Consumption (Economics); Prices; Supply and demand
§5. _The Apportionment of Labor among Places_. Again, as with capital,
it is when we turn to the _apportionment_ of labor between different
employments that both economic law and social ideal make their
appearance. It will be well, however, to consider briefly in the
first instance the different question of its apportionment between
places. This was hardly necessary in the case of capital, because the
possibilities of foreign investment are very numerous and easy: the
mobility of capital is thus sufficiently strong (once again it is only
_marginal_ adjustment that is necessary) to establish over at least a
large part of the world something near to a uniform rate of
interest. But this is not the case with labor. People do indeed move
from place to place within a country, and from one country to another,
in response to economic opportunities. That even the latter movement
may be a considerable thing, the present population of the United
States is a striking testimony. But obviously the mobility is very
incomplete. Here, then, we have what we might _loosely_ call an
economic law that labor tends to "flow" (as it is sometimes unhappily
phrased) to those places where it can command the highest reward; we
have this tendency in evidence, but it is far too weak to enable us to
lay down what would deserve more strictly the title of an economic
law, that in the long run the reward of the same kind of labor is
roughly equal in all places. Perhaps we can say this for many
districts in a single country; but for few countries is this true as
between all their districts. As between countries, it is not remotely
true.
Here, however, the imperfection of economic law is balanced by an
extreme uncertainty as to the ideal. Perfect mobility of labor may be
_economically_ desirable in a very narrow sense of the term; but it
opens out a vista of racial, national and cultural problems, into
which it will be better for us not to enter here. We must take for
granted the population of a country, like that of the world, as a
given fact.
When we do this, the question of its remuneration is on all fours with
the more general question discussed above. That the remuneration of
the labor of a country is mainly governed by the relations between
demand and supply is an inexorable fact. In view of the international
mobility of capital, the main distinctive factor in the demand for the
labor of a particular country is the supply of natural resources,
which it knows how to use. Where the natural resources are great
relatively to the population, there wages will rule high; where the
converse is true, wages will rule low. This result of economic
analysis is abundantly confirmed by experience. The relatively high
wages in the new world, the low standard of living in the densely
populated East; the economic history of Ireland are so many
object-lessons of its truth.
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