There is another possible criticism of a theoretical sort. It may be
pointed out that it is proposed to increase wages on the basis of data
derived from the whole field of industry. And it may be argued,
therefore, that the increases undertaken by the reason of the showing of
that data may be considerably greater than particular industries could
stand, without an increase in the price of their products. On the other
hand, they may be considerably less than the increase required in other
industries to reduce the profits return to approximately the approved
level.
As to the first possibility, it is entirely conceivable. A wage movement
based upon the profits return from all industries and applied equally to
all groups of wage earners might cause price increases in particular
industries and possibly temporary dislocation and even some
unemployment. Such price changes and dislocations, however, are
constantly occurring in industry in the absence of any policy of wage
settlement, due to the effect of wage increases in one industry on wage
movements in other industries. There is little reason to believe that
the measure advocated will add considerably to the frequency of their
occurrence. It might in one respect serve to lessen the extent of such
disturbances. It might make less frequent the recurrence of wage
demands, originating in particular industries because of high profits in
these industries, and spreading over a large part of the field of
industry. For, as has been emphasized, organized groups of wage earners
will not accept passively a change for the worse in their position in
the economic scale. Finally, there is a safeguard in the fact that no
wage increase need occur in any industry except upon the demand of the
wage earners in that industry. Joint discussion might make it clear that
wage increases could not be well afforded in particular industries, and
joint agreement reached upon that fact. The self-interest of the wage
earners, here as elsewhere, would prove to be some sort of a check upon
unwise wage increases.
As to the second possibility--that wage increases undertaken on the
showing of data derived from all industries may be considerably less
than the increases required in particular industries to bring down the
profits return in those industries to the approved level--that, too, is
entirely conceivable. But against this disadvantage must be weighed
those which would be attendant upon any measure by which wages in
particular industries are adjusted by reference to the profits return in
those industries, which subject has already been considered. The fact
must be accepted. In any plan such as the one proposed, faith would have
to be put in the power of indirect influences to keep the profits return
in particular industries from greatly and consistently exceeding the
approved level.
Public-domain text, read in full here on John Shaqi.
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