In countries which are fast advancing to riches, the low rate of profit may, in the price of many commodities, compensate the high wages of labour, and enable those countries to sell as cheap as their less thriving neighbours, among whom the wages of labour may be lower.
In reality, high profits tend much more to raise the price of work than high wages. If, in the linen manufacture, for example, the wages of the different working people, the flax-dressers, the spinners, the weavers, etc. should all of them be advanced twopence a-day, it would be necessary to heighten the price of a piece of linen only by a number of twopences equal to the number of people that had been employed about it, multiplied by the number of days during which they had been so employed. That part of the price of the commodity which resolved itself into the wages, would, through all the different stages of the manufacture, rise only in arithmetical proportion to this rise of wages. But if the profits of all the different employers of those working people should be raised five per cent. that part of the price of the commodity which resolved itself into profit would, through all the different stages of the manufacture, rise in geometrical proportion to this rise of profit. The employer of the flax dressers would, in selling his flax, require an additional five per cent. upon the whole value of the materials and wages which he advanced to his workmen. The employer of the spinners would require an additional five per cent. both upon the advanced price of the flax, and upon the wages of the spinners. And the employer of the weavers would require alike five per cent. both upon the advanced price of the linen-yarn, and upon the wages of the weavers. In raising the price of commodities, the rise of wages operates in the same manner as simple interest does in the accumulation of debt. The rise of profit operates like compound interest. Our merchants and master manufacturers complain much of
the bad effects of high wages in raising the price, and thereby lessening the sale of their goods, both at home and abroad. They say nothing concerning the bad effects of high profits ; they are silent with regard to the pernicious effects of their own gains; they complain only of those of other people.
OF WAGES AND PROFIT IN THE DIFFERENT EMPLOYMENTS OF LABOUR AND
STOCK.
The whole of the advantages and disadvantages of the different employments of labour and
stock, must, in the same neighbourhood, be either perfectly equal, or continually tending to
equality. If, in the same neighbourhood, there was any employment evidently either more or
less advantageous than the rest, so many people would crowd into it in the one case, and so
many would desert it in the other, that its advantages would soon return to the level of other
employments. This, at least, would be the case in a society where things were left to follow
their natural course, where there was perfect liberty, and where every man was perfectly free
both to choose what occupation he thought proper, and to change it as often as he thought
proper. Every man's interest would prompt him to seek the advantageous, and to shun the
disadvantageous employment.
Pecuniary wages and profit, indeed, are everywhere in Europe extremely different, according
to the different employments of labour and stock. But this difference arises, partly from
certain circumstances in the employments themselves, which, either really, or at least in the
imagination of men, make up for a small pecuniary gain in some, and counterbalance a great
one in others, and partly from the policy of Europe, which nowhere leaves things at perfect
liberty.
The particular consideration of those circumstances, and of that policy, will divide this
Chapter into two parts.
PART I. Inequalities arising from the nature of the employments themselves. The five following are the principal circumstances which, so far as I have been able to
observe, make up for a small pecuniary gain in some employments, and counterbalance a
great one in others. First, the agreeableness or disagreeableness of the employments
themselves; secondly, the easiness and cheapness, or the difficulty and expense of learning
them ; thirdly, the constancy or inconstancy of employment in them ; fourthly, the small or
great trust which must be reposed in those who exercise them; and, fifthly, the probability or
improbability of success in them.
First, the wages of labour vary with the ease or hardship, the cleanliness or dirtiness, the
honourableness or dishonourableness, of the employment. Thus in most places, take the year
round, a journeyman tailor earns less than a journeyman weaver. His work is much easier. A
journeyman weaver earns less than a journeyman smith. His work is not always easier, but it
is much cleanlier. A journeyman blacksmith, though an artificer, seldom earns so much in
twelve hours, as a collier, who is only a labourer, does in eight. His work is not quite so dirty,
is less dangerous, and is carried on in day-light, and above ground. Honour makes a great part
of the reward of all honourable professions. In point of pecuniary gain, all things considered,
they are generally under-recompensed, as I shall endeavour to shew by and by. Disgrace has
the contrary effect. The trade of a butcher is a brutal and an odious business ; but it is in most
places more profitable than the greater part of common trades. The most detestable of all
employments, that of public executioner, is, in proportion to the quantity of work done, better
paid than any common trade whatever.
