Saturday, July 14, 2012

What Social Classes Owe to Each Other 

William Graham Sumner - 1883


The discussion of "the relations of labor and capital" has not hitherto been very fruitful. It has been confused by ambiguous definitions, and it has been based upon assumptions about the rights and duties of social classes which are, to say the least, open to serious question as regards their truth and justice. If, then, we correct and limit the definitions, and if we test the assumptions, we shall find out whether there is anything to discuss about the relations of "labor and capital," and, if anything, what it is.

Let us first examine the terms.

1. Labor means properly, toil, irksome exertion, expenditure of productive energy.

2. The term is used, secondly, by a figure of speech, and in a collective sense, to designate the body of _persons_ who, having neither capital nor land, come into the industrial organization offering productive services in exchange for means of subsistence. These persons are united by community of interest into a group, or class, or interest, and, when interests come to be adjusted, the interests of this group will undoubtedly be limited by those of other groups.

3. The term labor is used, thirdly, in a more restricted, very popular and current, but very ill-defined way, to designate a limited sub-group among those who live by contributing productive efforts to the work of society. Every one is a laborer who is not a person of leisure. Public men, or other workers, if any, who labor but receive no pay, might be excluded from the category, and we should immediately pass, by such a restriction, from a broad and philosophical to a technical definition of the labor class. But merchants, bankers, professional men, and all whose labor is, to an important degree, mental as well as manual, are excluded from this third use of the term labor. The result is, that the word is used, in a sense at once loosely popular and strictly technical, to designate a group of laborers who separate their interests from those of other laborers. Whether farmers are included under "labor" in this third sense or not I have not been able to determine. It seems that they are or are not, as the interest of the disputants may require.

1. Capital is any product of labor which is used to assist production.

2. This term also is used, by a figure of speech, and in a collective sense, for the persons who possess capital, and who come into the industrial organization to get their living by using capital for profit. To do this they need to exchange capital for productive services. These persons constitute an interest, group, or class, although they are not united by any such community of interest as laborers, and, in the adjustment of interests, the interests of the owners of capital must be limited by the interests of other groups.

3. Capital, however, is also used in a vague and popular sense which it is hard to define. In general it is used, and in this sense, to mean employers of laborers, but it seems to be restricted to those who are employers on a large scale. It does not seem to include those who employ only domestic servants. Those also are excluded who own capital and lend it, but do not directly employ people to use it.

It is evident that if we take for discussion "capital and labor," if each of the terms has three definitions, and if one definition of each is loose and doubtful, we have everything prepared for a discussion which shall be interminable and fruitless, which shall offer every attraction to undisciplined thinkers, and repel everybody else.

The real collision of interest, which is the centre of the dispute, is that of employers and employed; and the first condition of successful study of the question, or of successful investigation to see if there is any question, is to throw aside the technical economic terms, and to look at the subject in its true meaning, expressed in untechnical language. We will use the terms "capital" and "labor" only in their strict economic significance, viz., the first definition given above under each term, and we will use the terms "laborers" and "capitalists" when we mean the persons described in the second definition under each term.

It is a common assertion that the interests of employers and employed are identical, that they are partners in an enterprise, etc. These sayings spring from a disposition, which may often be noticed, to find consoling and encouraging observations in the facts of sociology, and to refute, if possible, any unpleasant observations. If we try to learn what is true, we shall both do what is alone right, and we shall do the best for ourselves in the end. The interests of employers and employed as parties to a contract are antagonistic in certain respects and united in others, as in the case wherever supply and demand operate. If John gives cloth to James in exchange for wheat, John's interest is that cloth be good and attractive but not plentiful, but that wheat be good and plentiful; James' interest is that wheat be good and attractive but not plentiful, but that cloth be good and plentiful. All men have a common interest that all things be good, and that all things but the one which each produces be plentiful. The employer is interested that capital be good but rare, and productive energy good and plentiful; the employe is interested that capital be good and plentiful, but that productive energy be good and rare. When one man alone can do a service, and he can do it very well, he represents the laborer's ideal. To say that employers and employed are partners in an enterprise is only a delusive figure of speech. It is plainly based on no facts in the industrial system.

Employers and employed make contracts on the best terms which they can agree upon, like buyers and sellers, renters and hirers, borrowers and lenders. Their relations are, therefore, controlled by the universal law of supply and demand. The employer assumes the direction of the business, and takes all the risk, for the capital must be consumed in the industrial process, and whether it will be found again in the product or not depends upon the good judgment and foresight with which the capital and labor have been applied. Under the wages system the employer and the employé contract for time. The employé fulfills the contract if he obeys orders during the time, and treats the capital as he is told to treat it. Hence he is free from all responsibility, risk, and speculation. That this is the most advantageous arrangement for him, on the whole and in the great majority of cases, is very certain. Salaried men and wage-receivers are in precisely the same circumstances, except that the former, by custom and usage, are those who have special skill or training, which is almost always an investment of capital, and which narrows the range of competition in their case. Physicians, lawyers, and others paid by fees are workers by the piece. To the capital in existence all must come for their subsistence and their tools.

No comments:

Post a Comment