I am disposed to think that Mr. Cairnes takes too despondent a view of the possibilities of progress that are comprised in the position of the wage-labourer, but it is precisely that view that has lent force to the socialist criticism of the present order of things, and to the socialist calls for a radical transformation by State agency. The main charges brought by socialists against the existing economy are the three following, all of which, they allege, are consequences of the capitalistic management of industry and unregulated competition:—1st, that it tends to reduce wages to the minimum required to give the labourer his daily bread, and that it tends to prevent them from rising above that minimum; 2nd, that it has subjected the labourer's life to innumerable vicissitudes, made trade insecure, mutable and oscillatory, and created relative over-population; and, 3rd, that it enables and even forces the capitalist to rob the labourer of the whole increase of value which is the fruit of his labour. These are the three great heads of their philippic against modern society: the hopeless oppression of the "iron and cruel law" of necessary wages, the mischief of incessant crises and changes and of the chaotic régime of chance, and the iniquity of capital in the light of their doctrine of value. Let us examine them in their order.
I. Socialists found their first charge partly on their interpretation of the actual historical tendency of things, and partly on the teaching of Ricardo and other economists on natural wages. Now, to begin with the question of historical fact, the effect which has been produced by the large system of production on the distribution of wealth and the general condition of the working class is greatly misconceived by them. So far as the distribution of wealth is concerned, the principal difference that has occurred may be described as the decadence of the lower middle classes, a decline both in the number of persons in proportion to population who enjoy intermediate incomes, and also in the relative amount of the average income they enjoy. Their individual income may be higher than that of the corresponding class 150 or 200 years ago, but it bears a less ratio to the average income of the nation. The reason of this decline is, of course, obvious. The yeomanry, once a seventh of our population, and the small masters in trade have gradually given way before the economic superiority of the large capital or other causes, and modern industry has as yet produced no other class that can, by position and numbers, fill their room; for though, no doubt, the great industries call into being auxiliary industries of various kinds, which are still best managed on the small scale by independent tradesmen, the number of middling incomes which the greater industries have thus contributed to create has been far short of the number they have extinguished. The same causes have, of course, exercised very important effects on the economic condition of the working class. They have reduced them more and more to the permanent position of wage-labourers, and have left them relatively fewer openings than they once possessed for investing their savings in their own line, and fewer opportunities for the abler and more intelligent of them to rise to a competency. This want may perhaps be ultimately supplied under existing industrial conditions by the modern system of co-operation, which combines some of the advantages of the small capital with some of the advantages of the large, though it lacks one of the chief advantages of both, the energetic, uncontrolled initiative of the individual capitalist. But at present, at any rate, it is premature to expect this, and as things stand, many of the old pathways that linked class with class are now closed without being replaced by modern substitutes, and working men are more purely and permanently wage-labourers than they used to be. But while the wage-labourer has perhaps less chance than before of becoming anything else, it is a mistake to suppose, as is sometimes done, that he is worse off, or even, as is perhaps invariably imagined, that he has a less share in the wealth of the country than he had when the wealth of the country was less. On the contrary, the position of the wage-labourer is really better than it has been for three hundred years. If we turn to the period of the English Revolution, we find that the income which the labourer and his family together were able to earn was habitually insufficient to maintain them in the way they were accustomed to live. Sir M. Hale, in his "Discourse Touching the Poor," published in 1683, says the family of a working man, consisting of husband, wife, and four children, could not be supported in meat, drink, clothing, and house-rent on less than 10s. a week, and that he might possibly be able to make that amount, if he got constant employment, and if two of his children, as well as their mother, could earn something by their labour too. Gregory King classifies the whole labouring population of the country in his time, except a few thousand skilled artisans, among the classes who decrease the wealth of the country, because, not earning enough to keep them, they had to obtain occasional allowances from public funds. We do well to grieve over the pauperism that exists now in England. A few years ago, one person in every twenty received parochial support, and one in thirty does so yet. These figures, of course, refer to those in receipt of relief at one time, and not to all who received relief during a year. But for Scotland we have statistics of both, and the latter come as nearly as possible to twice as many as the former. If the same proportion rules in England, then every fifteenth person receives relief in the course of the year.