Evidently the employer who cannot pay a living wage is not obliged to do so, since moral duties suppose a corresponding physical capacity. In such circumstances the labourer's right to a living wage becomes suspended and hypothetical, just as the claim of a creditor when the debtor becomes insolvent. Let us see, however, precisely what meaning should reasonably be given to the phrase, "inability to pay a living wage."
An employer is not obliged to pay a full living wage to all his employés so long as that action would deprive himself and his family of a decent livelihood. As active director of a business, the employer has quite as good a right as the labourer to a decent livelihood from the product, and in case of conflict between the two rights, the employer may take advantage of that principle of charity which permits a man to prefer himself to his neighbour, when the choice refers to goods of the same order of importance. Moreover, the employer is justified in taking from the product sufficient to support a somewhat higher scale of living than generally prevails among his employés; for he has become accustomed to this higher standard, and would suffer a considerable hardship if compelled to fall notably below it. It is reasonable, therefore, that he should have the means of maintaining himself and family in moderate conformity with their customary standard of living; but it is unreasonable that they should indulge in anything like luxurious expenditure, so long as any of the employés fail to receive living wages.
Suppose that an employer cannot pay all his employés living wages and at the same time provide the normal rate of interest on the capital in the business. So far as the borrowed capital is concerned, the business man has no choice; he must pay the stipulated rate of interest, even though it prevents him from giving a living wage to all his employés. Nor can it be reasonably contended that the loan capitalist in that case is obliged to forego the interest due him. He cannot be certain that this interest payment, or any part of it, is really necessary to make up what is wanting to a complete scale of living wages. The employer would be under great temptation to defraud the loan capitalist on the pretext of doing justice to the labourer, or to conduct his business inefficiently at the expense of the loan capitalist. Anyhow, the latter is under no obligation to leave his money in a concern that is unable to pay him interest regularly. The general rule, then, would seem to be that the loan capitalist is not obliged to refrain from taking interest in order that the employés may have living wages.
Is the employer justified in withholding the full living wage from his employés to provide himself with the normal rate of interest on the capital that he has invested in the enterprise? Speaking generally, he is not. In the first place, the right to any interest at all, except as a return for genuine sacrifices in saving, is not certain but only presumptive.[244] Consequently it has no such firm and definite basis as the right to a living wage. In the second place, the right to interest, be it ever so definite and certain, is greatly inferior in force and urgency. It is an axiom of ethics that when two rights conflict, the less important must give way to the more important. Since all property rights are but means to the satisfaction of human needs, their relative importance is determined by the relative importance of the ends that they serve; that is, by the relative importance of the dependent needs. Now the needs that are supplied through interest on the employer's capital are slight and not essential to his welfare; the needs that are supplied through a living wage are essential to a reasonable life for the labourer. On the assumption that the employer has already taken from the product sufficient to provide a decent livelihood, interest on his capital will be expended for luxuries or converted into new investments; a living wage for the labourer will all be required for the fundamental goods of life, physical, mental, or moral. Evidently, then, the right to interest is inferior to the right to a living wage. To proceed on the contrary theory is to reverse the order of nature and reason, and to subordinate essential needs and welfare to unessential needs and welfare.
Nor can it be maintained that the capitalist-employer's claim to interest is a claim upon the product prior to and independent of the claim of the labourer to a living wage. That would be begging the question. The product is in a fundamental sense the common property of employer and employés. Both parties have co-operated in turning it out, and they have equal claims upon it, in so far as it is necessary to yield them a decent livelihood. Having taken therefrom the requisites of a decent livelihood for himself, the employer who appropriates interest at the expense of a decent livelihood for his employés, in effect treats their claims upon the common and joint product as essentially inferior to his own. If this assumption were correct it would mean that the primary and essential needs of the employés are of less intrinsic importance than the superficial needs of the employer, and that the employés themselves are a lower order of being than the employer. The incontestable fact is that such an employer deprives the labourers of access to the goods of the earth on reasonable terms, and gives himself an access thereto that is unreasonable.
Suppose that all employers who found themselves unable to pay full living wages and obtain the normal rate of interest, should dispose of their businesses and become mere loan capitalists, would the condition of the underpaid workers be improved? Two effects would be certain: an increase in the supply of loan capital relatively to the demand, and a decrease in the number of active business men. The first would probably lead to a decline in the rate of interest, while the second might or might not result in a diminution of the volume of products. If the rate of interest were lowered the employing business men would be able to raise wages; if the prices of products rose a further increase of wages would become possible. However, it is not certain that prices would rise; for the business men who remained would be the more efficient in their respective classes, and might well be capable of producing all the goods that had been previously supplied by their eliminated competitors. Owing to their superior efficiency and their larger output, the existing business men would be able to pay considerably higher wages than those who had disappeared from the field of industrial direction. As things are to-day, it is the less efficient business men who are unable to pay living wages and at the same time obtain the prevailing rate of interest on their capital. The ultimate result, therefore, of the withdrawal from business of those who could not pay a living wage, would probably be the universal establishment of a living wage.
Of course, this supposition is purely fanciful. Only a small minority of the business men of to-day are likely to be driven by their consciences either to pay a living wage at the cost of interest on their capital, or to withdraw from business when they are confronted with such a situation. Is this small minority under moral obligation to adopt either of these alternatives, when the effect of such action upon the great mass of the underpaid workers is likely to be very slight? The question would seem to demand an answer in the affirmative. Those employers who paid a living wage at the expense of interest would confer a concrete benefit of great value upon a group of human beings. Those who shrank from this sacrifice, and preferred to go out of business, would at least have ceased to co-operate in an unjust distribution of wealth, and their example would not be entirely without effect upon the views of their fellow employers.
An Objection and Some Difficulties
Against the foregoing argument it may be objected that the employer does his full duty when he pays the labourer the full value of the product or service. Labour is a commodity of which wages are the price; and the price is just if it is the fair equivalent of the labour. Like any other onerous contract, the sale of labour is governed by the requirements of commutative justice; and these are satisfied when labour is sold for its moral equivalent. What the employer is interested in and pays for, is the labourer's activity. There is no reason why he should take into account such an extrinsic consideration as the labourer's livelihood.
Most of these assertions are correct, platitudinously correct, but they yield us no specific guidance because they use language vaguely and even ambiguously. The contention underlying them was adequately refuted in the last chapter, under the heads of theories of value and theories of exchange equivalence. At present it will be sufficient to repeat summarily the following points: if the value of labour is to be understood in a purely economic sense it means market value, which is obviously not a universal measure of justice; if by the value of labour we mean its ethical value we cannot determine it in any particular case merely by comparing labour and compensation; we are compelled to have recourse to some extrinsic ethical principle; such an extrinsic principle is found in the proposition that the personal dignity of the labourer entitles him to a wage adequate to a decent livelihood; therefore, the ethical value of labour is always equivalent to at least a living wage, and the employer is morally bound to give this much remuneration.