This is the first chapter of The causes of wealth, translated by Theodore Caplow from Machinisme Bien être de Jean Fourastié (ed. 1975).

 

Chapter I

WAGES AND PURCHASING POWER IN FRANCE

IF THE MOVIES had existed before the seventeenth century, economic science would long since have passed out of the pioneer stage. A film like Farrebique[1]will give our grandchildren a better understanding of the life of contemporary farmers than a thousand classic treatises on the history of France. Photography registers not only what is exceptional, but everything that lies within the field of the lens.

To all of these men, to all of those women whom painters have fixed on their canvases, and who tell us some of their thoughts, I should like to pose some simple questions that would have seemed devoid of interest to them, and that are for me the foundation of the study of historical causation: "What kind of furniture have you?" "Have you sheets on your bed?" "Have you mattresses of straw?" "Have you forks and spoons?" "How many knives have you?" "How many servants do you have?" "How many hours do you keep the lights on during the wintertime?" "Do you have glass in your windows?"

But the painters and the chroniclers seldom give us answers to these questions, precisely because they would have seemed banal and obvious. The reason that these practices seem obvious is that they endured for long periods and were not very different for the grandson than they had been for the grandfather. That which constitutes their interest for us is just this-that they are phenomena of slow evolution which, as a result, appear to be largely independent of social action, or, in other words, determinate.

It is thus understandable why "historicizing" history (histoire historisante in Lucien Febvre's phrase) abounds andwhy it leads only rarely to scientific conclusions. Before becomingaware of what really constitutes historical determinism,man attaches himself very naturally to what strikes his imagination,which is precisely the unpredictable and the fortuitous.The effort of our generation is to find in the daily routine thenecessary material for historical science.

This "historicizing" mentality explains why history has survived until our day, almost entirely without reference to economic reality or with false ideas concerning that reality. Either the historian accepts as normal that which is really exceptional and was described by the chronicler because it was exceptional, or he overlooks the existence of a norm completely. This is why, for example, with reference to the level of living, the Frenchman of today imagines his ancestor dining normally like Louis XIV on the day of the inauguration of the Chateau of Vaux.

The available factual documents give an entirely different picture.

The celebrated text of La Bruyère has been buried under the dissertations of professors of literature and political historians. It has become established that La Bruyère never left the world of gilded salons and that he certainly knew much less than we do about the peasants of his district. But it was Vauban who wrote in 1698, in his Projet de Dime Royale:

The wandering life which I have led for 40 years or more, having often given me occasion to see and visit under many circumstances the greater part of the provinces of this kingdom, I have often had occasion to give scope to my reflections, and to observe the good and the evil of the regions, to examine their condition and situation, and that of the peoples, whose poverty having often excited my compassion, led me to seek out its cause... It is certain that misery is pushed to extremes and that if it is not remedied, the little people will fall into an extremity from which they will never rise; the great roads of the countryside and the streets of cities and towns being full of beggars, whom hunger and nakedness drive from their homes.

By all the researches which I have been able to make, during the many years that I have applied myself to them, I have concluded with certainty that, in these recent times, close to a tenth part of the population is reduced to beggary, and actually begs. That of the nine other parts, there are at least five which are in no condition to give alms to these, because they themselves are very nearly reduced to this unfortunate condition. Of the four other tenths which remain, three are extremely uncomfortable, and embarrassed by debts and processes: and that in the tenth, where I put all of the gentry, clergy and laic, all of the high nobility, all of the lesser nobility, military and civil officers, the prosperous merchants and the propertied and comfortable middle class, one can hardly be sure of a hundred thousand families: and I do not believe it to be false, if I should say that there are not ten thousand small or great, whom one may say to be certainly well off[2]…

The high price of salt makes it so rare, that it causes a kind of famine in the kingdom. The little people are not able to season meat for their use, for lack of salt. There is hardly a household which would not be able to raise a pig, which they do not do because they have nothing with which to salt it. They do not even salt their soup but half, and often not at all[3].

For the rest, everything that I say about this is not taken from hearsay and casual inspections of the country, but on visits and enumerations which were exact and carefully planned, on which I had worked for two or three years in succession[4].

About 1730, the crude plow without wheels obliges the peasants "to work prone, almost like animals, they had only small donkeys to pull the plow and one sees them harness up their almost naked wives at the same time." They feed themselves "with rye bread from which the chaff has not been removed, which is heavy and black as lead. Their children eat this bread, and a four year old girl has as large a belly as a pregnant woman." The duke of Nemours, who wrote these words, had no apparent interest in blackening the facts.

The problem of a historical evolution of the level of living is thus posed. Three kinds of studies enable us to verify it. In this chapter we shall study income and nominal wages and then, separately, the purchasing power of nominal wages. The statistics of per capita consumption will permit us later on to relate these two initial inquiries.

