It will suffice to take note only of the simpler and most fundamental aspect of the process. Thus it is not misleading, for present purposes, to say that the capital which is at the command of industry in the U. S. at the present time is the result of accumulation in private hands of some part of the product of past labor.
[10] J. M. Keynes, "Economic Consequences of the Peace," pages 18-20. See also A. Marshall, "Industry and Trade," Appendix P headed "Possibilities of the Future."
[11] In the very interesting study made by Prof. Bowley on "The Change in the Distribution of the National Income, 1880-1913" (Great Britain), page 27, a similar conclusion is stated.
See also the article of Prof. A. A. Young entitled "Do the Statistics of the Concentration of Wealth in the United States mean what they are commonly assumed to mean?" In the March, 1917, issue of the Journal of the American Statistical Association.
CHAPTER III—THE PRINCIPLES OF WAGES
Section 1. A knowledge of the forces governing existing wage levels essential in any attempt to work out a policy of wage settlement for industrial peace.—Section 2. Wage incomes determined by great number of forces. The three most important and constant among these stated.—Section 3. These three to be taken up in order. The volume of the flow of wealth in the country of the worker the first to be considered. Its relation to wages indirect, as all product is joint result.—Section 4. The scientific management theories of wages based on a misconception of the relation between the productive contribution of labor and wages. These theories merely an elaboration of one method of wage payment. They have perceived one important truth, however.—Section 5. The "group-demand" theory of wages as held by some trade unions, based on a similar misconception. Valid, sometimes, from group point of view; unsound from point of view of labor in general.—Section 6. The second important force determining wages is the relative plenty or scarcity of the different groups or agents of production. How this governs the share of the product going to wage earners.—Section 7. Many important modifying forces to the influence upon wages of relative plenty or scarcity. The most important considered.—Section 8. The forces determining the sharing out of the product of industry summarized. The idea of normal equilibrium in distribution a mistaken one.—Section 9. A brief analysis of the factors which determine actual plenty or scarcity of the different agents of production at any one time.—Section 10. The third important force introduced—the relative plenty or scarcity of different kinds of labor. The existence of relatively separate groups of wage earners discussed. The nature of an investigation of the principles of wages.
1.—In the preceding chapter, an attempt was made to mark some of the broader tests which will confront any policy of wage settlement for industrial peace and to foresee the ends that must be accomplished. An effort was made to define some of the conditions of industrial peace. To what extent these conditions are attainable, and how they are to be sought, remains to be studied. The starting point of further study is a knowledge of the forces which govern the distribution of the product of industry at the present time in the United States—that is, a knowledge of the principles of distribution. Our intention, however, is to undertake that study only in so far as it is necessary to explain how wage incomes are determined. Such a partial study of the principles of distribution with the special purpose of making clear the factors that govern wage incomes will occupy the next two chapters. They will constitute a statement of wage principles.
2.—The distribution of the product of industry between the wage earners and the other groups who share in it is a continuous process in which each group asserts its own interests and purposes. Wages are settled through a series of separate bargains between the wage earners and the owners or directors of industrial enterprises. The outcome of these bargains, as regards wages, is determined by the interaction of a great number of circumstances or forces, some of which are relatively more constant and more important than others. We will begin our study of wage principles by considering those forces which are relatively the most important and the most constant.