<h2>CHAPTER 25</h2>
<h3>THE WAGE SYSTEM AND ITS RESULTS</h3>
<h4>§ I. SYSTEMS OF LABOR</h4>
<div class="sidenote">The wage system defined</div>
<div class="sidenote">Never the exclusive form of organization</div>
<p>1. <i>The wage system is the organization of industry wherein some men,
owning and directing capital, buy at their competitive value the
services of men without capital.</i> The wage system is a method of
organization never found completely realized. A community made up
entirely of independent small farmers, living each on his little patch
of ground, does not have any essential feature of the wage system. So
long as they continue to be independent small farmers, owners of small
capital, self-employing workers, the wage system does not exist in
complete form. Some men with capital in every community are working for
wages, while others, as independent producers, are their own employers.
Society is not sharply divided into two classes, one controlling all the
working capital, the other quite without resources. The wage system may
be spoken of as prevailing to-day not as the exclusive, but as the
typical, or dominant, form, while side by side or along with it is found
independent production. It is clear that the wages here spoken of are
contract wages. The wage system implies a money contract between
employer and employed. The relation or bond between them is that of a
wage payment.</p>
<p>The wage system cannot be judged properly apart from questions to be
later considered, such as private property and the enterpriser's part in
industry; but some consideration of the subject properly belongs here.
The wage system<span class="pagenum"><SPAN name="Page_227" id="Page_227">[Pg 227]</SPAN></span> has become of recent years in America the dominant form
of industry. The theory of wages is applied most frequently in the
discussion of contract wages, and there are certain practical relations
between the results of the wage system and the theory of wages.</p>
<div class="sidenote">Workers subordinate in early societies</div>
<p>2. <i>The wage system, historically considered, is seen not to have
displaced a system of independent labor.</i> This question should be viewed
in historical perspective. As far back as history can be traced, the
masses of workers have been subordinate. Civilization began with
direction, with obedience to superiors on the part of the mass of men.
Within the family, in the rudest tribes, the women and children were
subject to the will of the stronger, the head of the family. Among the
Aryan races the family system was widened, and the patriarch of the
tribe secured personal obedience and economic service from all members
of the community. Chattel slavery, the typical form of industrial
organization in early tropical civilization, seems to have been one of
the necessary steps to progress from rude conditions; students to-day
incline to view it as an essential stage in the history of the race. But
as conditions changed with industrial development, chattel slavery
became a hindrance to progress, a disadvantage to higher industry.</p>
<div class="sidenote">Place of the workers in the Middle Ages</div>
<p>3. <i>Serfdom for rural labor and many limitations on the workman's
freedom in the towns, were the prevailing conditions in medieval
Europe.</i> Serfdom was both a political and an economic relation. The serf
was bound to the soil; the lord could command and control him; but the
serf's obligations were pretty well defined. He had to give services,
but in return for them he got something definite in the form of
protection and the use of land. Between the lord and the serf continued
a lifelong contract, which passed by inheritance from father to son, in
the case both of the master and of the serf. In the towns conditions
were better for the skilled workmen, but many things bore heavily on the
mass of the workers shut out from special privileges. There were<span class="pagenum"><SPAN name="Page_228" id="Page_228">[Pg 228]</SPAN></span> strict
rules of apprenticeship; gild regulations forbidding the free choice of
a trade or a residence; laws against immigration; settlement laws making
it impossible for poor men to remove from one place to another;
arbitrary regulation of wages, either by the gilds in the towns or by
national councils and parliaments, forbidding the workmen to take the
competitive wages that economic conditions forced the employers to pay;
combination laws forbidding laborers to combine in their own interest.
It is not an attractive picture, but, as far as is possible in a few
words, it is a truthful picture of the conditions that existed before
the coming of the modern system.</p>
<div class="sidenote">The wage system not the main cause of present evils</div>
<p>4. <i>Many continuing limitations on the freedom of the worker are not the
results of the wage system or a part of it, but are opposed to its
complete workings.</i> The worker's ignorance is a limitation, preventing
the choice of an occupation for which he might naturally be fitted.
