traditions. It is true that the Third Republic has made a determined effort to give to the urban and rural subdivisions a certain amount of freedom in the determination of local policy; but in spite of these efforts, the communes seem ever ready to look to the central government for guidance, while the latter regards its power as largely dependent upon control over local politics. The introduction of parliamentary government has increased the incentive to maintain strict central control. A ministry must keep the electors in the communes in harmony with its policy, in order to command a majority in the Chamber of Deputies.

This control of the central government furnishes the clue to the inability of the town councils of the socialistic municipalities to effect any radical changes in local policy. It also explains the indifference of property owners to the spread of revolutionary opinion. Where the council is the central organ of the city government, as is the case in France, one would naturally expect that the socialistic triumphs would arouse a feeling of uneasiness as to the security of property rights. The town authorities neglect no opportunity publicly to express their opposition to the existing social system. In September, 1897, I found the city hall of Roubaix covered with large placards denouncing the capitalists in unmeasured terms, and demanding for the workingmen a share "in the common heritage." These outbursts are regarded by the well-to-do classes as expressions of irresponsible political opinion. As long as the central government remains free from socialistic taint, private property has nothing to fear. Although political conditions fully justify this feeling of security, its existence indicates a condition of political irresponsibility which threatens to sap the vitality of national as well as of local institutions. Freedom of opinion, with its resulting diversity, is an essential requisite to popular government. But responsibility must accompany each phase of political opinion; otherwise public life loses its vigor and elasticity. Conditions that permit a party to use its platform for purposes of agitation merely, must result in the most extreme forms of class antagonism. Under ordinary circumstances, the possibility of

acquiring power exerts a sobering and restraining influence upon political parties, for they may, at any time, be called upon to make good their promises. Where, however, political success carries with it no political obligation, all the ordinary safeguards against violent and ill-considered action are removed. This is precisely the situation of the socialists in France. They are given all the advantages for agitation with none of the responsibilities that come with power. The socialistic town councils can thus meet the demands of electors without incurring the risks which the enforcement of their decisions would entail. Socialistic candidates are able to point to a great number of measures passed by the votes of the party, but rendered ineffectual through the opposition of the central government. The party leaders pose as martyrs, while the loyalty of the rank and file of electors is strengthened through the conviction that they are being persecuted by their political opponents.

This unfortunate result is but one of the consequences of the extreme subordination of local to national political opinion. Because of this relation, government becomes associated with the idea of oppression and persecution, which creates a feeling of opposition to authority of any kind. Sudden revulsions of popular opinion and political instability inevitably follow. In such an atmosphere parliamentary government cannot survive. For its successful operation, a well-developed spirit of association and of political self-restraint, a respect for the rights of minorities and a keen sense of political responsibility, are necessary. All these qualities can best be developed through the constant contact with public affairs afforded by vigorous local institutions. Where these are lacking, as has been the case in France throughout the present century, we are certain to find a low level of political education, sudden changes of political feeling and a rapid growth of irresponsible political groups. The socialistic municipalities furnish abundant illustration of these conditions.

Of the many and perplexing problems now confronting the country, there is none more closely associated with the future of national power and influence than the development of local

self-government. In order to give national politics the stability necessary to progress, local institutions must impress upon the population the responsibilities of power. Where the central government assumes the control of local policy, political opinion follows the fancy and caprice rather than the judgment of the community. Under such conditions, local institutional life offers no resistance to the spread of revolutionary doctrine, thus making interference from without necessary to preserve social order. The gap between local policy and local opinion constantly widens, and leads to periods of political unrest in which the maintenance of political liberty becomes a cloak for the worst forms of despotism.

University of Pennsylvania.

L. S. ROWE.

THE DYNAMIC LAW OF WAGES.

AMONG the larger gifts of early economics to later

thought is the theory of natural value. The price of a commodity is natural when it equals the cost of producing it. If the entrepreneur who makes a commodity can sell it for enough to pay interest on all the capital that he uses, wages on all the labor that he employs, including any labor that he himself may perform in the management of his own business, and nothing more, the price is at its normal level. It is a no-profit price.

Two extensions of this principle are necessary, if it is to tell what is true. Not one article, merely, but all articles must sell at cost prices, if the value of any one of them is to be natural. If the article A sells at cost, while B and C sell for more than cost, then the value of A, in terms of B and C, is unnaturally low. Value, in a classical sense, is relative. The extension of the régime of cost values to the including of all commodities is a mere corollary of the classical method of stating the principle. There must be a universal régime of no profits, if the price of any single thing is to satisfy the classical requirement concerning the natural price.

A second extension is equally necessary; and this is contrary to traditional modes of thinking. The cost of all parts of the supply of an article must be uniform. If bad methods prevail in some mills, or if inferior management is found there, then the cost of the products of these mills is unnaturally large. The value of the goods shows no tendency to conform to the cost of this particularly expensive part of the supply. These mills having bad methods or inferior managers must change their methods and their management or stop running altogether. The better mills are making profits, and they are enlarging their output. This is bringing down the price of the goods and forcing one after another of the inferior employers to change his methods or to fail. The price of the product is tending continually downward toward the cost, not of the most expensive, but of the least expensive part of the supply. In the

absence of further improvements of method, and of other disturbing influences, the value will remain stable, not even at the cost that is now incurred in the best establishments, but at the cost that will hereafter be incurred in these shops of greatest efficiency, when they shall have sufficiently enlarged their products to appropriate the whole market to themselves. This mere enlargement of the output means additional cheapness. Uniform costs and minimum costs are thus necessary for the realizing of the classical idea of a value that is natural. Competition is forcing all values toward this level of minimum, no-profit prices. In the absence of movements that we term dynamic, all prices would reach that level and hold it.

The cost of producting an article in the worst situated establishment has, then, no price-regulating power. Price shows no tendency to settle itself at that rate and stay there. Rather does price itself determine the cost that is incurred in the worst situated establishment; for, it determines how bad the situation may be and permit the intrepreneur to survive.1

The true static or natural price equals the cost that the more efficient establishments would incur if improvements were to cease, and if these better concerns were to absorb the lion's share of the business.

As thus enlarged the classical theory of natural value is essentially a theory of static value. It tells what commodities would exchange for, if all the disturbances and readjustments that are described by the term dynamic were to stop, and if competition were to go on in ideal perfection.

A complete conception of a static state includes much more than this. It requires that costs themselves should conform to some law. The costs to an entrepreneur resolve themselves into wages and interest. These are normal if a unit of labor is as well rewarded in one industry as it is in another, if a unit of capital is so, and if a unit of either one of these agents always gets exactly what it produces. The different industries of society can never be in a state of static equilibrium unless labor,

'The continuous falling out of the more inefficient establishments checks the rate at which the entire product enlarges, and so influences the degree of rapidity at which price falls toward its true static level. This is the only way in which maximum cost acts causally on price.