during the week, and after work has stopped and he has paid his hands on Saturday night take a new inventory of his capital. The item of money will be less, for it has been paid out in wages; there will be less raw material, less coal, etc., and a proper deduction must be made from the value of the buildings and machinery for the week's wear and tear. But if he is doing a remunerative business, which must on the average be the case, the item of finished products will be so much greater as to compensate for all these deficiencies, and show in the summing up an increase of capital. Manifestly, then, the value he paid his hands in wages was not drawn from his capital, etc." (Progress and Poverty, page 53.) You will observe the qualification allowed in the sentence, "if he is doing a remunerative business, which must on the average be the case"—a qualification that admits the incorrectness of Mr. George's theory applied to unremunerative businesses. Nonpaying industries are not rare. One statistician tells us that from ninety to ninety-five per cent of all those who embark in business in this country—the majority of whom are employers of labor and pay out wages—fail. It seems extraordinary that an able thinker like Mr. George could believe he had discovered a general law which admittedly fails in so many instances. In applying the theory to the case of the Great Eastern steamship, Mr. George chooses a most unfortunate instance. He says: "Here is a machinist or boiler-maker working on the keel plates of the Great Eastern; is he not also just as clearly creating value-making capital?" Not necessarily. It depends entirely upon whether the steamship proves a success. Events since showed that she was a gigantic failure. She never earned more than a mere percentage of her cost, and was finally sold for old junk. The greater part of the wages paid to those workmen was drawn directly out of the pockets of the English capitalists, and little, if any, of it was ever returned.
The facts in all those instances selected by Mr. George simply show that under certain circumstances the wage-earner brings to his employer the fund out of which his wages are paid, and under others (probably the vastly greater number) the wages are paid directly out of the fund provided by the employer. The conclusion is, therefore, that while Mr. George has shown exceptions to the economic theory that wages are drawn from capital, he has certainly failed to establish the truth of his own.
In the broad philosophical sense, capital is always the mother of labor,[1] which simply means that before labor is possible there must be a stock or reserve fund of power—a certain potential force—from which labor draws its sustenance, whether it be in the
- ↑ See Prof. Huxley's essay, Capital, the Mother of Labor.
