Initially intended to cover all factories, Hobhouse eventually limited his proposed legislation to cotton mills, partly out of concern that the votes to pass comprehensive legislation did not exist, and partly in recognition of the power of the relatively well-organized cotton spinners, led by John Doherty. So limited, the first factory reform bill passed in 1833.[1] Oastler nevertheless felt betrayed by Hobhouse’s decision to seek to regulate only the cotton mills, as a good number of those with whom Oastler was concerned worked in the woolen trade and other industries not covered by the newer legislation. He therefore kept up the drum beat of his own campaign for reform and in 1834 appeared before the Select Committee on Hand-Loom Weavers' Petitions, which had been appointed by Parliament to investigate the claims of the weavers and to make recommendations of remedies, if any, to the House of Commons.The sufferings of the petitioners were well-known to contemporaries and have been the object of constant concern by historians.
Having testified first to the declining living standards and spirits of the weavers since the end of the Napoleonic wars in 1819, Oastler was asked if he were aware of "any attempt made at any time...to bring about a newly constructed system of wages" and he declared, "Yes," he was. "The plan that was adopted was the establishment of what was called the trades' unions, which were established for the express purpose...of making what they call the bad masters give as large wages as the good masters." Oastler also noted that he supported the plan, at least where the unions gave up "secrecy" and "intimidation," and sought instead "to join their masters with them in their unions, in order that they might agree among themselves without quarreling and get fair wages for a fair day's work" (281). He did not support working-class organization that had an "ulterior motive" or political intention." But when "their sole object has been to endeavor to obtain a good day's wage for a good day's work" (282), he thought them a worthy undertaking. He was then asked if he would "put an end to the freedom of labour?" Oastler replied, no. But he "would put an end to freedom of employing labourers beyond their strength" and "to anything which prevents the poor man getting a good living with fair and reasonable work" (283).
[1] It is also worth noting that [the same session of] Parliament also passed the first abolition of slave act, testifying to the close relationship between the anti-slavery movement and the labor movement, broadly conceived. Indeed, as [Seymour Dreshler and others] have argued, the rise of the labor movement, with its focus on injustices closer to home and thus, for many, more difficult to ignore, threatened to deprive the anti-slavery movement of its popular base--unless it proved open, as it did, to extending its humanitarianism to more local sufferers.
Monday, June 25, 2012
Thursday, June 21, 2012
The first use of the fair day’s wages/fair day’s work slogan
Reliable hints of the first use of the fair day’s wages/fair day’s work slogan are fairly easy to come by. Standard compilations of famous quotations routinely attribute the phrase to Thomas Carlyle, who used it in his influential 1842 essay, Past and Present, which sharply criticized the evils of, among other things, laissez faire and the factory system. Carlyle himself, however, attributed the phrase to the “strong men” of the “poor Manchester Insurrection” (84), a broad-based strike movement that spread throughout the industrialized regions of north England in August 1842, led by what Carlyle described as a “million hungry operative men” (82), whose central demand was “‘a fair day’s-wages for a fair day’s-work’” (84). But even this was not the first use of the phrase on a national stage. Three years earlier, Thomas Attwood, the founder of the Birmingham Political Union, which had played such an important role in the popular mobilization of support for the Reform Act of 1832, had also used it when presenting the first Chartist petition to Parliament on Friday, June 14, 1839. According to Attwood, the petition had been adopted by not less than 500 public meetings in 214 towns and villages across Great Britain, and signed by 1,280,000 people. “The petitioners,” he told the House of Commons, “state that they only want a fair day’s wages for a fair day’s work; and that, if we cannot give them that, then will they … change the representation of this House, with a view to the accomplishment of their wishes” (John Henry Barrow, ed., The Mirror of Parliament. Session of 1839. Vol. IV (London: Longman, Orme, et al., 1839), 2523-6 at 2524). In other words, while Attwood, like Carlyle, used the phrase, he too credited working class sources, in this case the hundreds of thousands of Chartist petitioners, with originating it.
Frederick Engels was thus not far from the truth when, in a brief overview of the English labor movement entitled "A Fair Day's Wages for a Fair Day's Labor," published in the 1881 inaugural issue of the Labour Standard, a London-based English language socialist newspaper, he credited the labor movement with coining the phrase. But he wrongly assumed that it was a conventional staple of the movement from the mid-1820s when, after the repeal of the Combination Acts of in 1825, trade unions emerged from the shadows of proscription. In fact, a computer-aided search of digitized English source materials from the late 1820s through the early 1830s turned up no such phrase. A "fair day's work" did turn up. But before the mid-1830s, it appeared as often in comments by local overseers of the poor, or more distant managers of Caribbean plantation, concerned that their charges, whether black or white, were not working as hard as they might, than it did in reference to the demands of English wage laborers. Thanks to the relatively new, computer-aided access to a wide range of source materials from the 19th century (and even earlier), it is also now possible to date its first use fairly easily and confidently to 1834 testimony by Richard Oastler before a Parliamentary committee investigating the conditions of the hand loom weavers, and its subsequent first appearance as a demand of the labor movement proper, in an April 1835 open letter, which appears to have been written by Oastler himself, from what purported to be the “Central Committee of the Hand-Loom Weavers of Bradford” to their local MP, the geologist and reformer, George Poulette Scrope, esq.
