This theory of wages is called the "Iron Law of Wages" because of its absolute and pitiless rigidity. For instance, the Iron Law of Wages will prevent lower prices of food benefiting the workman in any way.

"If the working cla.s.s is enabled to buy cheap bread, the operation of the 'Iron Law of Wages' will secure all the advantage for the capitalists, as it did in the days of the saintly Bright, when the corn laws were repealed. Capital is always the same in its effect on the working-cla.s.s, whether manipulated by an individual capitalist, joint-stock enterprise, munic.i.p.ality, or government, and with each step in concentration the working-cla.s.s gets relatively less and the master cla.s.s gets richer, more corrupt, and more b.e.s.t.i.a.l, as recent events in Berlin and elsewhere show."[166] The "Iron Law of Wages" is irrefutable and irresistible. "Economists have come to talk about the 'Iron Law of Wages' with as much a.s.surance as if it were an irreversible law of Nature."[167]

The Iron Law of Wages exists chiefly in the imagination of British Socialists. The general wage of British workmen living in towns ranges from, say _18s._ to more than _2l._ per week, and its amount does not depend on the cost of subsistence, but on the working skill and various other factors. If the Iron Law of Wages were correct, wages would be almost uniform. The Iron Law of Wages can possibly apply only to one small cla.s.s of workers, the lowest and least skilled labourers, provided that unemployment is so great among them that they abandon collective bargaining and underbid one another down to the level of subsistence. When workers are organised, the Iron Law of Wages does not apply. The level of wages depends, broadly speaking, on supply and demand. Wages rise when two employers run after one workman; wages fall when two workmen run after one employer. An employer who engages a workman does not ask, "How much do you eat?" but "What can you do?"

and he proportions the worker's remuneration not to his appet.i.te, but to his ability and his value as a producer. The wages paid to married men and to unmarried men are identical in the same trade. If there was an "Iron Law of Wages," the wages of married men should be about twice as large as those of unmarried men.

The Iron Law of Wages is manifestly absurd. It has therefore been officially abandoned by the German Socialists at the Halle Congress of 1890 "as being scientifically untenable."[168] "German Social Democracy no longer recognises the Iron Law of Wages."[169] The British Socialists have not abandoned it, probably not because they believe it to be scientifically correct--no one can believe that--but because it is a plausible and effective means of poisoning the minds of the people.

As regards the factors which determine wages, one of the foremost Socialist authorities says: "Thoughtful workmen in the staple trades have become convinced by their own experience, no less than by the repeated arguments of the economists, that a rising standard of wages and other conditions of employment must depend ultimately on the productivity of labour, and therefore upon the most efficient and economical use of credit, capital, and capacity."[170] In other words, productivity and profit determine wages, and it is ridiculous that Socialists argue: "Over 90 per cent. of our women do not drink, back horses, smoke, attend football or cricket matches, they do not stop off their work to watch England and Australia play at cricket, and the result is they are paid less wages than men in our factories for doing the same work."[171] Does Councillor Glyde really believe that women's wages would rise as soon as they took to smoking and drinking?

THE LAW OF INCREASING MISERY

According to this law the improvements in machinery, the increase of capital and increase of production do not benefit the worker. They only lead to a decline in wages and thus increase the workers' misery.

"In proportion as the use of machinery and division of labour increases, in the same proportion the burden of toil also increases whether by prolongation of the working hours, by increase of the work exacted in a given time, or by increased speed of the machinery, &c."[172] "The faster productive capital increases, the more does the division of labour and the employment of machinery extend. The more the division of labour and the employment of machinery extend, so much the more does compet.i.tion increase among the labourers and so much the more do their average wages dwindle. And thus the forest of arms outstretched by those who are entreating for work becomes ever denser and the arms themselves grow ever leaner."[173] "The more the worker labours the less reward he receives for it; and that for this simple reason, that he competes against his fellow-workmen and thus compels them to compete against him and to offer their labour on as wretched conditions as he does, and that he thus, in the last result, competes against himself as a member of the working-cla.s.s."[174] "The worker in the factory gets, as a worker, absolutely no advantage from the machinery which causes the product of his labour to be multiplied a hundredfold."[175] "John Stuart Mill, it will be remembered, questioned whether mechanical invention had lightened the labours of a single human being."[176] "With increasing powers of production, the worker's share, and therefore his purchasing power, grows less."[177]

