§ 1. Workers subordinate in early societies. § 2. Workers in the Middle Ages. § 3. Growth of the wage system. § 4. Pros and cons of the wage system. § 5. Time work. § 6. Task work. § 7. Piece work. § 8. Premium plans. § 9. Aim of profit-sharing. § 10. Examples of profit-sharing. §11. Difficulties in profit-sharing. § 12. Defective theory of profit-sharing. § 13. Purpose of producers' cooperation. § 14. Limited success of producers, cooperation. § 15. Its main difficulty.

§ 1. Workers subordinate in early societies. As far back as the history of settled and populous communities can be traced, the masses of workers have been subordinate. Civilization began with direction, with obedience to superiors on the part of the mass of men. Even in the rudest tribes, the women and children were subject to the will of the stronger, the head of the family. Among the Aryan races the family system was widened, and the patriarch of the tribe secured personal obedience and economic services from all members of the community. Chattel slavery, the typical form of industrial organization in early tropical civilization, seems to have been one of the necessary steps to progress from rude conditions; students to-day incline to view it as an essential stage in the history of the race. But, as conditions changed with industrial development, chattel slavery became an inefficient form of industrial organization and a hindrance to progress. Slavery in the southern states of the American union was long a modern exception. The combination of racial difference between subject and master people, of warm climate, of special agricultural crops and of conditions in which slave labor could be employed with least disadvantage, combined to delay the disappearance of slavery from a community in which the life of the master people was in many respects on the highest plane of civilization.

§ 2. Workers in the Middle Ages. Serfdom for rural labor and many limitations of workman's freedom in the towns were the prevailing conditions in medieval Europe. Serfdom was both a political and an economic relation. The serf was bound to the soil; the lord could command and control him; but the serf's obligations were pretty well defined. He had to give services, but in return for them he got something definite in the form of protection and the use of land. Between the lord and the serf there continued an implied contract, which passed by inheritance from father to son, in the case both of the master and of the serf. In the towns conditions were better for the free master class of the artisans who owned their tools and often a little shop where they both made and sold their products. But the mass of the workers, shut out from special privileges, bore a heavy burden. There were strict rules of apprenticeship; gild regulations forbidding the free choice of a trade or a residence; laws against migration into the town; settlement laws making it impossible for poor men to remove from one place to another; arbitrary regulation of wages, either by the gilds in the towns or by national councils and parliaments, forbidding the workmen to take the competitive wages that economic conditions would have forced the employers to pay; combination laws forbidding laborers to combine in their own interest. These conditions prevailed even in the periods and in the countries often referred to as particularly favorable for the working classes (such as England in the fifteenth century).

§ 3. Growth of the wage system. Throughout the Middle Ages these conditions were gradually changing, and the changes were hastened by the discovery of America, by the social unrest accompanying the Reformation, and by other forces. Servile dues in the rural districts were, in England, by the sixteenth century, commuted for cash payments, and had begun to disappear in the other western countries of Europe. The agricultural work was done partly by the peasant landowners, partly by yeomen farmers on their own land, and partly by laborers hired by landowners or by tenant farmers (enterprisers with some capital for equipment). The growth of commerce and of the mechanical trades in the towns required larger ships, factories, and shops, and increasing investments. This required in the towns an increasing proportion of hired laborers having little or no capital invested in industry, and living on wages. This change went on more and more rapidly with the introduction of machinery in the eighteenth and nineteenth centuries, and "the wage system" grew steadily to be a more and more important part of the economic structure.1

§ 4. Pros and cons of the wage system. The wage system has certain practical merits of workableness which account for its progress and dominance. It keeps alive competitive motives among the wage workers to improve and advance by skill and industry; it brings the planning and management of business into the hands, in the main, of the provident and capable.2 Under the wage contract, the employer, as the one best prepared to do it, takes the risk as to the future selling price of the produce; the worker receives in a definite sum at once the market value of his services. This is of growing importance, for the larger the market and the longer the waiting period in industry, the greater the element of uncertainty and financial risk. Wage payment, therefore, is a form of insurance to the workingman; he gets something definite instead of taking chances he is ill prepared to take. "Wage payment is a form of credit to the laborer whose labor is applied to producing the goods for customers distant in time and in place. The employer advances to the workman the present value of his labor, embodied in a product for future sale, discounted at the prevailing rate.

1 See Vol. I, pp. 227, 318, 322.

2 See Vol. I, p. 329, on selection of managed and managers.

But the wage system has brought with it grave problems of inequality of incomes and of opportunity that at times threaten the very existence of democratic society. It means for the mass of men continuance throughout life in the position of hired workers, with no possibility of becoming self-directing enterprisers. In connection with increasing division of labor, it means for great numbers unvarying application to one narrow task, with little understanding of its relation to the whole and with less joy in workmanship than the old independent handicraftsmen had. Yet is it correct to say that the wage system causes these inequalities in ability and in variety and agreeableness of tasks? Is it not rather itself the result of the differences of ability, a way found through society's long experience by which individuals may choose their occupations within the range of their abilities to gratify the desires of consumers, a way of attaining a high degree of efficiency in production ? 3 The problem for a wise political economy to solve is, and will be, to retain the best in the wage system, while remedying its evils or reducing them to a minimum.