“PASSING IT ON”

Industrial Unionist, Volume 1, Issue 8, 1 September 1913, Page 4

“PASSING IT ON”

The minds of men at all times and in all stages of sociological and economic development are occupied by popular fallacies which emanate from the degree of development reached at any particular time. And as the intellectual development increases and men learn to think more and more in the abstract, the fallacies fade away and are superseded by truth. One of these fallacies —the most popular of all in the sphere of economics—is the belief, that a rise in wages can be met by the masters raising, at will, the price of commodities, and thus deprive the workers of the benefits of their increase in wages. It is also said that the higher the wages, the greater the value of the product, and consequently the higher the price thereof. Let us see now, whether Master No. 1 can “ pass it on ” to Master No. 2, and Master No. 3 to the ultimate consumers, namely, the workers who gained the rise in wages. It is a general belief that they can.

If Master No. 1 is affected by a rise in wages and successfully “ passes it on ” to Master No. 2, it presupposes that Master No. 1 has a monopoly over his goods to enable him to do it. Master No. 1 in most cases does pass it on. But at whose expense? Not at the expense of the workers, as we shall see later on.

If a 10 per cent, rise in wages can be passed on from one to the other until it reaches its final destination, then the small business man is in no way affected. The facts are that he is affected, as his bitter wailings in opposition to a rise in wages indicate. He knows he has many competitors who are always trying to undersell him, and this he knows tends, not to raise prices, but to reduce. Many of these small business men find that they cannot pass it on, and are eventually put out of business. One result of a rise in wages is therefore concentration of capital and fewer capitalists. As our subject is of a most delicate nature, it would require an exhaustive analysis of the actions and re-actions, and of the relation of one industry to another consequent upon a rise in wages, so that we can here only deal with a few of the most important factors. Since their last agreement the waterside workers of New Zealand gained an annual increase in wages of £33,000, for the same amount of work as before the rise. The steam ship companies raised the price of tonnage 1/-, which more than paid back the £33,000. In this case it is easily seen that the steam ship companies actually gained.

Yes, but who paid the shilling? Surely not the watersiders, who most certainly gained by the rise. Remember the steam ship companies have a monopoly, and are thus enabled to pass it on.

We all know that the master class spend at least three times as much as the workers do. Therefore the masters pay 9d out of every 1/-, and the workers as a whole, not the watersiders alone, pay the remaining 3d. This extra, 3d, however, must add to the value or Cost of reproducing labourpower, and as all things tend to sell, and, when supply and demand are equal, do sell at their value, this labour-power must soon be bought at a higher price owing to its increased cost of production. The greater the cost in producing any article the greater is its price, and labour-power is no exception to this rule. Another result of a rise in wages is therefore to add to the cost of producing labour-power, which addition reacts upon the capitalist, who is then compelled to buy it at the increased cost, thus maintaining the gain for the workers as a whole.

A rise in wages cannot help making the fact known in the sphere of circulation, for as soon as a rise takes place, the amount of money in circulation is found to be insufficient, provided, of course, that the velocity of circulation or credit is constant. In order that these prices are to be realised we must either increase the amount of coin or increase the velocity of circulation. This latter, being the easier method, is adopted, and the credit system, to which there is always a limit, is extended. This having been effected, the sum total of prices increases while the same amount of coin remains constant. A million pounds, for example, functions as £1,100,000, or increases its velocity (exchanges) by 10 per cent, to meet the 10 per cent, increase in wages. Assuming as we have that the amount of coin is constant, this law can manifest itself in no other manner. This credit, however, is not extended to all those who want it, but only to those who hold the best securities. The small business man being again the victim, is forced out of business, and enters the ranks of the wage-earning class. Third result : A general rise in prices accompanied by a 10 per cent, increase in the velocity of circulation.

Everybody knows that prices are high when money is plentiful, and that things are cheap when money is scarce. By increasing the amount of money in circulation we simply increase the sum total of

(By P. Short)

prices. Productivity remaining the same the sum total of. values or commodities do not vary with the sum total of their prices, e.g., if four loaves of bread take, on the average, one necessary social hour to produce, they are worth one hour because an hour’s labour is embodied in them*. Their value can be increased only by increasing the time necessary for their production. Their price, on the other hand, may be increased by charging 4d instead of 3d a loaf, but that would not increase the number of loaves. In the first place my shilling would buy four loaves, in the second only three. I can buy four loaves by increasing my shilling to 1/4, failing this I may get credit from my baker. One or the other I MUST have in order to buy the bread. My shilling, since it will now only buy three loaves, has melted in my pocket to 9d; so also has the shilling in the safe of the steam ship companies. A rise in prices depreciates the value of the money of both the master and worker alike. They are both buyers and sellers. Fourth result: Masters and workers are affected relativelv the same.

The “ cost of living ” (the price of living) during the last 10 years has increased by 32 per cent, as compared with an increase in wages of 16 per cent., a difference of 16 per cent. Had there been no increase in wages during that time the price of living would have remained at 32 per cent. This proves that a rise of wages is a distinct gain.

The price paid for wage-lalibur is, let it be remembered, NOT a factor in determining either the price or value of commodities, as most pseudo-economists have declared it to be. The masters, on the other hand, know instinctively that the more they pay for labour the less they get in return, as shown by their manner of refusing every demand for higher wages. The factors compensating a rise in wages are to be sought for, not in the laws of the wages of labour, but rather in the manner in which that labour is producing the ’wealth of the world. The price of living, as already seen, is rising faster than wages. This is due to the laws of value, and not to increasing wages.

The many attempts of workingclass fools to reduce the “ cost of 1 living ” are so many attempts to reduce the portion of labour’s product that the worker receives, and to increase relative surplus value for their masters.

A working day is divided into two parts —one part in which the wage-worker produces the value of his labour-power, or wages, the

oilier part in which lie works gratuitously for his master. These parts are known as necessary time and surplus time respectively. The longer a worker spends in working necessary time, the less lie can spend in working surplus time, and the less the profit for the boss.

Assume' for example a baker is paid in kind and not in money, and that in his product, bread, is embodied all the necessary means for his subsistence. Say our baker produces 24 loaves in a day of 12 hours, or at the rate of two loaves an hour, and that six hours are necessary to produce his wages, and is paid 12 loaves. If by more up-to-date methods of production

our baker reduces his “ cost of living ” by producing his wages in four hours, he can now produce 12 loaves in four hours, or at the rate of three an hour, instead of two an hour. Now, since every hour is represented by three loaves, 12 hours would be represented by 36 loaves. A contraction of one portion of the working-day is an extention of the other portion. Where our slave, the baker, at one time worked six hours for himself and six for his master, he now works four hours for himself and eight for his master. The master now receives 24 loaves instead of 12. Our baker continues to receive the same wages, 12 loaves, and is quite contended with his lot, while on the other hand his master,

who knows that “ time is money/’ endeavours to lengthen the hours of' labour. It is clearly seen by the above how the boss gets richer and the worker gets relatively poorer,

and these conditions will become more intensified with every improvement in the means of production, providing neither that the hours of labour be shortened in proportion to the increased productivity, nor the intensity of labour be reduced by the workers themselves

To deal with the effects of a fall in the value of gold upon prices is a special subject, and therefore I make no mention of it, as it does not necessarily have any bearing on the subject of “ Passing It On.”

In conclusion, let me say, that while both our worthless master and his worthy slave may be ignorant of the laws of value, the former is glided by a sort of economic instinct, the latter —destitute of both both instinct and reason —is guided merely by the cravings of his stomach and that in a very small degree.