1.     NOMINAL WAGES AND SALARIES

Of all the returns for goods and services, wages are the best known. The figures for income other than wages and salaries are practically unobtainable except in very special cases. Happily, the salaries of certain categories of high administrative employees furnish a good index of the income of the middle classes, because of the easy mobility between these positions and managerial positions in large scale private enterprise. The emoluments of councilors of state, of section chiefs in ministerial agencies, financial officers, and so forth, permit the recipients to live in bourgeois style.

 

*

 To say that salaries and wages are among the best known prices does not at all imply that we have accurate knowledge of them. Here also, the spurious analogy of wage rates has led many historians to underestimate their importance. Nevertheless, the widespread nature of the phenomenon means that traces are left in a host of documents such as account books, itemized statements, and notarial acts. But these documents have been preserved at random. It requires considerable analysis to draw valid conclusions from such disparate elements. The oldest statistical series of average salaries goes back to 1806. It was prepared by the General Statistical Office of France and it refers to certain categories of skilled workers at Paris. Not a single statistical average of workers' wages in the provinces was calculated before 1844. At that date the oldest series of averages for a well-defined group of provincial workers begins for workmen employed in the coal mines. Francois Simiand has extended this series back as far as 1789, by means of data furnished to the inquiries of .1884 and 1901 by the Anzin and Aniche companies.

The salaries of officials, which were relatively stable in that era, have been estimated for several kinds of employment as far back as 1800. For the period of the ancien regime, a determination of this kind is impossible because of the variety of remunerations. Plurality of office was the rule and salaries were based on this plurality. The principal posts received different rewards according to the personality of the incumbent and the other functions that he exercised. In the present state of knowledge, it would take a considerable effort to give even a rough idea of the salaries of officials and officers before 1789.

In sum, we do not have any scientifically calculated statistical average of wages for any occupational group for the period before 1800. Nevertheless, it is possible to form a fairly exact idea of the wages of workers of average skill. D'Avenel has published a considerable mass of documents dealing with wages, unfortunately nearly unusable because of the systematic work that he accomplished in translating the money of the time into standard francs of 1900 or 1914. The conversion rates that he adopted were based on the silver content of the livre tournois[5]. The twenty-five-year averages which he calculated are questionable. The remarkable work of Father Hanauer is similarly very difficult to use for the same reason. In order to find the value of the averages in the original currency, it is necessary to undo what the author has accomplished with so much toil. Nevertheless, the relative stability of wages in that era enables us to distinguish different orders of magnitude, so that some definite findings may be drawn from these studies and from a great number of other investigations and original documents.

Another interesting result of the statistics of d'Avenel and Hanauer is the picture they provide of the hierarchy of salaries and wages when occupational groups are compared. The great work of d'Avenel gives a table showing the wages of agricultural laborers with and without subsistence, and of certain other categories of wage earners from the year 1200 until 1888. It appears from this that agricultural laborers throughout the course of the centuries earned almost one-half less than skilled workers. Similarly, the wages of women were always at least 30 per cent less than those of men. From 1476 to 1890, the wages of women remained less than the wages of men in the proportion of 60 to 100, except during the years 1626 to 1675 (rates of 71 and 68), and from 1726 to 1750 (rate of 66).

The wage level of the agricultural day laborer is fairly well known nowadays. First approximated by Jean Jaures and later by Paul Louis, this series was studied by Ernest Labrousse and a number of other investigators.

The general results of these studies are summarized in the three following tables:

Table I gives the trends of the hourly wage of the unskilled laborer in cities other than Paris, from 1725 to 1959. This table, whose sources and methods of calculation are taken from the author's pamphlet on retail and wholesale prices[6], can be regarded as valid within an error of 20 per cent.

The figures for dates earlier than 1870 are maximum figures, that is to say that the observed values are in 90 per cent of the cases, less than the values given in the table.

 Table II shows the annual salaries of certain categories of officials for the period 1800-1951[7].

The third table allows us to follow changes in the fan of salaries and to note that the relative standing of various salariesis in a perpetual state of flux. The salary of a councilorof state increased by a factor of at least 40 from 1800 to 1948;the salary of a professor at the College de France by 100; theaverage salary of an office boy in a government agency by 220;the hourly wages of laborers in provincial cities by more than400. The wage rate of workers without special job traininghad increased to 80 per cent of the skilled-worker wage rateat the end of the period, compared to an average of about 50per cent before 1800. The wage rate of women has also beenraised in comparison to that of men and the present differenceis only about 20 per cent.