Oastler was the proud "steward to Thomas Thornhill, esquire," a wealthy member of the landed gentry, whose estate near Huddersfield (across the Pennine hills northeast of Manchester) he managed and in whose county house, Fixby Hall, he lived, as had his father before him (GDHC, CL, 278). Like Carlyle, Oastler was a staunch defender of the ways and manners of traditional English society when, as he preferred to imagine it, social obligations could be counted on to trump the competitive opportunities of the cash nexus. An active anti-slavery campaigner, as had been his father before him, Oastler carried his opposition to chattel slavery and his concern for the condition of African slaves in the Americas over into a similar opposition to the harmful social effects of the new "factory system" and concern for the condition of the working classes in England, especially the youngest and most vulnerable among them. Hence, after a troubling conversation with his good friend, John Woods, a Yorkshire textile manufacturer worried about the many young children employed long hours in his mills, Oastler penned his famous letter on "Yorkshire slavery," which has been rightly credited with launching the factory reform movement. Moved by the letter, John Cam Hobhouse introduced into Parliament the first of his reform bills setting limits to the hours of work for children; calling on employers to keep "time books," documenting the hours on the job by various classes of employees; and establishing a factory inspectorate to examine these books on a periodic basis to ensure compliance.
Monday, June 18, 2012
The Problem
"A fair day's work for a fair day's pay. That is what I remember my father saying since I was a little girl. He explained it was the theory behind organized labor."
"A fair day's wages for a fair day's work" has a checkered reputation. On the one hand, it (or something very much like it) is widely recognized and accepted in trade union circles as a clear and succinct statement of one of the labor movement's central goals. The formula is, as it were, the theory of trade unionism. On the other hand, the slogan itself, and the practice of trade unionism it theorizes, have been widely dismissed in radical intellectual circles as a second-best, if not actually a second-rate, aspiration. Lenin's idea that "trade union consciousness" is not only different from but also detrimental to and even destructive of true revolutionary "class consciousness" comes to mind here. So, too, does the IWW's pointed dismissal of “fair wages” as a conservative dodge, which can be found in the preamble of its constitution, adapted in 1908. Moreover, “Big Jim” Thompson, the influential Wobbly organizer who wrote the preamble, took the sentence in which he disparaged fair wages for fair work more or less word for word from Karl Marx’s lecture to June 1865 meeting of the London section of the International Working Men's Association on the role trade unions in a capitalist system of production, which first appeared in English as Value, Price and Profit in 190_. There Marx had concluded, “Instead of the conservative motto, ‘A fair day’s wage for a fair day’s work!’ they [‘the working class’] ought to inscribe on their banner the revolutionary watchword, ‘Abolition of the wages system!’” Similar sentiments are common in contemporary academic discourse (Ian Christie; David Harvey; Istvan Metzaros).
But how "conservative" is the program of a fair day's wages for a fair days work, really? Is it in fact a poor substitute for a truly radical program of "Abolition of the wages system"? Or does it have its own transformative virtues, not only from the standpoint of its moderation but also from the standpoint of its stringency? In the essay that follows, I propose, first, to explore the origins of slogan, discussing in some detail who coined it, in what context, and to what effect. I then propose also to explore the ways the slogan was subsequently used, by whom and to what purpose, and to compare it to other strategic alternatives on offer at various times. Doing proves an excellent opportunity to review the theory and practice of Anglo-American trade unionism, the world’s first, as it has developed and as it has come down to us.
-- New Jersey high school senior, 2011
"A fair day's wages for a fair day's work" has a checkered reputation. On the one hand, it (or something very much like it) is widely recognized and accepted in trade union circles as a clear and succinct statement of one of the labor movement's central goals. The formula is, as it were, the theory of trade unionism. On the other hand, the slogan itself, and the practice of trade unionism it theorizes, have been widely dismissed in radical intellectual circles as a second-best, if not actually a second-rate, aspiration. Lenin's idea that "trade union consciousness" is not only different from but also detrimental to and even destructive of true revolutionary "class consciousness" comes to mind here. So, too, does the IWW's pointed dismissal of “fair wages” as a conservative dodge, which can be found in the preamble of its constitution, adapted in 1908. Moreover, “Big Jim” Thompson, the influential Wobbly organizer who wrote the preamble, took the sentence in which he disparaged fair wages for fair work more or less word for word from Karl Marx’s lecture to June 1865 meeting of the London section of the International Working Men's Association on the role trade unions in a capitalist system of production, which first appeared in English as Value, Price and Profit in 190_. There Marx had concluded, “Instead of the conservative motto, ‘A fair day’s wage for a fair day’s work!’ they [‘the working class’] ought to inscribe on their banner the revolutionary watchword, ‘Abolition of the wages system!’” Similar sentiments are common in contemporary academic discourse (Ian Christie; David Harvey; Istvan Metzaros).
But how "conservative" is the program of a fair day's wages for a fair days work, really? Is it in fact a poor substitute for a truly radical program of "Abolition of the wages system"? Or does it have its own transformative virtues, not only from the standpoint of its moderation but also from the standpoint of its stringency? In the essay that follows, I propose, first, to explore the origins of slogan, discussing in some detail who coined it, in what context, and to what effect. I then propose also to explore the ways the slogan was subsequently used, by whom and to what purpose, and to compare it to other strategic alternatives on offer at various times. Doing proves an excellent opportunity to review the theory and practice of Anglo-American trade unionism, the world’s first, as it has developed and as it has come down to us.
