9. Wages of the newspaper reader is aware of the many references to "fair wages" that are made when a labor controversy is on in a, community. Such wages are in the background of the conflict, for they are seemingly far from being con nected with demands made by both sides in the con test. On the occasion of the threatened railway strike in 1910, the authorities to whom the wages matter was referred increased the rates for different classes from $0.0260 to $0.0268 per mile for conductors, and from $0.0133 to $0.0150 per mile for passenger brakemen.
Below the surface of every wage contest is the great principle of marginal efficiency. Each addi tion of labor and capital makes a contribution to the product, and it is the return of the marginal instal ment that determines the return of all other instal ments. The wages of the market move steadily to ward such a result, but the conditions prevailing may seemingly determine the wages irrespective of this un- derlying principle. In other words, there is a dis: tinction between natural wages and market wages.
The wages of the market are the wages of the mo ment. At any given time the market gives forth the price of labor. It has been shown in previous chap ters that demand and supply are the great cutting blades of the economic shears. Demand and supply are words to conjure with, for an understanding of these terms throws light on some of the most impor tant problems in the field of economics.
It must not be forgotten that the consumer con trols and regulates production. By his labor and by his utilities he is able to direct the demand for other utilities with which capital and labor move to supply him. The demand for commodities thus comes to be determined by the amount of utilities which are exchanged for the product of capital and labor in any given instance. Many disturbing elements bear upon both demand and supply. The consumer's will oper ates thru demand, first, for commodities, and second, for the various productive steps and instruments. The producer, on the other hand, directs an increas ing stream of materials and energy toward the crea tion of finished marketable goods and services.
The immediate, direct demand for labor is deter mined by the interpretation that the owners- of capi tal put upon the demand made by consumers of prod ucts. The capitalists guess how much product the
consumers will take, how long it will be before this product brings a return, and how much capital will come into use in the furnishing of the product.
In the early months of 1915, the discussion on this point was anxious, and at times heated. Much doubt existed about the amount of capital that would be available for productive uses after the war. Prices of commodities and the employment of labor waited upon the decision. If the immediate supply of capi tal was thus likely to affect the demand for both commodities and labor, the supply of labor would act in much tire same way upon the demand for places and the number of men available for work.
There are many restrictions placed upon laborers in the different groups, tho the barriers grow less im passable as society develops. Within the groups, numbers change and, in most instances, increase. Standards of living, of course, affect the numbers, which increase as the cost of living decreases; and, con versely, decrease as the cost of living increases. The cost of training men, the influence of environment in stimulating intelligence, the entrance of women and children into the field of employment, the use of ma chinery, and the competition 'from abroad affect the number of workers available in the different groups In regard to the labor of groups, the wages received are determined by the marginal product, but this, in turn, vari,cs with the changes in the number of la borers who offer their services in any group. Conse quently, the wages received depend upon both sup ply and demand. The demand for labor is based upon the marginal product which capital must have in order to supply the needs of consumers ; and the supply of labor depends upon the many factors that influence the increase in numbers.
Capital and labor come in contact in the market. The capitalist measures carefully the marginal return of labor, keeping in mind any discounts he may be called upon to make. The laborer has in view the necessities of life and the pain and fatigue he is com pelled to undergo while laboring. Ile balances the utilities that he receives against this pain and fatigue, and comes to a conclusion regarding the offered wages. The maximum and the minimum of the wage scale are thus set.