Walker's own showing, rents and profits are not taken
out of the product before wages, but, on the contrary,
they consist of what remains after wages are paid.

Now, what, under these circumstances, becomes of
Mr. Walker's theory that production is the measure
of wages ? Why, it is entirely demolished. So far
as affording any true explanation of the law of tvages,
there is literally nothing left of it. If wages are paid

* " Political Economy,*' p. 254, par. 284.

| In this he is unquestionably correct. Every business failure is a
proof of it. It is because the manufacturer or merchant, after paying
wages (which legally as well as economically has the first claim) has
no profits, or not enough to pay other costs, that he goes into bank-
ruptcy or leaves the business.



PRODUCTION NOT THE MEASURE OF WAGES. 57

before rent and profits, as Mr. Walker shows, then,
manifestly, they can exercise no influence in deter-
mining wages. It would be just as reasonable to say
that a person who will draw water from my well to-
morrow by so doing will limit the quantity I can draw
from it to-day. Under these circumstances to say
" that wages equal the whole product minus rent, in-
terest and profits " is merely to utter a truism, which
conveys no more information than would the announce-
ment of a boy who hooked a single fish, that his catch
equalled all the fish in the sea minus those he didn't get.

In what sense, then, is production the measure of
wages ? The mere fact that wages are drawn from
production does not make production the measure of
wages. True, wages cannot be more, but they can be
and are less than production. The amount produced
may determine the former, but it clearly does not
regulate the latter. The fact that there is but a hun-
dred cannot possibly be the cause of my not having
more or less than fifty. Since wages are the first to
draw upon production, and since they do not take all
the product, the question is, What determines the
amount or the proportion that they do take ? It can-
not be production, because there is already more pro-
duced than they take. It cannot be rent or profits,
because, as Mr. Walker has shown us, they only take
what is left after wages are determined. Then, how
the amount that goes to wages is regulated is still the
question. And it is the question to which Mr. Walk-
er's theory, stripped of the errors he himself explodes,
affords no answer.

Again, in order to sustain his position that wages are
determined by production, he points to the fact that
wages are highest where production is largest. Well,



58 WEALTH AND PROGRESS.

if wages are high because production is large, why is
production large? The answer to this is important,
because if wages depend upon production, in order to
raise wages we must know how to increase production.
Now, suppose a given community produce a million
dollars' worth of commodities a week and pay half a
million dollars in wages, and, after a few years, the
product rises to two millions and wages increase to a
million dollars a week, if we ask Mr. Walker why the
wages increased from half a million to one million a
week, he will reply, " Because the product was doub-
led." But if we follow with the second question, the
answer to which is necessary in order to understand
the answer to the first, and ask " Why the product was
doubled?" his theory has no reply. But if we leave
him a moment and seek the true answer to the second
question, we shall find that it proves his reply to the
first one to be entirely fallacious.

Why was the product doubled ? Why were two
millions produced instead of one ? The answer is very
simple. The second million was produced for the same
reason that the first was, viz., because it was demanded,
the only reason why anything is ever continuously
produced. Then, the product was doubled because
the demand was doubled. Why was the demand
doubled ? Because the normal consumption of the mass-
es (wage-receivers) in the community, which is com-
mensurate with and indicated by wages, was doubled.
Thus we find that instead of the wages or consumption
by the masses being governed by production, as Mr.
Walker's theory affirms, the reverse is everywhere true,
and production is determined by consumption, or
wages.*

* See Chapter II.



LESS CONSISTENT THAN THE ENGLISH THEOR Y. 59

Again, if it were true, as Mr. Walker would have us
believe, that wages rise because production is increased,
such a thing as a business depression would be impos-
sible. For, as soon as the warehouses began to get
overstocked, wages would begin to rise, and the stock
would soon be carried off. But we know from bitter
experience that the reverse of this is the case ; that
when the warehouses begin to fill up factories begin to
stop, wages fall, and " hard times," with all their social
evils, overtake us.

