22 POLITICAL ECONOMY 



reluctance on the part of the labourers to sel 1 , leading the pur- 

 chasers of labour and produce, one or both, to pay more, lest 

 they should lose wholly, or in part, their profits, or the enjoy- 

 ment of the produce. Competition is the process by which the 

 price is ascertained at which the desire for the commodity and 

 the reluctance to sell it are equal, but in no way can be said to 

 determine the price. 



We have come to a point where the identity of the wages 

 fund argument with the demand and supply argument is 

 obvious. The wages fund is the desire for labour, as measured 

 by the total sum paid for it. That desire may increase or 

 decrease in consequence of the increased reluctance of men to 

 sell their labour. The increase of the fund invested by the 

 capitalist may be due to increased payments he receives or 

 expects to receive from his customers, or it may be directly due 

 to a relinquishment of profits. It is wholly impossible to say 

 when this will or will not be the case ; it is impossible to fix 

 any one given rate of average return on capital which may be 

 taken as a kind of standard towards which, in all times and 

 places, the profits tend. By the joint action of capital and 

 labour, profits are made ; that is to say, produce results from 

 their action which exceeds the value of produce consumed by 

 them in the process. Each claims a share in the profits ; each 

 must have some share, or each will refuse his aid. How much 

 must each have ? in what proportion shall the profits be divided ? 

 We apprehend that this is purely a question of bargain, and 

 that the share each receives will vary, and may legitimately 

 vary, within very wide limits. The capitalist may not force 

 the labourer to work ; the labourer may not force the capitalist 

 to invest savings productively ; each must tempt the other, and 

 it is entirely a question of experiment how much temptation 

 will in each case be required. It is quite possible that the 

 temptation which was sufficient yesterday will not be sufficient 

 to-day. Those who misapply the doctrine of demand and 

 supply, or the wages fund argument, assume that the sum avail- 

 able to pay the workmen is fixed beforehand, or, if not fixed, 

 must be diminished by any increase of wages. To assume this 

 is to beg the question. Every effect which is distinctly seen to 

 follow on changes in demand and supply, as popularly under- 



