Something must be said as to the power of the state to regulate wages. As far as any direct regulation is concerned, it seems to State regulation of wages. be only possible within narrow limits. The state might of course institute certain complex sliding-scales for different classes of labour and make them compulsory, but this would rather be an official declaration of the natural market rate than a direct regulation. Any rate which the state of trade and prices would not bear could not be enforced: masters could not be compelled to work at a loss or to keep their capital employed when it might be more advantageously transferred to another place or occupation. Thus the legal rate could not exceed to any considerable extent the market rate. Nor, on the other hand, could a lower rate in general be enforced, especially when the labourers have the right of combination and possess powerful organizations. And even apart from this the competition of capitalists for labour would tend to raise wages above the legal rate, and evasion would be extremely easy.
The best illustration of the failure to raise the rate of wages directly by authority is found in the English poor law system Poor relief in aid of wages. between 1796 and 1834. “In the former year (1796) decisively fatal step of legalizing out-relief to the able-bodied; and in aid of wages, was taken,” and “in February 1834 was published perhaps the most remarkable and startling document to be found in the whole range of English, perhaps indeed of all social history” (Fowle's Poor Law). The essence of the system was in the justices determining a natural rate of wages, regard being paid to the price of necessaries and the size of the labourer's family, and an amount was given from the rates sufficient to make up the wages received to this natural level. The method of administration was certainly bad, but the best administration possible could only have kept the system in existence a few years longer. In one parish the poor-rate had swallowed up the whole value of the land, which was going out of cultivation, a fact which has an obvious bearing on land nationalization as a remedy for low wages. The labourers became careless, inefficient and improvident. Those who were in regular receipt of relief were often better off (in money) than independent labourers. But the most important consequence was that the real wages obtained were, in spite of the relief, lower than otherwise they would have been, and a striking proof was given that wages are paid out of the produce of labour. The Report of the Poor Law Commissioners (1834) states emphatically (p. 48) that “the severest sufferers are those for whose benefit the system is supposed to have been introduced and to be perpetuated, the labourers and their families.” The independent labourers suffered directly through the unfair competition of the pauper labour, but, as one of the sub-reporters stated, in every district the general condition of the independent labourer was strikingly distinguishable from that of the pauper and superior to it, though the independent labourers were commonly maintained upon less money. In New Zealand and Australia in recent years a great extension has been made of the principle of state intervention in the regulation of wages.
But, although the direct intervention of the state, with the view of raising the nominal rates of wages, is, according to theory Factory legislation. and experience, of doubtful advantage, still, when we consider real wages in the evident sense of the term, there seems to be an almost indefinite scope for state interference. The effect of the Factory Acts and similar legislation has been undoubtedly to raise the real wages of the working-classes as a whole, although at first the same arguments were used in opposition to these proposals as in the case of direct relief from the poor-rates. But there is a vital difference in the two cases, because in the former the tendency is to increase whilst in the latter it is to diminish the energy and self-reliance of the workers. An excellent summary of the results of this species of industrial legislation is given by John Morley (Life of Cobden, vol. i. p. 303):—
“We have to-day a complete, minute, and voluminous code for the protection of labour: buildings must be kept pure of effluvia; dangerous machinery must be fenced; children and young persons must not clean it while in motion; their hours are not only limited but fixed; continuous employment must not exceed a given number of hours, varying with the trade but prescribed by the law in given cases; a statutable number of holidays is imposed; the children must go to school, and the employer must have every week a certificate to that effect; if an accident happens notice must be sent to the proper authorities; special provisions are made for bake-houses, for lace-making, for collieries, and for a whole schedule of other special callings; for the due enforcement and vigilant supervision of this immense host of minute prescriptions there is an immense host of inspectors, certifying surgeons, and other authorities whose business it is to ‘speed and post o'er land and ocean’ on sullen guardianship of every kind of labour, from that of the woman who plaits straw at her cottage door to the miner who descends into the bowels of the earth and the seaman who conveys the fruits and materials of universal industry to and fro between the remotest parts of the globe.”
The analysis previously given of real wages shows that logically all these improvements in the conditions of labour, by diminishing the “quantity of labour” involved in work, are equivalent to a real rise in wages. Experience has also shown that the state may advantageously interfere in regulating the methods of paying wages. A curious poem, written about the time of Edward IV., on England's commercial policy (Political Songs and Poems, Rolls Series, ii. 282), shows that even in the 15th century the “truck” system was in full operation, to the disadvantage of the labourers. The cloth-makers, in particular, compelled the workers to take half of their wages in merchandise which they estimated at higher than its real value. The writer proposes that the “wyrk folk be paid in good moné,” and that a sufficient ordinance be passed for the purpose, and a law to this effect was enacted in the 4th year of Edward IV. The Truck Acts have since been much further extended. Again, the legislation directed against the adulteration of all kinds of goods, which also finds its prototypes in the middle ages, is in its effects equivalent to a rise in real wages.[1]
The power of trade unions in regulating wages is in most respects analogous in principle to that of legislation just noticed. Trade unions and wages. Nominal wages can only be affected within comparatively narrow limits, depending on the condition of trade and the state of prices, whilst in many cases a rise in the rate in some trades or places can only be accomplished by a corresponding depression elsewhere. At the same time, however, it can hardly be questioned that through the unions nominal wages have on the whole risen at the expense of profits—that is to say, that combinations of labourers can make better bargains than individuals. But the debatable margin which may make either extra profits or extra wages is itself small, and the principal direct effect of trade unions is to make wages fluctuate with prices, a rise at one time being compensated by a fall at another. The unions can, however, look after the interests of their members in many ways which improve their general condition or raise the real rate of wages, and when nominal wages have attained a natural maximum, and some method of arbitration or sliding-scale is in force, this indirect action seems the principal function of trade unions. The effects of industrial partnership (cf. Sedley Taylor's Profit Sharing) and of productive co-operation (cf. Holyoake's History of Co-operation) are small in amount (compared with the total industry of any country) though excellent in kind, and there seem to be no signs of the decay of the entrepreneur system.
The industrial revolution which took place about the end of the 18th century, involving radical changes in production, destroyed Effects of machinery on wages. the old relations between capital and labour, and perhaps the most interesting part of the history of wages is that covered by the 19th century. For fifty years after the introduction of production on a large scale, the condition of the working-classes was on the whole deplorable, but great progress has since been made. The principal results may be summed up under the effects of machinery on wages—taking both words in their widest sense. Machinery affects the condition of the working-classes in many ways. The most obvious mode is the direct substitution of machinery for labour. It is clear that any sudden and extensive adoption of labour-saving machinery
- ↑ On this subject compare Jevons, The State in Relation to Labour, new edition by F. A. Hirst.
