Chart XV.
How far Mr. Mill was in error may be seen by Chart [No. XV], which shows the enormous increase of cotton production under the régime of free labor as compared with that of slave-labor in the United States. The abolition of slavery has been an economic gain to the South. Moreover, the exports of raw cotton have increased from 644,327,921 pounds in [pg 460] 1869, to 2,288,075,062 pounds in 1883; while for corresponding years the exports of tobacco increased from 181,527,630 to 235,628,360 pounds. In other words, exports of tobacco were increased by 30 per cent, and those of raw cotton by no less than 255 per cent. Besides, the prices of cotton and tobacco are no higher now than before 1850.
An advantage of a similar economical, though of a very different moral character, is that possessed by domestic manufactures; fabrics produced in the leisure hours of families partially occupied in other pursuits, who, not depending for subsistence on the produce of the manufacture, can afford to sell it at any price, however low, for which they think it worth while to take the trouble of producing. The workman of Zürich is to-day a manufacturer, to-morrow again an agriculturist, and changes his occupations with the seasons in a continual round. Manufacturing industry and tillage advance hand in hand, in inseparable alliance, and in this union of the two occupations the secret may be found why the simple and unlearned Swiss manufacturer can always go on competing and increasing in prosperity in the face of those extensive establishments fitted out with great economic and (what is still more important) intellectual resources.
In the case of these domestic manufactures, the comparative cost of production, on which the interchange between countries depends, is much lower than in proportion to the quantity of labor employed. The work-people, looking to the earnings of their loom for a part only, if for any part, of their actual maintenance, can afford to work for a less remuneration than the lowest rate of wages which can permanently exist in the employments by which the laborer has to support the whole expense of a family. Working, as they do, not for an employer but for themselves, they may be said to carry on the manufacture at no cost at all, except the small expense of a loom and of the material; and the limit of possible cheapness is not the necessity of living by their trade, but that of earning enough by the work to make that social employment of their leisure hours not disagreeable.
§ 4. —But not when common to All.
These two cases, of slave-labor and of domestic [pg 461] manufactures, exemplify the conditions under which low wages enable a country to sell its commodities cheaper in foreign markets, and consequently to undersell its rivals, or to avoid being undersold by them. But no such advantage is conferred by low wages when common to all branches of industry. General low wages never caused any country to undersell its rivals, nor did general high wages ever hinder it from doing so.
To demonstrate this, we must turn to an elementary principle which was discussed in a former chapter.[290] General low wages do not cause low prices, nor high wages high prices, within the country itself. General prices are not raised by a rise of wages, any more than they would be raised by an increase of the quantity of labor required in all production. Expenses which affect all commodities equally have no influence on prices. If the maker of broadcloth or cutlery, and nobody else, had to pay higher wages, the price of his commodity would rise, just as it would if he had to employ more labor; because otherwise he would gain less profit than other producers, and nobody would engage in the employment. But if everybody has to pay higher wages, or everybody to employ more labor, the loss must be submitted to; as it affects everybody alike, no one can hope to get rid of it by a change of employment; each, therefore, resigns himself to a diminution of profits, and prices remain as they were. In like manner, general low wages, or a general increase in the productiveness of labor, does not make prices low, but profits high. If wages fall (meaning here by wages the cost of labor), why, on that account, should the producer lower his price? He will be forced, it may be said, by the competition of other capitalists who will crowd into his employment. But other capitalists are also paying lower wages, and by entering into competition with him they would gain nothing but what they are gaining already. The rate, then, at which labor is paid, as well as the quantity [pg 462] of it which is employed, affects neither the value nor the price of the commodity produced, except in so far as it is peculiar to that commodity, and not common to commodities generally.
However, without there being any change in the productiveness of any industry, if the price of the article should rise, for instance, from an increased demand, that would make the total value arising from the products of the industry larger in its purchasing power, and so there would be a larger sum to be divided among labor and capital. If there be free competition, more capital would move into this one industry under the hope of larger profits, and so wages would rise. Therefore, it is possible that high wages and high prices may go together, but not as cause and effect. In fact, the change in price generally precedes the change in wages. On the other hand, while low wages are not the cause of low prices nor high wages of high prices, yet the two may be found together, as both due to a common cause, viz., the small or great value of the total product.[291]