evil for the majority of those who are below the level of decent living. At every point, therefore, the problem is one of concrete expediency, not of agreement or disagreement with a real or imaginary economic law.

Some of those who oppose the device on the ground of expediency set up an argument which runs about as follows: the increase in wages caused by a minimum wage law will be shifted to the consumer in the form of higher prices; this result will in turn lead to a falling off in the demand for products; a lessened demand for goods means a reduced demand for labour; and this implies a diminished volume of employment, so that the last state of the workers becomes worse than the first. Not only is this conception too simple, but it proves too much. If it were correct every rise in wages, howsoever brought about, would be ill advised; for every rise would set in motion the same fatal chain of events. Voluntary increases of remuneration by employers would be quite as futile as the efforts of a labour union. This is little more than the old wages fund theory in a new dress. And it is no less contrary to experience.

The argument is too simple because it is based upon an insufficient analysis of the facts. There are no less than four sources from which the increased wages required by a minimum wage law might in whole or in part be obtained. In the first place, higher wages will often give the workers both the physical capacity and the spirit that make possible a larger output. Thus, they could themselves equivalently provide a part at least of their additional remuneration. When, secondly, the employer finds that labour is no longer so cheap that it can be profitably used as a substitute for intelligent management, better methods of production, and up to date machinery, he will be compelled to introduce one or more of these improvements, and to offset increased labour cost by increased managerial and mechanical efficiency. This is what seems to have happened in the tailoring industry of England. According to Mr. Tawney, "the increased costs of production have, on the whole, been met by better organisation of work and by better machinery."[259] In the third place, a part of the increased wage cost can be defrayed out of profits, in two ways: through a reduction in the profits of the majority of business concerns in an industry; but more frequently through the elimination of the less efficient, and the consequent increase in the volume of business done by the more efficient. In the latter establishments the additional outlay for wages might be fully neutralised by the diminished managerial expenses and fixed charges per unit of product. This elimination of unfit undertakers would not only be in the direction of greater social efficiency, but in the interest of better employment conditions generally; for it is the less competent employers who are mainly responsible for the evil of "sweating," when they strive to reduce the cost of production by the only method that they know; that is, the oppression of labour. Should the three foregoing factors fall short of providing or neutralising the increased wages, the recourse would necessarily be to the fourth source; namely, a rise in the price of products. However, there is no definite reason for assuming that the rise will in any case be sufficient to cause a net decrease of demand. In Oregon the increased labour cost due to the minimum wage law amounted, as we have seen, to only three mills per dollar of sales in mercantile establishments. Even if this were all shifted to the consumer—something that is practically impossible—it would be equivalent to an increase of only three cents on each ten dollars' worth of purchases, and thirty cents on each hundred. The reduction in sales on account of such a slight rise in prices would be infinitesimal. In the case of possibly the majority of products, the lessened demand on the part of the other classes might be entirely counterbalanced by the increased demand at the hands of the workers whose purchasing power had been raised through the minimum wage law. The effect upon sales, and hence upon business and production, which follows from an increase in the effective consuming power of the labouring classes is frequently ignored or underestimated. So far as consumers' goods are concerned, it seems certain that a given addition to the income of the wage-earning classes will lead to a greater increase in the demand for products than an equal addition to the income of any other section of the people.

Nevertheless, the possibility must be admitted of some diminution of employment, owing to higher prices and decreased demand. And it is certain that some workers would not be worth the legal minimum to their employers. A part, but probably not all, of these could find employment at a lower wage, through a system of permits for "slow workers." Whatever the amount of unemployment resulting from both these causes, it would undoubtedly be an evil of lesser magnitude than that which at present follows from the under-payment of a majority of the labouring population. And it could be remedied by two measures which are in any case necessary for social welfare, and which would be hastened by the establishment of a legal minimum wage. These are adequate and scientific laws and institutions to deal with the general problem of unemployment, and a comprehensive system of industrial and vocational training.

