Note 485 — Chapter VI

The course of prices after 1870 demonstrates how disastrously this principle would have operated for the wage-earners had it been universally adopted. Between 1870 and 1894 the Index Number compiled by the Economist, representing the average level of market prices, fell steadily from 2996 to 2082, irrespective of the goodness of trade or the amount of the employers’ profits. Any exact correspondence between wages and the price of the product would exclude the wage-earners, as such, from all share in the advantages of improvements in production, cheapening of carriage, and the fall in the rate of interest, which might otherwise be turned to account in an advance in the workman’s Standard of Life. On the other hand, in an era of rising prices, when these influences are being more than counteracted by currency inflation, increasing difficulty of production, or a world-shortage of supply, an automatic correspondence between money wages and the cost of living would be useful, if it did not lead to the implication that the only ground for an advance in wages was an increase in the cost of living. The workmen have still to contend for a progressive improvement of their Standard of Life whatever happens to profits.