TRANSACTIONS OF SECTION F. 675 



3. On some Economic Fallacies of Trades Unionists. 

 By Professor J. J. Shaw. 



The theory of the Unions on the subject of wages was that they might be 

 raised without either increasing capital or diminishing the supply of labour by 

 lowering the rate of profits, and, on the other hand, they might be lowered 

 without either diminishing capital or increasing the supply of labour by raising 

 the rate of profits ; that the most obvious way to increase the reward of the 

 labourer was to diminish that of the capitalist, and the direct way to diminish 

 the labourer's reward was to increase the share that fell to the capitalist. This 

 reasoning overlooked the fact that there was in every community a certain rate of 

 profit which was the minimum that any capitalist would be content to accept ; 

 that if his profits were permanently forced below that minimum he would with- 

 draw his capital, and in the end there would result a fall of wages even below the 

 point at which they stood when the artificial rise commenced. The idea enter- 

 tained by the organisers of trades unions of effecting by their action a permanent 

 rise in the average rate of wages, independently of any change in the general pro- 

 ductiveness of industry, was one that could never be realised. This could be done 

 only by lowering the rate of profit, and in these countries the rate of profit was 

 always on the verge of the minimum. To lower the rate of profit, therefore, was 

 to check accumulation, and thereby to diminish the fund out of which labour was 

 paid. Labourers, by combination, could do much to alter the rate of wao-es tem- 

 porarily, and in particular trades. But it was evident that the high wages were 

 obtained at the expense of the consumers, and if the commodities they produced 

 was one consumed by their own class they reduced the wages of their fellow- 

 workmen as much as they raised their own. To the important economic question 

 whether the wage-earning classes could by combination permanently raise the 

 average rate of wages, he was obliged to answer " No." What the working classes 

 most of all needed to be taught was that their destiny was in their own hands, 

 that their happiness was not made or marred by the by-laws of their unions or the 

 tyranny of their masters, but depended wholly and solely on their own prudence 

 foresight, and self-control. ' 



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