12: The Wages Class
The "wages" class is meant to describe all those workers who sell their services to an employer and whose pay is an agreed-upon amount. It does not, strictly speaking, involve the independent craftsman who employs himself, nor those whose compensation is closely tied to their productivity. In Walker's time, he estimated it to be about 40% of the working population (EN: in the present day, it is likely far more.)
A great deal of squawking is made about the wages class in the press and in the streets, as the connection between effort and reward is unclear and disconnected from the cost to the consumer. The cobbler cannot claim to be underpaid for his work, as he can see a clear connection between the quality and quantity of shoes he produces and his income. Nor can a journalist demand cobblers should have more compensation without obviously insisting that consumers should pay more for the shoes they purchase. But when there is a worker in a shoe factory, the connection between work and pay, between his wages and the prices consumers pay, is less obvious and wages can be misconstrued as philanthropy or misanthropy.
It is also necessary to disambiguate between the wages received by a worker, which constitute the income from which he provides for the wants and needs of his household, from the wages paid by his employer, which constitute an expense of doing business and are to be covered by the price that consumers pay. They are, in fact, the same money and may even in some instances involve the very same coins, but they are different concepts.
There is rather a long passage about the disappearance of the "peasant proprietor" from England, as well as the rest of Europe. People who farmed their own land and traded their produce in market are largely being replaced by larger landowners who pay laborers to work their land. The artisans, who would sell their own product from a workshop, are also being replaced as factory-made goods sell for less and machines diminish the need for traditional skills. In all, the economy seems to favor the end of the man who is his own master.
The self-employed laborer is a different species or worker to the wage-earner, in that he seeks a market for his finished goods and his effort to produce them is a secondary concern. His welfare is more directly tied to his productivity, skill, and demand for goods in the marketplace. And "more directly" reflects that a wage-earner's income is often tied to those same things, but through the subjective judgment of his employer.
He next distinguishes the tenant farmer from the wage-earning class, as the tenant is no different than the peasant proprietor in terms of his compensation. While he pays a fixed amount to his land-lord in exchange for the use of land, his income is otherwise derived directly from the product of his labor, and not the labor itself.
He further ruminates to exclude workers whose payment is a share of the profits of the product - as his income is still derived from the success of the operation as a whole. His is more of a partnership arrangement on a cooperative venture. Likewise, those who are paid for piece-work are not wage-earners as their income is derived from their productivity directly - they are like proprietors who sell to a single customer.
He also draws a distinction between salary and wages, as such individuals are typically employed for a long period of time and their work does not produce a product. The domestic servant is such an example, as his master's income is not related to the labor of his servants. Neither is the income of a manufacturing operation dependent on its accountants' labor. Rather, they are hired out of the revenue of the employer to help with tasks that are necessary, but not directly related to production.
The wage-earner performs a task that is directly related to the production of his employer's product, or the provisioning of his employer's service to customers. His work generates the means to pay his wage. The amount of labor an employer needs thus varies according to the amount of product he produces, which is planned according to the amount he predicts being able to sell.
The wage-system does, however, facilitate an economic system in which there can be significant production without wealth. To produce goods, a worker must have the capital to purchase equipment and supplies and to sustain his household until the goods are fabricated and sold. But a wage-earner has no such limitation - he receives funds to sustain his household well in advance of the completion and sale of his goods.
In essence, an employer is advancing wage-earners the money that the goods they fabricate today might fetch in the future - and the "might" rather than "will" denotes that the employer also absorbs the risk that the goods will not be sold.
The industrial system also makes labor a commodity that can flow more freely where it is needed. Because the peasant proprietor must invest his own capital in his shop, tools, equipment, and supplies, he cannot change his occupation easily. A wage-earner may change from being a weaver to a carpenter to a blacksmith to a baker by moving himself about various workplaces and using equipment and supplies furnished by his employer. This creates greater flexibility and elasticity for the economy within the market.
The notion that all members of an economic system bear equal risk, as some have argued, is absurd: it is inevitable that some will bear greater risk than others. The wage-earner system places the greater share of risk upon the owners of capital, who are fewer in number and better equipped to weather economic hardship than the larger number of workers whose financial resources are limited.
There is also the misrepresentation of wages as a competition between employer and employee. It seems to be so, as the income of one is the expense of another, but both derive from the same source: the revenue earned from the same of merchandise to the customer. In this struggle, employer and employee are collaborators. There are a great many fallacies and fictions about the relationship between the two if this is remembered.