Consumers and Wage-Earners: The Ethics of Buying Cheap

by J. Elliot Ross

It is true that some economists have maintained that the price of an article must cover its cost of production.[43] But as Professor Carver says, such an opinion "is probably the source of more error and confusion in economic discussions than any other mistake." (Loc. cit.) It may be granted, indeed, that the price will never be much below the expenses of production, understanding by "expenses of production" what the entrepreneur must pay out in wages, interest, etc. Yet even this is not because the expenses of production directly govern prices. They affect the price only indirectly by limiting the supply. For no entrepreneur will long continue in business if he be not able to sell his product at a profit, and his going out of business will decrease the supply and so raise the price by the well-known law of supply and demand.

But "costs of production," being the sum of the efforts and sacrifices of all concerned in making an article, are very different from "expenses of production."[44] It is by no means true, as Professor Sidgwick pointed out twenty-five years ago, that the amount necessary to enable a laborer to keep himself in good physical condition and reproduce himself forms a minimum below which the self-interest of an employer will not allow wages to fall.[45]

For in the first place, there is no assurance that a laborer is going to spend his wages for this purpose. How, then, can it be to his employer's advantage to pay him more than he is willing to take, when the surplus may be squandered in drink? And even assuming that the generality of laborers must receive such an amount in order to meet the demand for workmen, still they need not all receive it from their employers. An industry, such as the department stores, may try to get girls who obtain part of their support from fathers or brothers employed in other businesses.[46] Or wages of large classes may be supplemented by public or private alms. This was long the case under the English Poor Law. As the land-occupiers paid the greater portion of the rates, it was to the Manufacturers' advantage to have wages really come partly from the parish.

And the numbers of laborers can be kept stationary without each workman, or even every class, receiving enough to perpetuate himself. For their ranks can easily be recruited from an over-supply of some higher class. There is a constant pressure upon the upper strata, forcing down the unfit, and it is readily conceivable that these failures should take the places of still greater failures below.

There is, then, no physical or economic necessity forcing employers to pay fair wages to each individual worker, in the sense in which we are using the word "fair" for the sake of argument. "The effort to organize business with a view to cheap production, may be carried on in such fashion as to press unduly on those who work for wages; employers are in a position in which they may be able to drive hard bargains as to hours of work and rates of pay, and to pass on the risk of loss, which arises from fluctuations of business, to be borne by those who are thrown out of employment."[47] And not only may this, but there is every inducement and almost necessity urging that it should, be done except where the workmen are organized. No employer can afford to pay a workman more than his surplus over and above what would be produced without him, and it will be to his advantage to pay less. He is a purchaser of labor, and like every other purchaser wants to get that commodity at the lowest figure. And there are several differences between him and the purchaser of any other commodity that give him a distinct advantage in the bargain.

In the first place, not merely increased profits, what would be represented by a housewife's saving in shopping, urge him to buy cheap labor, but his own industrial existence, which will be lost if he does not get his workmen as cheap as his competitors. Having a greater prize at stake, he develops a greater skill. He has a wider view of economic conditions, a better knowledge of the state of trade elsewhere, and so he can outbargain the unorganized laborer.

Again, the laborer is in a worse position than the seller of almost any other commodity. For what he does not sell to-day disappears absolutely. If he does not dispose of it now he cannot to-morrow. A fruiterer can keep his oranges until the next day, if he is not satisfied with the current price. But to-day's labor can be sold only to-day. And if it be not sold, it is probable that the workman will be physically less fit to-morrow. Yet even if he does accept the wage offered, and it is less than enough to repair the daily waste of force, the same result will be brought about gradually. He is, therefore, confronted by the dilemma of taking what the idle are willing to accept, or becoming idle himself.

It needs only the imagining of one's self in the position of the unemployed to see that there is hardly any limit below which the wages of the weakest may not fall. A man without special skill and without savings, with not only himself but others to look out for, will be glad to get even what he knows will not completely support him.