What Prevents High Wages?
[Reprinted from Land and Freedom,
IT is impossible to write on existing industrial conditions and
ignore the nonsense being uttered on every hand. No one can circulate
among men at the present time without hearing bitter complaints that "Capital"
has not kept the promise made a year ago to keep up wages and maintain
working forces. The complaint is for the most part unjustified. No one
a year ago realized the gravity of the situation and the impossibility
of the general run of employers maintaining full forces at full wages
throughout the depression then beginning. The complaint, however, is
unjustified on quite other grounds as well.
The old theory that wages were derived from capital was long since
exploded. Wages are derived from production. But when production does
not sell, what is to become of wages?
Both capital arid labor, however, are culpable in that they did not
long since investigate this branch of economics and discover what it
is that several times in each generation dissolves markets by
undermining the public buying power.
High wages have been relied on to maintain this buying power. It is
obvious that if wages (using the term to describe the reward of all
productive effort, whether of hand or brain) be high enough, they
could absorb all production. It is obvious that as the world is
economically organized today it is not possible to raise and maintain
wages at any such figure. That being the case it is in order to find
out what there is in our economic system that prevents it. Is it not
possible to find out what it is that in some obscure way absorbs so
large a portion of the nation's legitimate earnings that neither
capital nor labor can prosper?