Saturday, June 16, 2012
A Brief Outline History of a Fair Day's Pay
A FAIR DAY'S PAY: A HISTORY OF SOCIAL IMPROVEMENT
The following is the prospectus for a short book entitled "A Fair Day's
Pay: A History of Social Improvement," a revisionist treatment of theories
of wages since Adam Smith, and of the controversies over how high (or low)
they should (and can) be. The proposed volume reviews the theories and
policies of both mainstream economists and policy makers as well as those
of various reformers. It will be of interest to policy makers,
philanthropists, journalists and academics, as well as to civic
associations, NGOs, and community- and labor-based organizations currently
working to raise the wages of the least well-paid and to close the growing
gap between the bottom rungs of the income ladder and the top. Recovering
the history of these ideas, as well as the policies they inspired, and
renewing our faith in their intellectual credibility, will do much to
strengthen on-going contemporary efforts to ensure "a fair day's pay for a
fair day's work."
"A Fair Day's Pay" summarizes and evaluates the labor market theories of
Smith and Ricardo; the population-subsistence theories of Malthus; the
fixed wage-fund theories of the early Mills and McCulloch; and the marginal
productivity theories of John Bates Clark and the modern neoclassical
tradition. It also details several alternative points of view, today
largely forgotten, which sharply challenged the mainstream notions. From
the standpoint of the critics, the mainstream theories functioned largely
to justify keeping wages lower than they might have been. The advocates of
the alternative theories, principally social and labor reformers with a
few professional economists at their side, rejected the mainstream
arguments as biased and self-serving. They emphasized the right of wage
earners to share with profit-takers equitably (though by no means equally)
in the fruits of their joint labor. They also championed many positive
actions to ensure that all wage earners had the opportunity and the power
to take both individual and collective steps to improve their social and
living conditions, including higher wages and better working conditions.
A conversation with Barbara Solow at the Russell Sage Foundation in 2011
first inspired me to explore this issue in depth. We were discussing the
effect of 19th-century Irish land tenure on the welfare of Irish peasants
nd Ireland, when I mentioned my research on the history of the slogan "a
fair day's wages for a fair day's work," or varieties thereof. I had been
able to identify its first use (Bradford, Yorkshire, England, 1834) and to
trace its subsequent course down to the present day through the continuing
debates between and among English and American trade unionists, employers,
politicians and economists. Upon hearing me describe some of my findings,
Professor Solow remarked, with her usual delightful candor, "I have never
understood what a 'fair wage' was." By which she meant, of course, in
contrast to just a plain old wage. (A wage is a wage is a wage, as
Gertrude Stein might have said.) What has fairness to do with it? If we
talk about a "fair wage," why not also talk about a just price? Doesn't
the latter make as much sense as the former?
The proposed book will address such questions through a history of various
theories of wages, which I divide into two general categories. The
"production school" treats labor as if it were a produced commodity like
any other, the price of which—i.e., its wage—is determined by supply and
demand in the market, which are in turn governed in the long term by how
much it costs to produce labor, and by its productivity. The "distribution
school," in contrast, believes wages determined by relations of
distribution rather than of production. In this view, labor is not a
commodity or factor of production: it (!) is a person; and a wage is not a
price paid to purchase a service but a share given those who participate in
its provision. Supply and demand are still matter, as does productivity,
but they matter in different ways.
"A Fair Day's Pay" will explicate these differences and explores their
implications. It takes and defends the view that, if we want to provide
everyone with higher wages, it is not enough simply to encourage employers
to be more innovative and wage-earners to be more educated. We need also
to support policies that give all wage earners more bargaining leverage,
including unionization, minimum income guarantees, and employment
transition programs, to help ensure that they are paid and treated well.
Nor can this support be merely formal. Even if government must become the
employer of last resort, or a living wage the standard upon which the
dollar is based (as Randall Wray once proposed), we need policies that give
all wage earners who are willing and able to work real options to earn
decent wages, whatever their job.
Chapter 1 focuses on Adam Smith, from whom all theories of wages, as indeed
all modern economics, in some sense descend, and on Thomas Hodgskin, the
latter day Smithian who was the first fully to develop the distributionist
implications of "The Wealth of Nations." On the one hand, Smith held wages
to be "everywhere regulated by … the demand for labor and the ordinary or
average price of provisions." In this way, he was a pioneer of the
production school. On the other hand, he also insisted that wages had to
be high enough to provide even "the lowest rank of people" with "those
things which the established rules of decency have rendered necessary"—a
standard that varied with "the custom of the country." In this way he was
a pioneer of the distribution school. Emma Rothschild, building on the
work of earlier historians, has recently done much to bring this other
Smith into view. Reconsidering Smith from the standpoint of his theory of
wages is another opportunity to underscore that he did not defend freedom
in order that a hard-working people might starve, but that they might
prosper.
As for the unduly neglected Thomas Hodgskin, his "Labour Defended against
the Claims of Capital" (1825) fleshed out the implications of Smith's
distribution theory of wages. Initially prepared for delivery as popular
lectures at the Mechanics Institute in London, his agitations coincided
with the ultimately successful effort to secure Parliamentary repeal of the
Combination Acts of 1799 and 1800. Ostensibly intended to prevent
treasonous collaborations with revolutionary France, with which England was
at war, the acts also served to repress rebellious associations of
agricultural laborers and urban journeymen, among other combinations.
