Principles of Political Economy

by Arthur Latham Perry

Is it open for us, to gain a somewhat deeper and clearer sense of what that is exactly that is rendered in these three classes of personal Services, before we pass to the considerations which determine in all cases their Value? It is plain, that what common Laborers sell for the most part, if not exclusively, is muscular exertion of some kind, guided by the mind as trained in habit, and aided by appropriate implements, all designed to meet the desire and so call forth the return-service of the purchaser; it is equally plain, that skilled Laborers with scarcely any more exceptions than before sell the same sort of physical exertions, or motions, this time guided by mental action of a higher grade and wider scope, and aided also by more elaborate tools working towards the desires and consequent returns of a set of buyers more scrupulous and exacting than the first set; and it is plain enough, that some of the highest professional services, for instance the surgeon's, though not by any means the mass of such services, are essentially of the same kind as the two former, namely, muscular motions, guided by the most intimate and exact knowledge of things, and aided too by instruments the most scientific and expensive. In many of the professional services the physical element sinks to a minimum, while the intellectual and moral factors come to the front and take up the chief attention; it will be found, however, that the physical factor is always present in some degree, as, for example, in the counsel's plea before the court, and in the physician's visit on his patient; and in almost all cases, if not in all, some implement or other plays its part in the process of professional service before it ends, as Cicero used a pitch-pipe or tuning-fork to gauge his voice in his great pleas for Roman clients.

Precisely what is rendered, then, in all cases of Personal Services in each of their three loose kinds, is muscular motion conjoined with mental effort and both these assisted by habit and by some form of what we call Capital. The Services are therefore Personal in the highest sense. The Mind and Body of the Laborer conspire to render them. The most sagacious animal can never be trained to render one of them. They are wholly human. Nevertheless the muscular part in the rendering—motion and resistance to motion—is just what tools and machinery can be made to take the place of in large measure but never in whole measure, because tools may not be taught to think. It may seem sometimes as if machinery were about to take the place of human hands in some classes of Production; but it will be found in the ultimate issue, as it has been found in every stage of the process, that human hands and human minds in action are absolutely essential at every point of the Exchanges among men. Men are so made and Society is so organized, that they need increasingly for their comfort and progress the personal services of their fellow-men, and can render their own in exchange for these; and consequently, there never can fail (under freedom) a Market for Personal Services of the three kinds.

Having now seen as closely as possible what that is which is rendered in personal services, let us pass to the principles which determine their remuneration. That is, we will now inquire carefully into the Value of personal services. We have learned already, that Demand and Supply in their action and reaction upon each other determine in all cases the value of Commodities for the time being; and we shall find it to be equally the dictate of all reason, and the outcome of all experience, that Demand and Supply decide too in all cases on the value of all Services and all Credits then and there. Shall we look first at the considerations that issue in the Demand for personal services, and then at those other considerations that limit the Supply of them?

1. Demand is never the mere desire for anything, but desire coupled with the ability to pay for it at rates satisfactory to the present holder. The Demand for Services, therefore, is made by the prospective purchasers of them; and the purchasers, of course, are those who desire them and are willing to pay for them at current rates. It will be easiest and surest for us to study the Demand for Services in each of the three classes of them in succession.

(1) The Demand for Common Laborers has several points of difference from that for Skilled, and from that for Professional, Laborers. It is scarcely ever intense. It is mostly disconnected from large accumulations of Capital. The desire is usually for immediate gratification, without any other end in view. It is frequently for such a service, as, if a renderer may not be conveniently and cheaply found, one is inclined to do for himself. For instances: if the barber be not accessible and reasonable and tolerably skilful, a man will certainly shave himself, provided he have not yet attained the independence and the luxury of wearing a full beard; and the ordinary housewife, if the cleanly and tractable domestic does not come into sight, will do her own work with casual assistance. It is this important fact, that common services among men and women in common life may in many cases be dispensed with altogether, and in many other cases substitutes be found for them, in connection with the other important fact, that common laborers learn their art quickly and easily, and consequently are present everywhere in large numbers, that makes the Wages of such laborers uniformly low. The Demand is moderate and the Supply is large.

(2) The Demand for Skilled Laborers is steadier and stronger than for Common, because in general the desire for these is not for immediate gratification, but for an ultimate satisfaction to arise from the commercial coöperation of these laborers with their employers, who are capitalists, in connection with accumulations of capital, the end in view being the production of commodities for sale at a profit. Here comes in a new motive on the part of capitalists to buy the personal services of laborers. The motive is simple and intelligible and commendable, but its nature and operation is popularly and grossly misapprehended.

