Before such a conclusion is warranted, we must grasp more clearly the nature of the causal relation between high standard of living and efficiency. How far are we entitled to regard high wages and other good conditions of employment as the cause, how far as the effect of efficiency of labour? The evidence adduced simply proves that _a_ _b_ _c_, certain phenomena relating to efficiency--as size of product, speed of workmanship, quantity of machines tended--vary directly with _d_ _e_ _f_, certain other phenomena relating to wages, hours of labour, and other conditions of employment. So far as such evidence goes, we are only able to assert that the two sets of phenomena are causally related, and cannot surely determine whether variations in _a_ _b_ _c_ are causes, or effects of concomitant variations in _d_ _e_ _f_, or whether both sets of phenomena are or are not governed by some third set, the variations of which affect simultaneously and proportionately the other two.
The moral which writers like Mr. Gunton and Mr. Schoenhof have sought to extract, and which has been accepted by not a few leaders in the "labour movement," is that every rise of wages and every shortening of hours will necessarily be followed by an equivalent or a more than equivalent rise in the efficiency of labour. In seeking to establish this position, special stress is laid upon the evidence of the comparative statistics of textile industries. But, in the first place, it must be pointed out that the evidence adduced does not support any such sweeping generalisation. The statistics of Mr. Gould and Mr. Schoenhof, for instance, show many cases where higher money and real wages of American operatives are not accompanied by a correspondingly larger productivity. In such cases the "cheap" labour of England is really cheap.
Again, in other cases where the higher wages of American workers are accompanied by an equivalent, or more than equivalent, increase of product, that increased product is not due entirely or chiefly to greater intensity or efficiency of labour, but to the use of more highly elaborated labour-saving machinery. The difference between the labour-cost of making and maintaining this improved machinery, and that of making and maintaining the inferior machinery it has displaced, ought clearly to be added in, where a comparison is made between the relation of net labour-cost to product in different countries, or in different stages of industrial development in the same country. The omission of this invalidates much of the reasoning of Schulze-Gaevernitz, Brentano, Rae, and other prophets of "the economy of high wages." The direct labour-cost of each commodity may be as little, or even less, than in England, but the total cost of production[231] and the selling price may be higher. Lastly, in that comparison between England and America, which is in many respects the most serviceable, because the two countries are nearest in their development of industrial methods as well as in the character of their labourers, the difference of money and of real wage is not commonly accompanied by a difference in hours of labour.