[4] But in King's time, out of a population of five millions and a half, 600,000 were in receipt of alms, i.e., more than one in ten; and if their children under 16 years of age were included, their number would amount to 900,000, or one in six. Now, while the labourers' wages were then, as a rule, unequal to maintain them in the way they lived, we know that their scale of living was much below that which is common among their class to-day. The only thing which was much cheaper then than now was butcher meat, mutton being only 2d. a lb., and beef, 1¼d.; but half the population had meat only twice a week, and a fourth only once. The labourer lived chiefly on bread and beer, and bread was as dear as it is now. Potatoes had not come into general use. Butter and milk were cheaper than now, but were not used to the same extent. Fuel, light, and clothing were all much dearer, and salt was so much so as to form an appreciable element in the weekly bill. When so many of the staple necessaries of life were high in price, the labourer's wages naturally could not afford a meat diet. Nothing can furnish a more decisive proof of the rise in the real remuneration of the wage-labourer since the Revolution than the fact that the wages of that period were insufficient to maintain the lower standard of comfort prevalent then, without parochial aid, while the wages of the same classes to-day are generally able to maintain their higher standard of comfort without such supplementary assistance. Then the hours of labour were, on the whole, longer; the death rate in London was 1 in 27, in place of 1 in 40 now; and all those general advantages of advancing civilization, which are the heritage of all, were either absent or much inferior.
These facts sufficiently show that if the rich have got richer since the Revolution, the poor have not got poorer, and that the circumstances of the labouring class have substantially improved with the growth of national wealth. As far as their mere money income is concerned there is some reason for thinking that the improvement has been as near as may be proportional with the increase of wealth. The general impression is the reverse of this. It is usual to hear it said that while the labourers' circumstances have undoubtedly improved absolutely, they have not improved relatively, as compared with the progress in the wealth of the country and the share of it which other classes have succeeded in obtaining. But this impression must be qualified, if not entirely rejected, on closer examination. Data exist by which it can be to some extent tested, and these data show that while considerable alterations have been made in the distribution of wealth since the rise of the great industries, these alterations have not been unfavourable to the labouring classes, but that the proportion of the wealth of the country which falls to the working man to-day is very much the same—is indeed rather better than worse—than the proportion which fell to his share two hundred years ago. Gregory King made an estimate of the distribution of wealth among the various classes of society in England in 1688, founded partly on the poll-books, hearth-books, and other official statistical records, and partly on personal observation and inquiry in the several towns and counties of England; and Dr. C. Davenant, who says he had carefully examined King's statistics himself, checking them by calculations of his own and by the schemes of other persons, pronounces them to be "very accurate and more perhaps to be relied on than anything that has been ever done of a like kind." Now, a comparison of King's figures with the estimate of the distribution of the national income made by Mr. Dudley Baxter from the returns of 1867, will afford some sort of idea—though of course only approximately, and perhaps not very closely so—of the changes that have actually occurred. King takes the family income as the unit of his calculations. Baxter, on the other hand, specifies all bread-winners separately—men, women, and children; but to furnish a basis of comparison, let us take the men as representing a family each, and if so, that would give us 4,006,260 working-class families in the country in 1867. This is certainly a high estimate of their number, because in 1871 there were only five million of families in England; and according to the calculations of Professor Leone Levi, the working class comprises no more than two-thirds of the population, and would consequently consist in 1871 of no more than 3,300,000 families. If we were to take this figure as the ground of our calculations, the result would be still more striking; but let us take the number of working-class families to have been four millions in 1867. The average income of a working-class family in King's time was £12 12s. (including his artisan and handicraft families along with the other labourers); the average income of a working class family now is £81. The average income of English families generally in King's time was £32; the average income of English families generally now is £162. The average income of the country has thus increased five-fold, while the average income of the working class has increased six and a half times. The ratio of the working class income to the general income stood in King's time as 1:2½, and now as 1:2. In 1688, 74 per cent. of the whole population belonged to the working class, and they earned collectively 26 per cent. of the entire income of the country; in 1867—according to the basis we have adopted, though the proportion is doubtless really less—80 per cent. of the whole population belonged to the working class, and they earned collectively 40 per cent. of the entire income of the country. Their share of the population has increased 6 per cent.; their share of the income 14 per cent.
