Socialism (part 2)

CHAPTER II.
The Cause of Poverty.

Be it now our task to enquire how poverty arises in this age of splendour, as a preliminary to considering how it may be abolished.

It may not be amiss here to remind the reader how obviously wrong are those people who ascribe the poverty and unemployment of the workers to the war.

Mr. Rowntree says that in a year of good trade, before the war, 15 1/2 per cent of the working class, or 10 per cent, of the whole population, of York, were living actually below the poverty line, while 28 per cent of the entire population of that city were living below, upon, or very little above it.

Mr. Charles Booth concluded from his researches in London that 30.7 per cent of the population (or assuming the national ratio of workers to capitalists, about 36 per cent, of the working class population) of the metropolis were living in similar conditions of poverty, and other investigators working in other cities have arrived at identical results.

This, mark, was the state of things in a " year of good trade," with unemployment at a low level. Hence, unemployment had not a vast deal to do with it. Obviously, if unemployment were the cause of poverty, it would need much more, than 6.8 per cent, of unemployment to explain the terrible plight of 36 per cent of the whole working class.

Unemployment is not the cause of poverty. These twelve and a half millions of victims hunger while they are earning wages. They are poor because their wages are insufficient.

Wo have first, then, to discover how wages are determined.

How Wages are Determined.

Wages are the price of something which is sold. The prices of all other things rise and fall with the changing relations of supply and demand. So also with wages.

But these changes only cause wages to fluctuate about a certain point — they do not determine that point. In fact, they cannot determine that any more than the finger which plucks a banjo string determines the line about which the string vibrates. What, then, does determine the point about which wages vary? Why, when supply and demand equal each other, do wages not find a higher or lower resting place ?

What, first of all, is it that the worker sells? It is not actual labour, for that does not exist at the time of the sale. It is labour-power.

Labour-power and labour are two different things. Labour-power is contained within the worker's body, and so belongs to him, and can be sold by him. It only becomes labour by being put out from his body — by the process of working. When he has converted his labour-power into labour, the labourer's power has ceased to exist. It has been turned into something else. He has, in very fact and deed, " put out his strength "—turned it into labour, which is now resident, not in himself, but in the material upon which he has been working.

It is quite evident from this that the wage-labourer cannot sell his labour, for as soon as it is performed, it is contained within material belonging to his master, and it therefore belongs to his master, the owner of the substance in which it is embodied. It is the master who sells the labour in the form of finished products.

The worker, then, sells his labour-power for wages, and wages, we have seen, fluctuate with supply and demand. We were asking what determines the point about which this fluctuation takes place. It cannot be supply and demand, for they only determine the vibration; they are the finger that plucks the string. We want the equivalent of the bridge and nut which support the string.

A sale is an exchange of one object for another, and what we are asking for is simply the standard by which labour-power is measured against money.

Different things are measured against one another by the qualities they possess in common. Thus bread may be measured on the balance by means of an iron weight, because, and only because, both the bread and the iron possess oue quality in common — weight. And when you have balanced them, you know that they each possess the same quantity of the quality, weight, and therefore, they are equals in that respect. All you have done, in fact, by weighing them, is to declare that no matter how they may differ in bulk, texture, colour, or other quality, they are equals in weight.

Similarly, you may measure out a pint of peas and a pint of porter in a pint pot, and declare them equal bulks, but you can only do this because they both possess bulk.

But all things of value can be measured against gold, no matter how diverse may be their character. A ton of coal and a quarter of an ounce of gold, we may say, are worth each other. They are equals, but in what respect? We have only five senses, and all the physical qualities of the gold and the coal must make themselves known through those senses or remain unknown. Are they the same to the touch, taste, sight, smell, or hearing? No, they are not.

It cannot be utility in which they are equal, for ths most generally useful things are the cheapest. The race cannot exist without food, but could get along very well without gold — much better than without iron; yet of how much greater worth is gold (in exchange) than an equal weight either of bread or iron !

If a ton of coal is worth £1 in London, we know that at the pit mouth it will be worth only about half that amount. Whatever quality the coal and gold possesses in common, and by means of which they are compared, as values, is possessed by them in different proportions at, say, Newcastle and London. Yet both possess exactly the same physical properties and the same utility in both places.

The only way in which coal in Newcastle differs from coal in London is in the amount of labour which it has absorbed; this, then, must be the common quality by means of which the coal and gold are measured.

It is so in fact — but under certain qualifications. The labour must be necessary labour. Carrying coal to London is necessary labour, because coal is needed there and there are no mines in the vicinity. Carrying the coal to London by rail or boat is necessary labour, because they are the most economical means; but carrying it by pack-horse would not be necessary labour, because much less wasteful means are available.

Labour, then, is the common quality possessed by all things of value, and by which they are measured. To say, therefore, that two tons of coal are worth £1 at Newcastle is simply to say that it has taken the same amount of necessary labour to produce the coal as it has taken to produce the gold. In London about one ton would contain the labour equal to that contained in the £1.

One of the things that regularly exchange for gold is labour-power. Labour-power has no quality in common with gold except the labour that is embodied in it. The labour which is embodied in labour-power is the labour contained in the food, clothing, shelter, etc., consumed by the worker in producing his labour-power. Thus the necessary labour involved in producing labour-power is no more and no less than that contained in the labourer's means of subsistence.

We have now got that equivalent to the bridge and nut which support the vibrating string, that something which determines the point about which supply and demand shall cause wages to fluctuate. It is the cost of subsistence.

Let us now summarise our conclusions.

(1) The price of all exchangeable things fluctuates with the changing ratio of supply to demand.
(2) The point about which the price fluctuates is not determined by supply and demand, but by value.
(3) This value is not altered by supply and demand, though the price is; therefore price and value do not always correspond—things sell at one time above and at another below their value.
(4) Nevertheless, since value determines the point about which price fluctuates, when these fluctuations cancel one another, an average is struck which corresponds to value; therefore the average of prices, or prices in the long run, are identical with value.
(5) Value is determined by the amount, of necessary labour required to produce the exchangeable thing at the time and place at which it is required. It follows, then, that prices in the long run are determined by the cost in labour (not the cost of labour, i.e., wages, which have
nothing to do with it, but the cost in hours of labour) necessary to the production of the goods or commodities.

Now to apply these conclusions to labour-power and wages.

(a) Wages, being the price of labour-power, fluctuate under the influence of supply and demand.
(6) The, point about which wages fluctuate is determined by the value of labour-power.
(c) The value of labour-power depends on the amount of labour necessary to produce it. That labour is the labour embodied in the wealth which forms the subsistence of the worker and his dependents; therefore
(d) Wages are determined, in the long run, by the cost of the workers' subsistence.

Two things help to bring about this result. First, wages cannot for any extended time fall below the cost of these necessaries or the labour-power cannot be produced; secondly, wages cannot for long rise above this point because there is always an army of unemployed whose competition for work keeps wages down to the subsistence level.

The reader is invited to turn again to Mr. Rowntree's terrible "Poverty Line" of 21s. 8d., on or below which he and others found, by " accurate and scientific investigation," nearly a third of the population of this country are living, and to consider how correctly our deductions are drawn from facts. Our argumentative conclusions point to the finding that the workers, as a class, get no more than enough to reproduce the standard of efficiency required by our masters. In view of Mr. Rowntree's estimate of the condition of a third of the people, one is surprised that any standard of efficiency is produced at all.