AGRICULTURAL WAGES 799 



In actual life, indeed, the quantities of land and capital are fixed 

 just as little as is the number of laborers. The marginal employment 

 of laborers will therefore depend not alone on the amount of labor, 

 but on the amount of the other productive factors. For these are 

 all competing with each other. At a certain point in the process of 

 increasing the number of workmen on a given plot, of land it will be 

 more profitable to use more land instead of more workmen; and as 

 the better land acquires a value, a part of the product will consist of 

 land rent. In the same way at a certain point it will pay better to 

 use more machinery, so that an increasing part of the product will 

 consist of the rent of the machinery or of the interest on the capital 

 invested in it. And if there are continual temporary changes going 

 on, a part of the product will take the shape of profits to the entre- 

 preneur. All this, however, though it may obscure, cannot prevent, 

 the fact that there is always a point of marginal employment of labor, 

 and that at this margin there is the certain part of the product 

 ascribable to labor. The normal rate of wages, that is, the amount 

 to which wages tend to conform under conditions of free competition 

 and mobility of both capital and labor, is the amount of value which 

 a given increment of labor produces at the margin. 



It may be claimed that the productivity of anything at the margin 

 depends on relative scarcity. Scarcity, however, connotes supply, 

 and the supply of labor, like that of other things, depends on the cost 

 of production. This raises the question of the cost of living, and the 

 cost of living at any time is affected by the standard of life. The 

 standard of the Chinese coolie differs from that of the American 

 workman; the standard of the farm hand from that of the factory 

 operator. When the cost theory of wages is couched in terms of the 

 standard of life theory it loses the pessimistic connotation of the old 

 minimum of subsistence doctrine. For if wages vary with the standard 

 of life, anything which lifts the standard will raise the rate of wages. 



In reality, however, the standard of life cannot accomplish the 

 impossible. The highest standard will not prevent wages from falling 

 in the face of a decrease in the demand for the product and a decline 

 in industrial prosperity. If the employers cannot sell their product 

 at a given price, they must lower the cost or abandon the business. 

 From this point of view the cost of labor is like the cost of anything 

 else; it must adjust itself to the price. I 



The standard of life theory and the productivity theory may thus 

 be declared complementary. They are both true in the sense that 



