134 ECONOMIC PRINCIPLES

here considered, and the related standard of living, are
nevertheless of real importance in the wages problem. The
supply of labour does respond to the demand for it, though
immediate necessity may compel the acceptance by labour
of terms which, if anticipated, would have checked the growth
of population.
Wages cannot permanently exceed the value of the net
product of labour at the margin of employment, and
competition tends to make the two coincide. Wages, too,
cannot permanently fall below the amount needed to
maintain the standard of living of the class to which the
labour belongs, and competition tends to make these two
also coincide. As, in the general problem of value, utility
and cost of production each tend to equality with exchange
value, so too in this special case, The utility here is
measured by the value of the product of labour at the
margin of employment, while the cost of production includes
the cost of the necessaries and comforts of life usual in the
class to which the workman belongs, together with such
luxuries as are also customary, the workman’s family as well
as himself needing support as a condition of the continuity
of the labour supply. One may, perhaps, usefully consider
the cost of production of labour as comprising the maintenance
 of the labourer, including wear and tear allowance.
That allowance provides for the replacement of the workman
when his powers are exhausted, children replacing their
parents. Thus the cost of maintaining a family bears some
analogy with the cost of replacing machinery as it wears out,
the allocations to a renewals-and-extensions fund which are
commonly made out of the earnings of business enterprises.
If it be objected that the expenditure of a workman is not
wholly directed to keeping up working efficiency, an analogy
is not wanting in the case of machinery or materials used in
manufacture, Thus our present methods of using coal do
not utilise nearly all the energy which its combustion
develops.
The value of labour depends on its utility and cost of
production, and, if equilibrium were fully worked out under
competition, all three would have the same measure.