These conclusions, then, seem to be justified: the economic objections to a legal minimum wage are not essentially different from those that may be urged against any other beneficial labour legislation; and they have been sufficiently refuted by experience to throw the burden of proof upon the objectors. Expediency suggests, however, that in the United States the device should be applied gradually in two respects: for a few years it ought to be confined to women and minors; and when it is extended to men, the rates should approach the level of a complete family living wage by stages, covering, say, three or four years. The former restriction would enable the law to be carried through its experimental stages with a minimum disturbance to industry as a whole, and with a minimum of opposition, and the latter would greatly reduce the danger of male unemployment.[260]

Opinions of Economists

When the present writer made an argument for the legal minimum wage something more than ten years ago, he was able to find only one American economist who had touched the subject, and the verdict of that one was unfavourable.[261] A little over a year ago, Dr. John O'Grady sent an inquiry to one hundred and sixty economists of the United States to ascertain their opinions on the same subject. Of the ninety-four who replied seventy were in favour of a minimum wage law for women and minors, thirteen were opposed, and eleven were non-committal; fifty-five favoured such legislation for men, twenty were against it, and nineteen were disinclined to give a categorical answer. About three-fourths of those who responded expressed the opinion that the measure would tend to increase the efficiency both of the workers and of methods of production.[262]

It is worthy of note that the nine members of the late Federal Commission on Industrial Relations, although disagreeing widely and variously on most other important questions and proposals, were all favourable to a minimum wage law for women and minors.[263]

The most comprehensive and most searching criticism of the legal minimum wage from the viewpoint of economic theory has been made by Professor F. W. Taussig.[264] While he does not commit himself definitely to the assertion that a universal minimum wage of, say, eight dollars per week, would cause a notable amount of unemployment among women, he regards this consequence as sufficiently probable to indicate the "need of going slow in the regulation of women's wages." Specifically, he would have public wage boards refrain from fixing the minimum rates high enough to maintain women living away from home. His final and only serious argument for this position relates to the marginal effectiveness of women workers. He assumes that all "the fitful, untrained, indifferent women are got rid of; that all who offer themselves for work at the age of (say) eighteen years have had an industrially helpful education,—" and then raises the question whether all of them will be "able to get distinctly higher wages than are now current."[265] Obviously the question is not serious unless it contemplates the probability of unemployment for a considerable proportion. If only one per cent. or less of the women should be unable to find employment at the higher wages, the net social advantage of the minimum wage device would be so obvious as to render Professor Taussig's opposition quite unreasonable. Making the assumptions quoted above from his pages, let us try to see whether his apprehensions are economically justifiable.

If they are reasonable or probable they must rest on one of two fundamental conditions: the occupations available to women are too few to absorb all that would seek to become wage earners at eight dollars per week; or a considerable section of them would be unable to produce such a high wage. Possibly the first of these assumptions is true, but neither Professor Taussig nor any other authority has presented evidence to support it, and it is on the face of things not sufficiently probable to justify hesitation in the advocacy of a minimum living wage. If the second assumption be correct, if the product of a considerable section of women (all adequately trained) would be insufficient to yield them eight dollars per week, in addition to the other costs of production, the conclusion is inevitable that the same result would follow the attempt to pay all male adults (likewise adequately trained) a family living wage of, say, fifteen dollars per week. For the product of the average man does not exceed that of the average woman by even as great a ratio as fifteen to eight. If the average woman is not worth eight dollars a week to an employer in any kind of woman's occupation, the average man is not worth fifteen dollars. Therefore, we cannot hope, even with the aid of a thorough system of industrial and vocational training, to provide all adult males of average capacity with a family living wage and the minimum means of living a reasonable life.

This is a veritable counsel of despair. It implies either that the law of diminishing returns is already operating in this country in such a way as to prevent the national product from being sufficiently large to provide a minimum wage of fifteen dollars a week for men, and eight dollars a week for women; or that the product, though ample for this purpose, and for all the other necessary payments to the higher priced workers and to the other agents of production, cannot under our present industrial system be so distributed as to attain the desired end. For the first of these hypotheses there is no evidence worthy of the name. If Professor King is right in his estimate of an average family income of 1494 dollars annually[266] the difficulty before us does not lie in the field of production. Professor Taussig seems to rest his fears on the second hypothesis, on the assumed impossibility of bringing about the required distribution; for he points out that increased efficiency of the workers may, like increased efficiency of the material instrumentalities of production, in the long run redound mainly to the benefit of the consumers, while wages may be little if any above the old level. If these fears are justified, if the difficulty is entirely one of the mechanism of distribution, and if it cannot be overcome by legal enactment, then is our competitive organisation of industry bankrupt, and the sooner we find out that fact definitely the better. If the legal minimum wage will help to expose such a situation, will show that, no matter how much the productivity of the workers may be increased, a large proportion of them must by the very nature of the competitive system be forever condemned to live below the level of decent existence, then the minimum wage is worth having merely as an instrument of economic enlightenment.

