§ 9. Rarity of ability limiting choice of occupations. But even if all these psychic factors be duly accounted for, it is still evident that some men obtain a larger income for their services than others do. This is true whether they consume the results of their own labor, or sell them to others, or work for other men for a wage. Moreover, some labor having the highest value is the least strenuous and performed in the midst of the pleasantest surroundings, whereas most of the labor of the least value is the most arduous, disagreeable, and dangerous to health and to life. The laborers with low incomes thus have a motive to shift to more highly rewarded occupations. Why do they not do it? The answer is that they do to the extent of their respective abilities, knowledge, strength of will, and opportunities (limited of course by habit and by valuation of psychic income). But the various laborers have limited abilities and can not change at will and, despite the unfavorable ratio, they may be compelled to continue at the same work.4 Just as fields, plows, machinery for various purposes, grade off from the best to the poorest on the margin of use or already discarded, so men differ in their powers of labor. There are high value, low value, and no-value men and services of men.5 Even were there everywhere entire political freedom, and no legal influence of caste or status hindered the mobility of labor, mobility still would be hindered by the inequality and the rarity of ability. Just as apples can not be changed to peaches or sheep to horses when there is a change in their value, so the unskilled workman can not be changed to a skilled workman quickly, if he ever can. The possibility of workers changing within any brief period to occupations necessitating different, not to say higher, training is very small indeed. The individual laborers are constantly trying to adjust themselves, to get into places where they can earn larger incomes. Some move, some emigrate, some seek practice and education. Especially the workers between the ages of fifteen and twenty-five are at the time of life to choose the callings that promise to each the highest reward. Within limits an adjustment is possible, but these limits are not wide or not quickly shifted, and the incomes of particular laborers and groups of laborers continue to be very unequal in different occupations. Such changes of occupation as are made are far from enough to bring the values of the different services and their results to a common level.

4 Recall the disparity of talents ch. 16, sec. 12.

5 Recognizing the variety and inequality of human talent, some economists have spoken of the "rent of ability" and of "producers' rent." It is true that the difference in the rewards of labor, like land-rent, reflects the difference in the quality of agents; but this expression (the rent of ability) is to be avoided. While possibly it is suggestive in studying some problems, it is at best only an analogy, and on the whole a misleading one, confusing the terminology of rent and wages and dimming the distinction between free workers and owned and exchangeable wealth. See note on various meanings of rent, at end of ch. 14.

§ 10. Imputation of value to labor and to uses of wealth. Labor does not work with an equipment of free goods even on Robinson Crusoe's island. (See section 4 above.) Crusoe had a limited stock of cleared land and of other agents, some of which were irreplaceable. His valuation of them was implied in the choice and use made by him of these various agents when used in connection with his labor. A part of the total product of an isolated worker as a matter of value-estimation or imputation is a labor-income. Tho Crusoe had no occasion to apportion exactly the two parts of his divisible income, even a Crusoe in his choices would not attribute the total value of the product to his own labor. He is valuing material agents and labor together in a given economic situation. He might perhaps think and say, "I made this," or, "I made that," but he would constantly and necessarily act in a way that imputed a value to scarce material agents no matter whether much or little labor had been put upon them.

Each kind of goods and each act of labor is valued in accordance with the psychic income which it helps to secure. The value of the psychic income is reflected to the agents of production. An isolated laborer, such as Crusoe, would, however, not have as definite and complete a scale of values as that which arises in an exchange economy where money serves as a common denominator of values. The independent farmer, producing on his own farm nearly everything he consumes, is able to think somewhat more clearly of his labor and his wealth as separate sources of income, for he can earn wages by working for some one else and he can let his farm for a money-rent. Moreover, he, like Crusoe, is constantly imputing, in his mode of use, a value to the farm and to his own labor. This being true, the phrase "labor produces" is always misleading, for it suggests that the whole product is the result of labor alone, whereas products result from the combined action of the uses of materials and the services of labor. The total value is reflected back and imputed to the various agents in due proportion. The phrase used should always be "labor helps to produce."6

6The "labor theory of value" survives from the time when the Workman's kit of tools was so small that the true labor-income of the handworker was little less than his total receipts. The tinker, the shoemaker, and the tailor, who went from house to house in the old days, thought only in the vaguest way of marking off from their incomes a part to be accounted as the yield of their little outfit of tools. Labor therefore was thought of as the chief and almost the sole cause of the value of goods produced by artisans. The error in this view grew greater and greater with the increase of modern machinery, and it persists in many fallacious notions not only in popular thought but in systematic economics.