Natural Value (1889)

by Friedrich von Wieser (1851-1926)

Book V: The Natural Cost Value of Products

Chapter VII
The So-Called Costs of Production of Labour

NV-V-7.1 Through a very strange error in judgment the classical school of political economy has put forward the proposition that the exchange value of human labour also is determined by costs of production.
NV-V-7.2 The costs of production of human labour – if we substitute the prosaic personal meaning of this expression for the impersonal and figurative one – would be the costs of producing the labourer. What a monstrous idea! Can it be that there is a “production” of labourers in the same sense as there is a production of material things? Has such a thing ever been said even in the darkest ages of barbarism? Surely another name at least might have been chosen. But leaving the name, let us get to the substance.
NV-V-7.3 The substance is, that, by the cost of production of labour is meant the necessary cost of maintaining the labourer and his family; the means of subsistence which the labourers themselves regard as the minimum necessary to keep themselves in life, in strength, and in ability to work, to bring children into the world, and to bring them up to labour. And as the price of goods can never stand permanently either above or below the costs of production, so it is asserted that the wages of labour can never stand permanently either above or below the existence-minimum. Of course, this proposition can never be understood to apply to any but the commonest and worst paid form of labour, seeing that the better paid labour does raise itself above the lowest wage level that can be considered permissible.
NV-V-7.4 On the one side, so far as regards the impossibility of sinking below the minimum, there is, as a fact, a close, indeed a frightful analogy between the law of wage and the law of costs. Where the labourer has no other income to spend than his wage, wages cannot indeed fall permanently below the amount marked by the prices of the necessary means of subsistence. If the means of subsistence are scarce and dear, a higher wage must ultimately be conceded. Misery and death are the imperious forces which bring about this result, inasmuch as they reduce the number of labourers until the reduced supply has raised wages sufficiently to cover the necessaries of life.
NV-V-7.5 But how is it as regards the other side? Is it true that wages can never rise permanently above the costs of subsistence? Is there the smallest analogy, or even an apparent analogy, between the pressure exercised by the cognisance of cheaper conditions of production upon the valuation of products, and the pressure which might be exercised upon the valuation of labour by cognisance of cheaper conditions of life? Economists of the classical school assert that there is, and thereby they bring again into the question motives which have as little in common with the considerations that govern the production of goods, as the law of nature, which says that he who can find no means of sustenance must die, has with the considerations that govern the manufacturer who discontinues a business when it fails to return him its costs. The motive which is called upon to prove that wage cannot maintain itself above the minimum of subsistence is the power of the sexual instinct. If means of subsistence become cheaper and more abundant, there is the more room for increase of population, for marrying, producing children, and supporting them. The supply of labourers can go on increasing, and wages go on diminishing, until the maximum of population possible to maintain, and the existence minimum of wage, are again reached. This result is possible. But must it ever happen? Does it always happen? What has experience to say? It speaks plainly enough – so plainly that even those who assert that the law of costs obtains for labour find themselves forced to add to that law certain clauses which amount to nullifying it. Thus a clause is added which says that what determines wage is that amount of subsistence which the labourers themselves regard as the permissible minimum, since experience shows that the minimum wage differs from time to time, from place to place, and from nation to nation. But this clause cancels the law. If the opinion of the labourer is to be decisive, there can be no more talk of a compulsory, objective, fixed standard of wage. In yet another direction experience speaks still more conclusively. We notice everywhere that the wage for different kinds of labour is of varying amount. Only some of the labourers, and that not by any means the majority, are always held down to the lowest possible wage. But how could this be the case if the whole position of labour were entirely governed by the power of sexual impulse as is asserted? Would not the supply of labour under such a supposition be overwhelmingly large, – as a rule, and in the long run at all events, – and wages be reduced to the minimum in all branches of production? Would not all wages be equally low? The fact that higher wages are continuously maintained in the higher branches of labour, is a clear proof that the height of wage continues to be determined by considerations which are too powerful to admit of their favourable results being suspended by the sexual instinct; or – what amounts to the same thing – that the sexual impulse does not possess that destructive power which is ascribed to it. And if it does not possess this as regards one class of labour, it is impossible to see why it should be held necessary as regards the other class.