Professor Taussig's argument and illustrations[267] seem to contemplate a condition in which the number of women who become fitted for a certain trade is excessive relatively to the demand for its products, and to the supply of women in other industries. Were industrial training thus misdirected, and were the trained persons unable or unwilling to distribute themselves over other occupations, they would, indeed, face precisely the same dilemma as do the unskilled workers to-day. That is; a majority would be condemned to insufficient wages, or a minority to unemployment. But we have been assuming an adequate system of industrial and vocational training, a well-balanced system, one that would enable the workers to adjust their supply to the demand throughout the various occupations. In these conditions the economic axiom that a supply of goods is a demand for goods should become beneficently effective: the workers should all be able to find employment, and to obtain the greater part of their increased product. Surely Professor Taussig does not mean to commit himself to the view that every increase in the productive power of the workers will in the long run help them only inasmuch as they are consumers, the lion's share of the additional product being taken by other classes. Probably such is the usual result in a régime of unregulated competition, and unlimited freedom as regards the wage contract. But this is precisely what we expect a minimum wage law to correct and prevent. We rely upon this device to enable the workers to retain for themselves that share of the product which under free competition would automatically go to the non-labouring consumers. We hope that blind and destructive economic force can be held in check by deliberate and beneficent social control.

The fact of the matter seems to be that Professor Taussig's argument is too hypothetical and conjectural to justify his pessimistic conclusions. It is unpleasantly suggestive of the reasoning by which the classical economists tried to show the English labourers the folly and futility of trade unionism.

Other Legislative Proposals

The ideal standard of a minimum wage law is a scale of remuneration adequate not only to the present needs of individuals and families, but to savings for the contingencies of the future. Until such time as the compensation of all labourers has been brought up to this level, the State should make provision for cheap housing, and for insurance against accidents, sickness, invalidity, old age, and unemployment. The theory underlying such measures is that they would merely supplement insufficient remuneration, and indirectly contribute to the establishment of genuine living wages. In Europe, housing and insurance legislation is so common that no reasonable and intelligent person any longer questions the competency or propriety of such action by the State.

If an adequate legal minimum wage, in the sense just defined, were universally established, the State would not be required to do anything further to effectuate wage justice, except in the matter of vocational and industrial education. This would qualify practically all persons to earn at least a living wage, and would enable those who underwent unusual sacrifices either before or during their employment to command something over and above. In other words, all workers would then be able to obtain what we have called "the equitable minimum." And the labouring class as a whole would possess sufficient economic power to secure substantially all that was due by any of the canons of distributive justice.

Labour Unions

The general benefits and achievements of labour organisations in the United States down to the beginning of the present century, cannot be more succinctly nor more authoritatively stated than in the words of the United States Industrial Commission: "An overwhelming preponderance of testimony before the Industrial Commission indicates that the organisation of labour has resulted in a marked improvement in the economic condition of the workers."[268] Some of the most conspicuous and unquestionable proofs of rises in wages effected by the unions are afforded by the building trades, the printing trades, the coal mining industry, and the more skilled occupations on the railroads. Between 1890 and 1907 wages increased considerably more in the organised than in the unorganised trades.[269]

Nevertheless, when all due credit is given to the unions for their part in augmenting the share of the product received by labour, there remain two important obstacles which seriously lessen their efficacy as a means of raising the wages of the underpaid.

The first is the fact that the unions still embrace only a small portion of the total number of wage earners. According to Professor Leo Wolman, a little more than twenty-seven million of the thirty-eight million persons engaged in "gainful occupations" in the United States in 1910 were wage earners in the ordinary sense of that phrase, and of these twenty-seven million only 2,116,317, or 7.7 per cent., were members of labour organisations.[270] The membership to-day is about two and three quarter millions. If the total number of wage earners increased between 1910 and 1916 at the same rate as during the preceding decade, the organised portion is now somewhat less than 7.7 per cent. of the whole. Evidently the labour unions have not grown with sufficient rapidity, nor are they sufficiently powerful to warrant the hope that they will be soon able to lift even a majority of the underpaid workers to the level of living wage conditions.