Hodgkins' lectures were banned mid-course by Institute officials because
they were not sufficiently deferential to the reigning Malthusian
orthodoxy, which held that wages were low because the working classes were
too numerous; and they also prompted William Thompson, one of Robert Owen's
wealthiest and most influential followers, to pen a long rebuttal, "Labor
Rewarded. The Claims of Labor and Capital Conciliated: or, How to Secure to
Labor the Whole Products of Its Exertions" (1827), one of the most
important early contributions to the theories of both trade unionism and
cooperation. Hodgkins' views are worthy in themselves, however, for their
contributions to the theory of trade unionism and collective bargainig,
both of which are key tenets of most distribution theories of wages.
Smith's contemporaries and acolytes generally neglected the distributionist
import of his theories, preferring instead to enlist him in their own
causes, which was all the easier after his death in 1790. The persons most
responsible for this diversion were Edmund Burke, about whom Rothschild had
much to say; Thomas Malthus, whose influential warnings about
over-population lent a patina of theory to the notion that, if there were
too many wage earners chasing too few jobs, the wage earners had only
themselves to blame; David Ricardo, the stock-broker turned economist,
whose "Principles of Political Economy and Taxation" was little more than a
critical gloss on Smith, albeit from the standpoint of capital; and John R.
McCulloch, who energetically campaigned on behalf of a "wages-fund
theory"—the most widely held mainstream theory of wages in the nineteenth
century, according to which the capital available to pay wages was a fixed
amount and therefore any wage increase came at the expense of other, less
powerful wage-earners.
Chapter 2 outlines the contributions and influence of Malthus, Ricardo and
McCulloch by tracing the career of their best known supporter, John Stuart
Mill. An earnest Malthusian in his youth, Mill was arrested in 1824 for
passing out literature about contraceptive techniques in a working-class
neighborhood, for which offense he reportedly served several days in jail.
The first edition of his "Principles of Political Economy" (1848), written
during the great Chartist agitations that convulsed England for nearly a
decade, appeared in the midst of the democratic and socialist revolutions
on the European continent. Initially a strict Ricardian and wages-fund
man, the first edition of "Principles" was an erudite summary of the
prevailing orthodoxy. As he aged, however, Mill moved in an increasingly
distributionist direction, in no small part due to the influence of his
beloved companion, Harriet Taylor. He thus repudiated the wages-fund
doctrine in 1869 and was prepared toward the end of his life even to
declare himself, at least to his friends, a socialist. The various
editions of Mill's "Principles" and his other writing provide a convenient
path through the twisted history of mid-nineteenth century theories of
wages.
"A Fair Day's Pay" next tells the story of the wages-fund theory from the
point of view of both its defenders and detractors in the United States.
Since at least the seminal work of H. J. Habakkuk, economic historians have
agreed with the many 19th-century observers who noted that unskilled and
semi-skilled labor was relatively more scarce, and thus relatively more
highly paid, in the US than in England. In this view, try as they might in
the first half of the nineteenth century to lower wages, American employers
faced daunting labor supply constraints that no amount of jaw-boning about
a fixed wages-fund could overcome. They had to pay more or go wanting.
That the economy did not therefore falter was not lost on American
economists, however, and one of their number, Francis Amasa Walker, the
first president of the American Economics Association, issued one of the
most authoritative critiques of the wages-fund, "The Wages Question: A
Treatise on Wages and the Wages Class," in 1876.
Chapter 3 reviews Walker's arguments, as well as the emergent new orthodoxy
of marginal productivity, as codified by the influential arguments of
Stanley Jevons, John Bates Clark and Philip Henry Wicksteed, among others.
According to Adam Smith and most nineteenth-century economists, labor was
the source of all value. Clark felt impelled by the labor upheavals that
followed the Civil War, especially the national general strike on behalf of
the 8-hour day that began May 1, 1886, to state as clearly as possible what
a "fair wage" was. For the labor movement, the labor theory of value
entailed the equally true, for it, corollary that "to labor belongs the
whole of its product." Clark accepted both propositions as true and in
his "Philosophy of Wealth" (1886) asked, "What is labor's product?" His
answer, inspired in part by the marginalist methods of Stanley Jevons'
"Theory of Political Economy" (1871) and others, which held that each
individual participant in the productive process made a measurable
contribution to output and is justly owed at least the amount of that
contribution in return. A few years later, Wicksteed popularized these
conclusions in his "The Common Sense of Political Economy" (1910).
The following is the prospectus for a short book entitled "A Fair Day's
Pay: A History of Social Improvement," a revisionist treatment of theories
of wages since Adam Smith, and of the controversies over how high (or low)
they should (and can) be. The proposed volume reviews the theories and
policies of both mainstream economists and policy makers as well as those
of various reformers. It will be of interest to policy makers,
philanthropists, journalists and academics, as well as to civic
associations, NGOs, and community- and labor-based organizations currently
working to raise the wages of the least well-paid and to close the growing
gap between the bottom rungs of the income ladder and the top. Recovering
the history of these ideas, as well as the policies they inspired, and
renewing our faith in their intellectual credibility, will do much to
strengthen on-going contemporary efforts to ensure "a fair day's pay for a
fair day's work."
