sold; but a maximum of this kind is obviously liable to variation. We have to consider also what minimum share must be given to the other contributing factors, whether of labour or of capital, before the maximum of the wages under consideration can approach any degree of definiteness. Thus the same difficulties reappear, and below them is the still deeper difficulty: what causes determine the amount and the price (per unit) of the vendible commodity out of which both wages and profits are to be paid? The answer to this question obviously presupposes the theory of value.1

We

It appears, then, as the conclusion of the argument of the last three sections, that there is no short and simple rule by which the normal rate of wages in any employment can be determined over a long period or in the long run. cannot assign with any degree of precision the superior and the inferior limits between which it must lie, and thus we cannot fix upon any point about which the market rates must oscillate. What we can do, however, is to point out certain circumstances which cause certain classes to obtain more or less as their shares in the annual produce of the society. Following Adam Smith's classical treatment, these causes may be divided into two groups: (1) natural, or those dependent on the nature of the employment; (2) artificial, or those due to "the policy of Europe."

§ 4. Natural Causes of Differences of Wages in Different Employments. Adam Smith's enumeration and explanation of the natural causes of differences has been so frequently quoted and is so well known that only a short abstract seems necessary. It is worth observing, however, that here, as throughout his work, Adam Smith applies his principles to the highest as much as to the lowest grades of labour, and draws his illustrations from the wages of lawyers, clergymen, and artists, just as much as from those of common sailors, soldiers, and colliers.

(1) The agreeableness or disagreeableness of the employ1 This subject in the present work is discussed in Bk. III.

ment is illustrated by two classical examples: "honour makes a great part of the reward of all honourable professions," and "the most detestable of all employments, that of public executioner, is, in proportion to the work done, better paid than any common trade whatever." There is, however, much truth in Mill's criticism, that in many cases the worst paid of all employments are at the same time the most disagreeable, simply because those engaged in them have practically no other choice. (2) The easiness and cheapness, or the reverse, of learning the business. This factor operates in two ways. A difficult business implies, to some extent, peculiar natural qualifications, and it also involves the command of a certain amount of capital to subsist on during the process of learning, and thus in both respects the natural supply of labour is limited. (3) The constancy or inconstancy in the employment, — a point already noticed under real wages. (4) The great or small trust reposed in the workmen, an important consideration in all the higher grades of labour, e.g., bankers, lawyers, doctors, etc. (5) The chance of success or the Here it is to be observed that, owing to the hopefulness of human nature and the influence of the gambling spirit, the chance of success is generally overestimated, and, therefore, that the wages in employments where the chance of success is really small are lower than they ought to be. The most striking instance is furnished by the labour in gold mines, diamond fields, and the like, and the same cause also operates in many of the professions.

reverse.

All these causes of differences of wages in different employments may be explained by showing the way in which they operate on the demand and supply of labour in any particular group. If the "net advantages," to adopt Professor Marshall's phraseology, of any group are relatively high, then labour will be directly attracted to that group, and the children born in it will be brought up to the same occupation, and thus in both ways the supply of labour will be increased. But the "net advantages embrace the

conditions just enumerated. Again, if the other members of the community require certain forms of labour to a greater extent, there is an increase in the demand and a rise in their price.

§ 5. Conditions of the Operations of the Natural Causes. It is important to notice the conditions laid down by Adam Smith, in order that these natural causes may have their full effect.1 (1) In the first place, at the outset, he states that the employments compared must be in the same neighbourhood. In modern phraseology this implies that the mobility of labour is practically perfect, that the labourers know the conditions of work in different trades 2 and can move readily from place to place and employment to employment. (2) The employments considered must be well known and long established. In new trades, other things being equal, the projector can only attract sufficient labour by offering higher wages. In trades also in which fashion changes rapidly, the same cause operates. (3) The employments must be in their natural (or normal) state. "The demand for almost every different species of labour is sometimes greater and sometimes less than usual." Thus in agriculture, wages vary with the seasons, in the army and navy with war or peace, in many industries with the price of the produce, which again varies according to the quantity. (4) The trades considered must be the sole or principal employments of those who occupy them. The principle involved is that when a person obtains his subsistence from one occupation, he may work in his leisure at another, for less wages than would otherwise correspond to the nature of the employment. We have instances in various domestic industries. Here, however, as Mill observes, we must distinguish between the case in which the price depends mainly on the domestic supply and the case in which the price is governed by an outside market. A good illustration of Adam Smith's meaning is found in the

1 Bk. I., Ch. X., Introduction.

2 In Scotland artisans are commonly called tradesmen.

low wages obtained for literary work, although, of course, other causes e.g., honour or vanity also operate.

§ 6. Artificial Causes of Difference of Wages in Different Employments. According to Adam Smith, the policy of Europe has produced and increased inequalities in wages in three different modes, all of which are treated from the point of view of their effect upon competition: (1) In some employments competition has been unduly restrained, as, for example, by the action of guilds and corporations; (2) in others it has been unduly increased, as in the church by charitable education; (3) in some cases the free circulation of labour and capital, whether from employment to employment or place to place, has been obstructed by legal or customary regulations. In addition to these modes of action, he considers later on the direct interference of the law in fixing definite rates of wages. Whilst fully admitting the reasonableness of this arrangement and availing myself, as usual, of Adam Smith's learning and criticisms, I find it more in accordance with the general plan of this work to adopt a different method of inquiry. The subject is of such importance as to deserve a separate chapter.

CHAPTER XII.

THE EFFECTS OF LAW AND CUSTOM ON WAGES.

§ 1. Modes in which Law and Custom may affect Wages. It follows from the analysis previously given1 that law and custom may operate on wages considered as the net reward of labour for its toil-in three ways: namely, by affecting (1) the quantity of labour and the conditions of work; (2) the amount and nature of the real reward; (3) the relations of employers and employed in making contracts for labour. In the broadest sense of the terms the third mode may be said to include the other two, but as stated it refers specially to the relative powers of the two parties, a topic of sufficient importance to deserve separate mention. In general, customs, social institutions, and laws of various kinds affect these three elements simultaneously, though in different degrees.

§ 2. Slavery, Serfdom, and Patria Potestas. In tracing, as regards labour, the development of freedom of contract,2 in which, when perfected, we may suppose that both parties are on an equal footing, we must begin with the social state in which the powers of the employer are paramount. The two principal examples are the relations of master and slave, and of the head of a family to its members. In these cases the term "contract" is used entirely as “a convenient form for the expression of economic truths"; it is strictly only a quasi-contract, which, as Maine says, is no

1 Ch. X.

2 Cf. Maine's Ancient Law, Ch. IX., for the general development of

contract.