THEORY OF PRODUCTIVE EFFICIENCY 165
beginning to recognize the all-important and redeeming fact,
that cheap labor by no means means cheap production; that,
on the contrary, low cost of production and a high wage-rate
go hand in hand.
If a high wage-rate is an impelling cause in this country to
the introduction of improvements and the adoption of laborsaving
processes, the low wage-rate per diem ruling elsewhere
is an equally strong inducement for the continuance
of rusty and antiquated methods.
A high rate of wages expresses a high rate of productiveness,
and its converse a high consuming power. A relatively
high consuming power, high standard of living, is required
to make the laborer efficient, strong in body and in mind.
Without this, labor remains economically more or less sterile,
for which an adequate proof will be given in the further
progress of this work, treating the industries of the country
seriatim. Employers can therefore under no possibility lose
where a permanently high rate of wages rules. They cannot
possibly lose under a rising rate of wages even, as a rise in
actual wages is only possible with a rise of the productive
power of labor. A higher rate of wages than the one of a
previous period simply registers the change which has gone
on in the direction of improvement in the economy of production.
But, instead of being injured, the employer gains
positively by the rise in the standard of wages through the
increasing demand thereby created for the increasing product.
It is then clearly evident that there is no greater fallacy
than the doctrine that a low rate of wages is necessary to
insure a low cost of production. In fact, the opposite is shown
0 be the true principle upon which the productive processes
rf nations rest.
Professor Alfred Marshall, also of the University of
Cambridge, in his “Principles of Economics,” published
twenty years ago, commented on the relation of productiveness
to low labor costs as follows :!
~1“Principles of Economics,” Alfred Marshall, Professor of Political
Economy, University of Cambridge: Macmillan. London. 1907: p. 548.
