the natural stores of materials, the larger the whole product of industry and the larger also the share of the price that is attrib uted to the labor. Real wages must vary (other things equal) with available supplies of elementary materials, rising when they become relatively more abundant, and falling with their exhaustion or relative diminution. This is illustrated broadly by the high real incomes of the common laborer in new coun tries, despite some other adverse conditions, and by the lower incomes in countries poor in natural resources. As those nat ural resources that are exhaustible, as lumber, coal, and metal ores, grow less, their money price rises. That makes the pur chasing power of a day's labor less in exchange not only for those raw materials, but for everything which those materials are indirectly helping to create. It is possible to counteract this effect in part or wholly, temporarily or permanently, by substitutions and by other improvements, and by the discovery of new resources beneath the surface of the earth.
Even when population is stationary or decreasing, an abso lute decrease of the supplies of many of the principal natural materials is certain to take place and, in so far, real wages may be reduced. A decreasing food supply, on the contrary, can hardly occur with a stationary or slowly increasing popu lation such as results from effective volitional control.
Change in the artificial agents for shaping and moving things is the second great objective cause of changes in wages. It has been shown (Chapters 12 and 36) how the utilization of wealth is affected by scarcity and abundance of agents, and how saving increases the bounty of agents, improves the methods of production, and benefits the community as a whole, including those who have had no part in the saving (Chapters 24 and 38). Thus from several sides it has been seen how the necessary influence of a decaying equipment of tools must force laborers to lower, less effective, margins in the existing stocks of tools, and on the other hand how the rela tive increases of those agents, and the growth of science and invention, tend toward the raising of production and of the proportion going as wages. Other things being equal, real wages vary with the agencies for shaping and moving things, rising when they become relatively more abundant and effec tive, and falling if they decline. Except as affected by the increasing scarcity of some elemental materials, the reason able prospect is that tools and machinery will steadily be multiplied in number and improved in efficiency. This is a basis for optimistic prophecy.s § 6. Labor and its environment. Decreasing and increas ing returns are cases of changing proportionality, involv ing social, rather than individual adjustment; not the ad justment of enterpriser's money cost to prices, but of the whole labor supply in relation to the employment afforded by its environment. The individual employer thinks of the sup ply of labor as consisting of men seeking employment in his special industry. In this view it is the demand of the em
ployers that apportions the workers among the various occu pations, and seems to determine wages. The social view of the opportunity for labor, however, looks at the whole field. The opportunity for labor is then seen to be represented ulti mately not by human employers, but by resources and agents which labor can use. The rich acre, the tool, the machine, all material wealth needing the human touch to utilize it, rep resent opportunity for labor in this sense. The employers' demand for labor, therefore, is but a reflection of the oppor tunities embodied in resources. A million men are a great or a small population according as they occupy a little island or a large continent, according as they are equipped with a small or a large supply of agents.
a The wage•fund doctrine of wages once held a central place in economic discussion. It was that wages were determined by the relation of the number of laborers to the capital. "Capital" was taken in the narrow sense of a special fund set aside (it was never quite clear how) by the employers for the payment of wages. The element of truth in the doctrine was the recognition, somewhat dim, that wages are favorably affected by the efficiency of the whole economic environment in which labor works.
§ 7. Aspects of wealth. Wealth is the general term for those things which are felt or seen to be related to the grati fication of desires. This definition is wider or narrower ac cording to the senses in which the various words are taken. What is included in "things"? How deeply are they felt and how far-sightedly are they seen to be related? How immedi ate is the gratification t Individual wealth is usually taken to mean the valuable things the individual owns. Some would include "internal goods," such abstract qualities as honesty and cheerfulness; others would include not abstract qualities but men themselves with all their capacities of body and mind ; the free man owning himself and his powers to serve his own desires, the slave being owned. More frequently, and prop erly, the term individual wealth is limited to valuable agents objective to men, not including free men. There is much popular usage in favor of including evidences of claims of ownership such as notes, mortgages, stocks, and other credit in struments, by so doing making private wealth (tho not always consistently) synonymous with capital in our definition. There is good reason to keep the term wealth for the concrete things while using capital as the value expression of business power embodied in those things. Thus, the factory is wealth, the economic basis for the capital represented by stocks and bonds; the farm is wealth, the economic basis of the mortgage and of the owner's residual claim to the unmortgaged capital value.