P = R + I + W,
= R + p,
∴ W = p—I = p—Cr.
This shows that if the capital increases whilst p remains constant the wages will fall, and that in new countries, where p is large and C small, the wages should be large.
We have seen in I. that when r is constant C = Coert. Now, suppose I to have reached a constant value, then C = Co + It. The corresponding land-value will be—
V = V0e
The Malthusian theory states that population is kept down by its pressure against production—that is, if n is the population and w the demand of each.
P = nw,
∴ I = p—P =—R,
since nw = W.m
Similarly, if the law were p = nd we should get I = O, which is equally untrue and absurd.
Let the coefficient of labour-saving devices (s) be measured by the production which can be done by unit labour when using a labour-saving device. Then P = sN, where N is the number of men required to do this production with this coefficient. If we put R + I = mP, where m is some proper fraction, we have—
P = mP + W = mP + nw;
where n is the number of men available; so that—
w = N/n(1-m)s = P/n(1 - m).
Since R = P—p, the effect of increasing P is to increase R without increasing the wages, as the latter are included in p. Therefore to increase w we must increase (1—m)—that is, decrease m. Or we may put it that since P is directly proportional to s we must increase the ratio of N/n, which may be done by either increasing N or decreasing n. Let us examine these ways more in detail.
The diminishing of n has in the past been the most common way of increasing wages, but it has been far from successful, having been brought about by wars, pestilences, &c., which tend to diminish P at the same time; also, the destruction of property and ruin of the country generally is so great that the increase of wages is negligible.
The increasing of N has been tried—relief-works, for example—but is expensive, wasteful, and not lasting, for as soon as the artificial stimulant is removed the wages must revert to their former state.
The decreasing of m is what the single-taxers aim at doing, and what the rating on unimproved values aims at effecting. We have seen in II. that rent is the natural outcome of variable productivity and cannot be done away with, but it might be collected by the Government and distributed in the form of efficacious and lasting public works.