"Wage-labour rests exclusively on compet.i.tion between the labourers."[178] "The iron law of compet.i.tion means, and must mean, continued degradation for the workers, even though their physical condition in youth may be improved."[179] "The worker in the factory is now seen to work no shorter hours or gain no higher wages merely because the product of his labour is multiplied a hundredfold by machinery which he does not own. 'The remuneration of labour as such,'

wrote Cairnes in 1874, 'skilled or unskilled, can never rise much above its present level.'"[180]

The celebrated "Doctrine of Increasing Misery" stands in diametrical opposition to those facts with which nowadays every child is acquainted. During the time when our Socialists have been preaching the "Doctrine of Increasing Misery" working hours have been very greatly diminished and wages have not been reduced, but have risen by about 100 per cent. During the same time working hours in Germany have also been reduced and wages have risen up to 400 per cent.[181] The German Socialists have been honest enough to abandon the Doctrine of Increasing Misery under the guidance of Bernstein; the French have dropped it under the guidance of Sorel; the Dutch have seen its absurdity, guided by Vandervelde, their foremost leader. The British Socialists, on the other hand, have not abandoned it, though they must see its absurdity, probably because, though palpably and ridiculously false, the Doctrine of Increasing Misery is considered to be a useful and effective part of the Socialist agitator's stock-in-trade.

The next doctrine to be considered is

THE SURPLUS-VALUE DOCTRINE

The Socialists argue that the position of the worker cannot improve because the capitalist, possessing the monopoly of property, pockets all that the worker produces except the mere cost of his subsistence, which, owing to the "Iron Law of Wages," is given to the workman in the form of wages. "The amount of wealth which the labourer produces in the time for which he has sold his labour-force is out of all proportion to what it costs to produce and maintain his labour-force for that time. This, the difference between what he produces and his own cost of production, is surplus-value, and is taken and divided up by the capitalist into rent, interest, profit. This surplus-value, then, this profit, is so much robbery effected by taking advantage of the necessity of the proletarian--the naked propertyless labourer."[182] "All that the worker produces beyond what is absolutely necessary to keep himself and his offspring in life, this surplus beyond subsistence--this difference between the recompense of labour and its products--this unrighteous subtrahend, this swag, is the booty alike of slavelord, serflord, and drudgelord, or capitalist."[183] The question now arises: "How does the capitalist secure this surplus-value of labour without paying for it? If the workman is free, why cannot he insist on receiving, not the mere exchange-value of his commodity--'labour-power'--but the full value of the labour he expends for the capitalist? The capitalist obtains this surplus-value owing to his monopoly of the means of production. The labourer cannot, as a rule, command more than his cost of subsistence in return for his labour--although his wages, like the prices of all commodities, sometimes rise above this and sometimes fall below--because, although apparently free, he is really not free. He must sell his labour-power in order to live; he has no other commodity to dispose of. Consequently he must accept the terms that the purchaser will offer, subject only to two conditions--his own cost of subsistence and the fluctuations of the market."[184] "Owing to the monopoly of the means of production in the past, industrial inventions and the transformation of surplus income into capital have mainly enriched the proprietary cla.s.s, the worker being now dependent on that cla.s.s for leave to earn a living."[185]

The Surplus-Value Doctrine, like the preceding doctrines, is founded rather upon imagination than upon fact. In the first place, it is absurd to speak of a "capitalist cla.s.s" which, having a "monopoly of the means of production," exploits "the naked and propertyless labourer." This picture is a fancy picture. In the second place, "cla.s.s" is not synonymous with "caste." The population is not divided into two rigidly defined and limited castes of capitalists and wage-earners. There is neither a monopoly of capital nor a monopoly of labour. Capital is founded by thrift. Most respectable workmen are capitalists to a greater or lesser extent. Every day workmen become capitalists. It should not be forgotten that many of the wealthiest men, such as Rockefeller, Vanderbilt, Carnegie, Krupp, the first Rothschild, Sir Thomas Lipton, Pa.s.smore Edwards, and many others, have risen from the ranks and were working men--and every day capitalists lose their money and become workmen. Workmen may become capitalists by thrift. Co-operating workmen in England, France, Germany, and other countries own vast industrial undertakings, banks, &c. In those districts where thrift and co-operation are general (France, Switzerland, Holland) the "naked and propertyless labourers"

disappear, whilst in equally prosperous districts where improvidence is general, they are many. The prosperity of the working cla.s.ses in France, Switzerland, Holland, and other countries disproves the a.s.sertion that the workman is condemned to everlasting poverty because of the Surplus-Value Doctrine.

