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SUMMARY. Effect of new inventions upon laborer's income, 210–226.-9. Measured by an absolute standard, 210-211.-6. As compared with the income of the capitalist class, 211–226.—Effect on his person, 226–232.—a. Increasing demand for conformability, 226–228.—b. Reducing amount of routine mechanical work, 228-232.

In his excellent article on The Effects of Labor-saving Devices on Wages, in this Journal for November, 1905, Professor Johnson has not only anticipated many of my own conclusions, but has stated the matter so admirably that it would be superfluous to attempt another discussion of the points which he has covered. There are, however, certain aspects of the general problem which he did not attempt to expound, and these, together with the time which has elapsed since the publication of his article, must furnish whatever excuse is needed for the present paper.

The general conclusion reached by Professor Johnson is that "there is no logical basis for the view that every labor-saving invention must necessarily benefit the laborers in the long run.” With this conclusion no one can quarrel after mastering the arguments upon which it is based. One might still maintain, however,-and Professor Johnson admits as much,—that the net result of all labor-saving inventions taken together has been some gain in the conditions of the laboring classes as a whole, and that it will probably continue to be so in the future. This gain, however, is a gain only when measured from some absolute standard; that is, the laborers are lifted somewhat higher above an absolute physical minimum of subsistence than they were before these inventions were introduced or than they would have been if these inventions had never been introduced.

Hardly less important, however, than the question of the absolute improvement of the conditions of the laboring class is the question of its relative improvement as compared with other classes. Do the laborers gain as much as other classes (capitalists, for example) from these improvements in the arts of production? Do the advantages of industrial progress go mainly to the laboring classes or mainly to the capitalist and land-owning classes, or are they shared equally or proportionately? The peace of society depends almost as much upon this question as upon that of the absolute gain or loss to the laboring classes. The discontent of the laboring classes may be expected to increase, in spite of a rising standard of physical comfort, if they see that they are falling farther and farther behind other classes or that other classes are gaining more rapidly than they. This discontent is not likely to be allayed by demonstrating to them that they are several stages farther removed from physical want than their fathers and grandfathers were, so long as they believe that others are gaining more and entering more largely into the benefits of advancing civilization than they themselves are.

Professor Johnson's conclusion carries with it, as a matter of course, the conclusion that there is no necessary reason for believing that the laboring classes gain as much from an invention as other classes do. If the laborers do not necessarily gain anything whatever, obviously they do not necessarily gain as much as some one else, because somebody must gain if the invention is an improvement at all. But one observation made by Professor Johnson, sufficiently accurate when applied to the question which he had in mind, can scarcely be applied to the question now before us. He remarks, “Since, then, labor-saving devices may vary so widely in their economic characteristics, it appears to be unscientific to group them together when it is our aim to discover their economic effects. Such a method of procedure may prove anything. Rather we should construct theoretical types possessing clearly defined characteristics which represent the various possible economic relations, and study the possible effects of each of these types.” All this is true enough if the question in hand is whether each and every labor-saving improvement must necessarily benefit the laboring classes. This question is definitely answered in the negative when one clearly defined type of improvement is found to confer no benefit whatever upon the laboring classes. But, if the question is, Are laborers as a matter of fact gaining or losing as a result of the sum total of all the industrial improvements? it is necessary to consider the improvements as a group. If the question relates merely to the absolute improvement of their condition, the answer is so obviously in the affirmative as to need no discussion. But it is otherwise with the question of their relative improvement. Upon this point there is considerable difference of opinion. Some go so far as to maintain that, in the long run at least, the advantages of improvement go chiefly to the laborers, while others are equally positive in the opinion that practically the whole advantage goes to the capitalist or to the land-owner. Between these extremes there is room for every possible variation of opinion.

It is interesting to notice that even the strongest theoretical arguments in favor of the proposition that in the end the laborer gains from labor-saving inventions are


*Cf. J. B. Clark, Distribution of Wealth, p. 412; also publications of the American Economic Association, 3d series, vol. iv. pp. 130-142. Cf., also, F. A. Walker, The Wages Question.

? For example, Karl Marx and Henry George.

equally strong in favor of the proposition that the capitalist gains still more. Take, for example, the oft-repeated illustration of a "product-multiplying invention." This is an invention which, at first substituting machinery for labor, so cheapens the product that consumers buy more of it, so much more that in the end more laborers are employed in its production than before. There is thus a direct increase in the demand for labor in the industry in question, besides the advantage to the laboring class as a whole through the cheapening of the product. Now machinery is capital, and the substitution of machinery for labor is the substitution of capital for labor. This means that when the labor-saving device is introduced, the ratio between the labor and the capital employed in the industry is changed, capital assuming a relatively larger and labor a relatively smaller rôle. In the manufacturing of a given unit of product, more capital and less labor are used. Otherwise, it is not a laborsaving device. If the total product is so increased as to require more labor in the aggregate than before, the increase in the quantity of capital required will necessarily be still greater.

This is a mere matter of arithmetic. Let us assume that before the introduction of a certain labor-saving invention in a certain industry it required normally, and on the average, 100 laborers and $5,000 worth of capital to manufacture 1000 units of product, and that, after the invention is in use, 50 laborers and $6,000 worth of capital can manufacture the same quantity, namely, 1,000 units. If the consumption should so increase through this cheapening process that 3,000 units would be demanded where 1,000 units had been before, it would now require 150 laborers, or there would be a net gain of 50 per cent.

Some inventions, it is true, are capital-baving rather than labor-saving, but these will be considered later.

in the demand for labor. But, at the same time, to manufacture the increased product would require $18,000 worth of capital as against the $5,000 worth which had been required before,-a net gain of 360 per cent. in the demand for capital. If we assume that conditions in other industries remain unchanged, the net result of this invention will be to increase the demand for capital in the whole community more than proportionately to the increase in the demand for labor and to give the capitalist class the larger share of the advantages of the improvement.

If the product is an article consumed alike by laborers and capitalists, both will gain alike as consumers through this cheapening. If it is consumed mainly by the laboring classes, their gains as consumers will be greater than those of capitalists, and this may help to even up the comparative advantages to the two classes. But if, on the contrary, it is an article consumed mainly by the capitalist classes, their superior gains from the side of production would be accentuated from the side of consumption. If, however, we consider the question of improvement in general, the benefit from the standpoint of consumption through the cheapening of consumers' goods must be assumed to go to one class as often as to the other. Therefore, we may eliminate entirely the question of advantages to consumers.

In order that an invention may be "product-multiplying" rather than "labor-displacing," there must be an elastic demand for the product. In other words, a moderate fall in its price must occasion a considerable increase in the amount consumed. If, on the other hand, the demand is inelastic,--that is, if it takes a considerable fall in price to occasion a small increase in the amount consumed,—there is no reason to suppose that any more labor (or even as much) would be required in the industry



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