Hunting and fishing, the most important employments of mankind in the rude state of society,
become, in its advanced state, their most agreeable amusements, and they pursue for pleasure
what they once followed from necessity. In the advanced state of society, therefore, they are
all very poor people who follow as a trade, what other people pursue as a pastime. Fishermen
have been so since the time of Theocritus. {See Idyllium xxi.}. A poacher is everywhere a
very poor man in Great Britain. In countries where the rigour of the law suffers no poachers,
the licensed hunter is not in a much better condition. The natural taste for those employments
makes more people follow them, than can live comfortably by them; and the produce of their
labour, in proportion to its quantity, comes always too cheap to market, to afford any thing but
the most scanty subsistence to the labourers.
Disagreeableness and disgrace affect the profits of stock in the same manner as the wages of
labour. The keeper of an inn or tavern, who is never master of his own house, and who is
exposed to the brutality of every drunkard, exercises neither a very agreeable nor a very
creditable business. But there is scarce any common trade in which a small stock yields so
great a profit.
Secondly, the wages of labour vary with the easiness and cheapness, or the difficulty and
expense, of learning the business.
When any expensive machine is erected, the extraordinary work to be performed by it before
it is worn out, it must be expected, will replace the capital laid out upon it, with at least the
ordinary profits. A man educated at the expense of much labour and time to any of those
employments which require extraordinary dexterity and skill, may be compared to one of
those expensive machines. The work which he learns to perform, it must be expected, over
and above the usual wages of common labour, will replace to him the whole expense of his
education, with at least the ordinary profits of an equally valuable capital. It must do this too
in a reasonable time, regard being had to the very uncertain duration of human life, in the
same manner as to the more certain duration of the machine.
The difference between the wages of skilled labour and those of common labour, is founded
upon this principle.
The policy of Europe considers the labour of all mechanics, artificers, and manufacturers, as
skilled labour ; and that of all country labourers us common labour. It seems to suppose that
of the former to be of a more nice and delicate nature than that of the latter. It is so perhaps in
some cases ; but in the greater part it is quite otherwise, as I shall endeavour to shew by and
by. The laws and customs of Europe, therefore, in order to qualify any person for exercising
the one species of labour, impose the necessity of an apprenticeship, though with different
degrees of rigour in different places. They leave the other free and open to every body. During
the continuance of the apprenticeship, the whole labour of the apprentice belongs to his
master. In the meantime he must, in many cases, be maintained by his parents or relations,
and, in almost all cases, must be clothed by them. Some money, too, is commonly given to the
master for teaching him his trade. They who cannot give money, give time, or become bound
for more than the usual number of years ; a consideration which, though it is not always
advantageous to the master, on account of the usual idleness of apprentices, is always
disadvantageous to the apprentice. In country labour, on the contrary, the labourer, while he is
employed about the easier, learns the more difficult parts of his business, and his own labour
maintains him through all the different stages of his employment. It is reasonable, therefore,
that in Europe the wages of mechanics, artificers, and manufacturers, should be somewhat
higher than those of common labourers. They are so accordingly, and their superior gains
make them, in most places, be considered as a superior rank of people. This superiority,
however, is generally very small: the daily or weekly earnings of journeymen in the more
common sorts of manufactures, such as those of plain linen and woollen cloth, computed at an
average, are, in most places, very little more than the day-wages of common labourers. Their
employment, indeed, is more steady and uniform, and the superiority of their earnings, taking
the whole year together, may be somewhat greater. It seems evidently, however, to be no
greater than what is sufficient to compensate the superior expense of their education.
Education in the ingenious arts, and in the liberal professions, is still more tedious and
expensive. The pecuniary recompence, therefore, of painters and sculptors, of lawyers and
physicians, ought to be much more liberal; and it is so accordingly.