Family allowances constitute nowadays an important equalizing factor between the incomes of different occupational groups, because of the fact that these allowances are not proportional to earnings, but are the same from the top to the bottom of the hierarchy. The Chief Justice of the Court of Accounts, assuming him to be the father of two dependent children, earned in 1948 not more than four and a half times as much as his office boy by hour of work, although the difference between these two positions was of the order of 50 to 1 in 1800. At that time the annual earnings were 1000 francs for the office boy and 35,000 francs for the Chief Justice. Furthermore, the office boy was required to give about 3,000 hours of work per year, as against less than 2,000 for the high official.

 

It is not at all doubtful that the fan of salaries was even wider under the ancien regime. To give a general idea of the earnings of the ruling classes in the seventeenth century, we may look at three examples.

The first example concerns the salary and perquisites of Colbert, the famous minister of King Louis XIV. As general superintendent of buildings, he received only 24,000 pounds a year, but at all times he received additional salary payments, bonuses and satisfecit which raised his total income out of the public treasury to about 100,000 pounds. In addition, he had the freedom to undertake private ventures whose accounts are unknown to us, but which were on a considerable scale. Considering only the 100,000 pounds of public earnings, Colbert earned at least 500 times the average salary of an unskilled laborer. In 1955, the hourly wage of a laborer was about 150 francs, and the coefficient of 500 would give 75,000 francs per hour and 200 million per year. The reader may want to calculate for himself the amount of gross earnings that would be necessary today to have this net income after taxes[8].

A second example also shows the enormous inequalities of income that existed in earlier eras. The fees of the surgeon Felix, who operated on Louis XIV for a fistula in 1686, were 300,000 pounds, 1,500 times the wages of a laborer. The physician Daguin received a related fee of 100,000 pounds. There were a number of auxiliary charges, so that the royal treasury paid out a total of 572,000 pounds or close to 10 million hourly wage units. It is true that Felix had to try out his procedure on a large number of patients before operating on the king. Quite aside from these royal fees, Felix enjoyed a European reputation. On the other hand, if the operation had not succeeded, a flogging might well have taken the place of his honorarium[9].

Finally, a third illustration of the spread of the fan of salaries under the ancien regime can be drawn from the conditions of employment cited by Vauban for the four inspectors general of the army and the 140 military commissaries. Each inspector general received 24,000 pounds, or about 450,000 hourly wage units of the period. Each commissary received 5,100 pounds or about 100,000 hourly wage units. The modern equivalent would be 180,000 dollars without taxes[10].

As far as the regularity of earnings is concerned, we must not lose sight of the frequent occurrence of unemployment. After 1830, cyclical phenomena in the modern sense of the word were especially severe. Here is how Levasseur describes the economic crises that occurred between 1830 and 1837 at Sedan, a city where, according to all contemporary observers, the situation of the working population was comparatively favorable:

At Sedan, according to a report submitted by the mayor to the ministry, before the crisis of 1831, the textile workers, to the number of 12,500, had earned an average of two and one half francs a day. The crisis of 1830 to 1831 reduced their number to 5,000 and the wage to one and a half francs. These increased respectively to 11,000 and two and one-quarter francs from 1832 on, but there was again a depression in 1835.The working population fell to 9,000 and the wage to one and a half francs. Later, there was a slight recovery-10,000 employed workers at two francs a day-but during the actual depression there were not more than 7 000 in the workshops. They were hired at the rate of two francs, but did not earn in reality more than one and a half francs because they had only three-quarters of a day's work. The women earned a bare 60 to 75 centimes per day. Local and private charity relieved the temporary indigence of the working population, but always very incompletely[11].10

Strikes and fluctuations in employment were not peculiar to the nineteenth century. Before that they were just as common and more violent because of more widespread poverty.

At the present time, the traveler who visits the underdeveloped countries of the world will find unemployed groups of men almost everywhere, demonstrating the shortage of work in the small towns as in the cities. These serious disturbances in the volume and continuity of employment have occurred continually[12]. They should never be lost from view when we consider the income of the whole of the working class. The major phenomenon of worker unemployment will be considered at length in a later chapter.

 

2.     THE PURCHASING POWER OF WAGES

A study of monetary wage rates alone does not give any idea of the level of living of the wage earners. If, in fact, between the time of Louis XIV and 1959, the average hourly wage of the provincial unskilled laborer has been multiplied by about 2,000, increasing from one sou and six deniers to about 150 francs, the price of many goods has also risen greatly.

Purchasing power can be measured by the comparison of money wages with the price of the goods purchased with the wages. The term real wages is used to designate this relationship between the nominal salary and the price of the appropriate consumer goods.

