Chapter 48 Chapter V Labor Wages

A fifth characteristic of the first section of labor is the long training period required to provide professional competence. Another feature of the action of supply and demand of labor which we shall discuss is closely connected with the above.This feature lies in the fact that it takes a long time to cultivate and train capable workers, and the remuneration produced by this training is also very slow. This discounting of the future, this conscious matching of the supply of highly trained labor to the demand for it, can be seen in the choice of occupations by parents for their children and in their efforts to train them to a position higher than their own. see clearly.

On this point, Adam Smith said: "If an expensive machine is to be purchased, it must, before it wears out, perform an excellent work sufficient to recover the capital invested, and at the same time afford at least an ordinary profit. A man who has much labor and time to learn a trade which requires a peculiar skill, may be compared with that costly machine. The work which he learns shall be sufficient to exceed the ordinary wages of an ordinary workman, except that the whole cost of education shall be recovered, and at the same time he shall have at least Ordinary profit on a capital of equal value. And this must be realized in a considerable time, because the life of man is as indeterminate as that of machinery.

However, this statement can only be regarded as a generalization of general trends.For parents have different motives for raising and educating their children than they have for enticing capitalists to purchase a new machine, and besides that, the period of time in which earning power is acquired is generally longer for men than for machines; It is more difficult to reverse the forecast, and the adaptation of supply and demand is also slower and disadvantageous.Although factories, houses, mine shafts, and railway embankments have outlived their builders, these are exceptions to the general rule.

Section 2. Parents must look to a whole generation when choosing an occupation for their children; Difficulties in foreseeing the future. It takes at least one generation for parents to choose an occupation for their children until they are fully remunerated in that occupation.And in the process, the nature of the industry is likely to undergo fundamental changes, some of which may have been foreshadowed, but others which cannot be foreseen even by astute people familiar with the industry. Almost everywhere in Britain, the working class are regularly on the lookout for favorable career opportunities for themselves and their children.They ask relatives and friends who live in other areas about various situations, such as wages and incidental benefits and disadvantages in various industries.But it is very difficult to ascertain the reasons for the future fate of those occupations which they have chosen for their children.Moreover, there are not many people who think hard and explore in many ways.Most people judge without hesitation that the present conditions of each trade are sufficient to explain its future; Does not follow contemporary trends in compensation.

In addition, when some parents see that the wages of one industry are higher than those of other occupations of the same type for several years, they conclude that the wages will continue to rise in the future.But former increases have often been due to transitory causes, and even if there had not been a great influx of labor into the trade, an increase in wages has been followed by a fall, rather than a further rise.If a great deal of labor is brought into the trade, and the result is an oversupply of labor, wages will for many years be below their normal level. Next we must bear in mind the fact that some trades, though not accessible to all but the sons of those who practice them, are in great numbers supplemented by the sons of fellow workers in other trades.Therefore, when we consider the supply of labor to be transferred from the funds of those who pay for education and training, we always refer to the whole class, not to the unit of a profession.If the supply of labor is limited by the funds with which the costs of its production are paid, then in whatever class the supply of labor is determined by the wages of that class of labor in the previous generation, not in the present generation.

It should not be forgotten, however, that the reproductive rate of workers at all levels of society is due to many causes, of which prudent calculation of the future is of secondary importance; Public opinion has a great influence, and such habits and opinions are formed by the experience of past generations. Section 3. The mobility of adult workers is increasingly important due to the growing demand for general capabilities. We should not, however, neglect those factors which cause the supply of labor to follow the demand for it; as adults pass from one occupation to another, from one class to another, and from one place to another.While it is true that special opportunities sometimes bring into play the latent capacities of subordinate labor quickly and efficiently, the transfer from one grade to another is seldom done on a large scale.The founding of a new country, or the events of the American War, for example, raise up many men from among the lower ranks of laborers who are also able to bear the difficulties and responsibilities, but such things are rare after all.

But the changing employments and migrations of adults are in some cases so frequent and rapid that they greatly shorten the time during which the supply of labor follows the demand for it.The general ability to transfer easily from one trade to another is more and more important every year than the proficiency and technical knowledge which are specifically required in one branch of industry.Economic progress, therefore, is accompanied, on the one hand, by ever-changing methods of industry, making it more and more difficult to predict the demands of the next generation for any kind of labor, and, on the other hand, by an increasing power to correct errors in the regulation of supply and demand.