Now, I am far from adducing these considerations with the view of suggesting that the present condition of the working classes or the present distribution of wealth is even approximately satisfactory, but I think they ought to be sufficient to disperse the gloomy apprehensions which trouble many minds as if, with all our national prosperity, the condition of the poorer classes were growing ever worse and could not possibly, under existing industrial conditions, grow any better; to prevent us from prematurely condemning a system of society, whose possibilities for answering the legitimate aspirations of the working class are so far from being exhausted, that it may rather be said that a real beginning has hardly as yet been made to accomplish them; and to give ground for the hope that the existing economy, which all admit to be a most efficient instrument for the production of wealth, may, by wise correction and management, be made a not inadequate agency for its distribution.
The socialists are not more fortunate in their argument from the teaching of economists than in their account of the actual facts and tendency of history. The "iron and cruel law" of necessary wages is, as expounded by economists, neither so iron nor so cruel as Lassalle represented it to be. They taught that the price of labour, like the price of everything else, tended to settle at the level of the relative cost of its production, and that the cost of its production meant the cost of producing the subsistence required to maintain the labourer in working vigour and to rear his family to continue the work of society after his day; but they always represented this as a minimum below which wages would not permanently settle, but above which they might from other causes remain for a continuity considerably elevated, and which, even as a minimum, was in an essential way ruled by the consent of the labouring classes themselves, and dependent on the standard of living they chose habitually to adopt. If the rate of wages were forced down below the amount necessary to maintain that customary standard of living, the marriage rate of the labouring classes would tend to fall and the rate of mortality to rise till the supply of labour diminished sufficiently to restore the rate of wages to its old level. And conversely, if the price of labour rose above that limit, the marriage rate among the labouring class would tend to rise and the rate of mortality to fall, till the numbers of the working population increased to such an extent as to bring it down again. But the rate of marriage depended on the will and consent of the labouring class, and their consent was supposed to be given or withheld according as they themselves considered the current wages sufficient or insufficient to support a family upon. The amount of the labourer's "necessary" subsistence was never thought to be a hard and fast limit inflexibly fixed by physical conditions. It was not a bare living; it was the living which had become customary or was considered necessary by the labourer. Its amount might be permanently raised, if in consequence of a durable rise of wages a higher standard of comfort came to be habitual and to be counted essential, and the addition so made to it would then become as real an element of natural or necessary wages in the economic sense as the rest. Its amount might also permanently fall, if the labourers ceased to think it necessary and contentedly accommodated their habits to the reduced standard, and there might thus ensue a permanent degradation of the labourer, such as took place in Ireland in the present century, when the labouring class adjusted themselves to reduction after reduction till their lower standard of living served, in the first place, to operate as an inducement to marriage instead of a check on it, because marriage could not make things worse, and at least lightened the burdens of life by the sympathy that shared them; and served, in the second place, to impair the industrial efficiency of the labourer till he was hardly worth better wages if he could have got them. So far then was the doctrine of economists from involving any "iron or cruel" limit that they always drew from it the lesson that it was in the power of the labouring classes to elevate themselves by the pleasant, if somewhat paradoxical, expedient of first enlarging their scale of expenditure. "Pitch your standard of comfort high, and your income will look after itself," is scarcely an unfair description of the rule of prudent imprudence they inculcated on working people. They believed that the chief danger to which that class was exposed was their own excessive and too rapid multiplication, and they considered the best protection against this danger to lie in the powerful preventive of a high scale of habitual requirements.
