When speaking of the future of industry it is well to remember that forces now seldom used, and perhaps seldom thought of, such as the energies liberated by chemical and intermolecular action, may hold infinite resources in reserve for mankind. But agriculture is different. Admitting that with nitrogen got from the atmosphere, or with phosphorus extracted from the subsoil, we may enrich the land indefinitely, still we are continually confronted with the limitations of time and space, which must determine the development of living things, and of agricultural products among them. When albumen can be scientifically produced then will the Ricardian theory become obsolete. Until then it holds the field.
2. Of Wages and Profits
Let us now approach these two laws of Malthus and Ricardo—the law of population and the law of rent—and ask what effect they are likely to have upon the condition of the worker and the amount of his wages. The answer is not very reassuring. On the one hand there is an indefinite increase in the numbers of the proletariat—the result of unchecked procreation, for “the moral restraint” can hardly be said to have influence at all. The inevitable result is the degradation of human labour. On the other hand, the law of diminishing returns causes a continuous rise in the price of necessaries. Between low wages on the one hand and high prices on the other, the worker feels himself crushed as between the hammer and the anvil.
Turgot had long since given utterance to the tragic thought that the wages of the worker are only just sufficient to keep him alive. His contemporary Necker gave expression to the view in terms still more melancholy. “Were it possible,” writes Necker, “to discover a kind of food less agreeable than bread but having double its sustenance, people would then be reduced to eating only once in two days.” These must be looked upon as mere isolated statements, sufficiently well attested by contemporary facts, perhaps, but laying no claim to be considered general, permanent, and inevitable laws such as Ricardo and Malthus would have regarded them.
And Ricardo still more emphatically declares that “the natural price of labour is that price which is necessary to enable the labourers one with another to subsist and to perpetuate their race without either increase or diminution.” Note the last words, “without increase or diminution”; that is, if a working man has more children than are necessary for replacing their parents, then their wages will fall below the normal rate until increased mortality shall have again established equilibrium.
This is not tantamount to saying that nominal wages measured in terms of money cannot increase. Indeed, it is absolutely necessary that they should increase, seeing that the price of commodities is continually rising. If they were to remain the same the workman would soon be reduced to starvation. Wages accordingly will show a tendency to rise in sympathy with the rising price of corn, so that the workman will always be able to procure just the same quantity of bread, no more and no less. It is his real wages measured in corn that remain stationary, and upon this depends the well-being of the working class.
But do they really remain stationary? Ricardo does not seem to think so. “In the natural advance of society the wages of labour will have a tendency to fall, as far as they are regulated by supply and demand; for the supply of labourers will continue to increase at the same rate, whilst the demand for them will increase at a slower rate.”[346]
It is even possible that an increase in nominal wages may hide a decrease in real wages. In that case, of course, wages will appear to rise, but “the fate of the labourer will be less happy; he will receive more money wages it is true, but his corn wages will be reduced.” Only when the working classes are sufficiently thoughtful to limit the number of their children will it be possible to hope for a preservation of the status quo. “It is a truth which admits not a doubt, that the comforts and well-being of the poor cannot be permanently secured without some regard on their part or some effort on the part of the legislature to regulate the increase of their numbers, and to render less frequent among them early and improvident marriages.”
In other words, there will always be a demand for a certain number of individuals in order to supply the needs of industry. So long as this indispensable minimum is not exceeded the wages even of the very lowest order must be sufficient to maintain existence, for they must all be kept alive at any rate. But should the working population exceed this demand nothing can prevent wages falling even below the minimum necessary for existence, for there will no longer be any necessity for keeping them all alive.
It must be remarked here that on this question, as on that of rent, Malthus is less pessimistic than Ricardo. Far from maintaining that every rise in wages of necessity involves an excess of population and a consequent lowering of wages, Malthus believed that a capacity for forethought, which constitutes the most efficacious check upon the operation of blind instinct, may be engendered even among the working classes, and that a high standard of life once secured may become permanent. All this may be very true, but the reasoning involves us in a vicious circle. In order that a high rate of wages may produce its beneficial effects it must first of all be established, but how can it possibly be established as long as the working classes remain steeped in the misery caused by not exercising this forethought?
An exit from the circle is only possible by recalling the fact that the market wage incessantly oscillates about the natural wage according to the exigencies of demand and supply. If this accidental rise could be prolonged a little it might become permanent and modify the workman’s standard of life.[347]
Such is the law of wages, which has long since passed into an axiom, and whose authority is invoked in every discussion on social reform. To every socialistic scheme, to every proposal for social reform, there is always one answer: “There is no means of improving the lot of the worker except by limiting the number of his children. His destiny is in his own hands.”[348] Latter-day socialism, commencing with Lassalle, makes a careful study of the law, and returns to the charge against the existing economic order by affirming that in no respect is it a natural law, but merely a result of the capitalist régime, upon which it supplies an eloquent commentary.
We must not fail to note that in the Ricardian theory there is not what we can exactly call antagonism between the landed proprietor and the proletarian. To the latter it is a matter of indifference whether rents be high or low, for his money wages move in sympathy with the price of corn, but his real wages never change. The proprietor on his side is equally indifferent to rising or falling wages, for they never affect his receipts. His rent, as a matter of fact, is determined by the quantity of labour employed on the least fertile lands, but this quantity of labour has nothing to do with the rate of wages. The landlords are the grandees of a different order.[349]
The real struggle lies between capitalist and worker. Once the value of corn has been determined by the cost of producing it on the least favoured land, the proprietor seizes whatever is over and above this, saying to both worker and capitalist, “You can divide the rest between you.” This clearly is Ricardo’s view.[350] “Whatever raises the wages of labour lowers the profits of stock.” Wages can only rise at the expense of profits, and vice versa—a terrible prophecy that has been abundantly illustrated by the fortunes of the labour movement, but never more clearly than at the present moment.
But the mere statement of the fatal antagonism between capitalist and workman must have caused both grief and surprise to those economists who had endeavoured to demonstrate the solidarity of interests between them as between brothers. Bastiat was one of these, and he tried to show that in the course of economic evolution the share of each factor tends to grow, but that labour’s shows the greatest increase.
There can be no objection to Ricardo’s method of stating the law. The whole thing is so evident that it is almost a truism. A cake is being shared between two persons. If one gets more than his due share is it not evident that the other must get less? It may be pointed out, on the other hand, that the amount available for distribution is continually on the increase, so that the share which each participant gets may really be growing bigger. But that is hardly the problem to be solved.[351] Increase the cake tenfold, even a hundredfold, but if one person gets more than half of it the other must have