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第36章 The Wage-Fund Theory(2)

So far I have been speaking of the theory as applied to wages at a particular time.Now,what did it further imply of wages in the long-run?According to Ricardo's law,which has been adopted by Lassalle and the Socialists,wages depend on the ratio between population and capital.Capital may be gradually increased by saving,and population may be gradually diminished;but Ricardo thought that the condition of the labourer was surely on the decline,because population was advancing faster than capital.

While admitting occasionally that there had been changes in the standard of comfort,he yet disregarded these in his general theory,and assumed that the standard was fixed;that an increase of wages would lead to an increase of population,and that wages would thus fall again to their old rate,or even lower.The amount of corn consumed by the labourer would not diminish,but that of all other commodities would decline.Later economists have qualified this statement of the supposed law.Mill showed that the standard of comfort was not fixed,but might vary indefinitely.This being the case,the labourer might sink even lower than Ricardo supposed possible,for population might increase till the labourer had not only less of everything else,but was forced down to a lower staple of life than corn,for instance,potatoes.And this has,as a matter of fact,taken place in some countries.But,on the other hand,the standard might rise,as it has risen in England;and Mill thought that it would rise yet more.At first this was his only hope for the working classes.At a later period he trusted that the labourer,by means of co-operation,might become more and more self-employing,and so obtain both profits and wages.

It is interesting to inquire how this wage-fund theory grew up.Why was it held that employers could not give higher real wages?Its origin is easy to understand.When Malthus wrote his essay on population,there had been a series of bad harvests,and in those days but small supplies of corn could be obtained from abroad.Thus year after year there seemed to be a fixed quantity of food in the country and increasing numbers requiring food.

Population was growing faster than subsistence,and increased money wages could not increase the quantity of food that was to be had.Thus in 1800,when corn was l27s.the quarter,it was clear that the rich could not help the poor by giving them higher wages,for this would simply have raised the price of the fixed quantity of corn.Malthus assumed that the amount of food was practically fixed;therefore,unless population diminished,as years went on,wages would fall,because worse soils would be cultivated and there would be increased difficulty in obtaining food.But the period he had before his eyes was quite exceptional;after the peace,good harvests came and plenty of corn;food grew cheaper,though population advanced at the same rate.So that the theory in this shape was true only of the twenty years from 1795 to 1815.But,when it had once been said that wages depended on the proportion between population and food,it was easy to substitute capital for food and say that they depended on the proportion between population and capital,food and capital being wrongly identified.Then when the identification was forgotten,it was supposed that there is at any given moment a fixed quantity of wage-capital-food,boots,hats,furniture,clothes,etc.-destined for the payment of wages,which neither employers nor workmen can diminish or increase,and thus the rate of wages came to be regarded as regulated by a natural law,independent of the will of either party.

We have already seen that this theory is false;we have now to substitute for it some truer theory,and explain thereby the actual phenomena of the labour market,such,for instance,as the fact that wages at Chicago or New York are twice as high as they are in England,while the prices of the necessaries of life are lower.Though modern economists have pointed out the fallacies of the old wage-fund theory,no economist has yet succeeded in giving us a complete theory of wages in its place.I believe indeed that so complicated a set of conditions as are involved cannot be explained by any one formula,and that the attempt to do so leads to fallacies.Yet I am also aware that the public seem to feel themselves aggrieved that economists will not now provide them with another convenient set phrase in place of the wage-fund theory,and are inclined to doubt the validity of their explanations in consequence.Now,wages in a given country depend on two things:the total amount of produce in the country,and the manner in which that produce is divided.To work out the former problem we must investigate all the causes which affect the whole amount of wealth produced,the natural resources of the country,its political institutions,the skill,intelligence,and inventive genius of its inhabitants.The division of the produce,on the other hand,is determined mainly by the proportion between the number of labourers seeking employment and the quantity of capital seeking investment;or,to put the case in a somewhat different way,instead of saying that wages are paid out of stored-up capital,we now say that they are the labourer's share of the produce.What the labourer's share will be depends first on the quantity of produce he can turn out,and secondly,on the nature of the bargain which he is able to make with his employer.

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