Sec.2. Ideas and Institutions.  Another point is worth noting here.  We are sometimes advised to distinguish sharply between “What should be” and “What is”; often two very different things.  The advice is pertinent and useful, particularly in the sphere of sociology.  But our incorrigible habit of confusing the two things together is not without justification, or at least excuse.  For, in fact, they gravitate towards one another with a force which is just as strong as the capacity of man for understanding and controlling his environment.  When we have a system which is clearly bad, and when we see our way to make it better, we generally make the change however tardily.  Our sense of “What should be” thus reacts upon “What is.”  Meanwhile, until we can make the system better, our appreciation of “What is” affects our sense of “What should be.”  And the more so, as we are sensible.  For “What should be” is pre-eminently an affair of relativity.  A man may hold very strongly that equal pay to every individual is desirable, as he puts it, as an ideal.  But this will not prevent him, in a world in which managers are paid far more than manual workers, from maintaining hotly (at any rate, if he is sensible) that to pay the manager of a particular concern a manual worker’s wage would be monstrously unfair.  He would also argue that it would be highly inexpedient.  Equity and expediency are, in fact, intricately intertwined in our sense of “What should be”; and our sense of “What should be” in the particular is governed by our knowledge of “What is” in the general.

These may seem unnecessary commonplaces.  But they have a vital bearing on the modus operandi of economic laws.  These laws do not work in vacuo.  They work through the medium of the acts of men.  The acts of men are greatly influenced by their institutions, and by their ideas of right and wrong.  Both institutions and ideas may serve to smooth rather than obstruct the path of economic laws; because the laws may represent either “what should be” in the general, or “what is” in the general, and therefore “what should be” in the particular.  This may hold true even of a trade union or a sense of “fair wages.”  The business of economic theory is not to justify a regime of laissez-faire, still less to show the folly of bringing morals into business.  Its value is rather that it may help us, by improving our understanding, to shape our institutions, and to adopt our moral sentiments so as to promote the public welfare.  With these general notions in our minds, let us turn to see how stands the case with Labor.

Sec.3. The General Wage Level.  The term Labor may be used in a broad or in a narrow sense.  It may be confined to weekly wage-earners:  it may be extended to include all those who work, as the phrase goes, “with either hand or brain.”  It is with all classes of Labor, in the broadest sense of the term, that we must here concern ourselves.  It will be convenient, however, in the first instance to ignore the differences between them, and to consider the forces which determine what we may regard as the general wage-level.