"A Fair Day's Pay" summarizes and evaluates the labor market theories of
Smith and Ricardo; the population-subsistence theories of Malthus; the
fixed wage-fund theories of the early Mills and McCulloch; and the marginal
productivity theories of John Bates Clark and the modern neoclassical
tradition. It also details several alternative points of view, today
largely forgotten, which sharply challenged the mainstream notions. From
the standpoint of the critics, the mainstream theories functioned largely
to justify keeping wages lower than they might have been. The advocates of
the alternative theories, principally social and labor reformers with a
few professional economists at their side, rejected the mainstream
arguments as biased and self-serving. They emphasized the right of wage
earners to share with profit-takers equitably (though by no means equally)
in the fruits of their joint labor. They also championed many positive
actions to ensure that all wage earners had the opportunity and the power
to take both individual and collective steps to improve their social and
living conditions, including higher wages and better working conditions.
A conversation with Barbara Solow at the Russell Sage Foundation in 2011
first inspired me to explore this issue in depth. We were discussing the
effect of 19th-century Irish land tenure on the welfare of Irish peasants
nd Ireland, when I mentioned my research on the history of the slogan "a
fair day's wages for a fair day's work," or varieties thereof. I had been
able to identify its first use (Bradford, Yorkshire, England, 1834) and to
trace its subsequent course down to the present day through the continuing
debates between and among English and American trade unionists, employers,
politicians and economists. Upon hearing me describe some of my findings,
Professor Solow remarked, with her usual delightful candor, "I have never
understood what a 'fair wage' was." By which she meant, of course, in
contrast to just a plain old wage. (A wage is a wage is a wage, as
Gertrude Stein might have said.) What has fairness to do with it? If we
talk about a "fair wage," why not also talk about a just price? Doesn't
the latter make as much sense as the former?
The proposed book will address such questions through a history of various
theories of wages, which I divide into two general categories. The
"production school" treats labor as if it were a produced commodity like
any other, the price of which—i.e., its wage—is determined by supply and
demand in the market, which are in turn governed in the long term by how
much it costs to produce labor, and by its productivity. The "distribution
school," in contrast, believes wages determined by relations of
distribution rather than of production. In this view, labor is not a
commodity or factor of production: it (!) is a person; and a wage is not a
price paid to purchase a service but a share given those who participate in
its provision. Supply and demand are still matter, as does productivity,
but they matter in different ways.
"A Fair Day's Pay" will explicate these differences and explores their
implications. It takes and defends the view that, if we want to provide
everyone with higher wages, it is not enough simply to encourage employers
to be more innovative and wage-earners to be more educated. We need also
to support policies that give all wage earners more bargaining leverage,
including unionization, minimum income guarantees, and employment
transition programs, to help ensure that they are paid and treated well.
Nor can this support be merely formal. Even if government must become the
employer of last resort, or a living wage the standard upon which the
dollar is based (as Randall Wray once proposed), we need policies that give
all wage earners who are willing and able to work real options to earn
decent wages, whatever their job.
Chapter 1 focuses on Adam Smith, from whom all theories of wages, as indeed
all modern economics, in some sense descend, and on Thomas Hodgskin, the
latter day Smithian who was the first fully to develop the distributionist
implications of "The Wealth of Nations." On the one hand, Smith held wages
to be "everywhere regulated by … the demand for labor and the ordinary or
average price of provisions." In this way, he was a pioneer of the
production school. On the other hand, he also insisted that wages had to
be high enough to provide even "the lowest rank of people" with "those
things which the established rules of decency have rendered necessary"—a
standard that varied with "the custom of the country." In this way he was
a pioneer of the distribution school. Emma Rothschild, building on the
work of earlier historians, has recently done much to bring this other
Smith into view. Reconsidering Smith from the standpoint of his theory of
wages is another opportunity to underscore that he did not defend freedom
in order that a hard-working people might starve, but that they might
prosper.
As for the unduly neglected Thomas Hodgskin, his "Labour Defended against
the Claims of Capital" (1825) fleshed out the implications of Smith's
distribution theory of wages. Initially prepared for delivery as popular
lectures at the Mechanics Institute in London, his agitations coincided
with the ultimately successful effort to secure Parliamentary repeal of the
Combination Acts of 1799 and 1800. Ostensibly intended to prevent
treasonous collaborations with revolutionary France, with which England was
at war, the acts also served to repress rebellious associations of
agricultural laborers and urban journeymen, among other combinations.
Hodgkins' lectures were banned mid-course by Institute officials because
they were not sufficiently deferential to the reigning Malthusian
orthodoxy, which held that wages were low because the working classes were
too numerous; and they also prompted William Thompson, one of Robert Owen's
wealthiest and most influential followers, to pen a long rebuttal, "Labor
Rewarded. The Claims of Labor and Capital Conciliated: or, How to Secure to
Labor the Whole Products of Its Exertions" (1827), one of the most
important early contributions to the theories of both trade unionism and
cooperation. Hodgkins' views are worthy in themselves, however, for their
contributions to the theory of trade unionism and collective bargainig,
both of which are key tenets of most distribution theories of wages.
Smith's contemporaries and acolytes generally neglected the distributionist
import of his theories, preferring instead to enlist him in their own
causes, which was all the easier after his death in 1790. The persons most
responsible for this diversion were Edmund Burke, about whom Rothschild had
much to say; Thomas Malthus, whose influential warnings about
over-population lent a patina of theory to the notion that, if there were
too many wage earners chasing too few jobs, the wage earners had only
themselves to blame; David Ricardo, the stock-broker turned economist,
whose "Principles of Political Economy and Taxation" was little more than a
critical gloss on Smith, albeit from the standpoint of capital; and John R.