a.s.sertions in support of the "Surplus-Value Doctrine" such as "Carnegie and other millionaires have wrung their wealth literally out of the bodies of the underfed"[186] are as malicious as they are untrue. Men like Carnegie and Krupp have not "wrung their wealth out of the bodies of the underfed," but out of Nature. They have created vast industries in barren places, and the industries which they have created nourish now tens of thousands of working men. Men like Krupp and Carnegie have diminished misery, not increased it. Their capital, created by their brains with the a.s.sistance of labour out of Nature, has rather enriched labour than that labour has enriched Carnegie and Krupp. Their wealth is not dead wealth; it produces wages and articles of use. The "Surplus-Value Doctrine" is a grotesque distortion of, and an unjustified protest against, the fact that manufacturers and other organisers and directors of labour will not work for nothing.

We have seen in the foregoing that, according to the fundamental Socialist doctrines, "labour is the only source of wealth." We have also seen that, according to the "Iron Law of Wages" and the "Law of Increasing Misery," the workmen are condemned to great, permanent, and constantly increasing misery. Further, we have learned that, according to the "Surplus-Value Doctrine," all the fruit of their labour, minus the cost of their bare subsistence, is taken from the workers by the capitalists. Hence it is only natural and logical that the a.s.sertion of the fundamental doctrines, namely--

1. Labour is the only source of wealth, 2. Wages maintains mere animal existence, 3. The misery of the workers is constantly increasing, 4. The position of the worker is hopeless,

has led to this fifth doctrine:

THE LABOURER IS ENt.i.tLED TO THE ENTIRE PRODUCT OF HIS LABOUR

This doctrine is put forth by practically all British Socialists, not only as a doctrine but also as a demand. For instance "the New School of Trades-Unionists declare themselves in open and uncompromising revolt against the established relations between capital and labour; and they expound a new political economy which says that nothing less than the full fruits of industry shall be reckoned the fair reward of the producing cla.s.s. They want the whole four-fourths of their earnings, instead of the one-fourth at present doled back in wages."[187] This demand must have precedence over all other measures whatsoever, for "until you have settled the material question as to how the producers of wealth are to get for themselves the full value of what they produce by their labour, it is impossible to settle anything else."[188]

According to many Socialists, Socialism would immediately abolish their grievances and give to the worker the entire produce of his labour. "At present the frugal workman only gets about one-third of his earnings. Under Socialism he would get all his earnings."[189]

"Under the new order all will be productive workers, receiving an equivalent for what they produce--not merely one-half of it as now under the wage-system--in some form."[190] Under the heading "Basis of the Fabian Society," the Fabian Society publishes a statement of the fundamental principles of that Society in which we read: "If these measures" (confiscation of all private property) "be carried out, without compensation (though not without such relief to expropriated individuals as may seem fit to the community), rent and interest will be added to the reward of labour, the idle cla.s.s now living on the labour of others will necessarily disappear, and practical equality of opportunity will be maintained by the spontaneous action of economic forces with much less interference with personal liberty than the present system entails."

The absurdity of the demand for "the entire product of labour," which is raised by Socialists on behalf of the labourer is clear even to the most superficial thinker. The majority of Socialists know quite well that writing off, repairs, renewals, the replacing of machinery, the enlargement of factories, &c., cannot be done gratis, that the distribution of the whole produce of labour to the workers can be effected only by neglecting and destroying the means of production.

The impossibility of giving to the worker the "whole product of his labour" by abolishing the private capitalist is clearly recognised and honestly admitted by the German Socialists. Kautsky, for instance, writes: "If the income of the capitalists were added to that of the workers, the wages of each would be doubled. Unfortunately, however, the matter will not be settled so simply. If we expropriate capitalism, we must at the same time take over its social functions--among these the important one of capitalist acc.u.mulation.

