Another fundamental doctrine of Socialism is that of
"The Iron Law of Wages"
According to that law, "wages under competition can never be higher than that which will just support the labourer and enable him to renew his kind."[158] In the words of Lassalle, the inventor of the Iron Law of Wages, "the wages of the labourer are limited to the exact amount necessary to keep him alive."[159]
The British Socialist writers tell us: "The average price of wage-labour is the minimum wage—i.e. that quantum of the means of subsistence which is absolutely requisite to keep the labourer in bare existence."[160] "The labourer cannot as a rule command more than his cost of subsistence in return for his labour. This principle, that the return to labour is determined by the cost of subsistence of the labourer, is generally known as 'The Iron Law of Wages.' But has not this law been discarded even by some Socialists? There have been attempts in some quarters to demonstrate that this law does not actually operate with the rigidity at first claimed for it; but in truth, it stands as firmly to-day as when insisted upon by Lassalle."[161] "Capitalism always keeps the wages down to the lowest standard of subsistence which the people will accept,"[162] for "the basis of wages is the cost of subsistence of the labourer. This is called the 'Iron Law of Wages.'"[163] "By the Iron Law of Wages the recompense of the workers always tends to the minimum on which they are willing to subsist. If they are content with water to drink and cabbage to eat, they may be sure that the means of buying whisky or roast beef will very soon be taken from them. Messrs. Rentmonger, Interestmonger, and Profitmonger will speedily scent additional swag, and they will have it, too."[164] "The 'Iron Law of Wages' reduces the wages to as near the level of the means of subsistence as local circumstances will admit of."[165] If these arguments were correct it would follow that the workers could cause their wages to rise by drinking wine instead of whisky, and by smoking Havana cigars instead of pipe-tobacco.
This theory of wages is called the "Iron Law of Wages" because of its absolute and pitiless rigidity. For instance, the Iron Law of Wages will prevent lower prices of food benefiting the workman in any way. "If the working class is enabled to buy cheap bread, the operation of the 'Iron Law of Wages' will secure all the advantage for the capitalists, as it did in the days of the saintly Bright, when the corn laws were repealed. Capital is always the same in its effect on the working-class, whether manipulated by an individual capitalist, joint-stock enterprise, municipality, or government, and with each step in concentration the working-class gets relatively less and the master class gets richer, more corrupt, and more bestial, as recent events in Berlin and elsewhere show."[166] The "Iron Law of Wages" is irrefutable and irresistible. "Economists have come to talk about the 'Iron Law of Wages' with as much assurance as if it were an irreversible law of Nature."[167]
The Iron Law of Wages exists chiefly in the imagination of British Socialists. The general wage of British workmen living in towns ranges from, say 18s. to more than 2l. per week, and its amount does not depend on the cost of subsistence, but on the working skill and various other factors. If the Iron Law of Wages were correct, wages would be almost uniform. The Iron Law of Wages can possibly apply only to one small class of workers, the lowest and least skilled labourers, provided that unemployment is so great among them that they abandon collective bargaining and underbid one another down to the level of subsistence. When workers are organised, the Iron Law of Wages does not apply. The level of wages depends, broadly speaking, on supply and demand. Wages rise when two employers run after one workman; wages fall when two workmen run after one employer. An employer who engages a workman does not ask, "How much do you eat?" but "What can you do?" and he proportions the worker's remuneration not to his appetite, but to his ability and his value as a producer. The wages paid to married men and to unmarried men are identical in the same trade. If there was an "Iron Law of Wages," the wages of married men should be about twice as large as those of unmarried men.
The Iron Law of Wages is manifestly absurd. It has therefore been officially abandoned by the German Socialists at the Halle Congress of 1890 "as being scientifically untenable."[168] "German Social Democracy no longer recognises the Iron Law of Wages."[169] The British Socialists have not abandoned it, probably not because they believe it to be scientifically correct—no one can believe that—but because it is a plausible and effective means of poisoning the minds of the people.
As regards the factors which determine wages, one of the foremost Socialist authorities says: "Thoughtful workmen in the staple trades have become convinced by their own experience, no less than by the repeated arguments of the economists, that a rising standard of wages and other conditions of employment must depend ultimately on the productivity of labour, and therefore upon the most efficient and economical use of credit, capital, and capacity."[170] In other words, productivity and profit determine wages, and it is ridiculous that Socialists argue: "Over 90 per cent. of our women do not drink, back horses, smoke, attend football or cricket matches, they do not stop off their work to watch England and Australia play at cricket, and the result is they are paid less wages than men in our factories for doing the same work."[171] Does Councillor Glyde really believe that women's wages would rise as soon as they took to smoking and drinking?
The Law of Increasing Misery
According to this law the improvements in machinery, the increase of capital and increase of production do not benefit the worker. They only lead to a decline in wages and thus increase the workers' misery. "In proportion as the use of machinery and division of labour increases, in the same proportion the burden of toil also increases whether by prolongation of the working hours, by increase of the work exacted in a given time, or by increased speed of the machinery, &c."[172] "The faster productive capital increases, the more does the division of labour and the employment of machinery extend. The more the division of labour and the employment of machinery extend, so much the more does competition increase among the labourers and so much the more do their average wages dwindle. And thus the forest of arms outstretched by those who are entreating for work becomes ever denser and the arms themselves grow ever leaner."[173] "The more the worker labours the less reward he receives for it; and that for this simple reason, that he competes against his fellow-workmen and thus compels them to compete against him and to offer their labour on as wretched conditions as he does, and that he thus, in the last result, competes against himself as a member of the working-class."[174] "The worker in the factory gets, as a worker, absolutely no advantage from the machinery which causes the product of his labour to be multiplied a hundredfold."[175] "John Stuart Mill, it will be remembered, questioned whether mechanical invention had lightened the labours of a single human being."[176] "With increasing powers of production, the worker's share, and therefore his purchasing power, grows less."[177] "Wage-labour rests exclusively on competition between the labourers."[178] "The iron law of competition means, and must mean, continued degradation for the workers, even though their physical condition in youth may be improved."[179] "The worker in the factory is now seen to work no shorter hours or gain no higher wages merely because the product of his labour is multiplied a hundredfold by machinery which he does not own. 'The remuneration of labour as such,' wrote Cairnes in 1874, 'skilled or unskilled, can never rise much above its present level.'"[180]