Here, however, we encounter the central problem in the study of level of living, namely, that the very nature of consumption varies with the level of real earnings. For example, a wage earner who earns twice as much as another wage earner in the same place at the same time is not likely to buy twice as much bread, twice as many potatoes, and so forth. On the contrary, he spends more than twice as much for clothing, housing, and various non-alimentary goods. If the trends of all prices of consumer goods were parallel through time - if, for example, when the price of bread is multiplied by ten, the prices of potatoes, clothes, books, and all other merchandise and services are also increased by the same factor- the problem of the structure of consumption would not present itself. But it is the special characteristic of economic history continuously to present new disparities among price trends. In the short run, these are essentially due to maladjustment between production and consumption schedules. For example, if, for whatever reason over a period of several months, the supply of potatoes is greater than the demand without any corresponding surpluses of grain or of meat, the price of potatoes will decline by comparison with the prices of these other commodities. In the long run, however, it is the cost of production that controls the trends of selling prices and for that reason the long-term price trends are determined bytechnical progress.

Consequently, if we measure the purchasing power of a salary in relation to the consumption of a product or a service whose production has not been subject to any technical improvement, we observe a total lack of advancement in that sector of the level of living. With one sou and six deniers, the workman of 1680 was able to go to the barber as often as the contemporary workman with his 150 francs.

On the other hand, if we measure purchasing power in relation to a product that has been subject to intense technical advancement, we find a prodigious improvement in the level of living. For example, the price of a mirror four yards square has increased less than eight-fold in absolute price since 1702. It cost 2,750  pounds at that time, it now costs 21,000 francs. The purchasing power of a wage unit measured in relation to this product is therefore about 250 times as great in 1955 as it was in 1702.

These examples suggest that it is impossible to evaluate purchasing power without specifying at the same time the nature of the consumption involved.

The Four Great Types of Consumption

The consumption schedules that can be observed in the contemporary world are very diversified and undergo continuous change. We can group them in four major types by order of increasing income, as follows:

1) Consumption schedules with a predominance of millet.

2) Consumption schedules with a predominance of wheat bread.

3) Consumption schedules with a predominance of miscellaneous foods.

4) Consumption schedules with a predominance of non-alimentary goods.

Historically, the three earlier types of consumption schedule correspond to the average national situation in France of 1700, France of 1830, and France of 1955. The fourth type of situation has begun to be typical in such countries as the United States, Sweden, and the British dominions.

Consumption schedules with a preponderance of coarse cereals

Jean Jaures[13] in his History of Socialism writes thatthe average daily wage of the unskilled worker under the ancient regime was nearly equivalent to 10 pounds of wheatenbread. The day laborer of 1750 earned no more than one francper day on the average. Assuming that 240 pounds of wheatwas then worth 25 francs-a figure which was taken as theclassic average at that time-this represents less than 10 poundsof wheat, and therefore less than 10 pounds of bread a day.

But this laborer had an average of three children. He worked only about 290 days a year and the intermittent labor of his wife represented, at most, about 60 francs, entirely absorbed by expenses for clothing (not to mention kitchen utensils, taxes, and rent). The 290 francs of annual earnings of the head of the family made possible the purchase of an annual average of 2,800 pounds of wheat bread, about 560 pounds per person per year, or about one and one-half pounds per person per day. A kilogram of wheat bread furnished 2,380 calories, of which 2,040 were in the form of carbohydrates, and only 60 in the form of fats. A pound and a half of bread therefore represents 1,800 calories, of which 45 are in the form of fats. We are far from the 3,200 calories, of which 5305should be in the form of fats, which are nowadays estimated as necessary for the subsistence of the average category of manual workers. To reach the 2,900 calories necessary, on the average, to a member of this hypothetical family, it would be necessary to add to the 750 grams of bread a little more than a liter and a half of very good milk. However, the price of a liter of milk was, in general, higher than the price of a kilogram of bread, so that one might say that the average salary of 1750 was about one-third of the physiological subsistence minimum. (See Table IV[14]).

 

Although the wage rate of .8 to 1 franc per day was very stable throughout the course of the eighteenth century, so that the total income of a working family could hardly exceed a maximum figure of 350 francs per year, by contrast the price of bread was extremely unstable. Table V, which follows, is taken from the first book of M. Labrousse[15], and shows what the variations were from one year to another in the price of this essential staple. Even more than the previous table, this one gives us a picture that is essential for any understanding of the fundamental character of the level of living of the average man before the recent surge of technical progress[16]. The very existence of humanity was bound up to the production of cereals. It was impossible to store up surpluses, partly for technical reasons; but above all because there was no realization of the necessity of storage. Those who stored supplies, functioning as monopolists, were correctly held responsible for famines. Meteorological circumstances might transform a region from plenty to starvation without warning. Transportation from one region to another was not practical on a sufficient scale to equalize resources. In 1757, 240 pounds of wheat was worth 13.5 at Auch and 24 at Alençon, but in 1759·we find wheat more dear at Auch, 20.7, than at Alençon, 20.5. In 1764, Alençon showed the lowest price which occurred during a forty year period, 12.4, but six years later, it showed one of the highest, 34.4. The years 1768, 1769, 1770, and 1771, were hard years for the entire kingdom, but it was in 1772 that the people of Amiens reached the worst point of the crisis, 33.75, while for the other areas improvement was already underway. Seven years later, in 1780, wheat at Amiens had fallen to less than half this price, 15.15. It climbed again to reach 33.75 in 1789.