Section IV reiterates the distinction between long-run normal value and short-run normal value.A change in the specific pay for skill as distinct from pay that compensates for fatigue incurred in any particular job. We turn now to the principle that the revenue from the means of production of a commodity has a determinant effect in the long run on the supply and price of that instrument, and thus of that commodity.But in the short term, there is no time for it to fully play this role.What we are asking is, what if this principle is not applied to the material instruments of production, which are mere means to an end of production and which are at the same time the private property of the capitalist, but to human beings themselves, who are both the end of production and the property of the capitalist? is a means of production and at the same time belongs to itself, what amendments should be made to this principle?

First of all we should note that, since the multiplication of workers is slower, and consumption is also slower, we must understand the term "long run" in the strict sense, as we are talking about the normal demand and supply of labor. The term "long run" generally implies a longer period of time than the normal demand and supply relationship for ordinary commodities.There are many problems in which the time is long enough to match the supply of common commodities, and even the supply of the material instruments required for production, to the demand for them; As the "normal" price, as equal to their normal cost of production (in its broad sense); but it is not long enough to adjust the supply of labor to the demand for it.The average remuneration of labor for the period is therefore not at all the normal remuneration of the worker.The decision of this kind of remuneration can be attributed to two reasons:

On the one hand is the supply of labor and on the other is the demand for labor.This point requires further discussion. The fifth section continues. Market fluctuations in the price of commodities are determined by the temporal relationship between demand and the quantity supplied of the commodity that is, or can easily be brought, into the market.When the market price is higher than its normal level, those who can take advantage of the high price to supply the market with new commodities in time will get an extra high remuneration; an increase in their compensation. In the modern industrial world, however, it is above all the industrial capitalists who bear the risks of production and who benefit from rising prices as well as suffer from falling prices.The direct outlay, that is, the net revenue above the direct (money) cost of the commodity, expended in its production, is for the time being the return of capital (including their ingenuity and ability) invested in their enterprise in various forms.However, when business is booming, employers compete with each other, and each wants to expand the enterprise and strive to obtain as high a profit as possible, so the pressure of competition makes the employers agree to pay their workers higher wages in order to obtain their profits. and even if the employers acted in unison and refused for a moment to make any concessions, the association of their employees would force them to increase their wages, otherwise the advantages offered by the prosperity of the market would disappear.As a rule, a large part of this benefit soon accrues to the workers; so long as the prosperity lasts, their wages remain above normal levels.

