What Prevents High Wages?

Stephen Bell

[Reprinted from Land and Freedom, January-February 1931]

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?