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C.D. Warner, et al., comp.  The Library of the World’s Best Literature.
An Anthology in Thirty Volumes.  1917.
Of the Wages of Labor
By Adam Smith (1723–1790)
From the ‘Wealth of Nations

THE PRODUCE of labor constitutes the natural recompense or wages of labor.  1
  In that original state of things, which precedes both the appropriation of land and the accumulation of stock, the whole produce of labor belongs to the laborer. He has neither landlord nor master to share with him.  2
  Had this state continued, the wages of labor would have augmented with all those improvements in its productive powers, to which the division of labor gives occasion. All things would gradually have become cheaper. They would have been produced by a smaller quantity of labor; and as the commodities produced by equal quantities of labor would naturally in this state of things be exchanged for one another, they would have been purchased likewise with the produce of a smaller quantity.  3
  But though all things would have become cheaper in reality, in appearance many things might have become dearer than before, or have been exchanged for a greater quantity of other goods. Let us suppose, for example, that in the greater part of employments the productive powers of labor had been improved to tenfold, or that a day’s labor could produce ten times the quantity of work which it had done originally; but that in a particular employment they had been improved only to double, or that a day’s labor could produce only twice the quantity of work which it had done before. In exchanging the produce of a day’s labor in the greater part of employments, for that of a day’s labor in this particular one, ten times the original quantity of work in them would purchase only twice the original quantity in it. Any particular quantity in it, therefore,—a pound weight for example,—would appear to be five times dearer than before. In reality, however, it would be twice as cheap. Though it required five times the quantity of other goods to produce it, it would require only half the quantity of labor either to purchase or to produce it. The acquisition, therefore, would be twice as easy as before.  4
  But this original state of things, in which the laborer enjoyed the whole produce of his own labor, could not last beyond the first introduction of the appropriation of land and the accumulation of stock. It was at an end, therefore, long before the most considerable improvements were made in the productive powers of labor, and it would be to no purpose to trace further what might have been its effects upon the recompense or wages of labor.  5
  As soon as land becomes private property, the landlord demands a share of almost all the produce which the laborer can either raise, or collect from it. His rent makes the first deduction from the produce of the labor which is employed upon land.  6
  It seldom happens that the person who tills the ground has wherewithal to maintain himself till he reaps the harvest. His maintenance is generally advanced to him from the stock of a master, the farmer who employs him, and who would have no interest to employ him unless he was to share in the produce of his labor, or unless his stock was to be replaced to him with a profit. This profit makes a second deduction from the produce of the labor which is employed upon land.  7
  The produce of almost all other labor is liable to the like deduction of profit. In all arts and manufactures the greater part of the workmen stand in need of a master to advance them the materials of their work, and their wages and maintenances till it be completed. He shares in the produce of their labor, or in the value which it adds to the materials upon which it is bestowed; and in this consists his profit.  8
  It sometimes happens, indeed, that a single independent workman has stock sufficient both to purchase the materials of his work, and to maintain himself till it be completed. He is both master and workman, and enjoys the whole produce of his own labor, or the whole value which it adds to the materials upon which it is bestowed. It includes what are usually two distinct revenues belonging to two distinct persons,—the profits of stock, and the wages of labor.  9
  Such cases, however, are not very frequent, and in every part of Europe, twenty workmen serve under a master for one that is independent; and the wages of labor are everywhere understood to be, what they usually are when the laborer is one person, and the owner of the stock which employs him another.  10
  What are the common wages of labor, depends everywhere upon the contract usually made between those two parties, whose interests are by no means the same. The workmen desire to get as much, the masters to give as little, as possible. The former are disposed to combine in order to raise, the latter in order to lower, the wages of labor.  11
  It is not, however, difficult to foresee which of these two parties must, upon all ordinary occasions, have the advantage in the dispute, and force the other into a compliance with their terms. The masters, being fewer in number, can combine much more easily; and the law, besides, authorizes or at least does not prohibit their combinations, while it prohibits those of the workmen. 1 We have no acts of Parliament against combining to lower the price of work; but many against combining to raise it. In all such disputes the masters can hold out much longer. A landlord, a farmer, a master manufacturer or merchant, though they did not employ a single workman, could generally live a year or two upon the stocks which they have already acquired. Many workmen could not subsist a week, few could subsist a month, and scarce any a year, without employment. In the long run the workman may be as necessary to his master as his master is to him; but the necessity is not so immediate.  12
  We rarely hear, it has been said, of the combinations of masters, though frequently of those of workmen. But whoever imagines upon this account that masters rarely combine, is as ignorant of the world as of the subject. Masters are always and everywhere in a sort of tacit, but constant and uniform, combination not to raise the wages of labor above their actual rate. To violate this combination is everywhere a most unpopular action, and a sort of reproach to a master among his neighbors and equals. We seldom indeed hear of this combination, because it is the usual, and one may say, the natural state of things, which nobody ever hears of. Masters, too, sometimes enter into particular combinations to sink the wages of labor even below this rate. These are always conducted with the utmost silence and secrecy till the moment of execution; and when the workmen yield, as they sometimes do, without resistance, though severely felt by them they are never heard of by other people. Such combinations, however, are frequently resisted by a contrary defensive combination of the workmen; who sometimes, too, without any provocation of this kind, combine of their own accord to raise the price of their labor. Their usual pretenses are, sometimes the high price of provisions, sometimes the great profit which their masters make by their work. But whether their combinations be offensive or defensive, they are always abundantly heard of. In order to bring the point to a speedy decision, they have always recourse to the loudest clamor, and sometimes to the most shocking violence and outrage. They are desperate; and act with the folly and extravagance of desperate men, who must either starve or frighten their masters into an immediate compliance with their demands. The masters upon these occasions are just as clamorous upon the other side; and never cease to call aloud for the assistance of the civil magistrate, and the rigorous execution of those laws which have been enacted with so much severity against the combinations of servants, laborers, and journeymen. The workmen, accordingly, very seldom derive any advantage from the violence of those tumultuous combinations, which, partly from the interposition of the civil magistrate, partly from the superior steadiness of the masters, partly from the necessity which the greater part of the workmen are under of submitting, for the sake of present subsistence, generally end in nothing but the punishment or ruin of the ringleaders.  13
Note 1. Repealed in 1834. [back]

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