I. Distribution in economics embraces those principles on which the proceeds of industry are divided among the parties employed in their production.
If each man owned all the capital concerned in his business, and performed all the labor involved in each product, this question would be a very simple one. But when, as in the manufacture of chairs, of hardware and watches, and in the building of houses, there are many laborers of widely diverse capabilities, and especially when we remember that there are innumerable subsidiary occupations, as in the preparing of materials, the making of tools and machines, the protection of the workmen, the superintendence of the business, and in many other ways, the problem becomes a most complicated one.
The subject may be divided as follows:
1. Wages, or the compensation of labor.
2. Profits, or the compensation of the proprietor or employer.
3. Interest, or compensation for capital reckoned as money.
4. Rent, or compensation for the use of land.
5. Taxes, or compensation for protection by the government.
II. On the subject of wages diverse and contradictory opinions prevail. A large proportion of the British economists hold the theory that a low rate of wages is all that can be maintained, or is, on the whole, desirable among ordinary unskilled laborers. That a man should have compensation sufficient to furnish him with such food, raiment and shelter as are essential to keep him in good working condition; also, in addition, enough to enable him to support a wife (with what she can herself earn), and to rear at least two children, themselves prepared to become laborers; and to make some additional allowances for probable periods of sickness and inability to labor. So much is deemed absolutely essential even to the capitalist and employer, in order that their interests may not suffer. The school of writers referred to profess to find in the human constitution a law which prevents wages from going much beyond this limit. It is said that if they do go much beyond this, the population will multiply so rapidly, and the number of laborers will so greatly increase, that wages will not only fall back to their limit, but that great suffering will ensue.
Most American writers reject this view, though some of them appear to hold opinions logically implying it. Henry C. Carey takes the ground that there is not only no such law, but that there is one of a diametrically opposite character, which as thoroughly coincides with, as this antagonizes, the general provisions of an all-wise and beneficent creator. This law, as developed by Mr. Carey, is substantially that in any community where violence is not done to natural principles in the relations between capitalists and laborers, the share of the latter in the joint product to which both are contributors, is constantly increasing. While at first the capitalist receives much more than half, as time and the development of society go on his proportion is steadily diminishing till it becomes a small fraction of the whole, while that of the laborer is steadily increasing. At the same time, though the proportion of the capitalist is always smaller, the amount is always larger, owing to the always increasing productiveness; and for the same reason both the proportion and the amount received by the labor is enhanced. Evidence of this might be made obvious by comparing the compensation received by laborers in the earlier ages of almost any civilized race as compared with that received in its most advanced stage; and this, too, notwithstanding the vast imperfections under which society has labored and the unnatural conditions to which the laboring classes in all the earlier periods of history have been subjected. In the opinion of some writers this law is one of the grandest and most important of the recent discoveries in political economy.