The second obstacle is the fact that only a small minority of the members of labour unions are drawn from the unskilled and underpaid classes, who stand most in need of organisation. The per cent. of those getting less than living wages that is in the unions is almost negligible. With the exception of a few industries, the unskilled and the underpaid show very little tendency to increase notably their organised proportion. The fundamental reason of this condition has been well stated by John A. Hobson: "The great problem of poverty ... resides in the conditions of the low-skilled workman. To live industrially under the new order he must organise. He cannot organise because he is so poor, so ignorant, so weak. Because he is not organised he continues to be poor, ignorant, weak. Here is a great dilemma, of which whoever shall have found the key will have done much to solve the problem of poverty."[271]

The most effective and expeditious method of raising the wages of the underpaid through organisation is by means of the "industrial," as distinguished from the "trade," or "craft," union. In the former all the trades of a given industry are united in one compact organisation, while the latter includes only those who work at a certain trade or occupation. For example: the United Mine Workers embrace all persons employed in coal mines, from the most highly skilled to the lowest grade of unspecialised labour; while the craft union is exemplified in the engineers, firemen, conductors, switchmen, and other groups having their separate organisations in the railroad industry. The industrial union is as much concerned with the welfare of its unskilled as of its skilled members, and exerts the whole of its organised force on behalf of each and every group of workers throughout the industry which it covers. The superior suitability of the industrial type of union to the needs of the unskilled labourers is seen in the fact that more of them are organised in the coal mining than in any other industry, and have received greater benefits from organisation than their unskilled fellow workers in any other industry. Were the various classes of railway employés combined in one union, instead of being organised along the lines of their separate crafts, it is quite improbable that the unskilled majority would be getting, as they now are getting, less than living wages. While it is true that the various craft unions in an industry are often federated into a comprehensive association, the bond uniting them is not nearly so close, nor so helpful to the weaker groups of workers as in the case of the industrial unions.

Human nature being what it is, however, the members of the skilled crafts cannot all be induced or compelled to adopt the industrial type of organisation. The Knights of Labour attempted to accomplish this, and for a time enjoyed a considerable measure of success, but in the end the organisation was unable to withstand those fundamental inclinations which impel men to prefer the more narrow, homogeneous, and exclusive type of association. The skilled workers refused to merge their local and craft interests in the wider interests of men with whom they had no strong nor immediate bonds of sympathy. Among labourers, as well as among other persons, the capacity for altruism is limited by distance in space and occupational condition. The passion for distinction likewise affects the wage earner, impelling the higher groups consciously or unconsciously to oppose association that tends to break down the barrier of superiority. Owing to their greater resources and greater scarcity, the skilled members of an industrial union are less dependent upon the assistance of the unskilled than the latter are dependent upon the former; yet the skilled membership is always in a minority, and therefore in danger of being subordinated to the interests of the unskilled majority.

For these and many other reasons it is quite improbable that the majority of union labourers can be amalgamated into industrial unions in the near future. The most that can be expected is that the various occupational unions within each industry should become federated in a more compact and effective way than now prevails, thus conserving the main advantages of the local and craft association, while assuring to the unskilled workers some of the benefits of the industrial union.

Organisation Versus Legislation

In the opinion of some labour leaders, the underpaid workers should place their entire reliance upon organisation. The arguments for this position are mainly based upon three contentions: it is better that men should do things for themselves than to call in the intervention of the State; if the workers secure living wages by law they will be less likely to organise, or to remain efficiently organised; and if the State fixes a minimum wage it may some day decide to fix a maximum.

Within certain limits the first of these propositions is incontestable. The self education, self reliance, and other experiences obtained by the workers through an organised struggle for improvements of any kind, are too valuable to be lightly passed over for the sake of the easier method of State assistance. Indeed, it would be better to accept somewhat less, or to wait somewhat longer, in order that the advantages might be secured through organisation. However, these hypotheses are not verified as regards the minimum wage problem. The legal method promises with a high degree of probability to bring about universal living wages within ten or fifteen years. The champions of organisation can point to no solid reasons for indulging the hope that their method would achieve the same result within a half a century. Therefore, the advantages of the device of organisation are much more than neutralised by its disadvantages.

