pauperism. The Statute of 1388 contains the germs of and unemployment. all the subsequent Poor Law legislation: the principle of 'settlement'; the prohibition of vagrancy and begging; the distinction between the able-bodied and those 'unable to serve'; the jurisdiction of the Justice of the Peace-all are here; but there is no hint as yet that the State must relieve distress. The crisis of the fourteenth century recurred with in- Social legislatensified severity in the sixteenth,1 and the Tudor states- tion of the men showed characteristic courage in confronting it. Tudors. Agriculture had now become a commercial enterprise and the gilds had gone the way of the manors. There were other factors as well: notably the debasement and depreciation of the currency. Out of a mass of remedial legislation two statutes stand out pre-eminent : the Statute of Artificers (1563) and the Poor Law of 1601. The former was nothing less than a complete labour code which attempted to fix a scale of prices, to compensate for the decadence of the gilds by enforcing a uniform system of apprenticeships, and, from our present standpoint most important of all, to secure to the labourer a minimum wage and regular employment. Under the Poor Law of 1601 the State for the first time accepted a vast and direct responsibility for the maintenance of all such citizens as could not or would not maintain themselves. The 'lusty and able of body' were to be set on work'; the impotent poor to be relieved; the children to be apprenticed to trades. The State, therefore, was grappling energetically, if not The theory of wholly successfully, with the practical problems of employ- wages. ment and wages; but the economists had not as yet made any attempt to formulate a theory of wages, or to analyse the laws which govern the labourer's share in the product of industry. Smith and Adam Smith deals with the problem with characteristic Adam robustness, objectivity, and common sense; but, though wages." many of the doctrines elaborated by later economists are 1 Cf. supra, p. 32. The wagesund theory. deducible from his disjointed statements, he himself abstains, perhaps prudently, from any attempt to weave them into a coherent and connected theory. Here, as elsewhere, he is the pioneer, cautiously feeling his way. He begins, however, as we have seen, with the elliptical and incautious statement that the produce of labour constitutes the natural wages of labour', though he quickly corrects it by the assertion that wages everywhere depend upon a bargain between two parties whose interests are by no means the same'. Perhaps the nearest approach to a definite theory is to be found in the statement that the wages of the inferior classes of workmen' are necessarily regulated by two different circumstances: the demand for labour, and the ordinary or average price of provisions'. The price of necessaries determines the minimum rate of wages: by 'necessaries' being understood 'whatever the custom of the country renders it indecent for creditable people, even of the lowest order, to be without'. The 'standard of comfort' theory begins to emerge. So also does the wages-fund theory. The demand for those who live by wages cannot increase but in proportion to the increase of the funds which are destined to the payment of wages.' Nay more: it necessarily increases with the increase of the revenue and stock [elsewhere the national wealth'] of every country and cannot possibly increase without it '.3 Malthus, Senior, and Mill had not far to go for the genesis of the doctrine they elaborated. Wages in England were, as Adam Smith conclusively showed, well above the mere subsistence level in his day; but they tended to be still higher in countries which though less rich than England were developing even more rapidly; as in the English colonies. The thing to be dreaded from the labourer's point of view is the stationary state when the 'hands would naturally multiply beyond their employment' and then 'the competition of the labourers and the interest of the masters would soon reduce [wages] to the lowest rate which is consistent with common humanity'. 1 Bk. V, c. ii, art. iii. 2 Bk. I, c. viii. 3 Ibid. Still worse would their condition be in a decaying country, where (and this perhaps is nearly the present state of Bengal')' want, famine, and mortality' would prevail till the number of inhabitants in the country was reduced to what could easily be maintained by the revenue and stock which remained in it'. Again Malthus is implicit in Adam Smith. and Ri In Malthus, however, the wages-fund doctrine takes Malthus more definite shape. It was based upon two assumptions, cardo. both of them seemingly justified by the circumstances of the day: first, that the total food produce of any given country is a rigidly fixed amount; and, secondly, that of the total produce a fixed proportion, no less and no more, will go to the wage-earners.2 Ricardo, though credited with the formulation of an 'iron law of wages' did not hold that the wage-fund was rigidly fixed. The rate of wages, he held, was in inverse ratio to that of profits, but the labourers had it in their power, by raising the standard of comfort, to raise the minimum rate. The friends of humanity cannot but wish that