WAGES AND PRICES

Evening Post, Volume XCVII, Issue 28, 1 February 1919, Page 10

WAGES AND PRICES

PROCESS OF READJUSTMENT

PLEA FOR CO-OPERATION.

Much of the current discussion, of wages1 and prices and of their future direction seems to be based upon the idea that they are not necessarily connected' with one another, states the New York Journal of Commerce. Those who talk in this way probably, do not stop to consider very carefully what is the relationship between these two elements in, production, it needs to be kept in mind that there is an intimate dependence of -wages upon prices and that when one moves the other soon follows. Manufacturers who are suddenly dispensing with large numbers of their working force should remember that such action ttna-voidably diminishes the demand for good 3. Men who do not earn wages cannot buy, and until prices decline men who receive lower wages than formerly must buy less than they did. This may not apply directly to the market for the goods oi those who are responsible for the changes in employment, but when many suddenly follow the same policy the action so takea eventually reacts from one upon another and tire outcome is precisely what it would have been had the change directly concerned the product of the plants which are deducing employment. 'what money will buy. On the other hand, lower prices make reductions of wages relatively unimportant to the employee, since what h^ wants to earn is not moDey but the things he needs to eat and wear. Readjustments in either wages or prices are followed by corresponding readjustments in the other, for tho two forms of compensation will not long remain apart or follow different courses. Processes of readjustment of wages and prices to one another or to industrial conditions in general are- not easy and invariably involve inconvenience. They are, however, irresistible in their action, and it is out of. the question for workers ,to "keep the advantages they have gained," as one Labour leader puts it, if by tihis they mean the continuance of high pay contemporaneous with lower prices.. Producers likewise cannot lower wages, too rapidly if they want to sell their goods to advantage. This is a situation that calls for mutual consideration and co-operation in order to avoid unfair or undue hardship to either side, 'and in order to make sticH changes as may occur easier for both to carry through. It "is. not a question of controversy between"Labour and Capital but of joint action by both factors. We are facing an era of reconstruction and we need to make the task as free from friction as we can. Why should not all parties to the operation join in facilitating it?