Wage incomes may be affected by changes in the volume of the product, no
matter what the cause or nature of the change. If suddenly some new
chemical fuel were discovered in the laboratory, or some business
efficiency expert were to discover some formula which made motors go
round, the labor now spent in coal mining could be turned to other
tasks. The volume of economic goods produced would be increased. The
product to be distributed would be greater, and wage incomes would rise.
A similar result would ensue if the magic formula of the expert endowed
all workingmen with greater skill and energy. Any addition to or
subtraction from the capacity of any agent of production tends to affect
not only its own income, but that of all claimants. The reward of any
one agent of production, for example, labor, depends not only on its own
part in production, but upon the contribution of all other factors. A
craftsman in the United States may be no abler than his fellow workman
in France, but may receive twice his wage.
This line of reasoning must be qualified in one respect. There is some
competition for employment between the several agents of production.
Their relative efficiency will affect the demand for them, and so will
also affect the share of the product each receives most directly. That
is a phase of the subject that will be considered at greater length at
another point.[15]
4.--Given an industrial society at work like the United States,
producing each year a varied flow of commodities and services, the
question arises as to what determines the share of that flow that goes
to the wage earners. We have already seen that the larger the product
is, the higher wages are likely to be. But what determines the sharing
out? That is the next matter to be considered. First, however, let us
examine briefly two theories of wages which are more or less current in
certain quarters, and which are built upon partial or complete
misunderstanding of the connection between wages and the work actually
performed by the wage earners.
Public-domain text, read in full here on John Shaqi.
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