are proportionally augmented, such an augmentation must certainly be brought about in the end.'1

He does not attempt to explain the steps of the process by which the augmentation is brought about.

On this question, as on many others, Senior begins by exciting great hopes of a clear exposition, and then miserably disappoints these hopes :

-

'Having given,' he says, 'a general outline of the three great classes among whom all that is produced is distributed, and of the general laws which regulate the comparative value of different products, we now proceed to consider the general laws which regulate the proportions in which landlords, capitalists, and labourers share in the general distribution, or in other words, which regulate the proportions which rent, profit, and wages bear to one another.' 2

Immediately afterwards he has two chapters or sections headed Causes on which the proportionate amount of rent depends,' and 'Proportionate amounts of profit and wages.' 4 The first of these tells us nothing whatever about the matter, except that the amount'-not even the 'proportionate amount'-of rent

'is subject to no general rule; it has neither a minimum nor a maximum. It depends on the degree in which nature has endowed certain instruments with peculiar productive powers, and the number of those instruments, compared with the number and wealth of the persons able and willing to hire them.'

The second chapter tells us absolutely nothing about the 'proportionate amounts of profit and wages.' The whole question, however, recurs under the heading of 'Causes which divert labour from the production of commodities for the use of labouring families.' 'Labour,' Senior says, 'instead of being employed in the production of wages, may be employed in the production of rent, taxation, or profit,'5 and the proportion of the whole labour devoted to the production of each share may be taken to be the same as the proportion of the whole produce falling to each share. But taxation may be regarded as a 'mode of expenditure,' and rent as 'something extrinsic,' so that all that remains is to • Political Economy, 8vo ed. p. 128. Ibid., p. 180.

1 Principles, pp. 379, 380. Ibid., p. 135.

Ibid., p. 139.

consider 'what decides the proportion of the shares' of labourers and capitalists:

"The facts which decide in what proportions the capitalist and labourer share the common fund appear to be two: first, the general rate of profit in the country on the advance of capital for a given period; and secondly, the period which in each particular case has elapsed between the advance of the capital and the receipt of the profit.'1

Senior arrives at this curious result by dint of treating the capital on which profit is obtained as if it consisted entirely of wage-fund, a sum periodically 'advanced' in payment of wages. If this were the case, what he says is so obviously true, that it is curious that he considered it necessary to spend many pages in proving it. If the wage fund x is advanced for a year, and the rate of profit is 10 per cent per annum, the common fund' to be divided annually will be equal to xx, and the labourers will receive 1 of the whole, and the capitalists. If the wage fund x were advanced for only one-twelfth of a year, and the rate of profit was still 10 per cent, the common fund' to be divided monthly would be x + (xx), and the labourers would get of the whole. If the wage-fund were advanced for a year, and the rate of profit were 20 per cent per annum, the 'common fund' to be divided annually would be xx, and the labourers would receive of the whole produce. In the course of his argument, Senior happened to give an arithmetical example, in which an addition to fixed capital causes a larger proportion of the produce to fall to profits, and a smaller to wages, but even this did not suggest to him that his theory was unsatisfactory. Yet it is obvious that as soon as the profit on capital other than wagefund is taken into account, his proposition becomes meaningless.

120

J. S. Mill tells us nothing about the proportions in which the whole produce is divided between rent, wages, and profit. About the proportions in which produce-minus-rent is divided between profits and wages, he does say something, but as he proceeds on the assumption that the rate of profit and the Pp. 193, 194.

1 P. 185.

capitalists' proportion of the produce are the same thing, we have already dealt with his teachings on this subject in dealing with variations of profits per cent. He probably agreed with Ricardo in believing that in the progress of society rent and wages receive a larger, and profits a smaller proportion of the whole produce.

§ 2. Distribution of Wages among Workers.

Supposing the causes which determine average wages to be known, it will clearly be of the greatest importance to know how the total income derived from labour is divided between the various workers. Why does one worker get more and another less than the average? The chief cause of difference is obviously the difference in industry and capacity. The lazy man and the fool will not generally earn as much as the industrious and the intelligent. Upon so obvious a fact economists have not thought it necessary to waste their time. More obscure are the causes of differences of earnings between persons of equal industry, and so far as is known, equal original capacity, when engaged in different occupations.