Moreover, Ricardo distinctly maintained that though the natural rate of wages was determined as he had explained, yet the operation of that natural law might be practically suspended in a progressive community for an indefinite period, and that the rate of wages actually given might even keep on advancing the whole time, because capital was capable of increasing much more rapidly than population. The price of labour, he taught, would in that case be always settled by the demand for it which was created by the accumulation of capital, and the sole condition of the accumulation of capital was the productive power of labour. The rate of wages in a progressive community might therefore almost never be in actual fact determined by this "iron and cruel law" at all, and so there is not the smallest ground for representing economists as teaching that the present system compels the rate of wages or the labourer's remuneration to hover to and fro over the margin of indigence.
Lassalle, then, built his agitation on a combination of errors. He was wrong in his interpretation of the tendency of actual historical development; he was wrong in his interpretation of the doctrine of economists; and now, to complete the confusion, that doctrine is itself wrong. If we are at all to distinguish a natural or normal rate of wages from the fluctuating rates of the market, that natural or normal rate will be found really to depend, not on the cost of producing subsistence, but on the amount or rate of general production, or the amount of production per capita in the community, or, in other words, on the average productivity of labour. It is manifest that this would be so in a primitive condition of society in which industry was as yet conducted without the intervention of a special employing class, for then the wages of labour would consist of its product, and be, in fact, as Smith says, only another name for it. It would depend, however, not exclusively on the individual labourer's own efficiency, but also on the fertility of the soil and the general efficiency of the rest of the labouring community. While according to his own efficiency he would possess a greater or smaller stock of articles, which, after providing for his own wants, he might exchange for other articles produced by his neighbours; the quantity he would get in exchange for them would be great or small according to the degree of his neighbour's efficiency. The average real remuneration of labour, or the average rate of wages, in such a community would therefore correspond with the average productivity of its labour. But the same principle holds good in the more complex organization of industrial society that now exists, though its operation is more difficult to trace.
The price of labour is now determined by a struggle between the labourer and the employer, and the fortunes of the struggle move between two very real, if not very definitely marked, limits, the lower of which is constituted by the smallest amount which the labourer can afford to take, and the higher by the largest amount which the employer can afford to give. The former is determined by the amount necessary to support life, and the latter by the amount necessary to secure an adequate profit. Now the space between these two limits will be always great or small in proportion to the general productivity of labour in the community. The general productivity of labour acts upon the rate of wages in two ways, immediately and mediately. Immediately, because, as is manifest, efficient labour is worth more to the employer than inefficient; and mediately, as I shall presently show, because it conduces to a greater diversion of wealth for productive purposes, and so increases the general demand for labour. In modern society, as in primitive, the labourer not only obtains a higher remuneration if he is efficient himself, but gathers a higher remuneration from the efficiency of his neighbours.
This will be obvious at once to any one who reflects on the improved remuneration of the common unskilled labourers. The man who works with pick and shovel makes, according to Mr. Mulhall's estimate, £30 a year now, while he only made £12 a year in 1800, when bread was about twice as dear, and yet he probably did quite as good a day's work then as he does now, except so far as his better wages have themselves helped his powers of labour, through affording him a more liberal diet, and in that case the same question is raised, How did he come to get these better wages? It was not on account of an increase in his own production, for that was the effect, not the cause; it was on account of the general increase in the productivity of all labour round about him. The great improvement in industrial processes have brought in more plentiful times, and he shares in the general plenty, though he may not have directly contributed to its production. He gets more for the same work, not merely because people in general, with their larger surplus, can afford to give him more, but because, having more to devote to industrial investment, they increase the demand for labour till they are obliged to give him more.