48 



SCIENCE. 



[N. S. Vol. XIX. No. 471. 



3nterest, including in that term compensa- 

 tion for the risk assumed, is all that cap- 

 ital, as such, ever obtains from produc- 

 tion ; it is the least which it will accept. It 

 is high when tlie supply of capital is small 

 in proportion to the demand for it, and 

 low when the condition is reversed. Protit 

 is not for capital; it is the wages of the 

 usually arduous labor of determining the 

 direction of industrial investments or the 

 differential reward of exceptional eco- 

 nomic foresight or technical skill. Those 

 who reap profits are diiferentiated from 

 those who receive wages by the fact that 

 profits are dependent upon success (pos- 

 sibly it is better to. consider that in the 

 case of failure there are really negative 

 profits), while wages constitute a pre- 

 ferred claim, the payment of which is 

 usually arranged for in advance. 



THE LIMIT OP WAGES. 



Here, then, are the conditions of the 

 problem. Labor must have its wages at 

 all times and under all conditions. In the 

 long run directing efficiency must have its 

 profits and capital must have its interest. 

 Wages may often absorb portions of the 

 shares of the other claimants, but unless 

 these are eventually satisfied, the efficiency 

 of industry will be impaired and capital 

 will cease to accumulate, either because the 

 owners of wealth prefer to consiime it or 

 because they hoard it rather than permit 

 its use as capital on unsatisfactory terms. 

 Thus is the limit of wages fixed. The ef- 

 forts of organized workingmen to secure 

 higher wages deserve approval so long as 

 they do not threaten industrial efficiency 

 through a reduction of interest or profits 

 below the minimum limits respectively 

 fixed by marginal capitalists and entre- 

 preneurs. Demands that exceed these lim- 

 its would, if granted, produce results 

 which could only react unfavorably upon 

 those who made them. The increase and 



progressive diffusion of industrial intelli- 

 gence tend to reduce the amounts which 

 can be effectively demanded by those 

 whose service to society lies in determining 

 the character and organization of produc- 

 tive efforts, and the rapid accumulation of 

 capital tends to reduce the general rate of 

 interest. Consequently, wage-earners can 

 reasonably anticipate an increasing share 

 of the value annually produced, and if, 

 under favorable conditions, they fail to 

 receive it they may justly demand a 

 change in the proportion which they are 

 accorded. 



WHY WORKMEN ORGANIZE. 



The instinct which impels workingmen 

 to organize rather than to deal separately 

 with their employers is precisely the same 

 as that which at other points of economic 

 contact has universally led to efforts to 

 mitigate the consequences of competition 

 by the simple device of combination. The 

 single worlmian, dealing with an employer 

 of many workmen engaged to render sim- 

 ilar service, is at exactly the same sort of 

 disadvantage which confronts the small 

 manufacturer who has to sell in a market 

 to which a multitude of competing pro- 

 ducers have access on equal terms. There 

 is nothing strange in the fact that the char- 

 acteristic movement of the great industrial 

 revolution which has been in progress since 

 the invention of the spinning jenny and 

 the power loom has left its impress upon 

 labor as well as upon capital. If labor had 

 not organized, it would have been a sadly 

 belated factor in the industry of the open- 

 ing years of the twentieth century. Just 

 as capital must continue to compete with 

 capital, so labor will compete with labor as 

 long as capitalistic production and the 

 wages system endure, but on either side 

 folly could go no further than to seek the 

 perpetuation of the crude, cut-throat com- 

 petition which seeks the immediate exter- 



