The idea that an increase of wages involves a diminution of profits is a part of the same heresy which teaches that a fall of wages produces a rise of prices. To begin with, the capitalist is not concerned so much about the rate as he is the aggregate amount of profits he will receive. What he really wants is not so much a large proportion as a large actual amount of wealth; nor has the laborer, or the community so much interest in reducing the actual income of the manufacturer as they have in increasing their own. This can only be economically accomplished by increasing the aggregate consumption. Low wages make small consumption and a limited use of capital with slow methods of production inevitable, which, even at a high rate of profits, makes a large aggregate income impossible. For example: Suppose a manufacturer of shoes in order to live according to the accepted standard of his class was forced to charge a profit of ten cents a pair; and if by investing a large amount of capital and using improved machinery he could make the same shoes for one-third less, and be able to sell twice as many, he could reduce the price of the shoes to the consumer, and increase the wages of the laborer, and actually obtain more wealth per day for himself at five cents a pair than he has previously done With his small production at a profit of ten cents a pair. This, however, can only be possible when the aggregate demand for the shoes is increased. That is why the cotton manufacturer of today is actually richer with a profit of two cents a pound on cotton cloth than he was fifty years ago with a profit of more Than double that amount. Thus it is that the large production consequent upon the increased consumption of wealth by the masses makes all classes actually richer. By the increased aggregate production, the laborer can get more wealth through his higher wages, the general consumer can obtain more through lower prices, and the manufacturer while receiving a smaller per cent. of the total products actually obtains a greater quantity of wealth through the larger productions and extended business. This is exactly what has taken place throughout all the stages of industrial progress. It is a natural result of all the influences which tend to increase the market for products and make the concentration of capital in production possible.
We are therefore warranted in saying that the economic effects of a general reduction of the hours of labor would be to raise the standard of living and increase real wages; promote the concentration of capital; and the use of improved machinery; will cheapen production, lower prices, and while diminishing the rate, will increase the aggregate amounts of profits. Obviously, therefore, it would tend to improve the economic and social condition of the laborer and the consumer without injuring that of any other class.
Wednesday, October 29, 2008
Economic and Social Importance of the Eight-Hour Movement
"By the increased aggregate production, the laborer can get more wealth through his higher wages, the general consumer can obtain more through lower prices, and the manufacturer while receiving a smaller per cent. of the total products actually obtains a greater quantity of wealth through the larger productions and extended business."