For example, when inflation reached its peak in 1873, the wages of miners were very high. A certain amount of skilled labor with the same efficiency) is determined.If it were not possible to import such unskilled labour, the wages of the miners were limited only by two reasons: the elasticity of demand for coal on the one hand, and the gradual attainment of working age by the descendants of the miners.The fact is that most of those who have been absorbed from other industries are reluctant to leave their own, because they might be able to get very high wages if they stayed in this industry.The prosperity of the coal and iron industry at that time was only the peak of the wave of credit expansion.These new miners are very unaccustomed to underground work, and the discomfort at work has a bad effect on their health. At the same time, due to lack of technical knowledge, the danger of work has increased, and because of poor skills, they have wasted a lot of energy.Therefore, their competition does not reduce the increase in special rewards to miners' proficiency. When the tide of credit inflation turned sharply downwards, the new miners who were least fit to mine coal left the mines; People in coal mines can reach the limit of higher wages in other industries.This limit is the lowest limit, for the tide of credit inflation, when it reached its highest point in 1873, has devastated well-to-do business, damaged the very foundations of prosperity, and left almost every industry in a more or less unhealthy state. in a state of depression. The sixth section continues. We have already pointed out that only a part of the proceeds from the improvements being consumed count as its net income.For from these returns a consumption equal to the capital value of the improvements must be deducted, before any net revenue can be calculated.In the same way, to arrive at the net revenue of machinery, the cost of its use and wear and tear must be deducted.Since the miner, like machinery, is subject to wear and tear, this wear and tear must also be deducted from his wages in calculating his special remuneration for skilled labour. But there is another difficulty in the case of miners.For the owner of the machine, once deducting the cost of its use (including wear and tear), suffers no loss from the long hours in which the machine is in operation, unlike the skilled laborer, who does lose by working long hours. , he suffers from many additional inconveniences, such as lack of rest and freedom of movement.If a miner works only four days a week for £1, and six days a week for £10s., only a part of this extra ten shillings may be taken as a measure of his proficiency. remuneration, for the rest must be regarded as remuneration for his increased fatigue and wear and tear. From the above, it can be concluded that the market price of various things, that is, the short-term price, is mainly determined by the relationship between its demand and its existing stock; or material elements), this demand is "derived" from the demand for those commodities produced by it. During a relatively short period of time wages vary more often with the selling price of the product than before the selling price of the product has not changed. But the revenues from all the factors of production (human and material) and the revenues they are likely to receive in the future constantly affect that part of the population whose actions are sufficient to determine the future supply of those factors.There is then a constant tendency towards a position of normal equilibrium in which the supply of each factor and the demand for its services are in such a relation that the remuneration given to the suppliers of the factor is sufficient to compensate their Labor and sacrifice.If the economic conditions of a country remain for a long time constant, this tendency must itself cause demand and supply to match, so that machines and men generally acquire and train an amount approximately equal to the cost of training labour, the necessaries of life and habits of life. Necessities are also counted.But even if the economic conditions themselves remain unchanged, the customary necessities may change under the influence of non-economic causes.This change affects the supply of labor, thereby reducing national income and altering its distribution.In fact, the economic conditions of a country are constantly changing, so the adjustment point of the normal demand and supply of labor is also constantly moving. Section 7. Remuneration for rare talents provides a surplus over the cost of training that is in some respects similar to land rent. Now the question we have to discuss is, to what category should the extra income from special talents fall?Because this income is not the result of investing human labor in factors of production in order to increase production efficiency.At first glance, therefore, there is good reason to regard it as the producer's surplus, which arises from the productive advantages bestowed by nature.If what we are analyzing is only the components of personal income, then this analogy is useful and tenable.The following questions are of interest: How much of the income of the successful is due to chance and luck?How much is due to better career opportunities?How much is the profit on the investment in special training?How much is paid for exceptional hard work?How much is left as a producer's surplus, or rent, due to special talents? However, if we are dealing with all the members of an industry, and do not deduct the low remuneration of the losers, we cannot arbitrarily treat the exceptionally high remuneration of the winners as rent.Because other conditions remain unchanged, the labor supply of any industry is determined by the expected remuneration of the industry.The future of those involved in the profession cannot be foreseen.Some people start out with little hope, but it turns out that they have huge potential abilities, and they may make a fortune by luck;Therefore, the chances of success and failure should be seen together, just like a fisherman's fishing has gains and losses, and farmers' harvests have good harvests but regrets.When a young man chooses a career for himself or his parents choose a career for him, he must consider the huge reward of the successful person. Therefore, the reward is a part of the price paid for the supply of labor and ability to find a job in the long run, thus, It is included in the real normal supply price of labor in the industry or the "long run" normal supply price of labor. It must be admitted, however, that if a certain class of men are endowed with special gifts, suited only to a particular occupation, and not to others, and therefore, at any rate, pursue that occupation, then, when we discuss the general The rewards they receive for success and failure opportunities cannot be counted as additional compensation.But in reality this is not the case.For a man's success in any occupation depends largely on the development of his faculties and interests, which cannot be foreseen except after he has chosen his occupation.At least this foresight is as dubious as that which the pioneer makes of the advantages of position and the future fertility of the various lands at his disposal.It is partly for this reason that the extra income from special endowment approximates not so much to ground-rent in old countries as to the producer's surplus from the better lands which the pioneers luckily selected.However, land and people are different in many ways.If this kind of analogy is carried too far, it is easy to be misleading.The term producer's surplus, therefore, must be applied to the remuneration of special powers only with the greatest care. Finally, it is worth noting that what has been said in Chapters 8 to 11 of the previous volume concerning the special remuneration for tools (whether of a rent or quasi-rent character) which are usable in several branches of production, applies also to talent and skill. remuneration.If machinery or land, capable of being employed in the production of one commodity, is employed in the production of another commodity, the supply price of the first commodity rises, though not to the extent of the increase by the income which those instruments afford in the second employment. .In the same way, when skill or talent which can be employed in the production of one commodity is employed in the production of another, the supply price of the former rises as its source dwindles.