It will thus be seen that whichever way we consider
Mr. Walker's theory of wages, it is wholly inadequate
to explain even the ordinary facts connected with the
subject. He, however, affirms an important truth not
recognized by the old school, viz., that wages are
drawn from the product of present industry instead of
from a wages fund. But, in attempting to prove that
because wages are paid out of present industry, there-
fore " production is the measure of wages," he fell into
one of the cardinal errors of the old doctrine, which,
having assumed that wages are drawn from capital,
affirmed that, therefore, capital is the measure of
wages.*

In order to sustain this assumption Mr. Walker
found it necessary to forget the conclusions he had
elsewhere established, and adopted the most obvious
errors of Henry George by inverting the natural order
of economic distribution. Consequently, so far from
affording any explanation of the true law of wages,
Mr. Walker's theory is really less complete, more in-
consistent, and quite as unsound as the English theory.

* " Wages Question," p. 12S.



6o WEALTH AND PROGRESS.



SECTION III. — Henry George's Theory.

Mr. George's theory of wages, briefly stated in his
own words, is as follows :* "In their degree wages
rise and fall in obedience to a common law. What is
this law ? The fundamental principle of human action
— the law that is to political economy what the law of
gravitation is to physics — is that men seek to gratify
their desires with the least exertion. . . . Now, under
this principle, what, in conditions of freedom, will be
the terms at which one man can hire others to work
for him ? Evidently they will be fixed by what the men
could make if laboring for themselves. . . . Thus the
wages which an employer must pay will be measured
by the lowest point of natural productiveness to which
production extends, and wages will rise or fall as this
point rises or falls. . . . Here, then, we have the law
of wages as a deduction from a principle most obvious
and universal ; that wages depend upon the margin of
cultivation ; that they will be greater or less as the prod-
uce which labor can obtain from the highest natural
opportunities open to it is greater or less, flows from
the principle that men will seek to satisfy their wants
with the least exertion."

After devoting seven pages to emphasizing the above
idea, he restates his whole conclusions thus :f " The
demonstration is complete. The law of wages we have
thus obtained as the corollary of the law of rent, and
it completely harmonizes with the law of interest. It
is that wages depend upon the margin of production, or



* " Progress and Poverty," pp. 150, 151, 152, popular edition,
t Ibid., pp. 156, 157, popular edition.



HIS THEORY STATED IN HIS OWN WORDS. 6t

upon the produce which labor can obtain at the highest
point of natural productiveness open to it without the
payment of rent. ' '*

To still further emphasize and enforce this theory,
he resolves it into three formal propositions as fol-
lows :f

" Where land is free and labor is unassisted by capi-
tal the whole produce will go to labor as wages.

" Where land is free and labor is assisted by capital,
wages will consist of the whole produce, less that part
necessary to induce the storing up of labor as capital.

"Where land is subject to ownership and rent arises,
wages will be fixed by what labor could secure from
the highest natural opportunities open to it without
the payment of rent."

Now, it will be seen from the above, all of which is
in Mr. George's own words, that his doctrine of wages
affirms three propositions :

First. That wages — the laborer's income, when work-
ing for an employer — where land is free, is determined
by what he could obtain by working for himself on
the best land obtainable.

Second. That wages, where land is subject to private
ownership and rent is paid, are determined by what
the laborer could procure from the best land obtainable
without paying rent.

Third. That as private ownership in land extends
and rent rises, the margin of cultivation is lowered ;
hence, the amount obtainable from free or " no-rent"
land diminishes and wages fall.

From these propositions it follows, as a logical ne-
cessity :

* The italics are his own.

\ " Progress and Poverty," pp. 156. 157, popular edition.



62 WEALTH AND PROGRESS.

(i) That wages will always be the highest where land
is not subject to private ownership, or where the best
land can be had free of rent.

(2) That where private ownership of land obtains,
and rent is paid, wages will diminish, or at least be ar-
rested as rent increases ; consequently, where rent is
the highest wages will be the lowest ; or

(3) That where all land is subject to ownership and
pays rent, wages will be equal to what the laborer
could obtain from the poorest land, minus the rent.
Consequently, the difference in wages in different com-
munities depends entirely upon the difference in the
productivity of the " no-rent" land.

