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as well. The price of the whole crop will correspond to the price of the exportable surplus. Wherever an exportable surplus is found in a country, protective duties cannot materially enhance prices.

Commodities which we produce in smaller amounts than we consume may command higher prices through tariff protection. Wool and sugar, for instance, are enhanced in price by import duties. But to secure this gain, agriculture takes heavy losses. The losses arise from the fact that most articles of manufacture are likewise protected. When the farmer buys his articles of consumption, he pays as part of the purchase price the tariff burden on those articles. Although the following estimate of the tariff burden is not vouched for as statistically accurate, it nevertheless is significant as an expression of careful opinion by a leading farm organization. The American Farm Bureau Federation estimated in 1923 that under the then existing tariff, farmers were paying $426,000,000 a year in the form of higher prices on the things they bought, in order to gain $125,000,000 of protection on everything they had to sell.

Realizing that the tariff has not enabled agriculture to raise prices as much as it has enabled other industries to do so, certain authorities have advocated schemes of valorization for farm products. Such schemes differ greatly in detail, but agree upon one basic principle. This principle is that an exportable surplus of any crop should be bought by government authority, so that domestic scarcity of supply will be severe enough to hold prices of farm products at a parity with prices of other products. An artificial and arbitrary control of domestic supply would be the means of guaranteeing that farm prices should not fall sharply below other prices. The exportable surplus would be dumped on the foreign market at whatever prices might be obtainable. The heart of this scheme is deliberate manipulation of the exportable surplus. Instead of leaving the size of this surplus to the whim of laissez faire under unbridled supply and demand, the size would be purposely dictated by the objective of maintaining a price balance for the benefit of agriculture.

From an economic standpoint, we may observe that such a regulated domestic scarcity would doubtless have the power to cause the desired. price maintenance. If the political administration could be successful, an assumption which raises grave doubts, the weapon would be strong enough to hold up farm prices. But while making this concession, we must also observe that much greater and sounder advantage would result from greater moderation in tariff and valorization control all around. Valorization would put teeth into the tariff for the farmer. But still more would perhaps be gained if protection of manufacture were greatly lessened, and the whole scheme of restrictions, discriminations, and artificial manipulations were minimized. If we must have an extreme tariff for manufacture, then perhaps valorization of farm products is the only recourse to enable farm prices to maintain their proper balance.

Farm Management.-Positive advance has been made in all phases of modern management. Science in management has promoted efficient industry in all lines. Farm management has increased in efficiency

materially. Nevertheless, it must be noted that a very large part of agriculture is still grossly inefficient. The inefficiency is closely related with small scale management. There are about 6,500,000 farms in this country, and therefore about that number of separate farm managements. Manufacture has only about 200,000 establishments, and therefore only about that number of separate managements. The vast mass of individual managements in farming means that each manager in the majority of cases is at best a mediocre manager. Where such a multitude of small units is involved, it is tedious and slow in the extreme to inculcate the new and improved methods of farming. Between the average method and the best method there is a gulf of difference. How to educate the mass of small farmers to adopt intelligently the most effective methods is one of the baffling problems of agriculture. The agricultural schools, the experiment stations, and the progressive farmers are developing farm methods in this direction, but their efforts are restricted by the inertia of the 6,500,000 separate units of management which prevail in farming. Whatever hopes one may entertain for the future of agriculture, one must remember this limitation and obstacle.

Conclusion. The problems which dominate modern agriculture are in large part an outgrowth of the tendency of agriculture to come more and more within the scope of the money economy. The canons and dictates of the pecuniary régime have penetrated farming, and color at every turn the progress and possibilities of that industry.

BIBLIOGRAPHY

BOYLE, J. E., Speculation and the Chicago Board of Trade.

CLARK, F. E., Principles of Marketing.

EAST, E. M., Mankind at the Cross Roads.

ELY, R. T., and E. W. MOREHOUSE, Elements of Land Economics.

FRIDAY, DAVID, American Economic Review, Supplement, March, 1923, pp. 151-155.

