The Natural Economic Order/Part IV/Chapter 5 O

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O. The Theorist on Wages

Now that railways, steam navigation and the right of free movement have placed vast tracts of fertile soil in America, Asia, Africa and Australia at the disposal of the workers; now that the growth of personal credit (the result of higher moral and educational standards and enlightened commercial legislation) has made capital accessible to the workers, the "iron law" of wages no longer holds good.

The labourer is no longer delivered over to the tender mercy of the landowner; he can break away from his serfdom and shake the dust of his native land from his feet. The land monopoly has been broken. Millions of workers have sought freedom by emigration, and the landowners are compelled to treat those who remain as free men. For the possibility of emigration has set them all free.

I was forced to abandon the iron law of wages; the facts disproved me. According to Moleschott and Liebig the quantities of nitrates and carbohydrates necessary for a man working twelve hours a day are contained in a pint of fish-oil and a few pounds of broad beans. These substances cost twopence, to which may be added one halfpenny for potato parings, clothing, housing and religious needs, total twopence halfpenny. This, then, was the iron limit above which wages could not rise. But wages were higher, so the law of the iron wage was a fallacy.

I tried to evade this difficulty by saying that the iron wage is the minimum required for the worker to maintain and propagate life on the level of his cultural standard (minimum cultural standard of existence). But this did not carry me far. For how had the worker fed on broad beans attained to a cultural standard at all?

How could the rascal escape from his well-guarded compound? And apart from that, what is culture, what is a minimum standard of existence? Fish-oil and broad beans are a Christmas feast for the weavers in the Eulengebirge. Such elastic terminology is useless for science. According to many people (nature faddists, cynics and so forth) a life without material needs is a sign of the highest culture, so the iron wage based on the standard of living would have to diminish with the increase of culture, which weans men from material needs. Are the weavers in the Eulengebirge less civilised than the obese persons who begin their day with a beer breakfast and look more like pigs than human beings ? Nor is it true that wages rise with the number of tankards or the quality of the tobacco.

The Minister of Commerce in the Prussian Diet stated that the average wages of the miners in the Ruhr district were as follows:

Marks 1900: 4.80; 1903: 3.88; 1901: 4.07; 1904: 3.91; 1902: 3.82.

Thus wages fell 25 % within a space of three years! Did the cultural standard of the miners also fall by 25 % in this short period[1]? Or did they lapse into the barbarism of total abstinence? Abstainers manage with less money, which would be an excellent reason for further reducing the minimum wage to the level of the cultural standard of total abstinence. But here the question arises why our rulers are not more enthusiastic supporters of the abstinence movement. Were it possible by means of total abstinence to reduce wages in favour of unearned income, the manufacture and sale of alcoholic drinks would be quickly prohibited ! But our rulers know better: Beware of your abstainers ! Without intoxicants a people cannot be "governed".

In a word, the minimum cultural standard of existence is humbug, and so is the iron law of wages. Wage movements take no heed of the standard of civilisation. The increase of wages which the workers imagine they have "wrested" for good from their employer is lost again tomorrow if business takes an unfavourable turn. If, on the other hand, the market improves, the increase of wages will automatically fall to their lot without a struggle and even without their demanding it, just as the higher price of wheat falls to the farmer without a struggle, when the prospects of the American harvest are reported to be poor.

For what are wages? Wages are the prices paid by the buyer (employer, merchant, manufacturer) for the goods supplied him by the producer (worker). This price, like the price of any commodity, is determined by the prospective selling price. The selling price. less rent on land and capital-interest, is the so-called wage. It follows that the law of wages is contained in the law of rent on land and the law of capital interest. The commodity, less rent and interest, is the wage. There is, then, no special law of wages. The word wage is a superfluous term in economic science, for wage and price are one. If I know what determines the price of commodities. I also know what the worker obtains for his produce.[2]

Free-Money has opened my eyes to all that; it has liberated me from my illusions about so-called "value", the very existence of Free-Money being a tangible refutation of all theories of value and of the very belief in value. And the belief in value being disposed of, the conception of "labour" went overboard, being wholly superfluous for an examination of economic laws. What is labour? Labour cannot be measured by the movements of the arms, or by the degree of fatigue, but solely by the produce of labour. James Watt in his grave does more work today than all the horses alive. it is not the labour, but the result of labour, the product, that matters. The product is the thing bought and paid for, as is clearly demonstrated in the case of piece-work. And at bottom all labour is piece-work.

But to buy commodities is to exchange commodities. Economic life therefore resolves itself into a series of exchange-transactions, and all terms such as "wages", "value", "labour" are simply superfluous circumlocutions for the two basic conceptions "commodities" and "exchange".

  1. We assume that the real wage fluctuated with the money wage. Otherwise the so-called "German Currency Standard" is simply a fraud.
  2. In the last part of this book I shall show that the owner of the meant of production (manufacturers) are simply pawnbrokers — a fact now. Indeed, generally admitted.