(4) Therefore, the only way real wages can be in-
creased is by reducing or abolishing rent, or, as Mr.
George puts it, abolishing " the private ownership in
land."

This doctrine, whatever else may be said of it, has
the merit of novelty, and, unlike Mr. Walker's, is at
least consistent with the general teachings of its author.
Indeed, it is a necessary part of Mr. George's scheme
to make all economic movement and social progress
depend upon rent or the private ownership of land.

But the question that is more important than its
consistency with itself or with the general economic
doctrines of its author (which we have elsewhere
shown* to be mainly fallacious) is its consistency with
ascertained facts and well-established principles.

Is the doctrine true, and does it afford an ex-
planation of industrial phenomena ? is the question.
Does it, for instance, explain why wages have risen



* See article in the Eonim (N. Y.)< for March, 1887, entitled
" Henry George's Economic Heresies."



WILL TILL THEORY EXPLAIN THE FACTS? 63

in some countries and not in others during the last two
hundred years ; why wages are higher in some indus-
tries than in others in the same localities, and differ-
ent in the same industries in different localities ; why
they are higher in large than in small cities ; and
higher in manufacturing than in agricultural countries
and districts ; and why men's wages in the same in-
dustries and under the same conditions are uniformly
higher than those of women ? No doctrine which
cannot answer these questions can furnish a scientific
or philosophic explanation of the economic law of
wages. Can Mr. George's theory stand this test ?
Let us see. We will take the propositions in the order
named above.

(1) Is it true, then, that wages {i.e. , the income of
the laboring classes) are the highest where land is not
subject to private ownership and where no rent is paid
for its use ?

The most elementary acquaintance with industrial
history is sufficient to prove that the very opposite is
everywhere the case.

There never was a time nor place in the world when
land was not subject to private ownership, and hence
no rent paid for its use, that the laborer's wages were
half or even one tenth as much as they are to-day in
England and the United States, where rents are the
highest of anywhere in the world. :< Where land is
free and labor is unassisted by capital," says Mr.
George, " the whole produce will go to labor as wages."
This is true ; and whenever or wherever those condi-
tions do or did exist the laborer received the least he
ever got in the world. Witness the tribal communi-
ties of Australia, India, and Africa, the Esquimaux,
the Patagonians, and our American Indians. The



64 WEALTH AND PROGRESS.

facts on this point are too obvious to need re-
counting, even to the most uninitiated observer. It Is
a notorious fact in universal history that the nearer
we find man to communal ownership of property, the
nearer is he to savagery and starvation. I do not say
that communal ownership of property is the cause of
his barbarism, but manifestly it does not save him
from it, as Mr. George would have us suppose. On
this point Mr. George, like many others in whom
sentiment dominates over reason, and feeling over facts,
appears to assume that if the laborer receives all he
produces he necessarily has one third more than when
he only obtains two thirds of it.* Nothing could be
farther from the facts in the case. In any state of so-
ciety where the laborer receives all the product it is
where he produces it all. And wherever all the wealth
is produced by human labor and none of it by capital,
i.e., by machinery, the whole product per capita is sure
to be very small, as in India, China, Africa, Patagonia,
Fiji Islands, etc. And wherever a large proportion of
the wealth is produced by machinery or capital, the
product per capita is sure to be very large, as in Amer-
ica, England, and other machine-using countries. f

If the laborer in the former countries got the whole
product he would receive less than one tenth as much
as the laborer in the latter countries would get if he
only obtained half the product.

As a matter of fact, it is universally true in all in-
dustrial communities that where the laborer obtains
the whole product he gets far less — often seven tenths
less — than where he only obtains one half of it. It
should always be remembered that wages are high

* See Chapter I., Part I. f See Chapter II., Part I.



