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Popular Science Monthly/Volume 53/October 1898/The Evolution of High Wages from Low Cost of Labor

THE EVOLUTION OF HIGH WAGES FROM LOW COST OF LABOR.[1]
By EDWARD ATKINSON.

IN dealing with this subject I shall not submit many statistics. For data sustaining this thesis reference may be made to my own published works notably to the Distribution of Products: yet more to the Senate Report on Prices and Wages for Fifty-two Years, compiled by Commissioner Wright. The figures give conclusive proof that in every branch of industry, especially in all the arts which have been most fully developed by the application of science and invention, there has been a progressive advance in the rate of wages or in the earnings of all who are occupied on the farm, on the railway, in the factory, or in the workshop. This advance has been subject to temporary reductions during periods of commercial crises, usually very moderate. In such periods there is apt to be unemployment for a portion of the working force rather than any considerable reduction in established rates of wages. These periods are usually of short duration and from each small decline wages have taken a speedy upward trend. This advance in all rates of wages has been coupled with a general decline in the prices of nearly all products. In some branches of industry the advance in the rate of wages has been less than in others. When each of these cases is dealt with, usually one of two causes will be found. In many arts the progress of invention has lessened the demand for individual skill and aptitude in the workman. For instance in the making of a steel plow a few years since nearly all the workmen were of necessity skilled mechanics, earning relatively very high wages, yet such has been the application of machinery to the production of the plow that laborers may be called in from the adjacent fields who, if possessed of ordinary intelligence, may in three months or less become expert attendants upon the machines on which the separate parts that constitute the plow are made. Their wages are now as high as those of the skilled mechanics of a former generation, While the men of the present generation who correspond to the skilled plow makers of a former day have gone up into employments requiring even a higher type of individuality at higher relative rates of wages.

The same rule may be observed in the textile factory. It has often been remarked that there seemed to be a deterioration in the quality of the factory operatives at the present time as compared to those who found good employment in textile factories in the ante-war period. In point of fact, the women of native birth who were then so numerous in the textile factories have advanced into employments which are better paid, less arduous and of a more individual quality. Their successors, largely French Canadians, who have taken their places in the factory, might not have been able to operate the machinery of a former day for lack of the individual qualities then called for. The mechanism is now more automatic than ever before. Consequently, those who do the work may be of less intelligence, yet their wages or earnings are now twice as much per day, more than double per hour, as compared to the American factory operatives of a generation since.

Again, the prices of the goods have been much reduced. In the grades of work which still require individual skill and aptitude in directing machinery of the highest type, the competition of employers to secure the services of the workmen of highest skill has advanced their rates of wages in some cases in excessive measure. Thus it happens that while during the last fifty years all wages have advanced, even the earnings of common laborers, there is a greater disparity in the rates at the present time than there ever was before. In this same period, while prices have been reduced, the margin of profits on each unit of product has been diminished yet more; the exceptions being only those products in which the supply of the crude material has been diminished in ratio to the increasing demand. This exception applies especially to the products of the forest.

We therefore find existing conditions to be, in fact, low relative prices, high relative wages, coupled with a lessened margin of profits in ratio to our total product as compared to each decade of the last fifty years. But, on the other hand, our aggregate product has been so vastly increased that even at the lessened margin on each unit the aggregate of profits is greater than ever before. The rich have become richer. The people of moderate fortunes have become much more numerous. The condition of the large proportion of those who do the manual and the mechanical work is better than ever before; and lastly, the submerged tenth are still poor in the ordinary sense in which the word is used, not from any fault in society, but because their own individual capacity has not been developed as rapidly as the opportunity which is offered them. There is probably a less relative demand for mere common and unintelligent labor than ever before. Such poor we shall always have with us and how to deal with that element in every population is not the purpose of this essay. I merely submit the fact that in the economic records of this country, which has enjoyed a continental system of absolute free trade among a greater number of persons spread over a wider area than ever enjoyed commerce free from restrictions before, there is a full and complete justification of the axiom of Frédéric Bastiat: "In proportion to the increase of capital, the absolute share (of a given product) falling to capital is augmented, but the relative share is diminished; on the other hand, the share falling to labor is increased both absolutely and relatively." We witness decade by decade increased production, lessened prices, higher wages, lessened cost of labor.

