i.e., in reference to the last portion of each supply of or demand for anything that is bought or sold, there must be brought about an exact equivalence of utility, of worth, and of remuneration, for the marginal increments in all employment.'So far as the economic forces work without friction, they secure to everyone the equivalent of his industrial significance at the part of the industrial organism at which he is placed.'2 Elsewhere3he asseverates that, as regards the workers in any employment, this means that 'they are already getting as much as their work is worth,' and that if they are to get more, this 'more' can only be got either out of 'communal funds,' or by making their work worth more.The same application of the marginalist doctrine is made by Professor Chapman.'The theory, then, merely declares that each person will tend to receive as his wage his value --that is, the value of this marginal product-no more and no less.In order to get more than he actually does get, he must become more valuable, --work harder, for instance -- that is, he must add more to the product in which he participated.'4 This is precisely the old 'laissez-faire, laissez-aller'
teaching, fortified by the conception that some special virtue attaches to the equalising process which goes on 'at the margin' of each employment of the factors of production.
The 'law of distribution' which emerges is that every owner of any factor of production 'tends to receive as remuneration' exactly what it is 'worth'.Now this 'law' is doubly defective.Its first defect arises from the fact that economic science assigns no other meaning to the 'worth'
or 'value' of anything than what it actually gets in the market.To say, therefore, that anybody 'gets what he is worth', is merely an identical proposition, and conveys no knowledge.The second defect is the reliance upon a 'tendency' which falsely represents the normal facts and forces.
It is false in three respects.It assumes in the first place an infinite divisibility of the several factors, necessary to secure the accurate balance of 'preferences' at the margins.It next assumes perfect mobility or freedom of access for all capital and labour into all avenues of employment.Finally, it assumes a statical condition of industry, so that the adjustment of the factors on a basis of equal productivity and equal remuneration at the margins may remain undisturbed.All three assumptions are unwarranted.
Very few sorts of real capital or labour approach the ideal of infinite divisibility which marginalism requires.An individual worker, sometimes a group, is usually the minimal 'drop' of labour, and capital is only infinitely divisible when it is expressed in terms of money, instead of plants, machines or other concrete units.Still less is it the case that capital or labour flows or 'tends' to flow with perfect accuracy and liberty of movement into every channel of employment where it is required, so as to afford equality of remuneration at the several margins.Lastly, in most industrial societies the constant changes taking place, in volume and in methods of industry, entail a corresponding diversity in the productivity and the remuneration of the capital and labour employed in the various industries 'at the margin.'5§8.This slightly technical disquisition is rendered necessary by the wide acceptance which 'marginalism' has won in academic circles.
Its expositors are able to deduce from it practical precepts very acceptable to those politicians and business men who wish to show the injustice, the damage and the final futility of all attempts of the labouring classes, by the organised pressure of trade unionism or by politics, to get higher wages or other expensive improvements of the conditions of their employment.
For if 'marginalism' can prove that, as Professor Chapman holds, 'in order to get more than he actually does get, he must become more valuable-work harder, for example,' it has evidently re-created the defences against the attacks of the workers upon the fortresses of capital which were formerly supplied by the wage-fund theory in its most rigorous form.If wages can only rise on condition of the workers working harder or better, no divergence of interests exists between capital and labour, no injustice is done to any class of labour, however low its 'worth' may be, and no remedy exists for poverty except through improved efficiency of the workers.If our political economists can bring this gospel of marginalism home to the hearts and heads of the working-classes, they will set aside all their foolish attempt to get higher wages out of rents and property and will set themselves to producing by harder, more skilful and more careful labour an enlarged product, the whole or part of which may come to them by the inevitable operation of the economic law of equal distribution at the margin!
It is right to add that an attempt is sometimes made to bring marginalism into a measure of conformity with the notorious fact that large discrepancies exist in the rates of remuneration for capital or labour or both in various industries, by treating these inequalities as brief temporary expedients for promoting the 'free flows' of productive power from less socially productive into more socially productive channels, and for stimulating improvements in the arts of industry.Abnormal gains, of the nature of prizes or bonuses, are thus obtainable by individual employment, or by groups of employers, who are pioneers in some new industry or in the introduction of some new invention or other economy.But these rewards of special merit, it is argued, are not lasting, but disappear so soon as they have performed their socially serviceable function of drawing into the favoured employments the increased quantity of new productive power which will restore the equality of productivity and remuneration 'at the margins'.