Neglect of children by parents is a limitation, preventing industrial
training and the development of qualities that would make it possible
for the child to excel. The faults of human nature cannot be attributed
to any "system"; and if they are remediable, it is by education and
better social opportunity. Trade unions often forbid boys to become
apprentices, and forbid the choice of a trade except under conditions so
exacting that to many they are impossible. Such limitations are made by
the privileged few in their own interest, but they are annoying and
opposed to the interests of the many. The typical wage system would be
one in which all such hindrances were lacking, in which there were no
social or political limitations on free competition except such as would
help in educating and training the worker. The wage system should be
judged by what it is, not by things directly opposed to its spirit.</p>
<p><span class="pagenum"><SPAN name="Page_229" id="Page_229">[Pg 229]</SPAN></span></p>
<h4>§ II. THE WAGE SYSTEM AS IT IS</h4>
<div class="sidenote">Merits and faults of the definite wage payment</div>
<p>1. <i>Under the wage contract the worker gets in a definite sum at once
the market value of his services.</i> Under the wage contract the employer
takes the risk as to the future selling price of the product. That he is
the one best prepared to assume the risk will be made clearer in the
discussion of the employer's function. Wage payment, therefore, is a
form of insurance to the workingman; he gets something definite instead
of taking chances he is ill prepared to take. Wage payment is a form of
credit to the laborer whose labor has not yet produced the distant
gratification. The employer advances to the workman the value of the
future gratification, discounting it at the prevailing rate of interest.
The darker side of the wage bargain is that the "cash nexus," as Carlyle
expressed it, is too often the only bond between the parties. When the
wages are paid, the employer considers his obligations discharged. There
is a lack of fellowship and sympathy in it all. Work should be a bond of
communion between men, but as it is, the laborers in some great
factories and their employers live in entirely different worlds. The
great inequality of their condition makes mutual understanding
difficult. They are master and man, "boss" and hireling, not co-workers,
each with a worthy part in the noble tasks of industry.</p>
<div class="sidenote">Strength and weakness of the worker in competition</div>
<p>2. <i>The wage-earner gets the competitive value of his services, securing
in most cases much more than a bare subsistence.</i> At the present time
competition is in a large measure active among employed as well as among
employers. A believer in the subsistence theory of wages must, under
these conditions, expect wages to fall to the starvation level. But
according to the law of wages here presented, it is to be expected that
wages can and will remain indefinitely above that level, falling or
rising as conditions change. The increase in material wealth of itself
tends to increase the<span class="pagenum"><SPAN name="Page_230" id="Page_230">[Pg 230]</SPAN></span> wages of the workman. The laborer, though without
resources and even though not contributing to the increase of capital by
saving, thus shares in the benefit of increasing capital. It is true
that under some conditions the workman is at a disadvantage in making
the wage contract; labor must be applied from day to day or it is lost,
and the laborer must work to live. While this does not determine the
rate of wages in the long run in any occupation nor to any great extent
except among the lowest grades of labor, it does give an advantage for
the moment to the employer, and enables him to exercise at times a harsh
power over the workmen in his immediate neighborhood. A single workman
is thus very often at a disadvantage, but it must not be overlooked that
in a large degree the competition for good workmen is effective between
employers in different trades and in distant localities.</p>
<div class="sidenote">Wages as affecting the ambition of the worker</div>
<p>3. <i>Increase of efficiency due to the sacrifice of parents or to
personal exertion, goes to the individual worker.</i> The most essential
practical feature in any industrial system is the appeal to the ambition
of each man. This appeal is made where a premium is placed on increasing
efficiency, by insuring to it a higher return. This result is possible
and in large measure is attained under the wage system. Little less