McCulloch, who energetically campaigned on behalf of a "wages-fund
theory"—the most widely held mainstream theory of wages in the nineteenth
century, according to which the capital available to pay wages was a fixed
amount and therefore any wage increase came at the expense of other, less
powerful wage-earners.
Chapter 2 outlines the contributions and influence of Malthus, Ricardo and
McCulloch by tracing the career of their best known supporter, John Stuart
Mill. An earnest Malthusian in his youth, Mill was arrested in 1824 for
passing out literature about contraceptive techniques in a working-class
neighborhood, for which offense he reportedly served several days in jail.
The first edition of his "Principles of Political Economy" (1848), written
during the great Chartist agitations that convulsed England for nearly a
decade, appeared in the midst of the democratic and socialist revolutions
on the European continent. Initially a strict Ricardian and wages-fund
man, the first edition of "Principles" was an erudite summary of the
prevailing orthodoxy. As he aged, however, Mill moved in an increasingly
distributionist direction, in no small part due to the influence of his
beloved companion, Harriet Taylor. He thus repudiated the wages-fund
doctrine in 1869 and was prepared toward the end of his life even to
declare himself, at least to his friends, a socialist. The various
editions of Mill's "Principles" and his other writing provide a convenient
path through the twisted history of mid-nineteenth century theories of
wages.
"A Fair Day's Pay" next tells the story of the wages-fund theory from the
point of view of both its defenders and detractors in the United States.
Since at least the seminal work of H. J. Habakkuk, economic historians have
agreed with the many 19th-century observers who noted that unskilled and
semi-skilled labor was relatively more scarce, and thus relatively more
highly paid, in the US than in England. In this view, try as they might in
the first half of the nineteenth century to lower wages, American employers
faced daunting labor supply constraints that no amount of jaw-boning about
a fixed wages-fund could overcome. They had to pay more or go wanting.
That the economy did not therefore falter was not lost on American
economists, however, and one of their number, Francis Amasa Walker, the
first president of the American Economics Association, issued one of the
most authoritative critiques of the wages-fund, "The Wages Question: A
Treatise on Wages and the Wages Class," in 1876.
Chapter 3 reviews Walker's arguments, as well as the emergent new orthodoxy
of marginal productivity, as codified by the influential arguments of
Stanley Jevons, John Bates Clark and Philip Henry Wicksteed, among others.
According to Adam Smith and most nineteenth-century economists, labor was
the source of all value. Clark felt impelled by the labor upheavals that
followed the Civil War, especially the national general strike on behalf of
the 8-hour day that began May 1, 1886, to state as clearly as possible what
a "fair wage" was. For the labor movement, the labor theory of value
entailed the equally true, for it, corollary that "to labor belongs the
whole of its product." Clark accepted both propositions as true and in
his "Philosophy of Wealth" (1886) asked, "What is labor's product?" His
answer, inspired in part by the marginalist methods of Stanley Jevons'
"Theory of Political Economy" (1871) and others, which held that each
individual participant in the productive process made a measurable
contribution to output and is justly owed at least the amount of that
contribution in return. A few years later, Wicksteed popularized these
conclusions in his "The Common Sense of Political Economy" (1910).
A Prospectus for "A Fair Day's Pay," Part II
Chapter 4 then traces how labor reformers like Ira Steward, trade unionists
like Samuel Gompers, and revolutionary socialists like Karl Marx, each used
a version of the classical labor theory of value to put pressure on both
the wages-fund and the marginal productivity theories and also to propose a
set of policies and social practices which, to them, would most likely
ensure that labor would get its due. Together with other labor reformers
and trade unionists, they insisted that the supply of capital expanded or
contracted according to investor expectations about the future and was not
limited to past accumulations. Rather capital could be created (and
destroyed) simply by the willingness of those with money or credit to
invest it (or not); also that the joint contributions to the output of
modern, highly interdependent production systems were indivisible and
therefore unmeasurable. Individual compensation, they argued, was a
function of bargaining power rather than productivity, which could not be
independently or objectively determined. They were in this regard
premature Keynesians; and they were so in another regard as well: they
insisted that putting people to work and paying them well for their labor
would always do more to restore confidence in the future than firing people
and cutting their wages. The best way to create a high-wage economy, they
argued, was to pay high wages (!), which their labor reforms and their
trade unions were intended to secure.
The revolutionary socialists were a different matter. Marx believed that
in a capitalist economy trade union agitation for higher wages was
ultimately self-defeating. While he allowed that there were circumstances
in which wage increases might successfully be won at the expense of
profits, and even acknowledged that a general wage increase was
theoretically as well as practically possible, he nonetheless did not
believe that trade union action, in and of itself, could ameliorate the
condition of the working classes. Redistribution was to him just reform;
sustained high wages, he believed, required a revolution (like that which
ended slavery in the US). On this point both the English and the US trade
unions disagreed. They preferred, in Marx's words, "to march behind the
conservative slogan 'a fair day's wages for a fair day's work'." Doing
so, however, did not make them "conservative"—at least certainly not in the
eyes of employers and the courts, who continued to find them a serious
threat to what they thought of as justice. Moreover, the trade unions were
always among the staunchest supporters of both political socialism and
producer and consumer cooperatives, which many saw, again in Marx's words,
as ways to "abolish the wages system" and ensure a more equitable
distribution of labor's product.
Chapter 5 focuses on the response of mainstream economics to the rise of
the labor and socialist movements. It includes a summary of the
contributions of both well-known economists like Alfred Marshall, and
lesser knowns like John Davidson ("The Bargain Theory of Wages" [1898]).