In addressing this association I may therefore venture to deal with deeper principles than those which govern the mere compilation of statistics.

It is but a year over a century since Malthus published his treatise upon population, in which he formulated what he believed to be a rule—namely, a tendency of population to increase in a geometrical ratio, while, as he believed, the means of subsistence could only increase in an arithmetical ratio. On this alleged tendency of population to Outgrow the means of subsistence he based a rule which has since been called a survival of the fittest. He regarded the destructive influences of war, pestilence, and famine as necessary elements in limiting population to the possibility of subsistence. This theory of Malthus later became joined to a theory of a lessened production of food on given areas of land in ratio to the work done upon it, which I believe originated with Ricardo. These two pessimistic conceptions rightly brought upon political economy the name of the dismal science. Subsequently, and in recent years, both Darwin and Wallace have stated that they derived the theory of a natural selection or a survival of the fittest from the treatise of Malthus, which gave to each of them a direction in their study of natural forces which led in the end to their great work in establishing the principle of evolution. It would be presumptuous on the part of any member of one of the unlearned professions to pass judgment upon this theory in its application to animal life viewed wholly on the physical side. Yet, while we must admit that the experience of a century does not suffice either to prove or to disprove any such far-reaching proposition as that of Malthus, we may rightly ask if it is not true that if there were a tendency of population to outgrow the means of subsistence, that tendency could not fail to have disclosed itself even within the short period of a hundred years. The fact that there has been no such tendency has an important bearing on the right definition of survival of the fittest.

All hypotheses must in the end be tested by the logic of facts and by the common sense of the community regarded as a whole. 'So theory survives which is not true and complete in all its bearings. Whether or not the theory of evolution as it is now stated is complete may rightly be questioned even by the unscientific mind. Have its advocates taken cognizance of the human will and of the reason of mankind acting under its direction as the prime factors in the production and distribution of the material subjects—food, shelter, and clothing—on which material existence depends? If it may be rightly held that such a tendency as that which Malthus thought he had proved had any real foundation, it would have been disclosed during the nineteenth century. It has not been. There has not been a single decade in the nineteenth century in which the means of subsistence have not gained rapidly on the population of the globe. The tendency throughout the century has been to abate the dangers and evils of famine, to distribute an increasing abundance of food over wider and wider areas at a lessened cost, to mitigate the horrors of war, and to develop sanitary science. If the theory of Malthus is well grounded, then it follows that the whole of the so-called progress developed in the nineteenth century has been worse than useless. It has been merely increasing the numbers who must ultimately be subjected to the horrors of war, pestilence, and famine, in order that mankind may survive upon the face of the earth. This tendency to increase of relative product has been accompanied by an enormous increase in the capital of the world—that is to say, in the products of labor saved for future reproductive service—and this vast relative increase of capital has tended to a great reduction in the normal rate of interest earned in its safe use. The improvements in sanitary science have also led to a very considerable prolongation in the lives of the intelligent. It is probable that the great life-insurance companies have only been saved from the disaster which might have ensued from the rapid reduction of the safe rates of interest on their investments by this fact that life has been prolonged considerably beyond any of the life tables which are made use of in computing the annual premiums. These gains have not been made by means of the frequent wars of the century, but in spite of them. The effect of war has been to devastate sections of important countries, and to diminish production more than it lessened population. The effect of the conscription of the strongest and healthiest of the men has led to their destruction in great numbers, and to the survival only of the less capable and less fit to reproduce the species. There has even been a distinct deterioration in the size, weight, and physical energies of the population even of great countries like France; yet in spite of these evil influences the population of continental Europe has steadily increased. The application of science and invention has enabled the debt and army ridden countries of Europe—France, Germany, Austria, Italy, and Russia—to improve their general conditions, and, although these evil influences have kept the great mass of the people poor and in some countries on the edge of starvation, yet they have only retarded material progress without in any instance stopping it. Among the English-speaking people of Great Britain and her colonies, and the United States, and in the industrious and less warlike countries of Europe—Holland, Belgium, and Switzerland—there has been a steady gain in virility, in stature, in physical condition, and in mental skill and aptitude. In some of the eastern countries of Europe but lately redeemed from the devastating rule of Turkey, the present improved conditions are in more striking contrast with those which prevailed at the beginning of the century.

