Wages and Prices. The Socialist View
Ever since the armistice gave the signal for the reopening of industrial warfare we have been met on all hands with the cry “High wages mean high prices.”
The Tale they Tell Us.
Editors and politicians have they tried to outdo one another in the attempt to convince the workers that they have reached the limit in “bettering” their financial position. To listen to their arguments one would imagine that profits had ceased to exist, that wages were the only charge on industry, and that the capitalist employers’ only aim in life was to find work for the workless.
The facts—that prices soared mountains high before wages commenced to move, that wages have not generally managed to catch up with prices, and that an excess profits tax has been good business for the State—are carefully kept in the background. The workers fail to make both ends meet and are told that they themselves are responsible for the failure.
Put Them to the Test.
We are further warned of the loss of foreign trade, just as though no other country had labour troubles, and as though the workers were responsible for the war which gave America and Japan their opportunity for filching Europe’s markets. But the best joke of the lot is the way in which our teachers deplore the workers’ ignorance of economics ! Every fragment of the truth which the latter get into their heads is ferociously assaulted as a fallacy. Let the workers, however, do a little more thinking and then see what becomes of newspaper economics.
The first thing that strikes one about the wages question is that if the employers can so easily pass on any rise to the consumer in the form of an increased price why their strenuous opposition to these rises ? The obvious answer is that the thing cannot be done; that if it is possible to raise prices in a given state of the market the capitalist takes advantage of the fact quite independently of any advance in wages. On the other hand, no rise in wages can enable a seller of commodities to get higher prices out of an unfavourable market. He has to put up with less profits ! There’s the rub ! And since profits, like wages, have to come out of prices, we might as well argue that high profits are the cause of high prices.
Where the Shoe Pinches.
As a matter of fact, however, neither wages nor profits nor both together form the basis of prices. Prices express value, a state of equality between two commodities; thus £2 = 1 pair of boots or two chairs, etc. Before we can understand value or prices, wages or profits we have to know in what sense money is equal to the things it buys, and further, in what sense these things, being equal to money, are, therefore, equal to one another.
What is value?—that is the question which knocks the stuffing out of any newspaper economist who has the pluck to tackle it—and there are not many that have, despite their desire to teach others.
Your Eye Skinned.
If we take a sovereign and any commodity it will buy (say a looking glass) and compare the two we are at first baffled to find any similarity between them. Size, shape, smell, colour, taste, weight —in every physical or chemical quality they differ. Yet men will exchange the one for the other. Their equality, therefore, must have something to do with their relationship to mankind. It is, in other words, a social relationship. Something that human society does with, money and mirrors gives them value before the exchange takes place. What does society do ? It produces them ! All commodities are the products of social labour. It is the act of labouring which puts value into them, and the quantity of labour, measured by the necessary time it takes, is the substance of value and the basis of prices.
The enormous increase in prices since the commencement of the war is therefore due in the main to the upheaval in the conditions of production. Millions of producers cannot, it is obvious, be pitch-forked into the arena of destruction without upsetting the established ease and rapidity with which wealth is produced.
To the workers, at any rate, it should be clear that their demands for higher wages are based upon this same preceding rise in prices, and that unless these demands are conceded it will be impossible for them to retain their efficiency as producers. That is to say that, unless the price of their commodity keeps pace with the prices of other commodities, of which it is a product, there will be less of that commodity available.
At the same time they must further realise that on the average nothing more than the value of their commodity can be obtained. The capitalists can and will successfully resist any encroachments upon their profits. Wage-saving machinery on the one hand, and the unemployed on the other, exist to keep in check any efforts after a wage which represents more than the cost of producing labour-power.
Is the position of the workers without remedy, then ? By no means. Let us invert the logic of our masters. If high wages mean high prices, then no wages should mean no prices. In other words, if the workers agreed to work for nothing they should be able to receive the fruits of their labour for nothing likewise. Oar newspaper editors have probably never thought of this outcome of their reasoning. If the workers took them and their ideas in deadly earnest a curious situation would arise Who or what would decide which belonged to the workers and which to the capitalists ? Only the naked force of the State ! The truth would then be revealed that the capitalists are robbers, that the wages system is a blind, and that might is right. The workers might then listen to the Socialist Party, and, spurred on by the knowledge they would thus acquire, commence to organise in real earnest for Socialism.