 

 

 

If we note that these are annual averages and that the seasonal and daily movements have many more variations still, it is possible to form an idea of the instability of living conditions under the traditional system[17].

The amplitude of these variations made the price of wheat the essential variable of the level of living of the people under that economic system. If real earnings had amounted to a pound and a half of bread per person per day, this would have been, in spite of its nutritional inadequacy, clearly less painful than a situation in which real earnings varied within a few years from close to three pounds to less than one. The periods in which the price of wheat was high were periods of frightful misery - a topic to which we will return later on.

The condition of the average man in the traditional era of humanity, that is to say before 1800, may then be summarized in the following way: The purchasing power of the working classes depended essentially upon the weather, and the level of living per capita and per day of a working class family varied between a maximum of about two and a half to three pounds of wheat during the best years and an extremely low minimum which, as late as the eighteenth century, often fell below a single pound of bread a day. To visualize this level of living, it should be recalled that, aside from all nicety about the distribution of calories into proteins, carbohydrates and so forth, two and a half pounds of bread is equal to 3,000 calories or exactly the average nutritional minimum when divided among a family of five persons. In one out of four years in the eighteenth century, and in one out of every five years in the seventeenth century, this minimum ration was attained. The average ration in the deficit years may be estimated as low as one-half or two-thirds of minimum subsistence.

 

*

 

Thus in economies of the type that prevailed in France and in virtually the entire world except for Great Britain and North America .before1750,  the per capita consumption of food and consequently the per capita production of food were plainly less than the physiological minimum. It is essential to realize that under these conditions, consumption and also production must have consisted almost entirely of cereals. The large scale production of meat was precluded by the fact that it requires an agricultural area five or ten times as great to produce the same number of meat calories as cereal calories. In order to produce pork, beef, or milk, grain must be fed to the animal. Pork requires 6 kilograms of grain per kilogram of weight on the hoof. Beef requires 12 kilograms per kilogram, and milk requires 1.3 kilograms. One kilogram of these products contains from 800 to 2,000 calories. The same kilogram of wheat gives 2,400 calories if made into bread.

Let us assume, for example, that with given techniques and a given number of labor hours, a hectare[18] of given land produces ten quintals[19] of wheat. This was about the maximum output before 1,800 for the best land in the best years. The harvest would furnish 2,400,000 calories. The same land used for dairy production would not give more than 550,000 calories. In the production of beef, it would give still less, perhaps 170,000 calories. The same land, then, is able to support 2,7 persons if it is used for cereals, or.6 persons if it is used for milk,0.2 persons if it is used to raise cattle, at a rate of 2,500calories per person per day. These figures are obviously approximate, but their order of magnitude is certain. It is remarkable that historians have tried and still try to describe and explain contemporary economic development without having placed in evidence a causal factor as simple and important as this[20].

These differences in the output of calories per hectare can be explained, in part, by differences in output or productivity per worker, although manpower is a more important factor for a hectare in cereal crops than for the same amount of land used for livestock. However, the dominant factor in primitive economies is not the rarity of manpower, which is on the contrary superabundant, but the scarcity of land which follows from the density of population. With her 25 million inhabitants and her 35 million arable hectares, France of 1700 was not able to direct her production except to the cereals. To provide 600 pounds of wheat per head per year to a population of 20 million people, a harvest of six million tons of wheat was necessary. With an average output of six quintals to the hectare, this required ten million hectares. Since, with the farming methods of the time, an average piece of land had to be left fallow at least one year out of three and would produce only a meager harvest of spring wheat or vegetables the second year, it is evident that the area annually planted in grain could hardly exceed these ten million hectares. If there had been any effort to produce calories in richer forms like milk, meat, and fruits, on any large scale, the nutritional deficit would have been even greater than it was.

Likewise, it is clear why populations that are dense in relation to their technology (such as France in 1750, the Balkan countries, India, or China today) must be satisfied almost exclusively cereals - wheat, corn, and rice.

When, as in the case of France of 1750, the nutritional poverty becomes sufficiently great, the principal effort of production is diverted to those cereals that we regard as secondary today (rye, barley, oats, buckwheat). As a matter of fact, these cereals give a slightly higher number of calories per hectare than does wheat[21].