The fear that the devotion of the workers to the union would decline as soon as living wages had been secured by law, seems to have no adequate basis either in experience or in probability. Speaking of the establishment of minimum wages in the tailoring industry of Great Britain, Mr. Tawney declares that it "has given an impetus to trade unionism among both men and women. The membership of the societies connected with the tailoring trade has increased, and in several districts the trade unions have secured agreements fixing the standard rate considerably above the minimum contained in the Trade Board's determination."[272] Similar testimony comes from Australasia. Indeed, this is precisely what we should be inclined to expect; for the workers whose wages had been raised would for the first time possess the money and the courage to support unions; and would have sufficient incentives thereto in the natural desire to obtain something more than the legal minimum, and in the realisation that organisation was necessary to give them a voice in the determination of the minimum, and to enable them to co-operate in compelling its enforcement. Indeed, general experience shows that organisation becomes normally efficient and produces its best results only among workers who have already approximated the level of living wages.

To be sure, the State could set up maximum instead of minimum wages,—if the employing classes were sufficiently powerful. But all indications point to a decline rather than an increase in their political influence, and to a corresponding expansion in the governmental influence of the labouring classes and their sympathisers. Moreover, the labour leaders who urge this objection are inconsistent, inasmuch as they advocate other beneficial labour legislation. The distinction which they profess to find between laws that merely remove unfair legal and judicial disabilities and laws that reduce the length of the working day or fix minimum wages, has no importance in practical politics or in the mind of the average legislature. If the political influence of labour should ever become so weak and that of capital so strong as to make restrictive labour legislation generally feasible, legislators would not confine their unfriendly action to the field of positive measures. They would be quite as ready to pass a law prohibiting strikes as to enact a statute fixing maximum wages. The formal legalisation of strikes, picketing, and the primary boycott which is contained in the Clayton Act, and for which the labour unions worked long and patiently, could conceivably be seized upon by some future unfriendly Congress as a precedent and provocation for legislation which would not only repeal all the favourable provisions of the Clayton Act, but subject labour to entirely new and far more odious restraints and interferences. The fact that governments passed maximum wage laws in the past is utterly irrelevant to the question of wage legislation to-day. A legal minimum wage, and a multitude of other protective labour laws are desirable and wise in the twentieth century for the simple reason that labour and the friends of labour are sufficiently powerful to utilise this method, and because their influence seems destined to increase rather than decrease. The contrary hypothesis is too improbable for serious consideration.

The conclusions that seem justified by a comprehensive and critical view of all the facts of the situation, are that organisation is not of itself an adequate means of bringing about living wages for the underpaid, but that it ought nevertheless to be promoted and extended among these classes, not only for its direct effect upon wages, but for its bearing upon legislation. The method of organisation and the method of legislation are not only not mutually opposed, but are in a very natural and practical manner complementary.

Participation in Capital Ownership

While those workers whose remuneration is below the level of decent maintenance are not ordinarily in a position to become owners of any kind of capital, many of them, especially among the unmarried men, can accumulate savings by making large sacrifices. As a matter of fact, hundreds of thousands of the underpaid have become interest receivers through the medium of savings banks, real estate possessions, and insurance policies. Every effort in this direction is distinctly worth while, and deserving of encouragement. Labourers who are above the minimum wage level can, of course, save much larger amounts, and with less sacrifices than the underpaid classes. In all cases the main desideratum is that the workers should derive some income from capital; but it is almost equally important that their capital ownership should wherever possible take the form of shares in the industry in which they are employed, or the store at which they buy their goods. This means co-operative production and co-operative distribution. The general benefits of the co-operative enterprise have already been described in chapter xiv. For the wage earner proprietorship in a co-operative concern is preferable to any other kind of capital ownership because of the training that it affords in business management and responsibility, in industrial democracy, and in the capacity to subordinate his immediate and selfish interests to his more remote and larger welfare.