in all countries the labouring classes should have a taste for comforts and enjoyments, and that they should be stimulated by all legal means in their exertions to procure them. There cannot be a better security against a redundant population. In those countries where the labouring classes have the fewest wants, and are contented with the cheapest food, the people are exposed to the greatest vicissitudes and miseries.'3 No modern socialist or trade unionist would quarrel with this view. J. S. Mill. James Mill, while adopting the principle of the wages- James and fund, so far modified it as to substitute capital for food as the determinant of wages. Universally then we may affirm, other things remaining the same, that if the ratio which capital and population bear to one another remains the same, wages will remain the same; if the ratio which 1 Ibid. Cf. Essay on Population, Bk. III, c. v; IV, c. iii. The first edition of the Essay was published in 1798. 3 * Principles (1821), c. v. J. S. Mill's retractation. Cairnes and Fawcett. capital bears to population increases, wages will rise; if the ratio which population bears to capital increases, wages will fall.' Instead of capital' Senior2 speaks of the 'fund for the maintenance of labour', but he added nothing essential to the theory, the final statement of which is found in John Stuart Mill. The doctrine is set forth in its most precise form, not in the Principles, but in the article in the Fortnightly Review 3 containing Mill's famous retractation. There is supposed to be, at any given instant, a sum of wealth, which is unconditionally devoted to the payment of wages of labour. This sum is not regarded as unalterable, for it is augmented by saving, and increases with the progress of wealth; but it is reasoned upon as at any given moment a predetermined amount. More than that amount it is assumed that the wages-receiving class cannot possibly divide among them; that amount, and no less, they cannot but obtain. So that the sum to be divided being fixed, the wages of each depend solely upon the divisor, the number of participants.' Mill pleads guilty to having along with the world in general' accepted this theory without the qualifications and limitations necessary to make it admissible'. His conversion was effected partly by the practical demonstration afforded by the growing influence of trade unionism that wages could be raised by the action of trade combination, partly by the attack delivered upon the theory by F. D. Longe, W. T. Thornton, and others. They denied the existence of any fixed fund destined for the payment of labour, apart from the produce of labour itself, and equally denied that the labouring population of a country constituted at any given time a supply of labour', to which the whole of such a fund must, under a system of competition, be unconditionally paid. The guns carried by Longe and Thornton were not very 1 Elements of Political Economy (1821), c. ii, § 2. 2 1830. 9 May 1869. A Refutation of the Wage-Fund Theory of Political Economy as enunciated by Mr. Mill, M.P., and Mr. Fawcett, M.P. (1866). Labour, its wrongful Claims and rightful Dues (1869). heavy, and the attack was largely directed against a position which no one had maintained. Mill's precipitate retreat is, therefore, a little difficult to understand. Probably it was due less to a philosophical conversion than to his growing appreciation of the influence of trade unions and his increasing sympathy with labour'. Be that as it may, Cairnes was not deterred from a vigorous restatement of the wages-fund theory1: nor did Henry Fawcett, despite his general adherence to Mill, join him in his recantation. The remuneration', writes Fawcett, 'which is intended to be given to the labourer is capital; therefore those only can exert a demand for labour who can apply capital for the remuneration of labour, and the greater the amount of capital to be applied in this manner the greater will be the demand for labour.' 2 The statement is, perhaps, somewhat elliptical, but properly understood it would seem to express not only a truth but a truism. That wages are, if not 'paid', at least advanced out of capital is surely undeniable; but it is essential to insist that the capital fund out of which they are advanced, so far from being a fixed and predetermined amount, is peculiarly elastic. Its amount depends partly on the effectiveness of the demand put forward by those who want commodities but cannot directly employ labour; partly on the prospects of remuneration held out to the potential capitalist; but largely also on the efficiency of labour itself, out of whose product the fund is perennially renewed. Such a restatement would appear to reconcile all that was really essential in the theory of the wages-fund with the substance of the 'product' theory as expounded with conspicuous ability by Francis A. Walker. In his treatise on The Wages Question (1876) Walker put Walker's theory of forward an original theory of wages, and further defined it wages. in his Political Economy (1883). He boldly denied that wages have any necessary relation to a capital fund. The rate of wages, he argued, was determined not by the amount 1 Some Leading Principles of Political Economy, Pt. II, § 1. |