The Frenchman of that era did not have the slightest idea of the number of calories produced by a unit of wheat, of rice, of barley, or of oats, any more than the Indian or the Chinese does today. He had, nevertheless, adopted just those crops which permitted a maximum density of population. This determinism was accomplished through the price mechanism. The output in bushels per hectare is clearly higher for the secondary cereals than for wheat, especially on mediocre land. Thus the secondary cereals are normally less dear than wheat. This is the reason why bread made with the secondary cereals, although clearly less nourishing and much less tasty and digestible, appeared preferable to the consumer. The outputs per hectare in rye were about the same on marginal land as the outputs per hectare in wheat on the best land; concerning barley, the average output compared to that of wheat in the proportion of nine to six. This is why in the years of scarcity and high prices, the demand for barley, rye, and buckwheat becomes greater, as shown by Labrousse[22]. There results from this an upset in production and the secondary grains tend to displace wheat.

 

*

 

These facts make it clear that the level of living characteristic of 1700 involved not only the predominance of food expenses in the average budget, and not only the predominance of expenditures for grain in comparison to other foods, but also the predominance of coarse cereals-that is "méteil," (millet) a mixture of wheat and other cereals, usually rye, in a variable proportion somewhere in the neighborhood of one part of wheat flour to one part of other cereals. Vauban, in Dime Royale, estimates the average budget of an agricultural laborer's family of four persons as follows:

 

1/3 of a minot of salt (a barrel of 17 kilograms)                 8 livres, 16 sous

10 setiers of mixed cereals (1,200 kilograms)                     60 livres

Rent, maintenance and other food items                             15 livre1, 4 sous

Taxes                                                  Maximum of 6 livres, minimum of 3 livres

TOTAL                                                                        Approximately 90 livres

 

In this type of budget, the ration of coarse cereal, being 2,400 pounds a year for four persons, gives less than two pounds of millet per capita per day. This ration corresponds to 400 grams of wheat bread and 400 grams of rye bread, or about 1,500 calories. The expenditures for coarse cereal in this workman's budget amounted to about 68 per cent of the total.

The foregoing example illustrates the purchasing power of a day laborer in 1750, the price of wheat being taken at 25 francs per setier, the average price during a large part of the eighteenth century. Toward 1789, Levasseur described a practically identical situation: "I have reached the conclusion after extensive calculation and on the basis of elaborate data obtained from country priests, that in the most indigent families, each individual has an allowance of only 60 to 70 livres per year including men, women and children, and that families which live on bread and dairy products, having a cow grazed by their children along the roadside and hedges, spend even less than this[23]."19 Thus the situation hardly differed at all from that described by Vauban, since between 1698 and 1790 the average price of wheat had increased from 7 to 25 livres.

From black bread to the frigidaire

In studies of the working class level of living, coarse grain flour is not mentioned after 1825. After that date in France, white bread made of wheat flour always appears and is explicitly designated. Moreover, the percentage of the total budget used for the purchase of bread decreased steadily from 1825 to the present.

In the era before 1830, expenditures for bread were always greater than half of the total expenditures for food, and constituted something between a third and a half of the total budget of working class families. De Morogues[24] estimates the consumption of bread during the period 1825 to 1832 at 19 ounces per person per day (almost exactly 600 grams) in the country, and at 16 ounces in the cities. This level of consumption required the expenditure of 303 francs in the country and 296 francs in the city for a family of five persons annually. De Morogues estimates the annual income of a working class family, if "well off," at 600 francs in the country and 860 in the city. The proportion of bread in the budget, therefore, ranged between 35 per cent in the city and 50 per cent in the country. The author emphasizes, however, that these figures refer to workers who are above the level of need. To obtain this income of 620 francs, 300 days of work were required of the head of the family at a daily wage rate of 1.25 francs, 200 days of work of his wife at 75 centimes, and 250 days of work by the oldest of his Children at 38 centimes a day.

After 1830, the importance of bread in the working class budget declined steadily. In Villermé's budget, bread still represents more than a quarter of total expenditures for the single worker in France and more than 35 per cent for families. In our time, the proportion of expenditures for bread in the working class budget has fallen to about three or four per cent. Furthermore, the price of bread today is a retail price set in the urban bakeries, while formerly it was the price of wheat delivered at the farm and the average housewife made her own bread. There was practically no difference between the price of a pound of bread and the price of a pound of wheat before 1800. With the development of commercial services, a difference has developed little by little. This is due to the fact that the commercial services of distribution have not yet benefited from technical progress in the same way as the services involved in the production of wheat. On the contrary, the number of labor hours necessary to distribute bread in a city have tended to increase because of the increasing size and complexity of urban conglomerations. In 1955, a kilogram of bread was worth 55 francs and a kilogram of wheat only 33. Thus, the difference between the two prices which was zero in 1780, is now of the order of 40 per cent.

