Note 58 — Chapter IV

In our imaginary community we have at first eight labourers, who produce fifty pounds a year a-piece = four hundred pounds. Then we have eight labourers + one able man, who produce four hundred pounds a year for each labourer = three thousand two hundred pounds. Of this the able man takes two thousand eight hundred pounds. Now, suppose the labourers strike for double wages, and succeed in getting them, their total wages are eight hundred pounds a year instead of four hundred pounds; and the employer’s income is two thousand four hundred pounds instead of two thousand eight hundred pounds. The labourers gain a hundred per cent; the employer loses little more than fourteen per cent. The labourers therefore have a stronger motive in demanding than the employer has in resisting. But let us suppose that, the total income of the community remaining unchanged, the labourers have succeeded in obtaining one thousand eight hundred pounds, thus leaving the employer one thousand four hundred pounds. The situation will now be changed. The labourers could not possibly now gain an increase of a hundred per cent, for the entire income available would not supply this; but let us suppose they strike for an increase of two hundred pounds. If they gained that, their income would be two thousand pounds, and that of the employer one thousand two hundred pounds; but the former situation would be reversed. The employer now would lose more than the labourer would gain. The labourers would gain, in round numbers, only eleven per cent; and the employer would lose fourteen per cent. Therefore the employer would have a stronger motive in resisting than the labourers in demanding.