§ 10. Friction in the adjustment of wages. The con formity of actual wages to the true equilibrium price under any given market conditions is never complete. Actual wages may be said, in somewhat indefinite phrase, to have "a tend ency to conform," to an abstract competitive price, meaning that the most fundamental forces are always working to that end. These forces, however, are counteracted by many other influences, some slight and temporary, and others strong and long continued. We do not here refer to such things as monopolistic power of organization which, however artificial it may seem, is a part of the economic situation for the time and determines the market-price. We refer to other condi tions, such as the following.
The wage received by any particular employee may be higher or lower than those of other workers and than the true market-price as a result of favoritism, due to friendship, re lationship, or bribery, in private employ, in corporations, or in government service.
As a whole, the prices of labor have more inertia and more momentum than do prices of material commodities. As the prices of the commodities that labor helps to produce go up or down, wages follow more slowly. This is true of wages whether the change is in the general scale of prices (see the standard of deferred payments in Vol. II) or in the price of the particular class of goods. Habits of thought count for more in wages than in most other prices. Caste and custom are great influences making for inertia of wages. The laborer thinks of his labor as worth so much, and in general is slow to ask more, and is loath to take less than he has been getting.
Combinations of workers may hasten the rise and retard the fall of the prevailing scale of wages. The adjustment of labor-supply to commodity prices is in large part brought about, therefore, when prices of products rise, by taking on less capable workers at the same wages, and by working more regularly and for more hours; and when prices fall, by throw ing the less efficient workers out of employment, and by work ing fewer hours. In contrast with wages, profits are quickly adjusted to price changes, going up quickly when prices of products rise, and going down, often for a time to a minus quantity, when prices fall. (See later under profits and en terprise.) § 11. Uniqueness of separate services. In many cases the individual employee can not get higher wages because of his immobility. He (or she) has a home, and must live at home, and tho he may have greatly improved in efficiency in the particular position, may not be able to accept positions open elsewhere at much higher salaries. He can not sell his
labor in an open market. Many positions of confidence and trust are such that it requires years of experience to gain ef ficiency, yet that experience and efficiency pertain to that particular job, and can not be in large part transferred else where. In such situations the employer may be able to retain this person, under existing market conditions, for less than he would have to pay to get some one else to fill the position sat isfactorily.
On the other hand an employer often is forced to pay a higher wage to hold an employee than on general price con ditions is warranted, in order to hol the services that have become particularly valuable to his b siness. In many cases, too, old employees are retained after they could be replaced by more efficient men at the same or lower salaries. Services are well-nigh the least standardized of all saleable things, and in countless cases both the laborer and his job have more or less the character of uniqueness; that is, there is no other job exactly like this one and no other laborer exactly suited for that particular work. These are facts which must neither be overlooked nor exaggerated to the point of obscuring the gen eral conformity of wages to market conditions.
§ 12. Labor-incomes and wealth-incomes. The funda mental principles of value and price apply fully to labor, as we have said. (See above, Chapter 18, section 1.) But the sale of the services of human beings is marked by important conditions—moral, political, social, and consequently also eco nomic—which distinguish it from the ordinary sale of material wealth. The distinction between men and things is from all these standpoints both of theoretical and of practical impor tance. It will not do to say : " The law of wages t Labor is a commodity, that 's all." Taking one point of view, and see ing only the value element common to all economic agents, we may be tempted to merge all in one category, and to say that men also are a form of In a democratic society where there is no chattel slavery and each worker must be deemed to be a free political agent, this distinction between men and things is largely what gives political economy any significance. In the social of economics, wealth I is always but a means to an en , whereas man is both a means (as laborer) and the end itsel (human welfare).