The formal contention of Adam Smith's celebrated chapter Of wages and profit in the different employments of labour and stock,' is that where there is 'perfect liberty' the differences in the wages earned by equal amounts of labour and the differences in the profits gained by equal amounts of stock are caused by the fact that employments have other advantages and disadvantages besides the income obtained by them, and that it is the whole advantageousness of different employments, not the income obtained from them, that any one would naturally expect to be equal:

"The whole of the advantages and disadvantages of the different employments of labour and stock,' he says, 'must, in the same neighbourhood, be either perfectly equal or continually tending to equality. If, in the same neighbourhood, there was any employment evidently either more or less advantageous than the rest, so many people would crowd into it in the one case, and so many would desert 1 Above, pp. 298-309.

1

it in the other, that its advantages would soon return to the level of other employments. This at least would be the case in a society where things were left to follow their natural course, where there was perfect liberty, and where every man was perfectly free both to choose what occupation he thought proper, and to change it as often as he thought proper. Every man's interest would prompt him to seek the advantageous, and to shun the disadvantageous employment.' 1

Apart from differences of wages and profit caused by 'the policy of Europe, which nowhere leaves things at perfect liberty,' he says, the difference of pecuniary wages and profit obtained in different employments of labour and stock arises 'from certain circumstances in the employments themselves, which either really, or at least in the imaginations of men, make up for a small pecuniary gain in some, and counterbalance a great one in others.' Of these, the five principal are, he says, so far as he has been able to observe: (1) the different agreeableness of different employments, (2) the different cost of preparing persons to pursue them, (3) the different constancy of employment in them, (4) the different amount of trustworthiness required in them, and (5) the different probability of success in them.

Interest in the examples with which Adam Smith illustrates these five circumstances has often blinded readers to his entire failure to show that 'perfect liberty' causes the whole advantages and disadvantages of the different employments to be either equal or continually tending to equality. His fourth circumstance, 'the small or great trust which must be reposed in those who exercise' the different employments obviously has no business to be where he places it. It is no disadvantage to a man to have trust reposed in him, and Adam Smith makes no attempt to show that it is. He simply says that goldsmiths and jewellers earn high wages 'on account of the precious materials with which they are intrusted,' and that

'We trust our health to the physician; our fortune, and sometimes our life and reputation to the lawyer and attorney. Such confidence could not safely be reposed in people of a very mean or

1 Bk. 1. chap. x. p. 45 a.

low condition. Their reward must be such, therefore, as may give them that rank in the society which so important a trust requires.'1

It is impossible to see any force in the 'must.' In several other cases in the course of the chapter, Adam Smith uses the same word, but in those cases he obviously has in his mind the idea of the opening paragraph of the chapter, that 'if in the same neighbourhood there was any employment, evidently either more or less advantageous than the rest, so many people would crowd into it in the one case, and so many would desert it in the other, that its advantages would soon return to the level of other employments.' But that idea is quite inapplicable here. According to it, the advantages of being a goldsmith or jeweller would soon be reduced by competition, and so many people would become physicians and attorneys that they would cease to obtain 'that rank in the society which so important a trust requires.'

Adam Smith's inclusion of this circumstance' thus practically amounts to an admission that 'perfect freedom' to choose an occupation would not necessarily produce equality of advantages and disadvantages in all the different employments. That this 'perfect freedom' does not produce equality of advantages and disadvantages, is known as a matter of fact to every one. We have attained in these days to almost perfect freedom in Adam Smith's sense of the words, with regard to competition in different employments, and yet we have not nearly attained to equality of advantages and disadvantages. Doubtless a man, whenever he has the choice, will prefer an occupation which is agreeable, easy to learn, and regular, and which offers a chance of obtaining great prizes, to one which is disagreeable, difficult to learn and irregular, and which offers no great prizes. But it does not follow, as a matter of fact, that pecuniary earnings only differ sufficiently to counterbalance the differences between the other advantages of the different occupations. Adam Smith says that if a long and expensive education or training was not looked upon by parents as a good investment for their sons, it would not be given, but this does not prove that the earnings of those who have received this training

1 P. 47 b.