VI。THEWAGE-FUND
Thisdoctrineledtooneofthestrangestofcontroversialcatastrophes。Inhischapterupon’wages’96*Millhadbegunwithanunluckyparagraph。Heintroducedtheword’wage-fund’todescribethesumsspentin’thedirectpurchaseoflabour’；andstatedthatwagesnecessarilydependedupontheproportionofthisfundtothelabouringpopulation。ThisdoctrinewasassailedbyThorntonin1869。97*Mill，reviewingThornton，astonishedthefaithfulbyacompleterecantation；and，thoughadiscipleortwo——especiallyCairnesandFawcett——continuedtoupholdthedoctrine，orwhattheytooktobethedoctrine，politicaleconomistshaveeversincebeenconfutingit，ortreatingitastooridiculousforconfutation。Ifwearetoassumethatthewage-fundwasatonceanessentialpropositionoftheold’classical’economyandapalpablefallacy，thewholestructurecollapses。Thekeystoneofthearchhascrumbled。Nor，again，isitdoubtfulthatthiscatastrophemarkedacriticalchangeinthespiritandmethodsofpoliticaleconomy。Andyet，whentheactualdiscussionisconsidered，itseemsstrangethatitshouldhavehadsuchimportance。Whatwasthis’wage-fundtheory’？TheanswerisgenerallygivenbyquotingthepassagealreadymentionedfromM’Culloch，aparagraphfromMill，andFawcett’sreproductionofMill。Mill’ssentences，saysProfessorTaussig，’containallthatheeversaiddirectlyandexplicitlyonthetheoryofthewage-fund。’98*Itisstrangethatsovitalapointshouldhavebeensobrieflyindicated。ThenMill’sablestfollower，Cairnes，declaresthatthoughhehadlearnedpoliticaleconomyfromMill，hehadneverunderstoodthewage-fundtheoryinthesensewhichThorntonputuponitandwhichMillaccepted。99*ButforMill’sadmission，hesays，hewould’haveconfidentlyasserted’thatnotonlynoeconomistbut’noreasonablebeing’hadeverassertedthedoctrine。Wearelefttodoubtwhetheritbereallyacorner-stoneofthewholesystemoranaccidentalsuperstructurewhichhadreallynogreatimportance。Atanyrateitwasratherassumedthanasserted；andyetissocloselyconnectedwiththesystemthatImusttrytoindicatethemainissue。
Inthefirstplace，the’wage-fund’isMill’sequivalentforAdamSmith’s’fundwhichisdestinedforthemaintenanceofservants’；100*andMill，again，startsfromapropositioninheritedfromSmith。’Industry，’hesays，’islimitedbycapital’——adoctrine，asheadds，perfectlyobviousthoughconstantlyneglected。101*Undoubtedlyanindustrialarmyrequiresitscommissariat：itsfood，clothes，andweapons。Itsveryexistencepresupposesanaccumulationofsuchsuppliesinordertothedischargeofitsfunctions。AmoredoubtfulassumptionisstatedbyAdamSmith。’Thedemand，’hesays，102*
’forthosewholivebywagesnaturallyincreaseswiththeincreaseofnationalwealth，andcannotpossiblyincreasewithoutit。’Thegrowthofthenationalwealth，thatis，’naturally’
involvesthegrowthofthewealthofeveryclass。Machineryincreasestheefficiencyoflabourandthereforeincreasesthepoweratleastofsupportinglabourers。Moreover，inthelongrun，andgenerallyatthemoment，thispowerwillcertainlybeexercised。103*Theinterestsofthecapitalistwillleadhimtosupportmorelabourers。Theidentityofinterestbetweentheclassesconcernedmightthusbetakenforgranted。Hence，wemaytrusttothespontaneousor’natural’orderofthingstobringtoallclassesthebenefitofimprovedindustrialmethods。Thisnaturalorder，again，includingtherateofwages，isunderstoodtoimply，atleast，theabsenceofstateinterference。Politicalrulersmustnottamperwiththeindustrialmechanism。Itwillspontaneouslyworkouttheprosperityofthewholenationandofeachclass。Lefttoitselftheindustrialorganismgeneratesthoseeconomicharmoniesuponwhichtheoptimistdelightedtodwell。’Natural’seemstotakethesenseof’providential。’The’economicharmonies’are，liketheharmoniesperceivedbyPaleyortheBridgewaterTreatisewritersinexternalnature，somanyproofsofthedivinebenevolence；anyattempttointerferewiththemcouldonlyleadtodisaster。Toshowindetailthemischiefsinvolved，toexposethecharlatanswhoseschemesimpliedsuchinterference，wasthegrandaimofmosteconomists。Mill，asweshallsee，wasveryfarfromacceptingthisviewwithoutqualification。HethoughtwiththeUtilitariansgenerallythatthe’sovereign’hadenormouspowers，andmoreoverwasboundtoapplythemfortheredressofsocialevils。Society，heheld，wasfullofinjustice。Lawsaggravatedmanyevilsandcouldsuppressothers。Stillthenormalfunctionofgovernmentistopreventviolence，seefairplay，andenforcevoluntarycontracts。Whenitexceedsthesefunctions，andtriesbysheerforcetoobtainresultswithoutconsideringthemeans，itmaydoinfinitemischief。Itactslikeanignorantmechanic，whoviolentlymovesthehandsoftheclockwithoutregardtothemechanism。ErroneousconceptionsoftheverynatureofthemachineryhadledtothepestilentfallacieswhichSmithandhissuccessorshadbeenlabouringtoconfute。Thefree-traders104*hadoftentoexposeonesophistrywhichdeludedthevulgar。Itsessenceis，asMillputsit，thatweattendtoonehalfofthephenomenonandoverlooktheother。105*Theprotectionistthinksoftheproducerandforgetstheconsumer。Halfthepopularfallaciesimplythefailuretotakeintoaccountalltheactionsandreactionswhichareimpliedbyagivenchange。Theprocessesbywhichindustryadaptsitselftovaryingconditions——