NOTES The labor-theory of value. Things go thus in the real world, however the student or the generous-minded social reformer at times may be tempted to shut his eyes to the truth, feeling that value ought to be in proportion to labor-time or to the unpleasantness of labor. There is a close correspondence, even identity, between the value of the goods and the value of the labor that produced them, but it is the value of the goods that is reflected to the labor, and not the reverse. For, if labor having a high value reflected from one product be applied to another product that has a low value, the value of that labor is in so far thrown away. As we saw, the values of goods resulting from equal labor-time of an iso lated laborer are often unequal; and a fortiori the values of equal labor times are sure to be still more unequal when the products result from the labor of different men of varied abilities and natures, trading in a community. There is therefore no unit of labor-time which can serve as a standard of the values of goods or which is embodied in equal proportions in goods of equal value. Rather, it appears that labor services are compared as to value only through the values they derive from their products. We thus speak of equal quantities of labor not as equal in time, but as equal in value, as so many dollars' worth.
It would be unnecessary to dwell on this truth were it not for the very common illusion that labor may be taken as the standard of value, and were it not for the frequent recurrence of the fallacious idea that goods in a market embody so-called labor-units in exact proportion to their values.
This idea that the value of goods is determined and measured by the quantity of labor put into them, is the "labor-theory of value" (not to be confused with the theory of the value of labor). It assumes that there is such a thing as a common standard unit of labor, a definite quantum, measurable antecedent to the value of the products. The labor-theory of value appears in manifold disguises both in popular doc trines and in systematic treatises on economics. The error in the theory is evident, first, because various kinds of labor differ in quality (or kind) not merely in quantity (or time) and, in truth, it is only through the values of their products that the different qualities of labor can be compared (singing with wood-chopping) ; secondly, because the values of goods differ not only with the labor applied (even if it were all of one quality) but with the amount of complementary agents used; thirdly, because of the differences in time elapsing between the application of labor, and the ultimate valuable results of the productive process.
(Of this more below, under time-value.) Various methods of remuneration. Many methods are employed to measure the services of wage workers, the main ones being by time and by the piece. In time work (by the hour, day, week, month, or year) a general average output is assumed, and the workman must come up to that standard if he is to hold his place. In piece work, the price per piece must be enough to make possible the prevailing time wage to workers of that grade if the supply is to be maintained in that in dustry. The piece price method is combined with time work, and is varied in many ways by giving premiums or bonuses for larger out puts within a given period. The conveniences of the different methods of payment vary from industry to industry, and even from task to task within the same factory, so that now one, now another method is followed. In any case, however, the aim is to find some convenient unit of service for the measurement of the amount of labor to be paid for, and to give a motive for efficiency to the worker. The wages paid by the various methods of remuneration—as by time, by the piece, by pre mium for output—all conform in a general way to the value of the service imputed through bidders in the market.
Real wages in Europe and America. Bearing in mind the limitations mentioned in sec. 7, the results of a study made by the British Board of Trade as to the conditions of the working classes in the cities of five different countries (about the years 1908-11) are here given. The further caution must be given that only certain groups of trades were investigated, those in building, engineering, and printing; and that the cost of living was taken only for food and rent (figures of rent here given are the average for two to six room apartments). The cost of living is calculated by assuming that food cost represents half of the cost of living and rent the other half. In fact food consti tutes something less than half, rent only about one fifth; but it will be observed that rents vary pretty closely in accord with money wages, and that the cost of things bought with the rest of wages, after pay ing for food and rent, consists very largely of the cost of labor. The figures are merely proportional (taking England as a base) and do not express any particular unit of money.