In the budget of a workman or a typist in New York, bread amounts to less than one per cent. Nine-tenths of expenditures for food are devoted to the purchase of "noble calories" such as meat, milk and fruit. Accumulated expenses for all starches do not amount to more than a fifth of all household expenditures. Schematically, the frigidaire, the automobile, and the washing machine have taken the place, or are taking the place, of his daily bread in the worker's budget.

Evolution of the Idea of Minimum Subsistence

As a result of these changes, the notion of minimum subsistence has been in flux for 150 years. When Vauban, Turgot, or Arthur Young speak of a worker in easy circumstances, they mean a worker who has enough bread to eat. The subsistence minimum for them is that income which allows the purchase of three pounds of wheat per day per capita, or the equivalent. They have reference to a physiological minimum. Expenditures for housing and for clothing appear negligible compared to the costs of food, and it does not occur to them that the working classes might have essential needs over and above nutrition. They are aware that extra work allows the purchase of the few earthenware pots and pans that constitute the equipment of the household. As for clothing, the miserable condition of which will be discussed presently, it is furnished by means of an unusual outlay during a "good year." Housing is paid for by work. Its low monetary value corresponds to its extreme inadequacy.

After 1830, by contrast, sociologists modified the concept of minimum subsistence by calculating the physiological minimum more and more generously, with increasing importance allowed to the "noble" calories. Also, they bring in a steadily increasing quota of expenditures for lighting, heat, clothing and, after 1920, for entertainment and vacations.

Table VI illustrates three characteristic types of subsistence minimum: that of .Vauban in 1698, that of Villermé in 1831, and finally a formula generally accepted by the labor unions in France in 1950. In studying these three types of subsistence minimum, the reader will be struck by the profound transformation of economic conditions which has occurred over the past 250 years.

To appraise these figures correctly, it must always be remembered that the subsistence minimum as stated by Vauban and Villermé did not represent a realizable possibility but an ideal whose attainment would solve every social problem. It was only after having observed that the average family income was 550 francs a year that Vauban states that an income of 750 francs would be required to place a family in easy circumstances. Similarly, Villermé notes that one out of two working class families do not achieve his budget minimum which he declares adequate on the grounds that those working class families who do achieve it declare themselves satisfied with their condition[25]. In sharp contrast to the foregoing, the modern concept of minimum subsistence implies a belief that no wage earner should receive a salary lower than that which will afford him the level of consumption described.

 

 

In other words, the subsistence minimum of Vauban is higher than the average actually observed for the nation; the subsistence minimum of Villermé is about equal to the average observed income; the subsistence minimum of 1950 is less than the actual average income observed for the nation. From 1949 to 1955 the evolutionary tendencies have been somewhat upset in France. But the broad outlines of the phenomena studied above have evidently not been modified.

 

 

 

 

*

 

What conclusions may we draw from these facts? The most certain is that the purchasing power of a wage, if it is to have scientific validity, must be measured by specific enumeration of the purchases that are possible for the earners of that wage. This suggests that it is impossible to undertake a serious appraisal of purchasing power before knowing the structure of the budgets of those wage earners whose purchasing power is to be measured.

Nevertheless, it would be ridiculous to carry a desire for precision to the point where nothing at all could be done. We must not be too exacting about the number of studies available, or about the methods they use, or about the reliability of averages. There is a real need for more studies and for more precise methods. On the other hand, however, we must be willing to use what results we have. Here, as elsewhere in the scientific domain, a measurement involving errors of the order of 20 per cent is worth decidedly more than no measurement at all.

This being the case, the development of purchasing power and, consequently, the rise in the level of living over the long run, can be measured by comparing the average consumption, at given dates, of the recipients of wages and other income. For example, Table VIII shows the difference in purchasing power of a salary of 450 francs in 1831 and of 161,500 francs in 1949.

 

The former corresponded to a payment of one and one-half francs per working day-a figure close to the average paid to unskilled laborers in Paris. The annual salary of 161,500 francs in 1949 was almost the exact equivalent of the wages paid to an unskilled laborer in the metallurgical industry in a provincial center at an hourly rate of 70 francs for 50 weeks of work plus two weeks of paid vacation. Thus the annual salary of 1831 was given in return for 3,600 hours of work, that of 1949 for 2,250 hours of work.

