I trust that Mr. Bailie will not suspect me of a desire to harass him in his elucidation of economic problems. If my criticisms are frequent, it is because I feel the necessity of maintaining a close scrutiny upon anything offered as a systematic presentation of Anarchism in compensation for the necessarily scrappy character of Liberty’s editorial demonstrations. It is important to be systematic and thorough; it is still more important to be sound.
At the present moment my complaint against Mr. Bailie is that his remarks upon the iron law of wages and the wage-fund theory are too vague to be intelligently weighed. It would have been well if, before attacking these two economic theories, he had accurately formulated them. Then we should have been able to judge of the validity of his objections. As he has failed to do so, I shall attempt to supply the deficiency.
What is the iron law of wages?
I state it thus: Given the causes that operate to keep the supply of labor in excess of the demand,—that is, the causes that sustain interest and rent,—the tendency of wages is toward a level with the cost of bare subsistence. This proposition is truly iron. It cannot be successfully disputed. If Mr. Bailie thinks it can be, I hope to see him try it. It is not possible to deny the iron law of wages except by eliminating the qualifying clause and treating the law as an absolute statement that the tendency of wages is toward a level with the cost of bare subsistence. Now, neither Marx nor any one else ever looked upon this as the law, as becomes obvious, so far as Marx is concerned, when we remember that he expected that under State Socialism the laborer’s wages—or, what is the same thing, the amount which the laborer would receive from the State for his labor—would equal his product. If Mr. Bailie assumes the iron law of wages to be the unqualified proposition above referred to, he is assailing a man of straw.
Again, what is the wage-fund theory?
Simply the iron law of wages stated in another form, which is as follows: Wages, being usually paid out of accumulated capital, are dependent upon the available amount thereof. This is equivalent to the iron law of wages, because the influences which keep the supply of labor in excess of the demand work through a restriction of the amount of available capital. The attempt is made to overthrow the wage-fund theory by assuming it to be a denial of the manifest truth that labor is paid out of the products of labor. Another man of straw. Nobody ever was insane enough to suppose that labor could be paid otherwise. But, true as this is, it is equally true that the laborer is rarely paid out of the products of his own labor. He is generally paid out of the products of the labor of other men who labored before him. In other words, he is generally paid out of accumulated capital. This capital is usually in the shape of monetary titles, owned by the employer, to merchandise and services offered in the market for sale, and the amount paid to employees depends upon the ratio of their own number to the amount of these exchangeable titles in the hands of would-be employers bidding for their services. Francis A. Walker has never shaken this truth a hair. In fact, there is nothing in the literature of political economy that has been more overrated than Walker’s fancied demolition of the wage-fund theory, which was never less demolished than it is today and never will be.