Co-operative ownership of the tools with which men work has advantages of its own over co-operative ownership of the stores from which they made their purchases, inasmuch as it increases their control over the conditions of employment, and gives them incentives to efficiency which results in a larger social product and a larger share thereof for themselves. As already pointed out in chapter xiv, the ideal type of productive co-operation is that known as the "perfect" form, in which the workers are the exclusive owners of the concern where they exercise their labour. Nevertheless, the "federal" type, in which the productive concern is directly owned by a wholesale co-operative, indirectly by the retail co-operative store, and ultimately by the co-operative consumers,—presents one important advantage. It could be so modified as to enable the employés of the productive enterprise to share the ownership of the latter with the wholesale establishment. Such an arrangement would at once give the workers the benefits of productive co-operation mentioned above, and render probable a satisfactory adjustment of the conflicting claims of producers and consumers. As intimated in chapter xxiv, such a conflict is inherent in every system of industrial organisation, and will become more evident and more acute in proportion to the strengthening of the position of labour.

A final reason for ownership of capital by labour deserves mention here, even though it has no immediate bearing upon the question of remuneration. Were all labourers receiving the full measure of wages to which they are entitled by the canons of distributive justice, it would still be highly desirable that the majority if not all of them should possess some capital, preferably in the productive and distributive concerns in which they were immediately interested. It does not seem probable that our economic system as now constituted, with the capital owners and the capital operators for the most part in two distinct classes, will be the final form of industrial organisation. Particularly does this arrangement seem undesirable, incongruous, and unstable in a society whose political form is that of democracy. Ultimately the workers must become not merely wage earners but capitalists. Any other system will always contain and develop the seeds of social discontent and social disorder.

REFERENCES ON SECTION IV

Adams and Sumner: Labour Problems. Macmillan; 1905.

Commons and Andrews: Principles of Labour Legislation. Harpers; 1916.

Walker: The Wages Question. New York; 1876.

Ryan: A Living Wage. Macmillan; 1906.

Snowden: The Living Wage. London; Hodder & Stoughton.

O'Grady: A Legal Minimum Wage. Washington; 1915.

Broda: La Fixation Légale des Salaires. Paris; 1912.

N. Y. Factory Investigating Commission. Appendix to Vol. III.

Tawney: Minimum Rates in the Chain-Making Industry. London; 1914.

Minimum Rates in the Tailoring Industry. London; 1915.

Turman: Le Catholicisme Social. Paris; 1900.

Pottier: De Jure et Justitia. Liege; 1900.

Polier: L'Idée du Juste Salaire. Paris; 1903.

Menger: The Right to the Whole Produce of Labour. London; 1899.

Garriguet: Régime du Travail. Paris; 1908.

Nearing: Reducing the Cost of Living. Philadelphia; 1914.

Chapin: The Standard of Living in New York City. New York; 1909.

Also the works on co-operation cited in connection with Section II, and those of Hobson, Carver, Nearing and Streightoff.

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CHAPTER XXVI
SUMMARY AND CONCLUSION

Throughout this book we have been concerned with a two-fold problem: to apply the principles of justice to the workings of the present distributive system, and to point out the modifications of the system that seemed to promise a larger measure of actual justice. The mechanism of distribution was described in the introductory chapter as apportioning the national product among the four classes that contribute the necessary factors to the process of production, and the first part of the problem was stated as that of ascertaining the size of the share which ought to go to each of these classes.

The Landowner and Rent

We began this inquiry with the landowner and his share of the product, i.e., rent. We found that private ownership of land has prevailed throughout the world with practical universality ever since men began to till the soil in settled communities. The arguments of Henry George against the justice of the institution are invalid because they do not prove that labour is the only title of property, nor that men's equal rights to the earth are incompatible with private landownership, nor that the so-called social production of land values confers upon the community a right to rent. Private ownership is not only socially preferable to the Socialist and the Single Tax systems of land tenure, but it is, as compared with Socialism certainly, and as compared with the Single Tax probably, among man's natural rights. On the other hand, the landowner's right to take rent is no stronger than the capitalist's right to take interest; and in any case it is inferior to the right of the tenant to a decent livelihood, and of the employé to a living wage.