What, then, is wanting in the logic of the Malthusian conception of the survival of the fittest adopted by Darwin and Wallace? May it not be held that it is only incomplete, being limited to dealing with man as an animal, without giving regard to that prime quality of man by which he is separated distinctly from every other animal in being endowed with progressive desires and with the capacity to provide for his increasing wants?

In an address which I had the honor of making to the graduating class of the State University of South Carolina, June 26, 1889, under the title of Consumption Limited, Production Unlimited, I presented this case in the following terms:

"I have ventured, therefore, to say that on the basis of the statistics compiled in recent years it may soon be proved to be a rule or law of life that the power of man to consume the means of subsistence is limited, while, on the other hand, the power of mankind to produce and distribute the means of subsistence is practically unlimited.

"I have frequently ventured in conversation to try this hypothesis upon different people, and the very surprise with which it has been usually received goes to prove that the theory of Malthus has unconsciously governed the thought of a very large proportion of the thinking people even of this country.

"In support of this rather startling proposition, it may be suitable to point out again that material life is itself only a conversion of material forces into a new form. Man is the only animal that accumulates experience and thereby attains the power to give a new direction of a permanent kind to these forces of Nature; he therefore frees himself from subjection to the law of the survival, either of the strongest, the most subtle, or the most cunning; he attains the power to exist and multiply by dominating the forces of Nature, thereby increasing production and he makes progress by exchanging services with his kindred. Under these conditions the survival of the intelligent and the capable in increasing numbers becomes assured, because they are the fittest to survive."

I will now attempt to deal with the well-intentioned but very malignant dogma of Malthus, and also with the yet more important and admitted truths presented by Darwin and Wallace, from the point of view of an idealist. I know not bow else to discriminate between one who holds the views which I shall attempt to present and one who regards man and his functions purely as a materialist giving regard to physical influences only.

So far as I comprehend the propositions submitted by either of these great leaders in scientific thought, their theories are all based upon the material conditions which govern man considered as one of the animals. If we deal with the existence of animal life as a stage in the conversion of forces by which the universe exists, we may fully admit that the animal is dominated by the forces of Nature. There may have been a development of species perhaps from a single germ. There has been a survival of one species of animal while others disappear. There has been an adaptation of animal life to the varying conditions of climate and soil in the long geologic ages. There has been a survival of the physically strongest of particular species. There has been a survival of the more intelligent species. Yet there is no evidence of the progressive development of intelligence or of experience in any existing species of animal except mankind. The dams built by the beavers in the far Northwest, of which Professor Agassiz computed the age at nearly two thousand years, as I remember, by the growth of the peat bogs that had gradually filled the lakes which the beavers created, were made in the same way that the beavers build their dams at the present time. There has been no variation, no progress. The beaver of the present generation to all intents and purposes corresponds to the beaver of two thousand years ago. True, the students of natural history have proved slight variations, slight adaptations and slight modifications in specific groups of animals, but as yet the one distinction remains which separates man from all other animals. None but men are endowed with progressive wants and with the mental capacity to secure their supply.

If it is held, as some naturalists may allege, that this statement is too strong, it may be admitted that there has also been a survival of species and of members of species whose brain measurement is to-day larger than in former periods which come within observation, and that there has been an increase of intelligence as distinguished from instinct. There are also members of particular species like beavers, who under certain conditions develop the power to build dams, and who under other conditions have not developed that power. Yet the fact remains that these slight variations, occurring in periods of almost geologic time, have no correspondence with the progress of mankind. No other animal has jet developed the powers of reflection, forecast, and imagination, which not only create new wants among men, but which also develop the powers by means of which these wants can be supplied. All other animals are dominated by the physical forces of Nature. Man alone dominates these forces, giving them a new direction, tending constantly to the increase of the means of subsistence at a much more rapid rate than the increase of the population.

