Sec.5. The Apportionment of Labor among Places.  Again, as with capital, it is when we turn to the apportionment of labor between different employments that both economic law and social ideal make their appearance.  It will be well, however, to consider briefly in the first instance the different question of its apportionment between places.  This was hardly necessary in the case of capital, because the possibilities of foreign investment are very numerous and easy:  the mobility of capital is thus sufficiently strong (once again it is only marginal adjustment that is necessary) to establish over at least a large part of the world something near to a uniform rate of interest.  But this is not the case with labor.  People do indeed move from place to place within a country, and from one country to another, in response to economic opportunities.  That even the latter movement may be a considerable thing, the present population of the United States is a striking testimony.  But obviously the mobility is very incomplete.  Here, then, we have what we might loosely call an economic law that labor tends to “flow” (as it is sometimes unhappily phrased) to those places where it can command the highest reward; we have this tendency in evidence, but it is far too weak to enable us to lay down what would deserve more strictly the title of an economic law, that in the long run the reward of the same kind of labor is roughly equal in all places.  Perhaps we can say this for many districts in a single country; but for few countries is this true as between all their districts.  As between countries, it is not remotely true.

Here, however, the imperfection of economic law is balanced by an extreme uncertainty as to the ideal.  Perfect mobility of labor may be economically desirable in a very narrow sense of the term; but it opens out a vista of racial, national and cultural problems, into which it will be better for us not to enter here.  We must take for granted the population of a country, like that of the world, as a given fact.

When we do this, the question of its remuneration is on all fours with the more general question discussed above.  That the remuneration of the labor of a country is mainly governed by the relations between demand and supply is an inexorable fact.  In view of the international mobility of capital, the main distinctive factor in the demand for the labor of a particular country is the supply of natural resources, which it knows how to use.  Where the natural resources are great relatively to the population, there wages will rule high; where the converse is true, wages will rule low.  This result of economic analysis is abundantly confirmed by experience.  The relatively high wages in the new world, the low standard of living in the densely populated East; the economic history of Ireland are so many object-lessons of its truth.