Iron law of wages

“ Seventy-five years ago it was thought that, with the increase of machinery, of factories, of the concentrated control of wealth, and especially with the wage system, there must go a steady depression in the welfare of the workingman. This idea was connected with the iron law of wages. It was believed by some that, whatever the causes of advancing social income might be, the wage system would rob the wage-earners of all share in progress. ”

“ 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? ”

“ 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 ”

“ At the best, it does not apply to those who can not procure work at all. And during the time when he has really work to do, it is impossible for the laboring man in western Europe, to earn enough so that he can have anything left over for days when he is out of work. He is thus reduced to beggary during part of the year, or to a gradual physical decline from lack of sufficient nourishment. But the iron wage-law does not apply even to the amount of daily wages earned by those actually employed. What is the minimum of income that will support an individual? ”

“ Certainly it can, but only by its application and extension to the field of factory production. To make the working class their own employers—that is the means, the only means, by which, as you can see for yourself, this inexorable and cruel law which determines wages can be abolished. When the working class is its own employer, the distinction between wages and profits will disappear, and the total yield of the industry will take the place, as the reward of labor, of the bare living wage. ”

“ An increase of wages then is the primary condition of any real improvement in the lives of the sweated workers. So the point is this. Can we do anything by law to screw up the remuneration of the worst-paid workers to the minimum necessary for tolerable human existence? I know that many people think it impossible, but my answer is that the fixing of a limit below which wages shall not fall is already not the exception but the rule in this country. That may seem a rather startling statement, but I believe I can prove it. Take the case of the State, the greatest of all employers. ”

“ With the increasing complexity of society, many other problems presented themselves to the worker, but for the most part they were subsidiary to the main question of wages. As long as man’s place was fixed by law or custom, a customary wage left small margin for controversy. But when fixed status gave way to voluntary contract, when payment was made in money, when workmen were free to journey from town to town, labor became both free and fluid, bargaining took the place of custom, 12 and the wage controversy began to assume definite proportions. ”

“ The simplest expedient which can be imagined for keeping the wages of labor up to the desirable point would be to fix them by law; and this is virtually the object aimed at in a variety of plans which have at different times been, or still are, current, for remodeling the relation between laborers and employers. No one, probably, ever suggested that wages should be absolutely fixed, since the interests of all concerned often require that they should be variable; but some have proposed to fix a minimum of wages, leaving the variations above that point to be adjusted by competition. ”

“ It would be absurd to treat it on the one hand as a commodity, and to want on the other hand to exempt it from the laws which regulate the prices of commodities. The slave receives a permanent and fixed amount of maintenance; the wages labourer does not. He must try to get a rise of wages in the one instance, if only to compensate for a fall of wages in the other. If he resigned himself to accept the will, the dictates of the capitalist as a permanent economical law, he would share in all the miseries of the slave, without the security of the slave. ”

“ Many people look askance, and justly look askance, at the interference of the State in anything so complicated and technical as a schedule of wages for any particular industry. But the point to bear in mind is this, that the wages, which under this proposal would be enforceable by law, would be wages that had been fixed for a particular industry in a particular district by persons intimately cognisant with all the circumstances, and, more than that, by persons having the deepest common interest to avoid anything which could injure the industry. ”

“ If the working man should resist that reduction of relative wages, he would only try to get some share in the increased productive powers of his own labour, and to maintain his former relative position in the social scale. Thus, after the abolition of the Corn Laws, and in flagrant violation of the most solemn pledges given during the anti-Corn Law agitation, the English factory lords generally reduced wages ten per cent. ”

“ The fixing of a Minimum Wage, with a definite sum fixed by statute, has not yet entered our laws, but the first step towards such a consummation has been taken in the shape of giving legal sanction to some hypothetical Minimum Wage which shall be arrived at after discussion within a particular trade. That trade is, of course, the mining industry. The law does not say: “No Capitalist shall pay a miner less than so many shillings for so many hours’ work.” ”

“ The wages of any other labour are here an inapplicable criterion.
The wages of superintendance are distinguished from ordinary wages by another peculiarity, that they are not paid in advance out of capital, like the wages of all other labourers, but merge in the profit, and are not realized until the production is completed. This takes them entirely out of the ordinary law of wages. The wages of labourers who are paid in advance, are regulated by the number of competitors compared with the amount of capital; the labourers can consume no more than what has been previously accumulated. ”

“ If the demand overshoots the supply wages rise; if the supply overshoots the demand wages sink, although it might in such circumstances be necessary to test the real state of demand and supply by a strike, for example, or any other method. But if you accept supply and demand as the law regulating wages, it would be as childish as useless to declaim against a rise of wages, because, according to the supreme law you appeal to, a periodical rise of wages is quite as necessary and legitimate as a periodical fall of wages. ”