 

 

 

Table X[26] recapitulates, by means of much less dependable data, the development of purchasing power for the recipient of a very high salary, 8,000 francs, in 1831. The table shows that to obtain the same commodities costing 8,000 francs in 1831, the amount necessary in 1949 would be 1,700,000 francs (and a little less than 3,000,000 francs in 1956). However, a family of five persons, having a net income of 3,000,000 francs after taxes at the present time, would not consume the same things as would have been selected in 1831 with 8,000 francs of income. Although the amount of food and housing is roughly the same, the relative importance of light, heating, and clothing in the budget has been considerably reduced. Miscellaneous expenses have been greatly increased and domestic expenses reduced as a result of a considerable disparity between the prices of items in these two categories. The domestic staff of this typical family has been reduced from three persons to one, while the proportion of the budget given over to miscellaneous expenses and maintenance has been doubled. These alterations in budget structure that are no less apparent in the working class budget than in the bourgeois budget will be further analyzed below. To appreciate the increase of the purchasing power of the high income wage earner, it must be remembered in studying the table, that a salary of 8,000francs in 1831 was that of the permanent chief of a small government agency[27], and that a functionary of this rank with three children was nowhere near a salary of 1,700,000 francs in 1949, or 3,000,000 francs in 1955. He earned only 900,000 francs in 1949 and 1,800,000 in 1955. However, if this official had benefited from the same relative increase of wages as the laborer, he would be earning more than 3,000,000 francs in 1949. The holders of high-salaried positions have suffered a loss of general purchasing power, measured either absolutely or relatively.

 

The study of the long-run changes in the level of living must therefore be based on at least an approximate enumeration of the goods and services actually consumed. Price distortions cause serious errors if one tries to relate income to the cost of particular products. Changes in budget structure lead to equally serious errors if income is related to the prices of a fixed consumption schedule.

On the other hand, in studying short-run changes in purchasing power and level of living, it is obvious that fixed patterns of consumption may be used as a basis. For example, it would be quite legitimate to take the items shown in Table VI to represent the consumption pattern of the Parisian laborer from 1947 to 1955. It would be possible to calculate a monthly index whose numerator would be the going monthly wages of such a laborer and whose denominator would be the total price of the goods listed in the quantities consumed during a given month. But if this index is carried beyond a short term of years, it leads to serious errors.

For similar reasons, it would be a mistake to suppose that an index calculated for laborers might be applied to high salaried workers. The cost of the commodities in the budgets of the prosperous do not vary in parallel with those in the working class budget. This problem will be taken up again later on. The following general principle may be introduced at this point: Since the working class budget in France is still dominated by expenditures for food, it is therefore controlled by the retail price of food. By contrast, the budgets of the rich are dominated by the products of luxury and by service items. In the short run there is no necessary correspondence at all between the fluctuations in the price of food items and of tertiary goods. Food products, being affected more strongly than most others by technical progress, tend in the long run to show relatively lower prices. Thus, all other things being equal, any index of the level of living of the comfortable classes and of rich countries has a tendency - at a given rate of technical progress - to rise more slowly than the index of the level of living in poorer classes and poorer countries. This fundamental economic law is a factor tending towards social equalization, at first in any one country and eventually in the entire world, if technical progress proceeds normally in the agriculture of undeveloped countries.

The foregoing considerations, however simple they may appear from a rational point of view, will nevertheless serve to show the difficulties involved in the study of purchasing power and level of living. The enumerations and the tentative measures appearing in Tables I to X above are given only as a basis for discussion and to illustrate the methods with which this topic can be handled. The author will be grateful to readers who call his attention to errors and omissions with the aid of accurate and factual documents.

Before undertaking such a study, it is necessary to have a clear idea of the development of the concept of minimum subsistence and its significance. The investigation of the level of living requires extensive research on family expenditures according to total income, number of children, social class, educational level, occupation, and so forth. Only a few such studies have ever been done. For many long years, no French institution except the Academy of Moral and Political Sciences had the material resources to undertake such projects. Unfortunately, after having supported the fine study of Villermé in 1831, the Institute completely abandoned this task. The efforts of Le Play, so remarkable in their conception, suffered from lack of funds and continuity and produced only a few hundred fragmentary monographs. The General Statistical Office of France did not have the necessary resources. It has been necessary to wait until recent years to see really scientific work done on a large scale on the level of living. These studies have been done by the Haute Autorité de la Communauté Européenne du Charbon et de l'Acier, which was mentioned in connection with nominal salaries[28]. The study of the level of living should be the core of economic science. Instead, it has remained the sole concern of a few isolated students until very recent years. This is why the best available data for the study of the long term development are still such scattered observations as travelers' notes, censuses of production for certain countries, estimates of per capita consumption, statistical summaries, enumeration of certain manufactured products like automobiles, bicycles and radio sets.

These are the indexes that we shall now consider.