James Connolly


Wages and Prices

(26 October 1907)

James Connolly, Wages and Prices, The Industrial Union Bulletin, 26 October 1907, p. 1.
Transcribed by Robert Bills on behalf of the Socialist Labor Party of America.
Marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

The Fellow-Workers Baer and Reed are to be congratulated upon their action in calling in question the position of Fellow-worker Thompson on the question of Wages and Prices. Not that I agree with their contention – I entirely disagree with it, but because the great importance of the point made by Thompson might have been overlooked had it not been so quickly challenged. This challenge and the letters resultant therefrom have, I trust, compelled the readers of our Bulletin to give to this very important question the study it deserves. Few economic questions are of such great practical importance to the labor movement as this one, and it is quite conceivable how a wrong upon this point might easily eliminate from us large numbers of our fellow-workers whose sympathetic adhesion had been gained by our agitation. Some years ago I brought up this question before the notice of the ST&LA as I was then convinced that some of the speeches of that body were at sea upon the matter, with the result that they were fast reducing their organization to a negligible quantity as an economic force. But my words then only evoked ridicule, and the less the writer knew about economics the stronger and the more vitriolic was their ridicule. That the IWW might not fall into the same pitfall, might not make the mistake of confounding revolutionary phraseology with true revolutionary teaching, I desire to say a few words in amplification of the contention of my fellow-organizer, Thompson.

The question can be correctly stated thus: Can the capitalist recover from the working class by a rise in prices that which he has lost by an increase in wages? Observe, the question is not, can the capitalist recover his losses by some means, but the question essentially is, can he recover them from the working class by means of a rise in prices. In all arguments upon this point the source from which he is to recover and the means he must employ are the very points in debate. I would not deny for a moment that he can recover his losses eventually by speeding up, by new machinery, by improved methods, by the leveling process of economic crises, reducing wages again below the former level, and by many other means. But all this is not the question. The question is, and the tendency to observe the question is so pronounced that it is necessary to continually reiterate it, the question is can the capitalist recover from the workers by a rise in prices? But the answer is emphatically NO! There are more lines than one on which that answer can be cleverly demonstrated as correct, but for the present I will confine myself to one only.

The fellow-workers who take up the position of Baer and Reed argue systematically as if the workers produced nothing they did not purchase and consume; produced nothing in short but the barest necessities of life of which they are the retail purchasers. If a body of workers are engaged in producing articles of food, coal, clothing or furniture, then the argument has a seeming plausibility. In the increased prices they would pay for those articles they would lose some of the value of their increased wages, but the overwhelming majority of wage workers in this country are not so employed, and when the workers do not purchase the products of their labor, an increase in prices does not affect them. But the line of reasoning of Reed, Baer et al., and all those who in the present or in the past champion such ideas, leaves out of account all those workers engaged in the production of commodities by which the workers are not purchasers or consumers, and all those the prices of whose products are fixed by law or custom. It leaves out of account all the metaliferous miners, all the machinists and metal workers or every description, all the steel and iron workers, all the street railroad men, and the whole of the printing trade, all the shipping industry, all municipal and government employees, all lumber men, all quarry men of every kind of stone – in fact, an enumeration of all the industries it leaves out of account would look like a census of the occupations of the working class, lacking only the food, clothing and coal industries to make it complete. But be it noted that those trades whose products are, as workers, do purchase and consume are the lowest paid in the country and the most sweated, proving conclusively that the wages paid are not the determining factor in causing the high prices. The one important industry I have omitted is the building industry. I have left it to the last because the high wages paid in the building trades are often quoted by ill-informed speakers as the cause of the high rents, and therefore as bearing out the theory I am opposing. On this point there are two facts to be noted: First. A very large proportion of the results of the labor of the building trades consists of artifices which the working class neither purchases nor rents. Therefore, high prices do not affect them – the workers. Second. High rents are primarily the result of capitalist concentration in large cities, increasing the value of space. That they are not caused by high wages is evidenced by the fact that vacant lots on which not a brick has been laid has also been soaring in price. It is simply a case of a section of the working class cutting into the profits of the capitalist speculator. Capitalist concentration in large cities would produce high rents if the workers in the building trades were only receiving a dollar a day.

Be it noted that in admitting that the theory I have opposed has some application in the food, clothing and coal trades, I must not be considered as admitting it in any but a very limited sense and degree. We have to remember that any increase in prices in such commodities hits every class. The lady of the capitalist class will spend more on one dress than the clothes of many a working woman will cost for a lifetime. In his double capacity as private individual and employer the capitalist consumes more coal than a hundred laborers, a fact conveniently forgotten by all the superficial thinkers who fly to the coal trade as the classical illustration of their topsy-turvy economic theory. Finally on the question as it affects these necessities of life, let me remind our readers of one fact that nothing but absolute blindness to industrial conditions can ignore, viz., that prices invariably go up first, and wages slowly climb after them. This fact of our common everyday experience is in striking confirmation of the theory of Marx, as you will find it stated, for instance, in Value, Price and Profit, viz., that the market prices of labor (wages) is determined by the value (price) of the necessaries of life. On the other hand, the contention of our opponents on this mater – the conception that a rise in wages is offset by a rise in prices, is best crystallized in the formula that wages determine prices, a theory that Marx at the beginning of the fifth chapter of the book in question calls “antiquated and exploded,” and in the end of the same chapter of the same book an “old, popular, and worn-out fallacy.”

Thus economic science, based upon and in alliance with the facts of life, emphatically refutes the contentions of the writers of Marx’s day as well as those of the charlatans of our day who revamp the same arguments to prove the same point.


Yours fraternally,
Newark, N.J.

Last updated on 15 January 2017