Such a 'predetermination'is of course a fiction.Was it ever taken for a fact?(120)It was rather,I believe,an assumption which has slipped into their reasoning unawares.Starting from the old proposition that 'industry is limited by capital,'and remarking that some capital did not go directly to wages,they simply amended the proposition by saying that wages depended on 'circulating'capital,and thought that the corrected formula would do as well as the old.Perhaps they assumed roughly that 'circulating'must bear a fixed proportion to capital in general;or that,at any rate,the proportion was somehow determined by general causes.The doctrine thus understood tends to become a merely identical proposition:the 'wage-fund'means simply the wages,and the rate of wages is given by the total paid divided by the number of receivers.The economists continued to lecture the labourers upon the futility of their aims with the airs of professors exploding the absurdity of schemes for perpetual motion.It must,however,be observed that neither Mill nor his disciples held that the rate of wages was unalterable.They had the strongest belief that it could be raised,and raised through the agency of trades-unions.Mill's disciple,Fawcett,as Professor Taussig remarks,(121)lays down the old wage-fund formula,and yet proceeds to argue about strikes raising wages without reference to this supposed impossibility.In an early article,(122)highly praised by Mill,Fawcett discussed strikes.
He appeals to the wage-fund doctrine throughout,and yet he approves of trades-unions,and only exhorts men to strike when trade is improving,instead of striking when it is falling off.
It does not for a moment occur to him that 'supply and demand'or the wage-fund theory determine every particular case.Undoubtedly men,by combining and taking advantage of the 'conjuncture',may get the best of a bargain.Fawcett holds,indeed,that the immediate advantage will be temporary or limited to one trade.
Still combination will,for the time,enable the men to get an earlier share of the improved profits.Then,he argues,and it is of this that Mill approves,that such a system,by interesting the men in business and letting them perceive the conditions of success,will lead to the consummation most ardently desired by Mill and himself;to a perception of an ultimate identity of interests and a final acceptance of some system of co-operation.
Thus,by listening to Malthus and raising the standard of life,the artisan will himself become a capitalist or a sharer in profits.
The wage-fund doctrine,so understood,included a reference not to the immediate bargain alone but to a more remote series of consequences.The 'predetermination'refers to the whole set of industrial forces which work gradually and tentatively.The ablest defender of the wage-fund,understood in this sense,was J.E.Cairnes (1823-1875),(123)who,like Thornton,was a personal friend of Mill;and,though an acute and independent thinker,was an admiring disciple.He met Mill's recantation by applying Mill's earlier faith.He does not believe in that 'economic will-o'-the-wisp,'(124)as Thornton calls it,the wage-fund,which supposes that in the bargain between men and masters there is a 'predetermined'amount which must be spent in wages.It is only predetermined,he says,in so far as all men act from certain motives which,under given circumstances,must bring about certain results.Thornton,he says,has talked as if 'supply and demand'meant a power which forced men to act in a certain way,instead of being merely a general phrase indicating the normal operation of these motives.To determine the general rate of wages we have to look at the whole mechanism,not at the special bargain.To explain that action Cairnes starts again from the Ricardian scheme.On the one hand we have,of course,Malthus;and on the other,the relation between wages and profits,the effective desire of accumulation,the necessity of resorting to inferior soils,with the consequent 'tendency of profits to a minimum'(for the proof of which he refers to Mill himself),and the accepted statement that profits are already within a hand's-breadth of the minimum.(125)Cairnes modifies the scheme in various ways,upon which I need not dwell:as by admitting ,non-competing industrial groups,'and arguing that the amount of the fixed and circulating capital is more or less determined by the direction of the national industries.Such conditions,he argues,determine the permanent rate of gages,though for a time oscillations within comparatively narrow limits may of course take place.Mill,in his unregenerate days,had argued,as we have seen,that the whole 'wage-fund'must be distributed,without giving any precise reason for the necessity.