important is the appeal to family affection to make possible by its
sacrifices each worker's best preparation.</p>
<p>An offsetting disadvantage appears in the loss to the laborer in the
decline of his powers. As he gains in wages if he increases in
efficiency, so he loses if his strength fails from accident or in the
course of years. This loss falls upon him, not, as is sometimes said to
have been the case under serfdom or slavery, upon his owner (as if that
secured to the slave immunity from suffering). It is true that in
general under the wage system the worker has no guarantee against loss
of work or, what is equally important, against sudden changes in
industry. He may be, and often is, a victim of invention and of changes
in machinery<span class="pagenum"><SPAN name="Page_231" id="Page_231">[Pg 231]</SPAN></span> or industrial processes, by which the masses of men are
the gainers.</p>
<div class="sidenote">Large liberty of the wage-worker</div>
<p>4. <i>Liberty of the worker in his choice of work and outside of working
hours makes for happiness, character, and progress.</i> Opinion is almost a
unit as to the truth of this statement. The present wage system is the
freest condition for the mass of men that ever has existed. Their
religious, political, and personal convictions, are for the most part
inviolate. There is a true but much misused maxim that liberty has its
dangers. Freedom means freedom to make mistakes. Intelligence and strong
industrial virtues are required to exercise properly a freedom newly
acquired. Thus it is the lowest class of labor that reaps the smallest
advantage from free conditions, and that suffers most from their misuse.</p>
<div class="sidenote">Limits to the worker's liberty</div>
<p>The main evil in the wage system is certainly not that the liberty of
the worker is too great, but that it is too small. The sale of labor
involves the obeying of orders during certain hours specified in the
contract. Here again the evil is greatest in the lowest grades of work,
while the great majority of wage-earners are left a large measure of
choice in the time and manner of their work. Where labor is severe and
without joy to the worker, it appears to be little better than a form of
slavery. Contrast the condition of the section hand, cursed and beaten
by a brutal foreman, with that of the wage-earner in the locomotive-cab,
self-respecting, self-directing, and trusted with the safety of property
and lives. The wage system is manifold, it is adaptable. If it holds a
portion of the laborers with a harsh hand, it gives to all a wide
measure of opportunity, and to most a great degree of independence in
their lives. A hasty resort to indiscriminating analogy, as in calling
wage-work "slavery," does not further truth or social justice.</p>
<p><span class="pagenum"><SPAN name="Page_232" id="Page_232">[Pg 232]</SPAN></span></p>
<h4>§ III. PROGRESS OF THE MASSES UNDER THE WAGE SYSTEM</h4>
<div class="sidenote">The rise of money wages</div>
<p>1. <i>The nineteenth century was a period of great progress for the masses
in America, England, and throughout Europe.</i> There are differences of
opinion as to the extent of this progress, the way in which it is to be
measured, and the degree to which it is an occasion for congratulation.
There is no longer any dispute as to the actual fact that it has taken
place. Many lines of evidence converge to confirm this one conclusion.
The average money wages in the United States may be represented in 1840
by 87.7, in 1860 by 100, and in 1891 by 161.2. This was the high mark
for a time and a decline followed. Again wages rose from 1897 on, and in
1899 had reached 163.2. They have continued to rise since and in 1903
attained the highest point in the history of our country and therefore
in the history of the world. Another temporary decline undoubtedly will
occur when industrial conditions become less prosperous.</p>
<div class="sidenote">Changes in real wages</div>
<p>Real wages, also, the power to purchase goods with labor, are greater
than ever before so far as this can be measured in the price of leading
commodities. The offsetting loss of the free health-giving pleasures of
country life cannot easily be expressed. In England likewise the rise in
money wages has been great. In 1860 it is represented by 100, in 1870 by
113, in 1880 by 125, in 1891 by 140, in the intervals some decline
occurring. For a century in all civilized lands wages have moved in an
ever-rising series of waves. The purchasing power of wages in England
increased ninety per cent, in the thirty years between 1860 and 1891.