The capitalists do not consume all their income; a portion of it they put away for the extension of production. A proletarian _regime_ would also have to do the same in order to extend production. It would not therefore be able to transfer, even in the event of a radical confiscation of capital, the whole of the former income to the working cla.s.s. Besides, a portion of the surplus value which the capitalists now pocket, they must hand over to the State in the shape of taxes.

For these reasons our Socialists are guilty of wilful deception if they tell the workers that under a Socialist _regime_ their wages would be doubled and trebled."[191] Nevertheless, the doctrine and the demand that "the labourer is ent.i.tled to the entire product of his labour" is not abandoned by British Socialists, apparently because it is extremely useful for arousing the pa.s.sions of the workers against the capitalists in accordance with Gronlund's advice,[192] and for bringing new adherents to the Socialist camp.

Only the Fabian Society, the more scientific section of the English Socialists, has mildly protested against this absurd doctrine and demand, but that protest has not been heeded. In a little-read pamphlet of that Society, the following statement may be found: "The Fabian Society steadfastly discountenances all schemes for securing to any person or any group of persons the entire product of their labour. It recognises that wealth is social in its origin and must be social in its distribution" (which means in plain English, must be preserved by the thrifty few, official or non-official, for the use of the unthrifty many), "since the evolution of industry has made it impossible to distinguish the particular contribution that each person makes to the common product, or to ascertain the value."[193]

Notwithstanding these emphatic statements, the Fabian Society preserves with characteristic duplicity[194] the statement in its programme that "rent and interest, will be added to the reward of labour."

Most British Socialist writers are not aware, or rather pretend not to be aware, of the necessity of preserving and increasing the national capital. In "Land, Labour, and Liberty," we read: "Whilst in 1845 the total wealth of this country was estimated at _4,000,000,000l._, it is now estimated at over _12,000,000,000l._ The monopolist cla.s.ses, without denying themselves anything, and whilst producing comparatively nothing, have piled up an additional eight thousand millions. The superfluous handful of mere possessors remain the flowers and foliage of society; the three-quarters of the nation of indispensable producers remain the manure."[195] This writer, like most Socialists, though acknowledging the enormous growth of the national capital of Great Britain, pretends that the "monopolist cla.s.ses" have not denied themselves anything. If that were true, the national capital would still amount to only _4,000,000,000l._ as in 1845. Great Britain would have few factories, no new machinery, no steamships, and but a very few miles of railway. But for the self-denial, the thrift of the "superfluous handful of mere possessors," Englishmen would still live in the Hungry Forties and Great Britain would be able to nourish only about 20,000,000 people as she did in 1845. National capital and the comforts and conveniences which it supplies to all are at least as much the result of thrift, inventiveness, enterprise, and wise direction as of manual labour.

The foregoing shows that, to say the least, the grievances of the Socialists are greatly--one might almost say grotesquely--exaggerated, and that they are largely founded on a perversion of facts; a perversion which can be easily explained by the desire of the Socialist leaders to arouse the blind pa.s.sions of the discontented wage-earners in accordance with Gronlund's advice, quoted on page 10.

The next doctrine which should be considered may be summed up in the words:

"THE EXISTING MISERY CAN BE ABOLISHED, NOT BY INCREASING PRODUCTION, BUT BY ALTERING THE DISTRIBUTION OF THE WEALTH PRODUCED"

"The Socialist emphatically denies the a.s.sertion that the poor must always be with us. The productive capacity of society is now so great that none need want, and all are able to earn their livelihood, and more, except where they are prevented from doing so by sickness, infirmity, or by the existence of laws and customs which the individual cannot himself, acting alone, remove."[196] "There is a demand for the labour of every man under any well-ordered social system. If there is a waste of men now, it is the fault of the wage system."[197] "Sufficient wealth is produced in this country to-day which would, under a well-ordered state of society, enable every man, woman, and child to have a sufficiency of all things essential to a healthy human life.

