798 AGRICULTURAL ECONOMICS 



continues to give its services unbidden; a laborer may work or not 

 as he lists. Commodity takes no holiday and does not strike. The 

 mule and the slave respond to the lash; harsh treatment of the work- 

 man may diminish rather than augment output. (3) Labor is perish- 

 able while many commodities are durable. After the lapse of a certain 

 time a laborer must sell his labor or starve. Laborers and capitalists 

 need each other, but under normal conditions the need of the laborer 

 is more urgent. (4) Finally, labor is inseparable from the laborer, 

 while the commodity may be separated from its owner. Commodities 

 are sold wherever the owner desires; labor can be sold only where 

 the laborer is. 



In order to reach a consistent theory of wages we must revert to 

 fundamental principles. All things possess value because of the 

 services which they render. The value of all production goods depends 

 on the value of the consumption goods. Production goods, however, 

 are composed not only of concrete objects, but of labor. Labor, there- 

 fore, has a value because its services or products have a value; it secures 

 a remuneration because it produces something for which people are 

 willing to pay. In other words, wages depend on productivity. 



The value of labor, however, like the value of all things, is affected 

 by marginal increments. If a man applies his labor to land which is 

 so abundant that it can be had for the asking, there will be no rent of 

 the land, and the value of the entire product will consist of wages. 

 By increasing the number of workmen, the product may be more 

 than proportionately increased, because the plot may be large and 

 several laborers in co-operation may establish so much better results 

 that the share of each will be greater. After the point of maximum 

 utilization has been reached, however, the law of diminishing returns 

 will assert itself, and each additional laborer will add relatively less 

 to the product, until if the product were continued long enough a 

 new laborer would make no new addition at all. The process will 

 never actually be carried to this point. At any given time, however, 

 there is always a final or marginal workman who is making some con- 

 tribution to the product. If there is free competition and if all the 

 laborers do their allotted task equally well, so that there is no choice 

 between them, the share of the product ascribable to any of the work- 

 men must be equal to the additions made by the last or marginal 

 laborer actually at work. Since the value of the entire product is 

 here due to labor, the rate of wages is equal to the product of the 

 marginal laborer. Wages depend on marginal productivity. 