For untold ages the wind-swept prairies of the great Mississippi Valley had served to nourish a few millions of bisons which, ranging from north to south and grazing as they went, maintained a certain proportion of animal life to the means of subsistence, while a small number of Indians warring among themselves and showing no signs of progressive development sparsely occupied what is now the granary of the world. Presently came upon the scene men who had learned how to direct the forces of iron, steel, and steam. All the material conditions were changed under the power of the directing mind of man. From that valley are distributed the means of subsistence without which even in the present year disastrous famines would have devastated Europe. No man yet knows or can measure the potential or the productive energy of a single acre of land anywhere in ratio to the labor put upon it. We stand at the very beginning of progress in scientific agriculture, leading to lessened labor and increased product.

In the mind of Malthus and of Ricardo land appears to have been regarded as a mine subject like mines of metal to exhaustion. We are but beginning to learn that land is but an instrument or a laboratory responding in its products to the minimum of labor and the maximum of intelligence.

In order that we may fully comprehend the true nature and source of the increased production of the means of subsistence throughout the centuries, we must give regard to the relative insignificance of accumulated capital as compared to mental capital or experience. Material wealth counts but little as compared to mental capital. I have often had occasion to refer to the fact that the richest and most prosperous state in the world may possibly accumulate capital to the measure of three or possibly four years of production. Several years since I made a very accurate measure of the total valuation of all the mills, works, railroads, dwelling houses, goods and wares, tools and implements of the Commonwealth of Massachusetts, standing for the savings in a concrete or material form of more than two centuries of progress. They did not then equal the measure of three years' consumption. That which is the wealth of one generation is destroyed by the inventor who substitutes better mechanism for purposes of production and distribution. The entire profit of one generation, even of one decade, consists in what had been wasted in the previous decade. We are always within less than a year of starvation, yet never before did we possess such absolute assurance of abundant consumption.

I never happened to read Disraeli's strange novels until the present summer. While I was thinking of what I had to say in this matter I came across a paragraph which seems to me to cover much the same ground over which I have been led by my observations of the hard facts of a long business life. "Man is not the creature of circumstances. Circumstances are the creatures of men. We are free agents, and man is more powerful than matter." This is another way of saying that man dominates the forces of Nature, and is not dominated by them.

Does not this same conception pervade the Hebrew Scriptures? Under the name of Moses it is written of mankind "to be fruitful and multiply and replenish the earth and subdue it, and have dominion over the fish of the sea and over the fowl of the air and over every living thing that moveth upon the earth." Do we not find throughout the Scripture record of the Jewish history the same conception of the unity of the creative mind named by the Hebrew Jehovah, by the Christian named God? Do we not find in the Hebrew theory of the origin of species the sense of order and uniformity? Is not mankind a part of that universe, and have we not the right to believe that to man by the power of will and reason, of forecast and imagination, has been given such dominion over the forces of Nature as to enable him to direct these forces to conditions of progressive welfare the scope and end of which no one can even yet measure? Each of these great investigators whom I have named in his day and generation has served to promote the very progress with which his own conceptions seemed to be most at variance.

The prime object which Malthus had in view was to overcome the evils of the then existing poor laws of Great Britain, which he accomplished. The theory of evolution is held by the masters of science to have given the greatest incentive to movement and progress yet recorded in the history of scientific research. Yet it may not be complete. In almost the same year in which Malthus presented his malignant theory, justifying war, pestilence, and famine as necessary factors in the life of man, Immanuel Kant published his great essay on Eternal Peace, resting its certainty on the development of commerce and on the mutual services which men render each other in spite of the interruptions of war, and in spite also of the evil conception of the functions of commerce which has so long pervaded the legislation of this country, from which we have yet to emerge—namely, that the import of the goods of foreign origin which we procure in exchange for the domestic products is an industrial war upon domestic industry.

