Adam Smith's Simplified Wealth of Nations, Book 1, Chapter 8a: Wages

Chapter 8a: Wages

1The produce of labour constitutes the natural recompence or wages of labour.

2 In the rude state, without land appropriation nor stock accumulation, the whole produce of labour belongs to the labourer.

3 Had this state continued, wages would have increased with productivity from the division of labour. 4 Though everything would have become cheaper, on the surface it may seem that things have become dearer. 5 But the rude state could not last beyond the introduction of private property. 6 As soon as land becomes private property, the landlord demands a share of what the labourer can produce from it. 7 An agricultural labourer seldom can maintain himself fully until the harvest. 8 The produce of almost all other labour is liable to the like deduction of profit. 9 An independent worker might have stock sufficient to: He is both master and workman 10 Such cases, however, are not very frequent. 11 Wages depend on the contract between employees and their employer, who have conflicting interests. 12 Employers, being fewer, can combine much more easily without going against the law. 13 Only the most ignorant imagine that employers rarely combine.

Minimum Wage

14 Although the interest of the employers frequently prevail, it is impossible for them to lower the wages of workers below a certain rate for prolonged periods

15A man must always live by his work, and his wages must at least be sufficient to maintain him.

Richard Cantillon
Richard Cantillon

The Demand for Workers

16 There are certain circumstances, however, which allow labourers to raise their wages above the lowest rate. 17 When the demand and employment for all kinds of workers is continually increasing, the workers do not need to combine to raise wages. 18 The demand for those who live by wages must always be in proportion to the funds for paying wages. 19 When the landlord has excess revenue, he uses it to employ more menial servants. 20 When an independent worker has excess stock for his own work and maintenance, he uses it to employ journeymen to profit from their work.

21 The demand for wage-earners increases with the increase of a country's revenue and stock, and cannot possibly increase without it.

Words: 1211 Next: Book 1, Chapter 8B: Wages in Different States