If we choose to call the whole of what he possesses applicable to the payment of wages, the wages-fund, that fund is co-extensive with the whole proceeds of his business, after keeping up his machinery, buildings and materials, and feeding his family; and it is expended jointly upon himself and his labourers. The less he expends on the one, the more may be expended on the other, and vice versa . The price of labour, instead of being determined by the division of the proceeds between the employer and the labourers, determines it. If he gets his labour cheaper, he can afford to spend, more upon himself. If he has to pay more for labour, the additional payment comes out of his own income; perhaps from the part which he would have saved and added to capital, thus anticipating his voluntary economy by a compulsory one; perhaps from what he would have expended on his private wants or pleasures. There is no law of nature ****** it inherently impossible for wages to rise to the point of absorbing not only the funds which he had intended to devote to carrying on his business, but the whole of what he allows for his private expenses, beyond the necessaries of life. The real limit to the rise is the practical consideration, how much would ruin him, or drive him to abandon the business: not the inexorable limits of the wages-fund.
In short, there is abstractedly available for the payment of wages, before an absolute limit is reached, not only the employer's capital, but the whole of what can possibly be retrenched from his personal expenditure; and the law of wages, on the side of demand, amounts only to the obvious proposition, that the employers cannot pay away in wages what they have not got. On the side of supply, the law as laid down by economists remains intact. The more numerous the competitors for employment, the lower, caeteris paribus, will wages be. It would be a complete misunderstanding of Mr. Thornton to suppose that he raises any question about this, or that he has receded from the opinions enforced in his former writings respecting the inseparable connection of the remuneration of labour with the proportion between population and the means of subsistence.
But though the population principle and its consequences are in no way touched by anything that Mr. Thornton has advanced, in another of its beatings the labour question, considered as one of mere economics, assumes a materially changed aspect. The doctrine hitherto taught by all or most economists (including myself), which denied it to be possible that trade combinations can raise wages, or which limited their operation in that respect to the somewhat earlier attainment of a rise which the competition of the market would have produced without them,--this doctrine is deprived of its scientific foundation, and must be thrown aside. The right and wrong of the proceedings of Trades' Unions becomes a common question of prudence and social duty, not one which is peremptorily decided by unbending necessities of political economy.
I have stated this argument in my own way, which is not exactly Mr. Thornton's; but the reasoning is essentially his, though, in a part of it, I have only been anticipated by him. I have already shown in what I consider his exposition of the abstract question to be faulty. I think that the improvement he has made in the theory of price is a case of growth, not of revolution. But in its application to labour, it does not merely add to our speculative knowledge; it destroys a prevailing and somewhat mischievous error. It has made it necessary for us to contemplate, not as an impossibility but as a possibility, that employers, by taking advantage of the inability of labourers to hold out, may keep wages lower than there is any natural necessity for; and è converso, that if work-people can by combination be enabled to hold out so long as to cause an inconvenience to the employers greater than that of a rise of wages, a rise may be obtained which, but for the combination, not only would not have happened so soon, but possibly might not have happened at all. The power of Trades'. Unions may therefore be so exercised as to obtain for the labouring classes collectively, both a larger share and a larger positive amount of the produce of labour; increasing, therefore, one of the two factors on which the remuneration of the individual labourer depends. The other and still more important factor, the number of sharers, remains unaffected by any of the considerations now adduced.
The most serious obstacle to a right judgment concerning the efficacy and tendencies of Trades' Unions, and the prospects of labour as affected by them, having thus been removed, the author has a free field for the untrammelled discussion of those topics. But the due consideration of them as presented in his work, requires an article to itself.