This leads me back to the thesis which gives the title to this paper. We are now exporting goods and wares of every type, from the crudest product of the field to the highest finished product of the metal works. Our supremacy over nearly every other nation, if not all, in the low cost of production of the crude materials which enter into these exports, our very low rate of national taxation, and our other advantages are conducive to this power of service which we render to other nations. Yet in this service the highest rates of wages are earned by our own workmen that are secured in any part of the world, ranging from twenty-five per cent to one hundred per cent above the rates of wages in the manufacturing countries with which we compete, and even tenfold the earnings in the nonmachine-using nations from which we procure the larger part of our imports. If the rate of wages governed our cost of production by the unit of product, not one dollar's worth of any of these goods would be sent out from our harbors. In this friendly contest to serve other nations for mutual benefit, the survival of the fittest will fall to that nation which maintains peace, order, and industry, and which removes all legal or artificial obstructions to commerce such as now exist in the fines that we impose on foreign goods under the name of protection, and in the obstructive provisions of our navigation laws whereby we are deprived of the paramount position upon the sea to which we are entitled.

It may have seemed as if I had been led wholly away from the subject which is the title of this paper in this somewhat presumptuous suggestion that the theory of evolution as represented by Darwin and his followers is totally inadequate in its application to the metaphysics of production and consumption or of trade and commerce. If the dogma of Malthus had been true in its application to the present century, and if the survival of the fittest based by Darwin upon the theory of a purely physical natural selection had been complete, the retrogression of the century would have been marked by deficiency of product, higher prices, lessening wages, larger relative profits, and increasing want. The trial balance of the more important countries and states of the world which are to be found in their statistical abstracts prove the reverse of all these necessary conclusions which must be derived from the erroneous or incomplete observations of the great investigators whom I have named. I trust, therefore, that the conclusions to which I have brought you may justify the title of my essay.

The real wage which is the incentive to work is the enjoyment of the necessaries, comforts, and luxuries of life—food, fuel, shelter. and clothing—that is to say, the necessaries and comforts of material existence. In the fact that the wages or earnings have risen while prices have fallen, and that those who do the physical work of production have secured decade by decade an increasing share of a constantly increasing product by the expenditure of their earnings when converted into terms of money, is to be found the disproof of the Malthusian theory so far as it may be disproved in a single century. In these facts is also to be found the necessity for the metaphysical treatment of the theory of evolution as yet only partially developed by Darwin, Wallace, and their successors.

One may even venture to cite the singular vagaries of Wallace in the matter of spiritualism in evidence of a lack of the faculty of observation in metaphysics on the part of a man who has been so eminent in his observations of purely physical conditions. May not Darwin's loss of enjoyment in music and art after his long application to the observations of Nature possibly indicate a tendency to one-sided development even in the mind of a man so supremely able? Men of far less ability often realize the loss in their power of enjoyment of the functions of the ideal after overmuch devotion to the study of material conditions. This is one of the dangers in dealing with statistics, yet the imagination is an absolutely necessary factor in statistical science. The mere compiler of figures, without comprehension of the subjects of which they are symbols and without capacity to read between the columns, is a mere drudge whose work always needs to be revised and often changed in the relation of all its parts, lest false impressions should be derived from figures which are themselves true. The statistics of a nation are but the trial balance of its accounts, corresponding to the balance sheet of a merchant. Nations may be betrayed by bad bookkeeping, as merchants often are.

It is also a matter of common observation that the man who devotes himself exclusively to the accumulation of wealth loses the very power of enjoyment which might ensue from its possession had he rightly comprehended his own function in the universe.

The mathematics and statistics of the astronomer disclose the order and unity which prevail throughout the universe. Universe itself is a synonym for unity. In my own mind it seems possible to predicate order and unity in the progress of mankind in material welfare on the simple ground that man is a part of the universe. The same creative mind or power by which the world is kept upon its way from an unknown beginning to an equally unknown ending (if there can be beginning or end in an eternal order) directs all the forces of creation of which mankind is a part. It seems to me that the man who comprehends that he himself is a unit and a factor in this great order of creation must find in the revelation of that reason and will by which he is differentiated from all other animals an emanation or inspiration from that higher power which makes for righteousness:

"High over space and time it rides,
The high thought that can never alter."