The profits of stock seem to be very little affected by the easiness or difficulty of learning the
trade in which it is employed. All the different ways in which stock is commonly employed in
great towns seem, in reality, to be almost equally easy and equally difficult to learn. One
branch, either of foreign or domestic trade, cannot well be a much more intricate business than
another.
Thirdly, the wages of labour in different occupations vary with the constancy or inconstancy
of employment.
Employment is much more constant in some trades than in others. In the greater part of
manufactures, a journeyman maybe pretty sure of employment almost every day in the year
that he is able to work. A mason or bricklayer, on the contrary, can work neither in hard frost
nor in foul weather, and his employment at all other times depends upon the occasional calls
of his customers. He is liable, in consequence, to be frequently without any. What he earns,
therefore, while he is employed, must not only maintain him while he is idle, but make him
some compensation for those anxious and desponding moments which the thought of so
precarious a situation must sometimes occasion. Where the computed earnings of the greater
part of manufacturers, accordingly, are nearly upon a level with the day-wages of common
labourers, those of masons and bricklayers are generally from one-half more to double those
wages. Where common labourers earn four or five shillings a-week, masons and bricklayers
frequently earn seven and eight; where the former earn six, the latter often earn nine and ten ;
and where the former earn nine and ten, as in London, the latter commonly earn fifteen and
eighteen. No species of skilled labour, however, seems more easy to learn than that of masons
and bricklayers. Chairmen in London, during the summer season, are said sometimes to be
employed as bricklayers. The high wages of those workmen, therefore, are not so much the
recompence of their skill, as the compensation for the inconstancy of their employment.
A house-carpenter seems to exercise rather a nicer and a more ingenious trade than a mason.
In most places, however, for it is not universally so, his day-wages are somewhat lower. His
employment, though it depends much, does not depend so entirely upon the occasional calls
of his customers; and it is not liable to be interrupted by the weather.
When the trades which generally afford constant employment, happen in a particular place not
to do so, the wages of the workmen always rise a good deal above their ordinary proportion to
those of common labour. In London, almost all journeymen artificers are liable to be called
upon and dismissed by their masters from day to day, and from week to week, in the same
manner as day-labourers in other places. The lowest order of artificers, journeymen tailors,
accordingly, earn their half-a-crown a-day, though eighteen pence may be reckoned the wages
of common labour. In small towns and country villages, the wages of journeymen tailors
frequently scarce equal those of common labour ; but in London they are often many weeks
without employment, particularly during the summer.
When the inconstancy of employment is combined with the hardship, disagreeableness, and
dirtiness of the work, it sometimes raises the wages of the most common labour above those
of the most skilful artificers. A collier working by the piece is supposed, at Newcastle, to earn
commonly about double, and, in many parts of Scotland, about three times, the wages of
common labour. His high wages arise altogether from the hardship, disagreeableness, and
dirtiness of his work. His employment may, upon most occasions, be as constant as he
pleases. The coal-heavers in London exercise a trade which, in hardship, dirtiness, and
disagreeableness, almost equals that of colliers ; and, from the unavoidable irregularity in the
arrivals of coal-ships, the employment of the greater part of them is necessarily very
inconstant. If colliers, therefore, commonly earn double and triple the wages of common
labour, it ought not to seem unreasonable that coal-heavers should sometimes earn four and
five times those wages. In the inquiry made into their condition a few years ago, it was found
that, at the rate at which they were then paid, they could earn from six to ten shillings a-day.
Six shillings are about four times the wages of common labour in London; and, in every
particular trade, the lowest common earnings may always be considered as those of the far
greater number. How extravagant soever those earnings may appear, if they were more than
sufficient to compensate all the disagreeable circumstances of the business, there would soon
be so great a number of competitors, as, in a trade which has no exclusive privilege, would
quickly reduce them to a lower rate.
The constancy or inconstancy of employment cannot affect the ordinary profits of stock in any
particular trade. Whether the stock is or is not constantly employed, depends, not upon the
trade, but the trader.
Fourthly, the wages of labour vary according to the small or great trust which must be reposed
in the workmen.
