The Principles of Political Economy

Henry Sidgwick

Book III

Chapter VI


§3. But granting that the encroachment on the opportunities of existing labourers, involved in private property, is adequately compensated to such labourers in the aggregate, it does not follow that the compensation is adequate in the case of all classes of these labourers. The question still remains whether the individualistic system of private property and free contract tends to give particular labourers what their services are fairly worth. And this question is one that cannot be avoided by the advocates of this system: since the prevalent acquiescence in the results of competitive distribution is largely due to the more or less definite conviction that free competition affords the best realisation possible, in a community of human beings, of the principle that ``every man should have the opportunity of obtaining a fair return for his labour''. Indeed we may say that Political Economy has importantly modified popular ethical conceptions, by defining the common moral ideal of equity in exchange, where pre-economic morality had left it vague and indeterminate. The pre-economic morality, whether of the vulgar or of philosophers, considered services and products as possessing ``intrinsic worth''; and the same conception still governs the moral judgments of the vulgar, even in the present stage of economic culture---thus, one continually hears thrifty housekeepers agreeing in moral disapprobation of the present race of servants, for their persistence in demanding ``more than they are worth''. But reflection soon shows that the ordinary estimate of this intrinsic worth is merely dependent on custom and habit;---so that some other standard of value has to be found, unless we are prepared to condemn any deviation from custom as extortionate. And this no one in modern times is prepared to do: extended historical knowledge has shown us the wide variations of such customs from place to place, and the changes that time has continually wrought in them; and has thus irresistibly demonstrated the irrationality of setting up as a final standard the custom of a particular age and country. In this difficulty the economic ideal of free competition has been widely accepted as supplying the required standard; so that the price, which competition tends at any time to fix as the market-price of any kind of services, has been taken to represent the universal or social---and therefore morally valid---estimate of the ``real worth'' of such services.

But---apart from the exceptional cases noticed in a previous chapter---this view of the market-price of services is only generally true with a very important qualification. The competitive remuneration of the individual's service to society does not tend to correspond to his share of the total utility of the kind of services he renders: what it tends to measure is merely its final utility,---what the community would lose by the subtraction of a single individual's services. This distinction at once explains and is illustrated by the advantage which under certain circumstances a class of labourers may conceivably obtain by a combination which enables them to sell their services in the aggregate; for they thus force society to reckon the total utility of this aggregate, which may be indefinitely greater than the sum of the additional utilities of the portions supplied by the individual labourers, estimated separately. And when any set of scantily paid workers complain of their wages as ``unfair'', this discrepancy between total and final utility often seems to be vaguely present to their minds; they consider the great importance to society of the aggregate of the services of their class, rather than the comparatively trifling importance of the services of any individual worker. Often, however, the complaint expresses simply the moral dissatisfaction with the proportionment of reward to final utility, which arises when the causes that influence the latter are clearly understood and carefully considered. If a man is as industrious to-day as he was yesterday, it seems hard that he should suffer because some unforeseen decrease in the demand for his commodity, or some increase in the supply of his particular kind of labour, has reduced the final utility of his services.

But if we reject the measurement of ``worth'' of labour by final utility, what other standard can we take? To determine the reward of any species of labour by estimating the loss which the subtraction of the whole aggregate of such labour would inflict on society is obviously futile and impracticable. The production of necessaries and that of luxuries would from this point of view be incommensurable; all, if permitted, would choose the former; and no reason could be given for selecting some rather than others for this high function and remuneration.

It may perhaps be suggested that we should estimate desert not by the utility rendered to the recipient of a service, but by the effort of the worker. But though this estimate is certainly in harmony with the general notion of good and ill desert, outside the region of exchange,---since the merit of a deserving act is generally held to lie in its intention rather than its result,---the attempt to apply this principle to the distribution of social produce would involve us in insuperable difficulties. For not only should we have to abstain from rewarding physical strength and quickness, and ingenuity, so far as these qualities are independent of the agent's voluntary effort; but we should find it hard to show why even energy and perseverance are to be remunerated, unless we can prove that these qualities are not merely inherited natural gifts: so that the principle of rewarding desert would be in danger of finding no realisation, through our scrupulous anxiety to realise it exactly! On the whole, therefore, we seem led to the conclusion that the demand for greater justice in distribution can only be practically interpreted as a demand that differences in remuneration, due to causes other than the voluntary exertions of the labourers remunerated, should be reduced as far as possible.

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