Capital is the result of Abstinence from the present use of a Valuable in gratification, for the sake of a future increase of it through Production. But Abstinence is always irksome in itself. It must have its prospective reward in an increase, a profit, or it will never transform itself from a mere valuable into a capitalized product. Now, the owner of the valuable, having transformed it into capital from this motive, is under a commercial necessity to hire laborers, in order by their help to make his capital yield a profit. Capital lying idle decreases in value even, to say nothing of its yielding no increase to itself; and the motive of the capital-owner, accordingly, is strong and constant to buy the services of laborers, to marry these services with his own capitalized products, and thus to produce commodities for sale, whose value shall be greater than the present value of the capital and the services combined. Here we reach in the minds and motives of a large class of men an ultimate Demand for laborers, and specially for skilled laborers, which is as true and constant to its legitimate end of Profit as the needle is true and constant to the pole.

At this point it is very evident, that, if the fair expectation of the capitalists be realized in a steady profit, and the larger the circle of capitalists and the more of capitalized products to each the better for all concerned, the Demand for laborers will become steady, and will be likely to steadily increase, because there will then be a constant motive on the part of all capitalists as such to put back a part or all of their yearly profits into capitalized products, and thus the Demand for laborers will become more intense, and the rates of Wages so far forth must be enhanced. The steady Demand for the services of the laborers hinges upon the steady Profits of the capitalists, and there is no antagonism between the interests of these two classes of buyers and sellers, but rather a complete identity of interest between them.

We are looking now solely at what constitutes the Demand for laborers of the second class. As always, so here, there is Desire first and then a ready Return-service. The Desire of employers of this class is for a Profit on their capital, and the return-service for the laborers is present as a part of these capitalized products. This part of the capital we call Wages-Portion. It is already in hand or provided to be in hand when the wages fall due. Of course it is expected, that the current wages will ultimately come out of the current joint-production of the laborers upon the capitalized products set apart for that purpose by the capitalist. But if the profits fail to the capitalists at the end of that industrial-cycle, whether it be two months or twenty-four, then Desire will fail or be weakened to hire laborers for the next cycle, and the return-services or Wages-Portion with which to pay them for another cycle will be lessened of necessity. Both elements in Demand are curtailed by the falling-off of Profits. There is at the same instant less desire to buy services and less ability to pay for them. It is of the very nature of capitalized products to wear out in the process of production; if there be not net profits at the end of the cycle for the capitalists, it shall go hard but there will be less wages for the laborers during the next cycle. This is not a matter of sentiment or of philanthropy, but of eternal law, which God has ordained and the devices of men cannot frustrate. Capitalists and laborers are joint partners in the same concern. Under industrial and commercial freedom their interests are identical. Both are buyers and sellers to each other at the same instant; and, as always when both parties are alike benefited and satisfied with a trade, both will cheerfully and profitably continue the connection. The Demand of each class for the product of the other will continue unabated. Profits and wages reciprocally beget each other.

But still it is not altogether true, what has sometimes been stated by economists, that capitalists are under the same sort of pressure to buy their services as the laborers are to sell them. Capital is a Valuable already created by the mutual desires and efforts of two persons, and is now the exclusive property of one of them, and has also been set apart by him through an act of will to be thereafter an aid to some future production under the motive of a new value to accrue thereby. The capital has now become secondary to and separated from the person who owns it. He very seldom understands the real nature and operation of it. He commonly imparts to it in his imagination a more substantive and persistent existence than it actually possesses. He is frequently more or less stuck up as towards his neighbors and employees in consequence of his possession of it. The very fact that he has capitalized it for future operations shows that he is independent of it as a means of present livelihood. The personal services of the laborers, on the other hand, stand in very different relations to them. Their personal services may indeed be valuable, but they cannot be capitalized. As laborers they have nothing else to sell. Unless they sell their services now, these have no existence even, still less can they have any value. It is only by a mischievous figure of speech, that the skill of laborers is sometimes spoken of as their "Capital." Therefore, the laborers are under a certain remote yet inherent disadvantage as sellers of their personal services, when compared with the capitalists as buyers of them. This disadvantage, however, though apparent in the nature of things, and under certain circumstances disastrous to the laborers, may disappear practically under another and natural state of things; and it is every way to be desired by both classes alike that it should disappear in practice.