But it devotes most of its attention to the Austrian students of Carl
Menger, who were among the most important founders of modern neoclassical
marginalist economics. The group included Eugen v. Böhm-Bawerk, Ludwig v.
Mises, Friedrich Hayek and Joseph Schumpeter, all of whom rank among the
most important liberal ideological opponents of socialism and trade
unionism world-wide. (Socialism and trade unionism had many illiberal
opponents—monarchists, aristocrats, fascists, Communists and others. What
distinguished the Austrian school was its liberalism.) Their arguments are
summarized here and their subsequent influence traced in the work of the
early John Hicks, Henry Simon and Milton Friedman, among others.
At least with respect to the theory of marginal productivity, which the
Austrians made their own, it is hard to find a contemporary economist who
is not, as it were, Austrian. Others before them had considered unions to
be illegal restraints of trade, even criminal conspiracies. But the ground
of the contemporary claim is mostly theirs. In effect, they argued, unions
are monopolies and as such are to be tolerated if and only if they serve a
larger social good, which they do not. The linchpin of this view is that
labor is a commodity and the labor market is a market, both like any other.
If so, then unions have the same market distorting effects as any other
monopoly and, as such, may be reluctantly tolerated if and only if they are
absolutely necessary. Otherwise they should be vigorously opposed. On the
other hand, if labor is not a commodity and labor markets are not actually
markets, then the outlook for the labor movement's desire to receive more
than just "whatever the market will bear" is very different. From this
alternative, very un-Austrian perspective, labor has right to a fair share
of the social product just as it has a right to a social minimum.
How is this claim, if just, to be realized?
Chapter 6 considers this question. Simply because a demand for higher
wages may be fair does not mean that all such demands will be fair. It is
possible for people to be paid too much as well as too little—as the
current compensation packages of many a financial analyst, banker and CEO
may be taken to illustrate. The claims of the various parties need to be
considered from the standpoint of equity as well as from the standpoint of
power. If wages are to be set on the basis of how much each party can
command, then we must ensure that all those engaged in the bargaining
compete on a relatively level playing field. If the game is fair, the
outcome can be considered fair, whatever it is.
But what if the game is unfair? Production theorists generally accept the
structure of the bargaining situation—including, especially, the
distribution of wealth and power—and ask only how much, given this
structure, each party receives. Distribution theorists, in contrast, seek
ways to ensure an equitable structure of bargaining among the various
parties. Both believe in "liberty of contract;" both, in short, are
liberals. But distribution theorists ask as well whether the liberty of
contract is real; and they favor positive action to create social
arrangements that guarantee "actual liberty of contract." They once did so
in no small part because they believed that a wage was a share, the outcome
of a social bargain, and not a price, which was best dictated to
wage-payers and earners in free and competitive markets. The difference is
between an approach that justifies (a) paying as little as you can for the
things you need or (b) giving as much as you can to those with whom you
work. It makes all the difference in the world.
In its Conclusion, "A Fair Day's Pay" considers the kinds of changes in
labor market policies that might help to secure a more equitable reward for
work—all kinds of work. It concentrates in particular on the problem of
how to raise the wages of service workers. The challenge appears very
different from the perspective of a production than from a distribution
theory of wages. According to the former, the best way, indeed the only
way, to increase service sector wages is to increase service sector
productivity. For production theorists, workers are generally paid what
they contribute: the more they contribute, the more they are paid.
Therefore, if a worker wants to be paid more, all they need do is
contribute more. According to the distribution school, however, workers
are not paid what they contribute but what they command. The more
bargaining leverage they have, the more they are paid. Furthermore,
leverage is a function of location. The more powerful your social or
bargaining position, the more you can command.
The way to increase service sector wages from a distributionist point of
view, then, is to increase bargaining power. We need not see the choice
as an either/or. We do not need to settle for an economy organized wholly
on principles of competition and suspicious disregard; or wholly on
principles of cooperation and mutual regard. The best way forward is to
strike a balance between the two—in particular, to distinguish clearly
between product and labor market policies. Labor is not a commodity and a
wage is not a price. The competition that drives innovation and a "race to
the top" in product markets is more likely to drive wage-cutting and a
"race to the bottom" in labor markets. We can do better. "A Fair Day's
Pay" is intended to help us understand how.
like Samuel Gompers, and revolutionary socialists like Karl Marx, each used
a version of the classical labor theory of value to put pressure on both
the wages-fund and the marginal productivity theories and also to propose a
set of policies and social practices which, to them, would most likely
ensure that labor would get its due. Together with other labor reformers
and trade unionists, they insisted that the supply of capital expanded or
contracted according to investor expectations about the future and was not
limited to past accumulations. Rather capital could be created (and
destroyed) simply by the willingness of those with money or credit to
invest it (or not); also that the joint contributions to the output of
modern, highly interdependent production systems were indivisible and
therefore unmeasurable. Individual compensation, they argued, was a
function of bargaining power rather than productivity, which could not be
independently or objectively determined. They were in this regard
premature Keynesians; and they were so in another regard as well: they
insisted that putting people to work and paying them well for their labor
would always do more to restore confidence in the future than firing people
and cutting their wages. The best way to create a high-wage economy, they
argued, was to pay high wages (!), which their labor reforms and their
trade unions were intended to secure.