Throughout Europe the same general change is seen, going always hand in
hand with new industrial methods and the displacing of the old
agricultural system by the wage system. As the hours of labor have at
the same time been shortened, the workers have gained doubly.</p>
<div class="sidenote">Need of a broad explanation of rising wages</div>
<p>2. <i>This progress is mainly due to the opening up of rich<span class="pagenum"><SPAN name="Page_233" id="Page_233">[Pg 233]</SPAN></span> natural
resources and to the development of industrial processes.</i> Recognized in
some measure by every one, this progress is attributed by different
observers to different causes: in America, by many to the protective
tariff; in England, by many to the freer trade introduced about 1840;
throughout the continent of Europe, to the spread of constitutional
government and free institutions; by trade-unions everywhere, to the
organization of labor. There is, doubtless, under certain conditions,
some portion of truth in each of these claims. But, either separately or
altogether, they fall short of a broad, reasonable, and sufficient
explanation. The two-fold proposition just presented, the justification
for which has been given in preceding chapters, points to a general and
adequate cause.</p>
<div class="sidenote">The gloomy view as to the wage system was mistaken</div>
<p>Seventy-five years ago it was thought that, with the increase of
machinery, of factories, of the concentrated control of wealth, and
especially with the wage system, there must go a steady depression in
the welfare of the workingman. This idea was connected with the iron law
of wages. It was believed by some that, whatever the causes of advancing
social income might be, the wage system would rob the wage-earners of
all share in progress. In view of the facts, if it cannot now be
asserted positively that the wage system is the cause of all the gain,
it can be asserted negatively that it is not inconsistent with great
progress on the part of the laboring classes. It might be possible to go
further and to maintain that the organization of industry, under the
wage system and competitive conditions, by its encouragement of
enterprise, energy, and economy, has been an indispensable condition in
the industrial progress which has in turn made possible the rising wages
of labor.</p>
<div class="sidenote">More workers now in better-paid callings</div>
<p>3. <i>The increased proportion of workers in the higher occupations means
a further rise in the average condition of the masses.</i> A smaller
proportion of workers is now engaged in the low-paid industries than
fifty years ago, and a correspondingly larger proportion is in the
better, or highly<span class="pagenum"><SPAN name="Page_234" id="Page_234">[Pg 234]</SPAN></span> paid, industries. Decade by decade the proportion
shifts toward the upper part of the scale. Both in America and in
England (doubtless also in other countries) more men are now engaged in
the higher professions and skilled occupations, a smaller proportion in
the lower occupations. This would raise the average of wages even if the
wages of particular occupations had not risen.</p>
<div class="sidenote">The masses gain by general social advance</div>
<p>4. <i>The diffused advantages of progress mean relatively more to the
masses than to the rich.</i> In the olden days the poor man was bound to
the spot where he lived, the rich man had his carriage; to-day poor and
rich ride side by side in the trolley car. The introduction of these
cheap methods of enjoyment means relatively more to the poor. Better
medical care, better sanitation, more abundant food, clothing, comfort,
free schools, and libraries have all a part in this movement. The
enormous possibilities in these lines are just beginning to be realized.
The achievements of the last twenty years read like a story from
fairy-land. It tells the leveling up of the conditions enjoyed by the
common man.</p>
<div class="sidenote">Better social conditions must grow out of the wage system</div>
<div class="sidenote">Improvement in the wage system</div>
<p>5. <i>Any sound method of improving social conditions must grow out of
experience, not break with it.</i> Even if things were on the downward
instead of the upward road there would be no excuse for wild
speculation. The only rational way is to find what is good in what is,
and build upon it. There can be no excuse for suggesting a method from
imagination. Projects of social change must be tried by successful
experiment, and gradually fitted to present needs. It is in this way
that the higher forms of life have developed; it is in this way that
social and political institutions have come into being. Things that work
successfully first in a small way are worthy of trial on a larger scale.
The wage system is a favorite object of attack for radical social
reformers. It has many unlovely features and there are many individual
cases of hardship. It may well be asked, What method shall be pursued to
reform it? Its retention, however, is not inconsistent with very great
changes in the<span class="pagenum"><SPAN name="Page_235" id="Page_235">[Pg 235]</SPAN></span> present political and economic arrangements. The
impersonal economic forces are working for improvement; but further,
there is a growth of sentiment, an increase in sympathy, a feeling among
men that the "cash nexus" is not the only bond that should unite
different classes, and this sympathy is becoming an economic force,
softening and improving many of the most unlovely features of the modern
wage system.</p>
<hr class="chap" />
<p><span class="pagenum"><SPAN name="Page_236" id="Page_236">[Pg 236]</SPAN></span></p>
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