THE FACTS ARE AGAINST THE THEORY. 65

or low, the laborer is rich or poor, not according as he
receives a large or small proportion of the total prod-
uct, but according as the amount he actually receives
is great or small. The wages of the laborer who,
with the aid of machinery, produces four dollars'
worth of wealth a day and receives two dollars, are
twenty times (two thousand per cent) higher than those
of the laborer who by hand labor produces ten cents'
worth of wealth a day and gets it all. Therefore,
while it is true that before land was " subject to pri-
vate ownership" and rent began to be paid or capital
was employed in production, " the whole product went
to the laborer as wages," it is not true that wages were
higher, but, on the contrary, that they were very much
lower then than they ever have been since rent began
to be paid.

(2) Is it true that where private ownership of land
obtains and rent is paid, that wages diminish or even
stop rising as rent increases ?

Not at all, but industrial data show it to be just the
reverse. Rents are everywhere the highest in large
cities, and it is precisely there where wages reach their
maximum the world over without a solitary recorded
exception. The same is true of agricultural rents.
They are the highest in the vicinity of cities and man-
ufacturing centres, and it is precisely there where the
wages of agricultural laborers, as all industrial statistics
show, are the highest in every country, even in India.*
In fact, on this point Mr. George's theory is directly

* See Buchanan's " Travels Through the Countries of Mysore, Ca-
nara and Malabar," Vol. I., pp. 124, 125 ; Leone Levi's " Earnings
and Wages," and Rogers's " Six Centuries of Work and Wages,"
p. 172, show the same to be true in England, and it is proverbially
true in this country.



66 WEALTH AND PROGRESS.

opposed to all the known facts in the case in all coun-
tries under normal economic conditions.

(3) Is it true that wages " are fixed," as Mr. George
avers, " by what the men could make if laboring for
themselves" ?

The answer to this question seems too obvious to
need stating, and yet there is a large number of
workingmen who have not the time or opportunity
for study, or mental training necessary to enable them
to master the subtleties of economics, who have been
misled by the ingenuity with which it has been pre-
sented, into accepting this statement, and to a consid-
erable extent are regarding with favor the propositions
for reform based upon in. Indeed, it would almost
seem as if Mr. George himself believed the statement.
After declaring that " this law of wages carries with it
its own proof and becomes self-evident by mere state-
ment," he says :* " The average man will not work for
an employer for less, all things considered, than he can
earn by working for himself ; nor yet will he work for
himself for less than he can earn by working for an
employer." With the obvious feeling that this logi-
cally seals the case, he adds : " And hence the return
which labor can secure from such natural opportunities
as are free to it must fix the wages which labor every-
where gets.

Clearly Mr. George labors under the belief that he
has here stated the proposition from the two opposite
points of view, viz., that of both the laborer and the
employer. But he has done nothing of the kind. In-
stead of statins: the case for both the laborer and



* " Progress and Poverty," p. 157, popular edition. The italics
are ours.



A DELUSIVE PRESENTATION. 67

employer, as he thinks to do, he has in different
phraseology merely stated the same thing twice for the
laborer.

True, " the average laborer will not work for an em-
ployer for less, all things considered, than he can earn
by working for himself. Nor yet will he work for him-
self for less than he can earn by working for an em-
ployer." But these statements only affirm what the
laborer will or will not do. How about the employer?
Will he give the laborer more than he can earn work-
ing for himself? That is the question Mr. George did
not ask — the true answer to which changes the whole
face of the subject. If Mr. George could have shown
that, as the laborer will not work for an employer for
less, so the employer will not give him more than he
can earn working for himself, the case would have
been logically closed, and what the laborer could make
working for himself would everywhere fix what he
could get working for an employer.

But this is exactly what he does not do, and for the
best of all reasons, viz., that it is impossible to do it.
Now, if it is true that the employer can and will pay
the laborer more than he can get working for himself,
then Mr. George's whole structure vanishes ; because
in that case what the laborer could earn working for
himself would have nothing whatever to do with decid-
ing what his wages would be when working for another.

Now, then, what are the facts ? Is it true, as Mr.
George assumes, that the employer does not pay the
laborer more than he could make by working for him-
self ? Most certainly it is not true.