The revolutionary socialists were a different matter. Marx believed that
in a capitalist economy trade union agitation for higher wages was
ultimately self-defeating. While he allowed that there were circumstances
in which wage increases might successfully be won at the expense of
profits, and even acknowledged that a general wage increase was
theoretically as well as practically possible, he nonetheless did not
believe that trade union action, in and of itself, could ameliorate the
condition of the working classes. Redistribution was to him just reform;
sustained high wages, he believed, required a revolution (like that which
ended slavery in the US). On this point both the English and the US trade
unions disagreed. They preferred, in Marx's words, "to march behind the
conservative slogan 'a fair day's wages for a fair day's work'." Doing
so, however, did not make them "conservative"—at least certainly not in the
eyes of employers and the courts, who continued to find them a serious
threat to what they thought of as justice. Moreover, the trade unions were
always among the staunchest supporters of both political socialism and
producer and consumer cooperatives, which many saw, again in Marx's words,
as ways to "abolish the wages system" and ensure a more equitable
distribution of labor's product.
Chapter 5 focuses on the response of mainstream economics to the rise of
the labor and socialist movements. It includes a summary of the
contributions of both well-known economists like Alfred Marshall, and
lesser knowns like John Davidson ("The Bargain Theory of Wages" [1898]).
But it devotes most of its attention to the Austrian students of Carl
Menger, who were among the most important founders of modern neoclassical
marginalist economics. The group included Eugen v. Böhm-Bawerk, Ludwig v.
Mises, Friedrich Hayek and Joseph Schumpeter, all of whom rank among the
most important liberal ideological opponents of socialism and trade
unionism world-wide. (Socialism and trade unionism had many illiberal
opponents—monarchists, aristocrats, fascists, Communists and others. What
distinguished the Austrian school was its liberalism.) Their arguments are
summarized here and their subsequent influence traced in the work of the
early John Hicks, Henry Simon and Milton Friedman, among others.
At least with respect to the theory of marginal productivity, which the
Austrians made their own, it is hard to find a contemporary economist who
is not, as it were, Austrian. Others before them had considered unions to
be illegal restraints of trade, even criminal conspiracies. But the ground
of the contemporary claim is mostly theirs. In effect, they argued, unions
are monopolies and as such are to be tolerated if and only if they serve a
larger social good, which they do not. The linchpin of this view is that
labor is a commodity and the labor market is a market, both like any other.
If so, then unions have the same market distorting effects as any other
monopoly and, as such, may be reluctantly tolerated if and only if they are
absolutely necessary. Otherwise they should be vigorously opposed. On the
other hand, if labor is not a commodity and labor markets are not actually
markets, then the outlook for the labor movement's desire to receive more
than just "whatever the market will bear" is very different. From this
alternative, very un-Austrian perspective, labor has right to a fair share
of the social product just as it has a right to a social minimum.
How is this claim, if just, to be realized?
Chapter 6 considers this question. Simply because a demand for higher
wages may be fair does not mean that all such demands will be fair. It is
possible for people to be paid too much as well as too little—as the
current compensation packages of many a financial analyst, banker and CEO
may be taken to illustrate. The claims of the various parties need to be
considered from the standpoint of equity as well as from the standpoint of
power. If wages are to be set on the basis of how much each party can
command, then we must ensure that all those engaged in the bargaining
compete on a relatively level playing field. If the game is fair, the
outcome can be considered fair, whatever it is.
But what if the game is unfair? Production theorists generally accept the
structure of the bargaining situation—including, especially, the
distribution of wealth and power—and ask only how much, given this
structure, each party receives. Distribution theorists, in contrast, seek
ways to ensure an equitable structure of bargaining among the various
parties. Both believe in "liberty of contract;" both, in short, are
liberals. But distribution theorists ask as well whether the liberty of
contract is real; and they favor positive action to create social
arrangements that guarantee "actual liberty of contract." They once did so
in no small part because they believed that a wage was a share, the outcome
of a social bargain, and not a price, which was best dictated to
wage-payers and earners in free and competitive markets. The difference is
between an approach that justifies (a) paying as little as you can for the
things you need or (b) giving as much as you can to those with whom you
work. It makes all the difference in the world.
In its Conclusion, "A Fair Day's Pay" considers the kinds of changes in
labor market policies that might help to secure a more equitable reward for
work—all kinds of work. It concentrates in particular on the problem of
how to raise the wages of service workers. The challenge appears very
different from the perspective of a production than from a distribution
theory of wages. According to the former, the best way, indeed the only
way, to increase service sector wages is to increase service sector
productivity. For production theorists, workers are generally paid what
they contribute: the more they contribute, the more they are paid.
Therefore, if a worker wants to be paid more, all they need do is
contribute more. According to the distribution school, however, workers
are not paid what they contribute but what they command. The more
bargaining leverage they have, the more they are paid. Furthermore,
leverage is a function of location. The more powerful your social or
bargaining position, the more you can command.
The way to increase service sector wages from a distributionist point of
view, then, is to increase bargaining power. We need not see the choice
as an either/or. We do not need to settle for an economy organized wholly
on principles of competition and suspicious disregard; or wholly on
principles of cooperation and mutual regard. The best way forward is to
strike a balance between the two—in particular, to distinguish clearly
between product and labor market policies. Labor is not a commodity and a
wage is not a price. The competition that drives innovation and a "race to
the top" in product markets is more likely to drive wage-cutting and a
"race to the bottom" in labor markets. We can do better. "A Fair Day's
Pay" is intended to help us understand how.
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