To-day the people produce this wealth, and, after they have produced it, quite two-thirds of it is taken from them by a very small section of the people. Consequently we have a very few rich, and many that are poor."[198] "We may claim to have solved the problem of how to produce enough, and the question which confronts us is how to bring distribution into line with the productive capacity of our people."[199] "The old argument that there is not enough work to do cannot be seriously listened to by anyone who has walked through a London or Manchester slum. There is work in the world for all, just as there is wealth in the world for all, and every man has a right to work, just as he has a right to wealth."[200] "The chief problem is not the production of more wealth, but its equitable distribution."[201]

The increase of production and therefore of reproductive capital in the form of machinery, mines, railways, ships, &c., in which most of the "Surplus-Value" is invested, is explained to be a matter of secondary consideration and importance, and it is stated that the world suffers rather from over-production than from under-production.

"The tendency of the conditions of employment under present circ.u.mstances, under the capitalist system, always is for production to outstrip consumption."[202] "Our power to produce has always, since the beginnings of capitalism, shown a tendency to grow more rapidly than our power to consume."[203] "Then because there is a plethora of goods and a dearth of purchasers, the workshops are closed and Hunger lashes the working population with his thousand-thonged whip. The workers, stupefied by the dogma of work, do not understand that the cause of their present misery is the overwork that they have inflicted on themselves during the time of sham prosperity."[204] "For some insane reason the capitalist has thought of nothing but production."[205] "If, by a fiat from heaven, the wealth of the world were doubled to-morrow and the present system of capitalistic monopoly and commercial compet.i.tion were allowed to continue, the social misery would, in a very short time, reappear in a form even still more accentuated, were that possible. Individualism, commercialism, capitalism--call it what we may--has demonstrably produced the evil."[206]

THE EXISTING CAPITALIST SYSTEM IS RESPONSIBLE FOR POVERTY, WANT, AND UNEMPLOYMENT

Unemployment is largely caused by commercial crises, commercial crises are caused by over-production, over-production is caused by the fact that the national industries are divided and the industrial output is regulated not by the nation in accordance with the national demand but by irresponsible private individuals whose aim is profit, not the fulfilment of a national demand. "The causes of commercial depression lie in the non-consumption of the incomes of our millionaires."[207]

Another Socialist writer a.s.serts: "Our era is cursed with crises occurring far more frequently than plagues and causing as much misery.

Economists say that these crises are caused by over-production.

Private enterprise compels every producer to produce for himself, to sell for himself, to keep all his transactions to himself, without regard to anybody else in the wide world. Merchants have got no measure at hand by which they can, even approximately, either estimate the effective demand of their customers or ascertain the producing capacity of their rivals. Production by all these manufacturers is, and must necessarily be, absolutely planless. This planless production must end in the market being overstocked with commodities of one kind or another; that is, that it must end in 'over-production.' In the trade which has been thus overdone, prices fall and wages come down; or a great manufacturer fails and a smaller or greater number of workmen are discharged. Crises are therefore the direct result of private enterprise."[208] "Why are men--men that is who are able and willing, nay, eager and anxious, to work--unemployed?

Because, it is said, there is nothing for them to do. Nothing for them to do? Is all the necessary work of the world, then, already finished, so that there is nothing more remaining for anyone to do? No; it is not because all the necessary and useful work is done that men are unemployed, it is because all the means of production--all the machines, tools, and implements of labour and all the raw material--are owned by a cla.s.s, and may only be used by permission of that cla.s.s, and when that cla.s.s can make a profit out of their use."[209] "It is indisputable that modern poverty is artificial. It is neither the result of divine anger nor the n.i.g.g.ardliness of Nature.

It is the product of the private ownership of land and capital by which men are prevented from earning their living unless the proprietary cla.s.s can make profit from their labour. The inevitable result of this system is that in all industries and at all times there are more men seeking employment than there is employment for.[210]"

"Your system of private ownership, in conferring the possession and control of the nation's storehouse of wealth and of the instruments by which all further wealth must be obtained from it, upon your capitalist cla.s.s, has reduced the nation at large into nothing more nor less than an elaborate machine which your capitalists use for extracting wealth from the earth for their own benefit.... It is not well that by a foolish and wicked system of government, one small cla.s.s of the community should be enabled to organise its production in such a manner that the full stream of wealth is diverted into their own possession whilst the ma.s.s of the nation by whose labour it is obtained are defrauded of it, and brought into a state of subtle slavery worse both in kind and degree than could be possible under any system of direct and open slavery."[211] "Unemployment is an inevitable feature of capitalism, and is impossible of removal without at the same time abolishing the capitalist system that produces it.