The wages of goldsmiths and jewellers are everywhere superior to those of many other
workmen, not only of equal, but of much superior ingenuity, on account of the precious
materials with which they are entrusted. We trust our health to the physician, our fortune, and
sometimes our life and reputation, to the lawyer and attorney. Such confidence could not
safely be reposed in people of a very mean or low condition. Their reward must be such,
therefore, as may give them that rank in the society which so important a trust requires. The
long time and the great expense which must be laid out in their education, when combined
with this circumstance, necessarily enhance still further the price of their labour.
When a person employs only his own stock in trade, there is no trust; and the credit which he
may get from other people, depends, not upon the nature of the trade, but upon their opinion
of his fortune, probity and prudence. The different rates of profit, therefore, in the different
branches of trade, cannot arise from the different degrees of trust reposed in the traders.
Fifthly, the wages of labour in different employments vary according to the probability or
improbability of success in them.
The probability that any particular person shall ever be qualified for the employments to
which he is educated, is very different in different occupations. In the greatest part of
mechanic trades success is almost certain; but very uncertain in the liberal professions. Put
your son apprentice to a shoemaker, there is little doubt of his learning to make a pair of
shoes; but send him to study the law, it as at least twenty to one if he ever makes such
proficiency as will enable him to live by the business. In a perfectly fair lottery, those who
draw the prizes ought to gain all that is lost by those who draw the blanks. In a profession,
where twenty fail for one that succeeds, that one ought to gain all that should have been
gained by the unsuccessful twenty. The counsellor at law, who, perhaps, at near forty years of
age, begins to make something by his profession, ought to receive the retribution, not only of
his own so tedious and expensive education, but of that of more than twenty others, who are
never likely to make any thing by it. How extravagant soever the fees of counsellors at law
may sometimes appear, their real retribution is never equal to this. Compute, in any particular
place, what is likely to be annually gained, and what is likely to be annually spent, by all the
different workmen in any common trade, such as that of shoemakers or weavers, and you will
find that the former sum will generally exceed the latter. But make the same computation with
regard to all the counsellors and students of law, in all the different Inns of Court, and you
will find that their annual gains bear but a very small proportion to their annual expense, even
though you rate the former as high, and the latter as low, as can well be done. The lottery of
the law, therefore, is very far from being a perfectly fair lottery ; and that as well as many
other liberal and honourable professions, is, in point of pecuniary gain, evidently
under-recompensed.
Those professions keep their level, however, with other occupations ; and, notwithstanding these discouragements, all the most generous and liberal spirits are eager to
crowd into them. Two different causes contribute to recommend them. First, the desire of the
reputation which attends upon superior excellence in any of them ; and, secondly, the natural
confidence which every man has, more or less, not only in his own abilities, but in his own
good fortune.
To excel in any profession, in which but few arrive at mediocrity, it is the most decisive mark
of what is called genius, or superior talents. The public admiration which attends upon such
distinguished abilities makes always a part of their reward; a greater or smaller, in proportion
as it is higher or lower in degree. It makes a considerable part of that reward in the profession
of physic ; a still greater, perhaps, in that of law; in poetry and philosophy it makes almost the
whole.
There are some very agreeable and beautiful talents, of which the possession commands a
certain sort of admiration, but of which the exercise, for the sake of gain, is considered,
whether from reason or prejudice, as a sort of public prostitution. The pecuniary recompence,
therefore, of those who exercise them in this manner, must be sufficient, not only to pay for
the time, labour, and expense of acquiring the talents, but for the discredit which attends the
employment of them as the means of subsistence. The exorbitant rewards of players,
opera-singers, opera-dancers, etc. are founded upon those two principles ; the rarity and
beauty of the talents, and the discredit of employing them in this manner. It seems absurd at
first sight, that we should despise their persons, and yet reward their talents with the most
profuse liberality. While we do the one, however, we must of necessity do the other, Should
the public opinion or prejudice ever alter with regard to such occupations, their pecuniary
recompence would quickly diminish. More people would apply to them, and the competition
would quickly reduce the price of their labour. Such talents, though far from being common,
are by no means so rare as imagined. Many people possess them in great perfection, who
disdain to make this use of them; and many more are capable of acquiring them, if any thing
could be made honourably by them.