Nevertheless, the present system of land tenure is not perfect. Its principal defects are: the promotion of certain monopolies, as, anthracite coal, steel, natural gas, petroleum, water power, and lumber; the diversion of excessive gains to landowners, as indicated by the recent great increases in the value of land, and the very large holdings by individuals and corporations; and the exclusion of large masses of men from the land because the owners will not sell it at its present economic value. The remedies for these evils fall mainly under the heads of ownership and taxation. All mineral, timber, gas, oil, grazing, and water-power lands that are now publicly owned, should remain the property of the states and the nation, and be brought into use through a system of leases to private individuals and corporations. Cities should purchase land, and lease it for long periods to persons who wish to erect business buildings and dwellings. By means of taxation the State might appropriate the future increases of land values, subject to the reimbursement of private owners for resulting decreases in value; and it could transfer the taxes on improvements and personal property to land, provided that the process were sufficiently gradual to prevent any substantial decline in land values. In some cases the State might hasten the dissolution of exceptionally large and valuable estates through the imposition of a supertax.

The Capitalist and Interest

The Socialist contention that the labourer has a right to the entire product of industry, and therefore that the capitalist has no right to interest, is invalid unless the former alleged right can be effectuated in a reasonable scheme of distribution; and we know that the contemplated Socialist scheme is impracticable. Nevertheless, the refutation of the Socialist position does not automatically prove that the capitalist has a right to take interest. Of the titles ordinarily alleged in support of such a right, productivity and service are inconclusive, while abstinence is valid only in the case of those capital owners to whom interest was a necessary inducement for saving. Since it is uncertain whether sufficient capital would be provided without interest, and since the legal suppression of interest is impracticable, the State is justified in permitting the practice of taking interest. But this legal permission does not justify the individual interest-receiver. His main and sufficient justification is to be found in the presumptive title which arises out of possession, in the absence of any adverse claimant with a stronger title to this particular share of the product.

The only available methods of lessening the burden of interest are a reduction in the rate, and a wider diffusion of capital through co-operative enterprise. Of these the former presents no definite or considerable reasons for hope, either through the rapid increase of capital or the inevitable extension of the industrial function of government. The second proposal contains great possibilities of betterment in the fields of banking, agriculture, stores, and manufacture. Through co-operation the weaker farmers, merchants, and consumers can do business and obtain goods at lower costs, and save money for investment with greater facility, while the labourers can slowly but surely become capitalists and interest-receivers, as well as employés and wage-receivers.

The Business Man and Profits

Just remuneration for the active agents of production, whether they be directors of industry or employés, depends fundamentally upon five canons of distribution; namely, needs, efforts and sacrifices, productivity, scarcity, and human welfare. In the light of these principles it is evident that business men who use fair methods in competitive conditions, have a right to all the profits that they can obtain. On the other hand, no business man has a strict right to a minimum living profit, since that would imply an obligation on the part of consumers to support superfluous and inefficient directors of industry. Those who possess a monopoly of their products or commodities have no right to more than the prevailing or competitive rate of interest on their capital, though they have the same right as competitive business men to any surplus gains that may be due to superior efficiency. The principal unfair methods of competition; that is, discriminative underselling, exclusive-selling contracts, and discrimination in transportation, are all unjust.

The remedies for unjust profits are to be found mainly in the action of government. The State should either own and operate all natural monopolies, or so regulate their charges that the owners would obtain only the competitive rate of interest on the actual investment, and only such surplus gains as are clearly due to superior efficiency. It should prevent artificial monopolies from practising extortion toward either consumers or competitors. Should the method of dissolution prove inadequate to this end, the State ought to fix maximum prices. Inasmuch as overcapitalisation has frequently enabled monopolistic concerns to obtain unjust profits, and always presents a strong temptation in this direction, it should be legally prohibited. A considerable part of the excessive profits already accumulated can be subjected to a better distribution by progressive income and inheritance taxes. Finally, the possessors of large fortunes and incomes could help to bring about a more equitable distribution by voluntarily complying with the Christian duty of bestowing their superfluous goods upon needy persons and objects.

