1: Wages and the Distribution of Wealth
Walker insists that all economic activity can be grouped into four categories: production, distribution, exchange, and consumption. In fact, production and consumption are the entire sum of wealth, and distribution and exchange are just the means of moving it about between producer and consumer - though it is with some irony that most economists simply ignore any wealth that is not distributed or exchanged, which in some markets is the more significant quantity.
(EN: Walker is hinting at the wealth that is consumed by its producer, which was more common in his time than the present day, in that there were more self-sufficient households that produced most of what they needed and traded very little.)
We also have some difficulty admitting that almost everything that is produced is meant to be destroyed - as consumption is most often the destruction of value. Though this seems a displeasing notion, nothing is permanent and the greater shame is for a useful good to never be used, but to be destroyed by the ravages of time or poor stewardship. Thus, the only alternative to consumption is waste.
Wealth is most obviously exchanged when the producer and consumer are different persons, and it must be distributed when different persons unite in production or consumption.
It is the distribution of wealth that is of greatest concern to the present topic, as when a product can be produced by a single person, there is no argument as to how the profit of its production should be allocated. But when as few as two people work together on producing something, there immediately arises a squabble over how the product of their work is to be split between them - whether they are dividing out the actual goods they produced (such as a fishing crew dividing its catch) or the profit generated from their sale.
The exchange and distribution of wealth can be a very simple and obvious process when it occurs among a small number of people, though it can become complicated when many are involved. And all the more so when others intervene to mediate in their squabbles. And in Walker's time (EN: the book was written in 1888) industrialization was bringing together a great number of men, with various talents, working together to produce massive amounts of products - and significant squabbling over how the profits were to be shared out.
He also mentions the ongoing struggle between capital and labor, and states that there is more a schism than ever before because the amount of capital required to establish a manufacturing operation (factory) is far more significant than that which was once required to outfit a workshop. So not only is there a pool of laborers squabbling over the amount each is due, there are also a multitude of owners and investors who are also squabbling, and the two groups are squabbling with one another.
(EN: Psychologically, it became an interesting phenomenon because the conflict became depersonalized. A worker in a small business likely knows and sees the owner regularly and there is a personal aspect to their relationship. Workers in a corporation may never meet the investors who own the mill. This remoteness and depersonalization served to make the conflict between factions all the more vicious and inhumane.)
Walker then defines five classes of labor, which are often distinguished clearly:
- Those who produce for themselves and by themselves, using their own capital. This includes those who produce for their own consumption, but who may also trade their work directly with others, more or less in discernible units of product.
- The tenant producer, most often in the agricultural sector, who works the land owned by a landlord, for which the producer pays a rent (either fixed or as a proportion of his product) that is agreed upon in advance.
- The hireling whose labor does not produce a product (such as domestic servants, soldiers, teachers, and clergymen) whose compensation is often based on time devoted to their work rather than a reflection of wealth they produce, as they produce none.
- The hireling whose labor does contribute to the production of a product, and whose effort can be correlated to the quantity and quality of goods produced
- The employers themselves, insofar as those who supervise, organize, and manage a workforce while doing none of the hands-on tasks of production.
(EN: This categorization system leaves out a good number of professions, particularly those who are rewarded for exchange: marketers, salesmen, transporters, wholesalers, etc. whose value is not the product, but in attracting buyers and delivering products to them. These are not always to be included in the third class, because they are often compensated in relation to the monies collected from the sale of product.)
All of these are rightly considered to be "workers" and all of them receive remuneration that is referred to as a "wage" - but it can already be seen that some wages can be correlated to production whereas others cannot, though their labor is also necessary to the production and consumption of wealth. All are claimants to the profitability of their employer - and discounting any of them would lead to an incomplete and inaccurate consideration of the topic of wages.