Economic World, November 3, 1923, pp. 616-618.

GRAY, L. C., American Economic Review, Supplement, March, 1923, pp. 173-6. HARRIS, E. P., Coöperation the Hope of the Consumer.

HIBBARD, B. H., Marketing Agricultural Products.

HUEBNER, G. G., Agricultural Commerce.

JOINT COMMISSION OF AGRICULTURAL INQUIRY, Report of 1921, 4 volumes.
MACKLIN, THEODORE, Efficient Marketing for Agriculture.

NATIONAL BUREAU OF ECONOMIC RESEARCH, Income in the United States, Volumes I-II.

NATIONAL INDUSTRIAL CONFERENCE BOARD, Tax Burdens and Exemptions, Research Report No. 64.

NOURSE, E. G., American Agriculture and the European Market.

UNITED STATES DEPARTMENT OF AGRICULTURE, BUREAU OF AGRICULTURAL ECONOMICS, Taxation of Rented Farms in 1919.

UNITED STATES DEPARTMENT OF AGRICULTURE, Yearbook of Agriculture (annual).

WARREN, G. F., and PEARSONS, F. A., The Agricultural Situation.

WELD, L. D. H., The Marketing of Farm Products.

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CHAPTER XIX

WAGES OF LABOR

The Nature of Wages.-Wages present a problem in value and in distribution. The value problem relates to the value of labor. The distribution problem relates to the share of the product which goes to labor. The analysis of wages is a special application of the general principles of value which have been previously described. Supply and demand of labor are determining factors, and marginal units of utility and of productivity are involved.

Labor value is commonly expressed in the form of a price. Wage rates are prices of a special factor, labor. Hence wage analysis is a special case of the general theory of prices.

The term labor as used in this discussion refers to hired labor, remunerated either by wages or salaries. The remuneration to labor when a man works for himself is not included in the analysis, except where specially noted. Part of gross rent, part of gross interest, part of business profit, is a labor return. But these incidental labor returns are not involved directly in the present wage analysis. We are concerned here with the remuneration going to labor in the employ of some one else.

Labor includes mental as well as manual effort. Socialistic writers have often attempted to narrow the term to effort of hand and brawn, and to exclude the supervisory work of the capitalist from the category of labor. We may take, however, the broader conception which admits the work of management, direction, supervision, and execution to the labor classification. Intellectual labor is just as truly labor as muscular labor. Where the intellectual labor of management is rendered in return for a salary from the employer, the salary is similar to the wage of the manual worker.

The two basic forms of wage payment are time rates and piece rates. Time rates are rates of so much per hour, or per day, or per week. Piece rates are rates of so much per unit of product made by the worker. The more pieces a man makes, the more pay he receives. Numerous variations of these two basic forms of wage payment appear in business practice, but all such variations are fundamentally shaped by the characteristics of either time or piece rates.

Nominal wages are to be distinguished from real wages. The nominal wages are simply the amount of payment expressed in terms of money. Nominal wages are money wages. But real wages involve factors lying back of the money itself. Real wages may be viewed either from the viewpoint of the employer of labor or of the laborer himself as a con

sumer. From the viewpoint of the employer, real wages are the unit labor cost of production. If two men working side by side draw one dollar an hour in wages, but one man produces twice as much as the other, obviously one man's labor is twice as expensive to the employer as the other. Real wages involve a twofold consideration: the nominal rate and the efficiency of the laborer. Both of these considerations are allowed for in the accountant's term, labor cost per unit of product. The accountant estimates the labor cost per pair of shoes, per ton of steel, per barrel of flour. Real wages to the employer are the real expense of production per unit of output. If we take the viewpoint of the laborer himself, in the capacity of consumer, real wages have reference to what the money wage will buy. Changes in the cost of living are constantly occurring. If the cost of living rises while money wages stand still, real wages actually fall. The purchasing power of the laborer's dollar is a basic factor in real wages. Real wages may mean either of two things, therefore, according to our point of view. From the employer's point of view, real wages are labor cost per unit of product. From the employee's point of view, real wages are the amount of goods which the money wages will buy.