The over-weening conceit which the greater part of men have of their own abilities, is an
ancient evil remarked by the philosophers and moralists of all ages. Their absurd presumption
in their own good fortune has been less taken notice of. It is, however, if possible, still more
universal. There is no man living, who, when in tolerable health and spirits, has not some
share of it. The chance of gain is by every man more or less over-valued, and the chance of
loss is by most men under-valued, and by scarce any man, who is in tolerable health and
spirits, valued more than it is worth.
That the chance of gain is naturally overvalued, we may learn from the universal success of
lotteries. The world neither ever saw, nor ever will see, a perfectly fair lottery, or one in which
the whole gain compensated the whole loss; because the undertaker could make nothing by it.
In the state lotteries, the tickets are really not worth the price which is paid by the original
subscribers, and yet commonly sell in the market for twenty, thirty, and sometimes forty per
cent. advance. The vain hopes of gaining some of the great prizes is the sole cause of this
demand. The soberest people scarce look upon it as a folly to pay a small sum for the chance
of gaining ten or twenty thousand pounds, though they know that even that small sum is
perhaps twenty or thirty per cent. more than the chance is worth. In a lottery in which no prize
exceeded twenty pounds, though in other respects it approached much nearer to a perfectly
fair one than the common state lotteries, there would not be the same demand for tickets. In
order to have a better chance for some of the great prizes, some people purchase several
tickets ; and others, small shares in a still greater number. There is not, however, a more
certain proposition in mathematics, than that the more tickets you adventure upon, the more
likely you are to be a loser. Adventure upon all the tickets in the lottery, and you lose for
certain ; and the greater the number of your tickets, the nearer you approach to this certainty.
That the chance of loss is frequently undervalued, and scarce ever valued more than it is
worth, we may learn from the very moderate profit of insurers. In order to make insurance,
either from fire or sea-risk, a trade at all, the common premium must be sufficient to
compensate the common losses, to pay the expense of management, and to afford such a profit
as might have been drawn from an equal capital employed in any common trade. The person
who pays no more than this, evidently pays no more than the real value of the risk, or the
lowest price at which he can reasonably expect to insure it. But though many people have
made a little money by insurance, very few have made a great fortune; and, from this
consideration alone, it seems evident enough that the ordinary balance of profit and loss is not
more advantageous in this than in other common trades, by which so many people make
fortunes. Moderate, however, as the premium of insurance commonly is, many people despise
the risk too much to care to pay it. Taking the whole kingdom at an average, nineteen houses
in twenty, or rather, perhaps, ninety-nine in a hundred, are not insured from fire. Sea-risk is
more alarming to the greater part of people ; and the proportion of ships insured to those not
insured is much greater. Many sail, however, at all seasons, and even in time of war,
without any insurance. This may sometimes, perhaps, be done without any imprudence. When
a great company, or even a great merchant, has twenty or thirty ships at sea, they may, as it
were, insure one another. The premium saved up on them all may more than compensate such
losses as they are likely to meet with in the common course of chances. The neglect of
insurance upon shipping, however, in the same manner as upon houses, is, in most cases, the
effect of no such nice calculation, but of mere thoughtless rashness, and presumptuous
contempt of the risk.
The contempt of risk, and the presumptuous hope of success, are in no period of life more
active than at the age at which young people choose their professions. How little the fear of
misfortune is then capable of balancing the hope of good luck, appears still more evidently in
the readiness of the common people to enlist as soldiers, or to go to sea, than in the eagerness
of those of better fashion to enter into what are called the liberal professions.
What a common soldier may lose is obvious enough. Without regarding the danger, however,
young volunteers never enlist so readily as at the beginning of a new war ; and though they
have scarce any chance of preferment, they figure to themselves, in their youthful fancies, a
thousand occasions of acquiring honour and distinction which never occur. These romantic
hopes make the whole price of their blood. Their pay is less than that of common labourers,
and, in actual service, their fatig