... ... PAGE 106 610 Pigou, A. C., Essays in Applied Economics. By Henry Higgs ... ... ... ... ... ... Schwiedland, E., Volkswirtschaftslehre. Vol. III. By M. Epstein 249 115 ... 252 ... 96 269 243 123 ... Venn, J. A., Foundations of Agricultural Economics. By C. S. Orwin ... Williams, G., Social Aspects of Industrial Problems. By Barbara Wolf, J., Markkurs, Reparationen und russisches Geschäft. By T. E. E. Schwiedland ... NOTES AND MEMORANDA :— ... Back, W. J., The Attack upon the Organiser Class ... Leppington, C. H. d'E., The War's Influence upon Village Life RECENT PERIODICALS AND NEW BOOKS ... ... } THE ECONOMIC JOURNALARY MARCH, 1924 THE POST-WAR WAGES PROBLEM 1 I BEFORE the war the economic changes to which wages had to be adjusted were gradual. Rates of wages, therefore, had a high degree of stability, and the relations between wages in allied or neighbouring occupations were equally stable. Wages, it may fairly be said, constituted a system, since there were well-understood rates for most occupations; the relations between these were stable and generally accepted, and a change in any one rate would prompt demands for a change in other rates. It was this systematic character of wages that made wage changes so simple a problem compared with to-day's task. The abstract and unanswerable general problem, What is a fair wage? never came up; the problem was always the problem of a particular rate for a particular job. This was argued by reference to the normal relation between the rate for that job and other rates, and to relevant economic changes that might justify a departure from that normal relation. A change in the value of money might make necessary a whole series of changes in rates of money wages, in order to restore the previous relation between different trades, or between wages and profits; but the problem was limited to modifying an established system of rates, so as to keep it in harmony with the economic facts on which wages ultimately rest. This modification itself was done largely by collective bargaining, for the individual employer or wage-earner, not by him; the ordinary employer had to work to conditions of employment which were set for him. Hence the wage system lent some of its own stability to prices, which, even more than wages, have got out of step since the war. The effect of the war was to dislocate this system and destroy 1 Paper read before Section F of the British Association at Liverpool, September, 1923. No. 133.-VOL. XXXIV. B its stability, with the result that we have been forced to face the problem of wages as a whole, and to consider absolute levels of wages in place of merely making adjustments. This result has been brought about in three ways: the war substituted sudden and extensive changes for the gradual changes to which we were accustomed before; it interrupted the process of continuous adjustment of wages to changed commercial conditions; and it introduced modifications, that brought wages into closer correspondence with war-time economic needs, but caused them to diverge from normal commercial needs. The rise in the cost of living, the profits of munition makers, the early losses and subsequent profits of other manufacturers, dilution, the creation of new industrial districts, the Government control of railways and coal-all involved either the need or the opportunity for extensive changes in wages, which the existing machinery of collective bargaining was too cumbrous to cope with. The orderly modification of wages to suit changes in the supply of different kinds of labour and changes in the demand for different kinds of work necessarily stopped, because the normal commercial basis of employment was lost. Instead, we had an attempt on the part of the Government to limit wage changes to bare cost of living advances, and to rely on other, authoritative, methods to direct labour to the changed purposes to which the war had given rise. Government control of wages, however, was successful only in lessening the force of the pull that the war enabled favoured classes of workers to exert; it did not neutralise it. Hence there were important modifications in wages, justified by the needs of industry in war-time, but bearing no necessary relation to peace-time commercial conditions. Unskilled labour, male and female, being for the first time insufficient to meet demand, was able to improve its relative position; the Committee on Production's policy of awarding flat-rate advances to meet the increased cost of living was a recognition, probably unconscious, of the improved bargaining position of the labourer. Control lost much of its effectiveness, because it was not imposed at the outbreak of war; by the time it was imposed systematically, considerable divergences had already taken place in the advances secured by different classes of workers. And in some directions control accentuated rather than prevented divergence from peacetime ratios. The encouragement of systems of payment by results, before sufficient experience was available to set piece-rates and bonus-times that would yield without wide variation earnings of the intended amount, led to wide divergences of wages, and In this dislocation of the pre-war relations between the Employers were equally without guidance as to what they could concede, since commercial conditions were so hard to judge. They resisted demands for increases in wages on the ground that |