Labour and the Popular Welfare

by W. H. Mallock

Let us see how he does this. The eight labourers, when he finds them, make each fifty pounds a year, or four hundred pounds in the aggregate; and this represents the normal necessaries of their existence. He, by the assistance which his Ability renders Labour, enables at last, after many stages of progress, these same necessaries to be produced by one single man, who, instead of producing, as formerly, goods worth fifty pounds, finds himself, with the assistance of Ability, producing goods worth four hundred pounds. There is thus an increase of three hundred and fifty pounds, and this increment the man of Ability takes.

Meanwhile, seven men are left idle, and with them the man of Ability makes the following bargain. Out of the three hundred and fifty pounds worth of necessaries which he possesses, he offers each of them fifty pounds worth—the amount which originally they each made for themselves, on condition that they will make other things for him, or put their time at his disposal. They accordingly make luxuries for him, or become his personal servants. For the three hundred and fifty pounds he pays them in the shape of necessaries, they return him another three hundred and fifty pounds in the shape of commodities or of service; and this new wealth constitutes the able man’s income.

◆1 In this case, there being no competition of employers, there would be no natural distribution of the increasing products amongst the labourers.

Such, reduced to its simplest elements, is the process on which the riches of the rich in the modern world depend. ◆¹ It will be seen, however, that in the case we have just supposed, the labourers, by the process in question, gain absolutely nothing. Each of them originally made fifty pounds a year. He now receives the same sum in wages. But the total product has increased by three hundred and fifty pounds, and of this the labourers acquire no share whatever. Nor, supposing them to be inexperienced in the art of combination, is there any means by which they could ever do so. And if our imaginary community were a complete representation of reality, the same would be the case with the labourers in real life.

◆1 But let us introduce a second man of Ability competing with the first, and the process of distribution of the increased product amongst the labourers begins at once.

◆¹ But it must now be pointed out that in one important respect, as a representation of reality, our community is incomplete. It represents the main process by which the riches of the rich are produced; but it offers no parallel to one factor in the real situation, owing to which the labourers inevitably acquire a share in them. In that community the rich classes are represented by a single person, who has no conflicting interests analogous to his own to contend against. But in actual life, so far as this point is concerned, the condition of the rich is different altogether. As looked at from without, they are, indeed, a single body, which may with accuracy be represented as one man; but as looked at from within, they are a multitude of different bodies, whose interests, within certain limits, are diametrically opposed to each other. In order, therefore, to make our illustration complete, instead of one man of Ability we must imagine two. The first, whose fortunes we have just followed, and whom, for the sake of distinctness, we will christen John, has already brought production to the state that has been just described. He has managed to get seven men out of eight to produce luxuries for himself,—luxuries, we will say, such as wine, cigars, and butter,—paying these seven men with the surplus necessaries which, with his assistance, are produced by the eighth man. But of these luxuries the seven men keep none; nor can they give any of them to the eighth man, their fellow. John takes all. But now let us suppose that a second man of Ability, whom we will christen James, appears upon the scene, just as anxious as John to direct Labour by his Ability, and just as capable of making Labour productive. But all the labourers are at present in the pay of John. James therefore must set himself to detach them from John’s service; and he accordingly engages that if they will work for him they shall not only each receive the necessaries that John gives them, but a share of the other things that they produce—of the butter, of the cigars, and of the wine—as well. The moment this occurs, John has to make a similar offer; and thus the wages of Labour at once begin to rise. When they have been forced up to a certain point, James and John cease to bid against one another, and each employs a certain number of labourers, till one or other of them makes some new discovery which enables the same amount of some commodity—we will say cigars—as has hitherto been produced by two men, to be produced by one; and thus a new labourer is set free, and is available for some new employment. We must assume that James and John could both employ this man profitably—that is, that they could set him to produce some new object of desire—let us say strawberries; and, this being so, there is again a competition for his labour. He is offered by both employers as much as he has received hitherto, and as the other labourers receive; and he is offered besides a certain number of strawberries. Whichever employer ultimately secures his services, the man has secured some further addition to his income. He has some share in the increasing wealth of the community; and, as John and James continue to compete in increasing the production of all other commodities, some share of each increase will in time go to all the labourers.

◆1 And nothing can stop this process except an increase of population in excess of the increase in the productive powers of Ability.

◆¹ One thing only could interfere with this process; and that has been excluded from our supposed community: namely, an increase in its numbers. And a mere increase in the numbers would in itself not be enough. It must be an increase which outstrips the discovery of new ways in which labour may be employed profitably. Let us suppose that to our original eight labourers, eight new labourers are added, who if left to themselves could do just what the first eight could do, namely, produce annual subsistence for themselves to the value of fifty pounds each. If, under the management of James or John, the productivity of these men could be multiplied eight-fold, as was the case with the first eight, James and John would be soon competing for their services, and the second eight, like the first eight, would share in the increased product. But if, owing to all the best land being occupied, and few improvements having been discovered in the methods of any new industries, the productivity of the new men could be increased not eight-fold, but only by one-eighth—that is to say, if what each man produces by his unaided Labour could be raised by Ability from fifty pounds, not to four hundred pounds, but to no more than fifty-six pounds ten shillings,—fifty-six pounds ten shillings would be the utmost these men would get, even if the Ability of James or John got no remuneration whatever. Meanwhile, however, the first set of workmen are, as we have seen, receiving much more than this. They are receiving each, we will say, one hundred pounds. The second set, therefore, naturally envy them their situations, and endeavour to secure these for themselves by offering their Labour at a considerably lower price. They offer it at ninety pounds, at seventy pounds, or even at sixty pounds; for they would be bettering their present situation by accepting even this last sum. This being the case, the original eight labourers have necessarily to offer their Labour at reduced terms also; and thus the wages of Labour are diminished all round.

Such is the inevitable result under such circumstances, if each man—employer and employed alike—follows his own interest at the bidding of common sense. One man is not more selfish than another; indeed, in a bad sense, nobody is selfish at all; and for the result nobody is to blame. The average wages of Labour are diminished for this simple reason, and for no other—that the average product is diminished which each labourer assists in producing. The community is richer absolutely; but it is poorer in proportion to its numbers.[53] Let us see how this works out. The original product of the first eight labourers was fifty pounds a head, or four hundred pounds in the aggregate. This was raised by the co-operation of Ability to four hundred pounds a head, or three thousand two hundred pounds in the aggregate. But the second set of labourers, whatever Ability may do for them, cannot be made to produce more than fifty-six pounds ten shillings a head, or an aggregate of four hundred and fifty-two pounds; and thus, whereas eight labourers produced three thousand two hundred pounds, sixteen labourers produce only three thousand six hundred and fifty-two pounds, and the average product is lowered from four hundred pounds to two hundred and twenty-eight pounds.[54]

◆1 This natural power, however, can be regulated by deliberate action, political and other, and made more beneficial to the labourers;