“ When the operators have this margin to work on they frequently accumulate a considerable supply beyond the immediate demands of the market. Then, asserting that the market is dull, they reduce wages. The men strike, of course, and the mills close. As production ceases, the price of iron goes up; and, as the foreign iron can not come in, the masters are fairly coining money out of the necessities of the public and the suffering of their own employés. In the course of a few months the latter accept the situation and go back to work at reduced wages. ”

“ It will know exactly how many men it will need to manufacture this pig iron. It will employ a few more men than those employed in 1910. The state will issue to the steel guild weekly the amount of store notes necessary to pay the wages upon the same scale as in 1910. Men engaged in the Steel Trust at the moment of transference will continue to work and receive the same rate of wages; but they will be entitled to their share of the profits after the amounts due annuitants and the amounts necessary to create a fund for old age and sickness have been deducted. ”

“ The rates of remuneration so arrived at would be based on the consideration of what the employers could afford to pay and yet retain such a reasonable rate of profit as would lead to their remaining in the industry. Such a regulation of wages would be as great a protection to the best employers against the cut-throat competition of unscrupulous rivals as it would be to the workers against being compelled to sell their labour for less than its value. ”

“ But though combinations to keep up wages are seldom effectual, and when effectual, are, for the reasons which I have assigned, seldom desirable, the right of making the attempt is one which cannot be refused to any portion of the working population without great injustice, or without the probability of fatally misleading them respecting the circumstances which determine their condition. So long as combinations to raise wages were prohibited by law, the law appeared to the operatives to be the real cause of the low wages which there was no denying that it had done its best to produce. ”

“ It may be that a labor union by threat of a general strike becomes able to resist wage reductions in times of business depression. [3] If so that is a bad thing. It is probable that the complete unionization of the workers in an industry, acting in collusion with their employers, may arbitrarily enhance their wages at the expense of the public. There may be results of that nature in the anthracite coal mining industry. Also in the building trades and some branches of manufacturing. These unions are absolutely cold-blooded and selfish. ”

“ So the Wage Boards Act and the Miners' Minimum Wage Act established machinery for fixing a wage in certain employments which, having regard to the circumstances of each trade, would insure that the wage-earner should enjoy a reasonable standard of health and comfort. All these measures are based upon the same principle, that absolute liberty of the individual meant the degradation, if not the destruction, of many individuals who were poor. ”

“ As a very considerable part of the working man's daily expenses is laid out in silver and copper, that is to say, in mere tokens, whose relative value to gold is arbitrarily fixed by law, like that of inconvertible money paper, a rise of money wages by 50 per cent. ”

“ They proclaim themselves the special champions of the toiling masses, while their policy would rob the laboring man of half of his savings, and grievously curtail the value of his wages. Am I asked, if the silver standard will relatively reduce wages, why so many employers of labor are opposed to it? The reason is obvious, because, aside from all considerations of sentiment, the prudent employers of labor know that they would lose vastly more through the disastrous disturbance of business sure to be caused by a free-coinage victory than they could possibly gain by the cheapening of labor. ”

“ Wages which are not a living wage unfit workmen for their duty in the government of the nation.
Does this fact justify a moral claim for a living wage to be fixed and enforced by the community? Ought a wage sufficient for the support of manhood to be a first charge on the product of labour and capital? The answer has in effect been given by the establishment of Wages Boards. There are now four trades in which a wage judged by a representative committee to be a living wage is enforced, and the same principle has lately been applied to the mining industry. ”

“ It promises to the labourers that they shall all have a certain amount of wages, however numerous they may be: and removes, therefore, alike the positive and the prudential obstacles to an unlimited increase. But besides the objections common to all attempts to regulate wages without regulating population, the allowance system has a peculiar absurdity of its own. This is, that it inevitably takes from wages with one hand what it adds to them with the other. There is a rate of wages, either the lowest on which the people can, or the lowest on which they will consent, to live. ”

“ Or, take the hope entertained by the advocates of the living wage, that its enforcement would produce a better type of management in those industries to which the legislation is applicable.
It is characteristic of the present industrial situation that no group should rest quietly under the dictation of what it is told is economic law or necessity. Given its way, each group tests anew the habits and arrangements by which it is constrained. Every time an industrial method is modified, the agents which share in distribution strike a slightly new balance. ”

“ And the numbers of laborers can be kept stationary without each workman, or even every class, receiving enough to perpetuate himself. For their ranks can easily be recruited from an over-supply of some higher class. There is a constant pressure upon the upper strata, forcing down the unfit, and it is readily conceivable that these failures should take the places of still greater failures below.
There is, then, no physical or economic necessity forcing employers to pay fair wages to each individual worker, in the sense in which we are using the word "fair" for the sake of argument. ”

“ It has often been contended that the multiplicity of wage rates for approximately the same work in industries in which wages are not settled by collective bargaining, is to be accounted for, above all, by the varying efficiency of individual wage earners. And, therefore, it is argued, that any attempt to standardize wages must lead to a concentration of employment upon those members of the group who are the more efficient, and must deprive the relatively less efficient of their employment. ”