Again, we find in the Hebrew myth the origin of the knowledge of good and evil which has been so fearfully misconstrued in the Christian dogma as the fall of man, the first recorded conception of the development of that mental energy by which mankind became differentiated from all other animals. We also find in the true rendering of the Greek text of the central precept of Christianity—in which, as I am assured by scholars, the word "agapao" is more correctly construed in English in the word "service," "Thou shalt serve thy neighbor as thyself"—the very principle of modern commerce by which it lives and moves and has its being, evolving mutuality of benefits through the exchange of products. This concept can be traced far back in Leviticus, in the writings of Confucius, and in the records of the Egyptians.

1 therefore venture to submit to the members of this association the suggestion that true as may be the theory of evolution as it now stands, it is not yet complete. It will remain inadequate until some philosophic observer yet greater than Darwin traces and defines the evolution of the mental or metaphysical forces by which mankind will surely attain its full development and dominion. Until the modern development of science and invention of the nineteenth century had become a part of the common practice and common knowledge of the civilized races, only the prophet or seer could forecast the conditions of peace, order, and mutual service which we have as yet so partially attained. Have we not now a basis for an inductive social science in this development? May we not rest assured or continue our work with full assurance that the humane element in the Divinity which shapes our ends and the divine element in the humanity to which has been given dominion over the forces which make for welfare, will be so combined and harmonized that the time will surely come when all mankind shall be free of what has been rightly named the hell of war?

Conclusion.—The ultimate suppression of war by the evolution of the forces of commerce may be well assured. War, however necessary it may sometimes be, must always remain a survival of brute or unintelligent force. Commerce, however restricted by the lack of intelligence among legislators, is yet an evolution of mental force, by which it is directed and by which it will ultimately dominate brute force. War is destructive: commerce is constructive. Every phase of war is of necessity conducted by methods which have no defense in morals. It requires the employment of spies, the use of falsehood, the ambuscade. Its greatest successes are achieved in getting the advantage of the enemy and striking him in the back. The art or invention of war consists in making each instrument of slaughter more and more effective, the advantage in the end falling to the gun of longest range, unless success is attained even under bad management by the yet greater incapacity of the enemy.

Commerce exists by the law of service. Its benefits are mutual. Its conduct demands probity and integrity. "The trust reposed in and deserved by the many creates the opportunity for the fraud of the few." War can only exist so long as the private soldiers are ignorant on the one side or the other. Had not the Confederate private soldiers in the civil war in this country been ignorant of the evil influence of slavery upon themselves they would not have fought in a war for the maintenance of slavery. If the conscript soldiers of Spain had not been kept in ignorance of the abuses of the rights of the Cubans by their own oppression at home, there would have been no cause for interference on the part of this country, and there could have been no war. When the men behind the guns in Germany become fully informed of their own rights, as they are rapidly becoming, they may cease to submit to the domination of the classes who carry the sword. The mediæval Junker who now assumes the powers of emperor will then become as helpless as his mediæval prototype, the knight in armor, became when gunpowder was invented. The brute rule of blood and iron will then give place to the intelligent rule of commerce and mutual service.

Taxes are collected at the barriers which part European nations from each other by duties on their respective imports to the amount of many hundred million dollars, and yet that revenue does not suffice to support the armies which except for those barriers to mutual service would not be required and could not be sustained.

As surely as the mental factor in production giving direction to the forces of Nature evolves increasing welfare, so surely will the brute force of war and the survival of the fighting instinct in man be suppressed by that spread of intelligence and common sense which is generated in the very conduct of commerce itself.

 


 
Recent statistics show that since the end of 1869 the postal traffic in France has nearly tripled, the telegraphic network has increased about nine times, the tonnage of the railways and interior navigation has doubled, deposits in savings banks have risen from!(;150,000,000 to $800,000,000; and other items of economical prosperity have shown corresponding growth.
  1. Read before Section I of the American Association for the Advancement of Science, Tuesday, August 23, 1898.