(2.ii.3) In the greater number of cases, however, especially in the more improved stages ofsociety, the labourer is one person, the owner of the capital another. The labourer has neitherraw material nor tools. These requisites are provided for him by the capitalist. For making thisprovision, the capitalist, of course, expects a reward. As the commodity, which was produced bythe shoemaker, when the capital was his own, belonged wholly to himself, and constituted thewhole of his reward, both as labourer and capitalist, so, in this case, the commodity belongs tothe labourer and capitalist together. When prepared, the commodity, or the value of it, is to beshared between them. The reward to both must be derived from the commodity, and the rewardof both makes up the whole of the commodity.
(2.ii.4) Instead, however, of waiting till the commodity is produced, and abiding all the delayand uncertainties of the market in which the value of it is realized, it has been found to suitmuch better the convenience of the labourers to receive their share in advance. The shape underwhich it has been found most convenient for all parties that they should receive it, is that ofwages. When that share of the commodity, which belongs to the labourer, has been all receivedin the shape of wages, the commodity itself belongs to the capitalist, he having, in reality, boughtthe share or the labourer and paid for it in advance.
1. That the rate of wages depends on the proportion betweenPopulation, and Employment, in other words, Capital (2.ii.5) We come now to the question as to what determines the share of the labourer, or theproportion in which the commodity, or its worth, is divided between him and the capitalist.
Whatever the share of the labourer, such is the rate of wages; and, vice versa whatever the rateof wages, such is the share of the commodity, or commodity's worth, which the labourerreceives.
(2.ii.6) It is very evident, that the share of the two parties is the subject of a bargain betweenthem; and if there is a bargain, it is not difficult to see on what the terms of the bargain mustdepend. All bargains, when made in freedom, are determined by competition, and the terms alteraccording to the state of supply and demand.
(2.ii.7) Let us begin by supposing that there is a certain number of capitalists, with a certainquantity of food, raw material, and instruments, or machinery; that there is also a certain numberof labourers; and that the proportion, in which the commodities produced are divided betweenthem, has fixed itself at some particular point.
(2.ii.8) Let us next suppose, that the labourers have increased in number one half, withoutany increase in the quantity of capital. There is the same quantity of the requisites for theemployment of labour; that is, of food, tools, and material, as there was before; but for every 100labourers there are now 150. There will be 50 men, therefore, in danger of being left out ofemployment. To prevent their being left out of employment they have but one resource; theymust endeavour to supplant those who have forestalled the employment; that is, they must offerto work for a smaller reward. Wages, therefore, decline.
(2.ii.9) If we suppose, on the other hand, that the quantity of capital has increased, while thenumber of labourers remains the same, the effect will be reversed. The capitalists have a greaterquantity than before of the means of employment; of capital, in short; from which they wish toderive advantage. To derive this advantage they must have more labourers. To obtain them, theyalso have but one resource, to offer higher wages. But the masters by whom the labourers arenow employed are in the same predicament, and will of course offer higher to induce them toremain. This competition is unavoidable, and. the necessary effect of it is a rise of wages.
(2.ii.10) It thus appears, that, if population increases, without an increase of capital, wagesfall; and that, if capital increases, without an increase of population, wages rise. It is evident, also,that if both increase, but one faster than the other, the effect will be the same as if the one hadnot increased at all, and the other had made an increase equal to the difference. Suppose, forexample, that population has increased one-eighth, and capital one-eighth; this is the same thingas if they had stood still, with regard to the effect upon labour. But suppose that, in addition tothe above-mentioned one-eighth, population bad increased another eighth, the effect, in thatcase, upon wages, would be the same as if capital had not increased at all, and population hadincreased one-eighth.
(2.ii.11) Universally, then, we may affirm, that, other things remaining the same, if the ratiowhich capital and population bear to one another remains the same, wages will remain the same;if the ratio which capital bears to population increases, wages will rise; if the ratio whichpopulation bears to capital increases, wages will fall.
(2.ii.12) From this law, clearly understood, it is easy to trace the circumstances which, in anycountry, determine the condition of the great body of the people. If that condition is easy andcomfortable, all that is necessary to keep it so, is, to make capital increase as fast as population;or, on the other hand, to prevent population from increasing faster than capital. If that conditionis not easy and comfortable, it can only be made so, by one of two methods; either by quickeningthe rate at which capital increases, or retarding the rate at which population increases;augmenting, in short, the ratio which the means of employing the people bear to the number ofpeople.