The Labourer and Wages

None of the theories of fair wages that have been examined under the heads of "the prevailing rate," "exchange-equivalence," or "productivity" is in full harmony with the principles of justice. The minimum of wage justice can, however, be described with sufficient definiteness and certainty. The adult male labourer has a right to a wage sufficient to provide himself and family with a decent livelihood, and the adult female has a right to remuneration that will enable her to live decently as a self supporting individual. At the basis of this right are three ethical principles: all persons are equal in their inherent claims upon the bounty of nature; this general right of access to the earth becomes concretely valid through the expenditure of useful labour; and those persons who are in control of the goods and opportunities of the earth are morally bound to permit access thereto on reasonable terms by all who are willing to work. In the case of the labourer, this right of reasonable access can be effectuated only through a living wage. The obligation of paying this wage falls upon the employer because of his function in the industrial organism. And the labourer's right to a living wage is morally superior to the employer's right to interest on his capital. Labourers who put forth unusual efforts or make unusual sacrifices have a right to a proportionate excess over living wages, and those who are exceptionally productive or exceptionally scarce have a right to the extra compensation that goes to them under the operation of competition. Labourers who are receiving the "equitable minimum" described in the last sentence have a right to still higher wages at the expense of the capitalist and the consumer, if they can secure them through the processes of competition; for the additional amount is an ethically unassigned or ownerless property which may be taken by either labourer, capitalist, or consumer, provided that there is no artificial limitation of supply.

The methods of increasing wages are mainly three: a minimum wage by law, labour unions, and co-operative enterprise. The first has been fairly well approved by experience, and is in no wise contrary to the principles of either ethics, politics, or economics. The second has likewise been vindicated in practice, though it is of only small efficacy in the case of those workers who are receiving less than living wages. The third would enable labourers to supplement their wage incomes by interest incomes, and would render our industrial system more stable by giving the workers an influential voice in the conditions of employment, and laying the foundation of that contentment and conservatism which arise naturally out of the possession of property.

As a matter of convenience, the foregoing paragraphs may be further summarised in the following abridgment: The landowner has a right to all the economic rent, modified by the right of his tenants and employés to a decent livelihood, and by the right of the State to levy taxes which do not substantially lower the value of the land. The capitalist has a right to the prevailing rate of interest, modified by the right of his employés to the "equitable minimum" of wages. The business man in competitive conditions has a right to all the profits that he can obtain, but corporations possessing a monopoly have no right to unusual gains except those due to unusual efficiency. The labourer has a right to living wages, and to as much more as he can get by competition with the other agents of production and with his fellow labourers.

Concluding Observations

No doubt many of those who have taken up this volume with the expectation of finding therein a satisfactory formula of distributive justice, and who have patiently followed the discussion to the end, are disappointed and dissatisfied at the final conclusions. Both the particular applications of the rules of justice and the proposals for reform, must have seemed complex and indefinite. They are not nearly so simple and definite as the principles of Socialism or the Single Tax. And yet, there is no escape from these limitations. Neither the principles of industrial justice nor the constitution of our socio-economic system is simple. Therefore, it is impossible to give our ethical conclusions anything like mathematical accuracy. The only claim that is made for the discussion is that the moral judgments are fairly reasonable, and the proposed remedies fairly efficacious. When both have been realised in practice, the next step in the direction of wider distributive justice will be much clearer than it is to-day.

Although the attainment of greater justice in distribution is the primary and most urgent need of our time, it is not the only one that is of great importance. No conceivable method of distributing the present national product would provide every family with the means of supporting an automobile, or any equivalent symbol of comfort. Indeed, there are indications that the present amount of product per capita cannot long be maintained without better conservation of our natural resources, the abandonment of our national habits of wastefulness, more scientific methods of soil cultivation, and vastly greater efficiency on the part of both capital and labour. Nor is this all. Neither just distribution, nor increased production, nor both combined, will insure a stable and satisfactory social order without a considerable change in human hearts and ideals. The rich must cease to put their faith in material things, and rise to a simpler and saner plane of living; the middle classes and the poor must give up their envy and snobbish imitation of the false and degrading standards of the opulent classes; and all must learn the elementary lesson that the path to achievements worth while leads through the field of hard and honest labour, not of lucky "deals" or gouging of the neighbour, and that the only life worth living is that in which one's cherished wants are few, simple, and noble. For the adoption and pursuit of these ideals the most necessary requisite is a revival of genuine religion.

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