That is a fact known to any Socialist with the most elementary knowledge of the economics of capitalism. Unemployment is caused by the exactions of the capitalist cla.s.s. The prime cause of unemployment is the robbery of the workers by which the capitalist cla.s.s appropriate the whole of the wealth produced by the workers, returning to them just as much on the average as will keep them physically fit to continue working. The difference between the quant.i.ties produced and consumed by the working cla.s.s (a difference continually increasing with every increase in the productivity of labour) represents a surplus which all the waste and all the luxury of its owners cannot absorb, with the result that the markets are glutted with an excess of commodities. Thus the 'over-production,' the crisis, and the slackening of production involving an increase of unemployment."[212]

Employers of labour profit directly from unemployment, and will therefore presumably do all they can to bring it about. "Employers and other well-to-do people have no interest in finding work for the workless. They benefit from the unemployment of the poor."[213] The foregoing statement is as malicious as it is absurd. Employers do not desire unemployment, partly from humanitarian reasons, partly because it is a loss to them. The father of English Socialism taught: "The labourer perishes if capital does not employ him. Capital perishes if it does not exploit labour."[214] In other words, unemployed labour means unemployed capital; besides, those business men who do not actually dismiss their workers suffer also through unemployment, because the unemployed are supported by the rates.

The doctrines that "the existing misery can be abolished, not by increased production but by altering the distribution of the wealth produced," and that the "capitalist system is responsible for want, poverty, and unemployment," are manifestly unsound. A larger consumption of food, clothing, &c., can be effected only by a larger production. Gluts and crises, with consequent unemployment, occur, not through general over-production, which would benefit all, but by ill-balanced production, as the following example will prove: Imagine an island off the African coast on which there are two villages, the inhabitants of which require only two commodities, loin-cloths and mealies. One village manufactures loin-cloths, the other raises mealies, and these are exchanged against each other. These villages fulfil the Socialistic ideal. There are no capitalists and no middlemen, and production is only "for use," not "for profit."

Balanced over-production will result in this, that every native will have a superabundance of loin-cloths and food. But supposing that the agriculturists go in for loin-cloth making, finding that occupation more congenial, and that they abandon much agriculture; or supposing that inclement weather, or a plague of gra.s.shoppers, should seriously curtail the harvest, then there will soon be a glut of loin-cloths and a crisis. The cry of over-production will arise among the loin-cloth makers, but that cry will be unjustified and absurd. The more the people make the more they will have, provided production is properly balanced. The doctrine that we suffer from over-production and that the capitalist system is at fault, that altered distribution rather than increased production will abolish misery, and that Socialism can prevent want and unemployment by a scientific organisation of production, is wrong.

Socialists may, of course, argue, "In the Socialist State production would be organised, and controlled, and properly balanced and harmonised," an argument which is irrelevant with regard to the over-production doctrine, and which besides is unsound, although it may be found in most Socialistic writings. As production is world-wide, the Socialists' control of production would also have to be world-wide. It would involve not only the control of all human energy throughout the world, but also the control of the seasons, of the weather, of insect plagues, of fashions, of appet.i.te, &c.

The foregoing proves that "men can never become richer till the produce of their labour increases. The more they produce the richer they will be, provided there be a demand for the produce of their labour. If a shoemaker makes four pairs of shoes in a day he will be twice richer than he would be if he made only two pairs in a day, provided that an increased demand is co-existing. The question, therefore, 'How can we become richer?' is reduced to this one, 'How can we increase the produce of labour and at the same time maintain an equivalent demand for that produce?'"[215] The doctrines that want and unemployment are due to over-production and to the capitalist system are wrong.

We now come to the

DOCTRINE OF THE CLa.s.s WAR

Having, by the fundamental doctrines enumerated in the foregoing, proved that all misery of the working ma.s.ses is caused by the existence of a capitalist cla.s.s which has enslaved the workers, the Socialists conclude that there is a natural antagonism between capital and labour; that social life is dominated by the Cla.s.s War.

"The Socialists say that the present form of property-holding divides society into two great cla.s.ses."[216] "Capitalist society is divided into two cla.s.ses: owners of property and owners of no property."[217]