As the technology of production has advanced, it has led more and more to specialization and minute division of labor. This specialization has generally involved a separation of the tasks of intellectual labor from the tasks of manual labor. Management takes upon its own shoulders the burdens of direction and supervision. Management assumes the responsibility of telling the laborer what to do. Management receives a salary. The labor which carries out the orders of management receives a wage. For this wage, labor is expected to perform certain services. In the modern factory, which is the dominant type of economic institution today, the distinguishing function of labor is the operation of machinery and the handling of material. This function of labor is performed under the direction and guidance of management. The material and machinery are the capital which is ultimately under the control of the owners. Labor's part in production is distinctly confined to the following out of plans, methods, and specifications under the guidance of powers higher up. It is not labor's function to decide whether new machinery shall be installed, or who shall own the machinery, or where the material shall come from or to whom the finished product shall be sold. Labor feeds raw material into the machine, lifts the levers and fingers the controls, takes the product away from the machine and either by hand or by the manipulation of further machinery transports the machine-made product to places where it can be used.

This restriction of labor's function was carried to an extreme in what has come to be known as Scientific Management. To quote F. W. Taylor, "In almost all the mechanic arts, the science which underlies each act of each workman is so great and amounts to so much that the workman who is best suited to actually doing the work is incapable of fully understanding this science without the guidance and help of those who are

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working with him or over him, either through lack of education or through insufficient mental capacity." In the carrying out of this division of function, the part of management is to plan, to invent, to conceive new ways of doing things, to plot new arrangements of machinery, to devise the science of production from beginning to end. At the same time, the part of labor is unquestioning acceptance of the technology worked out by management. Labor's part is primarily muscular and only secondarily mental. Labor's part is to use the fingers, the hands, the arms, the eyes, the ears, in lifting, watching, pushing, pulling, carrying and handling. In many economic processes, this division of function is carried to such an extreme that the imagination and thought of labor is not only unnecessary but is apt to interfere with the efficient operation of the machine. In other processes, the mental tax upon the laborer is still considerable, but even in these cases, the broader, the more fundamental features of the science of production are designed and laid down for him by engineers and managers.

The mechanical processes which labor carries through involve endless repetition. The operation of the automatic machine requires that the laborer shall touch the same lever in the same way, at the same speed, several thousand times per day. Where the machinery has not become completely automatic, the repetitive motions which the laborer performs are the chief features of his part of the operation. The inevitable consequence of repetition is monotony. The incessant performance of the same motion day in and day out, thousands and tens of thousands of times, leaves scant room for variety, newness, imagination, or originality. The work becomes irksome, fatiguing, uninteresting, monotonous.1

Under these conditions, labor involves a psychological cost to the laborer. The cost is the pain and boredom contained in the experience of the toil. Cost is equivalent to disutility of labor. To overcome this disutility, this pain-cost of labor, it is necessary to hold out to labor the hope of some ulterior reward. The ulterior reward serves as motivation to labor. It is a stimulus and incentive to endure the pains of labor in order that later on, with the wages earned, the joys and pleasures of life may be purchased. The pleasure-gain of consumption is the prize dangling before the eyes of the laborer-the prize which sustains his forbearance and endurance in the workshop, the mill, and the mine. Pleasure-gain is the ulterior reward which induces the laborer to suffer pain-cost.

This statement of the usual theory of cost and gain rests upon a sound core of fact, although it implies in one respect a vicious conclusion. The core of fact is that a great deal of labor is unpleasant under modern working conditions. Probably the majority of labor is disagreeable and irksome. It would not be done for the love of the work. It will be done only if ulterior reward is in prospect. This core of fact is obvious to any one who has worked in a factory or mine, or to any one who has observed such work. But the vicious implication contained in the above 1 See S. H. Slichter, The Turnover of Factory Labor, pp. 188-191.

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