Other things being the same, the average laborer
will work for himself in preference to being employed
by a boss. It is only because he can obtain more by



68 WEALTH AND PROGRESS.

working for another than by employing himself that
he will consent to do so. Did the hand-loom weavers
abandon their looms, and their wives and daughters the
spinning-wheels, and go to work in the factory because
they preferred to work for an employer ? Not at all !
On the contrary, they did everything in their power
to avoid it. Indeed, it was to prevent this that the
hand-loom weavers went from town to town in Eng-
land in mobs breaking " steam -looms." They only
consented to go into the factory when they were
starved out by their productions being undersold by
those of the factory. In other words, because the em-
ployers would pay them more than they could earn
working for themselves.

If the wages of the spinners and weavers to-day were
governed by what they could get by working for them-
selves they would not receive one fourth of their pres-
ent wages. The same is true of the wages in every
other industry in which large capitals and machinery are
employed.

Is it true that the average workman, employed in the
manufacture of hardware, pottery, furniture, glass,
paper, carpets, silks, and broadcloths, the workers in
gold and silverware, jewelry, brass, iron, tin, etc., the
carpenters, masons, bricklayers, machinists, engineers,
and the thousand-and-one other mechanics who work
for employers, only obtain as much in wages as they
could get by working for themselves, either in the same
or any other occupations open to them ? The idea is
so obviously opposed to the commonest facts of every-
day experience, that to seriously mention it is to at
once appear absurdly ridiculous.

Is there any truth in Mr. George's last proposition,
which he so confidently affirms, and upon the truth of



THE THEORY HISTORICALLY BASELESS. 69

which his whole theory depends, viz., that " where
land is subject to ownership and rent arises, wages will
be fixed by what labor could secure from the highest
natural opportunities open to it without the payment
of rent" ? Now, if there is any truth in this proposi-
tion, the wages in all industries will be identical with,
or, at least, very similar to, what the average laborer
can obtain from the land which can be had for nothing.
Clearly, if this were true, the wages of agricultural la-
borers would at least be as high as those in any other
industry, especially as they are the standard by which
all others are " fixed." The notorious fact, however,
is that they are everywhere the lowest. There is not
a country in the world in which the wages of artisans
are not higher than those of the laborers employed in
agriculture. It is true in every country in continental
Europe. In England the fact is simply notorious that
the wages of the agricultural laborers there are little
over one half those of mechanics and artisans. In this
country the wages or incomes of the farm laborers and
small farmers who work for themselves, as a class, are
not only lower than in any other occupation, but in
many cases they are nearly one half less.

Again, if " the wages which labor everywhere gets"
are fixed by what the laborer can secure from no-rent
land, why are the wages of carpenters, painters,
masons, bricklayers, tailors, printers, etc., higher in
this country than they are in Europe, higher in New
York than in smaller cities, and higher in large towns
than in the rural districts, and everywhere higher than
those of the farm laborer ? If the wages of the factory
operative and those of the carpenter, painter, mason,
and plumber are all " fixed" by what the average labor-
er can secure from the best no-rent land, why are those



70 WEALTH AND PROGRESS.

of the former from seventy-five cents to one dollar a
day less than those of the latter, or the wages of
women everywhere so much lower than those of men ?
Indeed, if wages were so determined these striking
differences would be impossible. The facts nowhere
sustain this absurd theory. Industrial data everywhere
show that instead of wages being governed by or
equal to what the laborer could get from land obtain-
able rent free, they nowhere sustain any recognizable
relation to it, and are everywhere much higher and
frequently double that amount.

It will thus be seen that in whatever way we con-
sider Mr. George's theory of wages, we find it to be
not merely inadequate to explain the facts, but every-
where directly controverted by them.



CHAPTER II.

WAGES AND THE LAW OF WAGES.
SECTION I. — Wages Defined.

In any scientific or philosophic view of the subject,
the true theory of wages must, as already observed,
not only explain how the aggregate amount of wealth
that goes to labor is determined, but it must also ac-
count for the variations in the general rate of wages in
different countries, industries, localities, etc., which,
as we have seen in the last chapter, the popular theories