"High wages, instead of leading to thankfulness of temper and improvement of mind, have, in too many cases, cherished pride and supplied funds for supporting refractory spirits in strikes wantonly inflicted upon one set of mill-owners after another throughout the several districts of Lancashire for the purpose of degrading them into a state of servitude." (Philosophy of Manufactures, p. 366.)
So again (p. 298):—"In fact, it was their high wages which enabled them to maintain a stipendary committee in affluence, and to pamper themselves into nervous ailments by a diet too rich and exciting for their indoor occupation."
The experiments of Robert Owen in raising wages and shortening hours in his New Lanark mills failed utterly to convince his fellow-manufacturers that a high standard of comfort among the workers would bring a correspondent rise in working efficiency.
The history of the early factory system, under which rapid fortunes were built out of the excessive toil of children and low-skilled adult workers paid at rates which were, in many instances, far below true "subsistence wages," furnished to the commercial mind a convincing argument in favour of "cheap labour," and set political economy for half a century at war with the rising sentiments of humanity.[227] Even now, the fear frequently expressed in the New World regarding the "competition of cheap labour" attests a strong survival of this theory, which held it to be the first principle of "good business" to pay as low wages as possible.
§ 2. The trend of more recent thought has been in the direction of a progressive modification of the doctrine of the "economy of low wages." The common maxim that "if you want a thing well done you must expect to pay for it" implies some general belief in a certain correspondence of work and wages. The clearer formulation of this idea has been in large measure the work of economic thinkers who have set themselves to the close study of comparative statistics. The work in which Mr. Brassey, the great railway contractor, was engaged gave him an opportunity of making accurate comparison of the work and wages of workmen of various nationalities, and his son, Sir Thomas Brassey, collected and published a number of facts bearing upon the subject which, as regards certain kinds of work, established a new relation between work and wages. He found that English navvies employed upon the Grand Trunk Railway in Canada, and receiving from 5s. to 6s. a day, did a greater amount of work for the money than French-Canadians paid at 3s. 6d. a day; that it was more profitable to employ Englishmen at 3s. to 3s. 6d. upon making Irish railways than Irishmen at 1s. 6d. to 1s. 8d.; that "in India, although the cost of dark labour ranges from 4-1/2d. to 6d. a day, mile for mile the cost of railway work is about the same as in England;" that in quarry work, "in which Frenchmen, Irishmen, and Englishmen were employed side by side, the Frenchman received three, the Irishman four, and the Englishman six francs a day. At those different rates the Englishman was found to be the most advantageous workman of the three." Extending his inquiries to the building trades, to mining, and to various departments of manufactures, he found a general consensus of opinion among employers and other men of practical experience making for a similar conclusion. In France, Germany, and Belgium, where wages and the standard of living were considerably lower than in England, the cost of turning out a given product was not less, but greater. In the United States and in a few trades of Holland, where the standard of comfort was as high or higher than in the corresponding English industries, more or better work was done. In short, the efficiency of labour was found to vary with tolerable accuracy in accordance with the standard of comfort or real wages.
In his introduction to his work on Foreign Work and English Wages, Sir Thomas Brassey gives countenance to a theory of wages which has frequently been attributed to him, and has sometimes been accepted as a final statement of the relation of work and wages—viz., that "the cost of work, as distinguished from the daily wage of the labourer, was approximately the same in all countries." In other words, it is held that, for a given class of work, there is a fixed and uniform relation between wages and efficiency of labour for different lands and different races.
Now, to the acceptance of this judgment, considered as a foundation of a theory of comparative wages, there are certain obvious objections. In the first place, in the statement of most of the cases which are adduced to support the theory reference is made exclusively to money wages, no account being taken of differences of purchasing power in different countries. In order to establish any rational basis, the relation must be between real wages or standard of living and efficiency. Now, though it must be admitted as inherently probable that some definite relation should subsist between wages and work, or, in other words, between the standard of consumption and the standard of production, it is not à priori reasonable to expect this relation should be uniform as between two such countries as England and India, so that it should be a matter of economic indifference whether a piece of work is done by cheap and relatively inefficient Indian labour or by expensive and efficient English labour. Such a supposition could only stand upon one of two assumptions.
The first assumption would be that of a direct arithmetical progression in the relation of wage and work such as would require every difference in quantity of food, etc., consumed by labourers to be reflected in an exactly correspondent difference of output of productive energy—an assumption which needs no refutation, for no one would maintain that the standard of comfort furnished by wages is the sole determinant of efficiency, and that race, climate, and social environment play no part in economic production. The alternative assumption would be that of an absolute fluidity of capital and labour, which should reduce to a uniform level throughout the world the net industrial advantages, so that everywhere there was an exact quantitative relation between work and wage, production, and consumption. Though what is called a "tendency" to such uniformity may be admitted, no one acquainted with facts will be so rash as to maintain that this uniformity is even approximately reached.
§ 3. There is, then, no reason to suppose that wages, either nominal or real, bear any exact, or even a closely approximate, relation to the output of efficient work, quantity and quality being both taken into consideration. But, in truth, the evidence afforded by Sir T. Brassey does not justify a serious investigation of this theory of indifference or equivalence of work and wages. For, in the great majority of instances which he adduces, the advantage is clearly shown to rest with the labour which is most highly remunerated. The theory suggested by his evidence is, in fact, a theory of "the economy of high wages."
This theory, which has been advancing by rapid strides in recent years, and is now supported by a great quantity of carefully-collected evidence, requires more serious consideration. The evidence of Sir T. Brassey was chiefly, though by no means wholly, derived from branches of industry where muscular strength was an important element, as in road-making, railway-making, and mining; or from the building trades where machinery does not play a chief part in directing the pace and character of productive effort. It would not be unreasonable to expect that the quantitative relation between work and wages might be closer in industries where freely expended muscular labour played a more prominent part than in industries where machinery was a dominating factor, and where most of the work consisted in tending machinery. It might well be the case that it would pay to provide a high standard of physical consumption to navvies, but that it would not pay to the same extent to give high wages to factory operatives, or even to other classes of workers less subject to the strain of heavy muscular work.