LABOR'S SHARE IN OUR INCREASED PROSPERITY
1. Wage System . -- In a primitive economic society the producer and the consumer were identical, that is, each producer consumed chiefly his own products. There was little specialization and there were no organized markets for either commodities or services. With relatively abundant natural resources and in the almost complete absence of capital, there were few problems of value in exchange and almost none of distribution.
Capitalism implies not merely the extensive use of tools, machinery, and other forms of capital goods, but also the institution of private property in capital and other forms of economic wealth. Again, capitalism implies individual enterprise and private initiative, rather than the collective ownership and operation of the instruments of production. Competition and freedom of contract are also involved. Markets exist, exchange flourishes, and price is the unconscious automatic force which regulates production. All of these factors, and more, are necessary to a complete understanding of capitalism and the wage system, both of which developed together and are still inseparable.
Industrialism, the most recent phase of capitalism, involves the factors of power machinery, the factory system, increased territorial specialization, and the development of world-wide markets. Although the wage system antedated the Industrial Revolution, it was not until then that minute division of labor developed and that capital assumed its present forms and importance. As power machinery replaced the craftsman and the factory system supplanted the domestic system, there came into existence a group of machine owners and a group of machine operators. The workers lost the ownership of the instruments of production and the control of their conditions of employment. The Industrial Revolution produced a different economic and social line of cleavage, as well as a new class consciousness. These factors have colored the modern concept of the wage system.
The term "wage system" is very vaguely used and is difficult of exact definition. It is essential, however, that we note some of its chief characteristics. Under the wage system the enterpriser determines the course of production and brings together the various factors in production, accepting the financial responsibility, in part at least, for his economic