SECTION CLXV.. Wages.--the Demand for Labor.

WAGES.--THE DEMAND FOR LABOR.

The demand for labor, as for every other commodity, depends, on the one hand, on the value in use of it, and on the other, on the purchaser's capacity to pay for it (his solvability), These two elements determine the maximum limit of wages, as the means of support considered indispensable by the workmen determine the minimum. There are circumstances conceivable under which the rise in wages might entirely eat up rents; but there must always be a portion of the national income reserved to reward capital (its profit). If wages were to absorb the latter also, the mere owner of capital would cease to have any interest in the progress of production. Capital would then be withdrawn from employment and consumed.[165-1] Obviously, no man engaged in any enterprise can give more as wages to his workmen than their work is worth to him.[165-2] Hence the additional product in any branch of industry, due to the labor of the workman last employed, has a controlling influence on the rate of the wages which can be paid to his fellow workmen. If the additional products of the workmen successively last employed constitute a diverging series,[165-3] the last term in the series is the natural expression of the unsurpassable maximum of wages; if they constitute a converging series, men the employer can pay the last workman higher wages than the additional product due to him; provided, however, that the reduction which is to be expected in the case of the workmen previously employed to the same level still leaves him a sufficiently high rate of profit.[165-4] Hence the growing skill of a workman, in and of itself, makes an increase of his wages possible;[165-5] while, conversely, if he can be replaced by capital, which always relatively decreases the value in use of his labor, there is a consequent pressure on his wages.

When the number of Then the additional yield men employed in obtained by the gathering them was last workman employed is

4, 80 scheffels, 5, 86.6 " 6.6 scheffels. 6, 91 " 4.4 " 7, 94 " 3 " 8, 96 " 2 "

(von Thünen, Der isolirte Staat, II, 174 ff.)]