This section is from the "Economics In Two Volumes: Volume I. Economic Principles" book, by Frank A. Fetter. Also available from Amazon: Economic
§ 1. Services of labor comparable with uses of wealth. § 2. Limitations of the labor-supply. § 3. The direction of labor guided by the value of its results. § 4. Value of labor to the isolated laborer. § 5. Rewards and sacrifices incident to occupations. § 6. Psychic factors in labor-incomes. § 7. Costs and deductions from nominal labor-incomes. § 8. The long-time and ultimate rewards of labor. § 9. Rarity of ability limiting choice of occupations. § 10. Imputation of value to labor and to uses of wealth.
§ 1. Services of labor comparable with uses of wealth. In the last two chapters we have sought to suggest in some measure the variety of human talents and the various conditions under which human labor is exerted for economic purposes. The aim of this and the succeeding chapter is to make clear the manner in which the various kinds of labor are evaluated (the value-problem), and how they are sold in the market (the price-problem of wages). Fortunately, we have already, in the theories of usance and of rent, all that is essential and fundamental to theories of labor-value and of wages. Man's services and wealth's uses move in parallel lines and are of parallel nature in contributing to the securing of income. Human actions directed toward some desired end constitute a usance of human beings; they are valuable services just as the work of domestic animals, the uses of tools, and the motions of machinery are valuable uses of wealth. These valuable services, partly rendered directly to persons and partly embodied in goods, constitute labor-incomes, comparable to the usance of wealth, the wealth-incomes. (See also Chapter 19, section 12.) The free laborer sells his services (separable uses) just as the owner of a more or less durative agent sells its usance, without selling the use-bearer. Our task, therefore, now is not to formulate a theory essentially different from the general theory of value and of price, but merely to show how labor exemplifies the general principles of value and of price, and particularly those of usance and rent, already set forth; noting any circumstances surrounding the process that are somewhat peculiar to the case of labor.
We know that value is the expression of a certain choice among goods, and price expresses a ratio of exchange that is arrived at among a number of buyers and sellers whose choices embody demand and supply. Let us look first at the more subjective aspects of the problem; that is, the value which labor as an agent for gratifying desires has to the human being who possesses the labor-power.
§ 2. Limitations of the labor-supply. The fundamental condition of all valuation is limitation of supply relative to the desires; so it is in the case of the valuation of labor. We have no difficulty in recognizing that some qualities of labor are scarce. There are some acts that are more difficult than others and some which few men can perform at all. Most women will confess that they cannot warble as Patti could, most men will admit that they have not the mercantile ability of John Wanamaker. There are not enough great surgeons with magic deftness of hand. There are not enough great medical specialists, men of marvelous insight, who do not guess and blunder, whose diagnosis is swift and sure. The man of mediocre capacity recognizes even through the fog of his self-esteem that there is a reason for the high value of rare services such as these. The proverb, "There 's always room at the top," is both a cheering and a pathetic truth. In every branch of human effort there is a never-ending lack of that higher qualification and training required for the best results.
But it is not so easy to see that the commonest services have value only because, at any particular time and place, they are scarce. Compared with the possible desires there are many things to be done if there were to be had at a low enough cost (or price) labor sufficient to do them. It is, alas, true that there may be a temporary maladjustment of industry, when either in a particular factory, or in a particular locality, or more generally at a time of industrial depression, there is a superfluity of human labor. This is the acute problem of unemployment. There is at all times a superfluity of human agents of certain kinds. Children are often eager to help, and grieve when they are told that they are "more bother than they are worth." Many of the ignorant, the insane, the feeble-minded, the vicious, drunken, and debauched, numbering unhappily many millions, can give to the world only negative uses, more properly called disservices. This is the chronic problem of the unemployable. But services of normal men are nearly always in demand, and the higher services are so rare that they are in great demand; except for temporary maladjustments in industry in our complex exchanging economy, labor of every kind is scarce, relative to the objects of desire which it might aid in procuring. Man's desires have no bounds, his powers are limited. No community has regularly at its command an absolute surplus of labor services (tho there are temporary maladjustments).1 Either through lack of ability or lack of skill and endurance and willingness to work, the people in a community altogether are unable to do enough work to satiate all the desires to which labor could minister.2 Men's strength and endurance fail after a few hours of exertion, and the desire to rest overcomes, at the end of each day's labor, the desire for other goods which continuance of labor could secure. If labor were available in unlimited amounts, it would afford an unlimited supply of ultimate services (so far as they are dependent on labor) and the value of these services would sink to zero. Some existing limitation of labor, therefore, is essential to its value.
1 However, it may easily happen that the laborers may be so numerous, relative to other resources, that the value of labor is lower than it might otherwise be, or than is consistent with general well-being. See on population, Part VI.
2 See ch. 36, sec. 3 on "the lump of labor" notion.
§ 3. The direction of labor guided by the value of its results. The labor available at any time and place can be turned to securing, improving, and multiplying the amount of any one, or of many different kinds of goods, or it may be distributed among them in any chosen proportion. Thus in a very real sense labor is a potential supply of goods. Within the limits set by materials to work upon and by the indirect agents to work with, the direction of the labor of one period determines the kinds and amounts of the goods of the next period—moment, month, or year. A savage tribe finds game plentiful and kills it; then turns to dressing skins to making canoes or gathering and making flint arrow-heads. At a time of famine the whole tribe gives all its energies to the search for food. In civilized lands men desire in turn the services of the baker, the blacksmith, the paper hanger, the piano tuner, and the dentist. Some of the services yield directly psychic income, and some are embodied in material goods which yield a psychic income. These various ultimate services and incomes have different values from period to period. These values serve as a guide in the application of each kind of labor, which is turned now in this direction, now in that, to render the most valuable ultimate service for which it is fitted. Particular kinds of labor-services therefore differ in desirability at any moment, and tho in a general way these differences persist in large measure, yet they vary constantly in some measure with changing circumstances. These facts explain the constant shifting, and attempts at shifting, of laborers from one occupation to another (as discussed more fully below in section 9 and in Chapter 19, section 3 and section 8).