NV-V-7.6 If the law of costs were true as regards wages of labour, it would also be true as regards the natural value of labour. The forces which are relied on to prove the law of costs in regard to labour, would, of necessity – if they do act as is asserted of them – have an equal effect under any social organisation. If the sexual impulse were possessed of such surpassing strength, it would, even in a communistic state, increase the number of labourers to the highest point which could be maintained at the existence minimum; only that here, where the labouring class would include the whole nation, the consequences would be so much the more comprehensive and destructive. To-day’s “iron law of wage” would be extended in the future to an iron law of universal misery.
NV-V-7.7 Modern economists are almost unanimous in repudiating the application of the law of costs to labour in its older and cruder form, but, on the other hand, they concede to the consideration of the costs of maintaining the labourer another effect. It is the effort of every class of labourers, they say, to retain the level of life to which they have once attained, making their claim of wages in correspondence therewith and striving to realise their claim, besides regulating their marriages and the size of their families in conformity. The wage, once become customary, is said to have a tendency to maintain itself as a permanency, and to resist the tendencies which would press it down. This law also, if it were a true law of wage, would have to be recognised as a natural economic law, as it also is founded upon a universal force. Experience, however, does not seem to justify it. Do not wages continually rise and fall? It is to be feared that the quite intelligible wish of the worker to retain a standard of income once reached has not the efficacy ascribed to it, of resisting the chances of an unfavourable issue to labour. If the return to labour falls, the natural value of labour falls, without being in the least prevented by the previous customary level of comfort, and it is in the highest degree likely that its exchange value will fall along with it. For although these do not by any means invariably coincide, – do we not often see wages falling short of natural value? – as things are, it may be considered an exceedingly rare occurrence that wages are in excess of natural value. The result which might be expected from the postponing of marriage and production of children would, in any case, come much too late; it could only be felt after years, in a succeeding generation, when circumstances would probably have been long before completely changed. Of course, the desire to obtain the highest possible income is a motive which cannot be considered as quite insignificant among the many motives determining the return from production. It is as fraught with consequences as are intelligence, skill, favourable natural circumstances. But why should this motive be brought prominently forward only as regards the return to labour? Is it not equally powerful as regards the products obtained from land and capital? And why should its influence be limited to the amount of income once obtained? Does it not go beyond this to the procuring of fresh income? The truth is that men endeavour to make all productive returns as large as ever their personal capacities will allow, and that the returns so obtained determine the value of the productive factors, – of labour, as of all the others. It is impossible to consider it even plausible, that a cause shall be effective as regards labour alone, by which the level of wage once reached obtains a peculiar power to maintain itself permanently unimpaired.
NV-V-7.8 Here too the modern economists, who advance such theories, probably do so merely in order to bring the law of wage into correspondence with the general law of the price of commodities. In one as in the other, they start with the false assumption of a fundamental opposition between costs and utility, and wish to find value between the “upper margin of utility” and the “under margin of costs.” But even supposing such an opposition did exist, it would not at all events be in the least applicable to labour. It is not possible to force labour into all the economic categories in which material goods by their nature are placed. A producible article is a good, that is, a useful thing – in two respects; firstly, in virtue of its effects – the effects in which it is “of use”; and, secondly, in virtue of its origin and upkeep, in which respects it is materially a matter of property. Labour can only be regarded as a thing in the former respect: in respect of its useful effects the economic use of labour may and ought to be considered. In the latter respect, labour is an affair of persons, and its origin and upkeep cannot be decided by purely economic considerations. It is overstepping the permissible sphere of economic control when the attempt is made to interfere with the personality of the labourer without regard to other considerations; and economic theory goes beyond its sphere when it claims to explain the facts of personal life exclusively by economic considerations.1

NV-V-7.n1.1 1 As labour is not the product of the labourer’s means of subsistence, so, conversely, the means of subsistence cannot be regarded as the productive factors of labour. In other words, the labourer’s means of subsistence are not capital. If labour be a good of the second rank, producing any kind of good of the first rank – a consumption good – the labourer’s fund of subsistence is in no way a good of the third rank, producing the labourer; it is again merely a good of the first rank, a consumption good for the labourer. This has a result of great importance as regards value. Value is communicated, as we have seen, first from the want for goods of the first rank, and then from these to the goods of second rank, and so on through all the ranks. If means of subsistence were capital, they would receive their value from the value of the service rendered by the labourer. But as they are simply means of subsistence, they receive their value from the wants which they provide for.

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