Why Wages Rise: 4. Tools to Harness Energy

F. A. Harper is a member of the staff of the Foundation for Economic Education.

The first two articles in this series dealt with the effect on wages of (1) union membership and (2) productivity. The third dealt with the division of the total product between pay for current effort and pay for the use of capital; how tools, provided out of savings, make it possible for the average person in the United States to produce perhaps twenty times as much as he could without them. This article deals with the reasons why production has increased so magnificently with the use of tools.

Food from Sun’s Energy

All life on earth is developed, sustained, and powered by energy from the sun. And that is the beginning of the story of how man has harnessed energy to improve his level of living.

Man cannot use the sun’s energy directly, except as it warms him and thus conserves the fuel already in his body for other uses. Were it possible to do this, the earth probably would be populated in unbelievable numbers; for the amount of energy coming from the sun is fantastically great.

Humans require a converter to change the sun’s energy into usable forms. All human food comes directly or indirectly from plants which make direct use of the sun’s energy in their growth. Plants are not, however, very efficient in doing this because about 10,000 units of the sun’s energy are required to produce and store ten units of energy in the grown plant.1

Plants are in a sense, then, tools of mankind—the basic tools in man’s life, without which there could be no human life as we know it. And as better plants can be found, they serve as better tools to raise man’s welfare—raise his wages, in a sense.

Some plants or parts of plants are eaten directly by humans. Others are eaten by herbivorous animal life, such as cattle; then we eat the cattle.

Herbivorous animals are not very efficient in storing energy, either. Of the ten energy units in the form of plants, said above to be produced from 10,000 units of the sun’s energy, only one unit of energy is grown and stored in the animal; and not all of this is considered edible by humans. But we also consume animal products, such as milk and eggs, which add to the animal’s efficiency somewhat.

So animals as well as plants serve us as tools, yielding a better life that is more to the human liking. And as more efficient animals can be found, that too raises wages, in a sense.”

Some animals are carnivorous and live on other animals, of course. But they are few and mankind generally has domesticated none of them for use as food. They are too inefficient to compete with herbivorous animals, and so can hardly be classed among man’s tools—except as a few are kept for pets to amuse us or for pulling an occasional dogcart of very low energy efficiency.

Animal Power

In addition to being domesticated for purposes of food in a direct sense, animals also take the sun’s energy that has been stored in plants and convert it into work, like tilling the soil, hauling loads, and the like. This process, in its time, was a great invention; for with the work of a horse, for instance, it became possible for a person to increase greatly his welfare—his wage.

According to Prentice, perhaps the greatest increase in work efficiency from draft horses came with the invention of a collar to replace the throat strap.2 This increased greatly the load the horse could pull. And there were other notable inventions of early days, such as the wheel to replace the dragged load and the “fifth wheel” by which to change the direction of four-wheeled vehicles.

Though highly important at the time of their discovery as compared with prior efficiency of human production, all these developments are rather unimportant in explaining the level of our present welfare. As we shall see, the present level comes mainly from other developments.

So back over time man has discovered how to use the energy from the sun, first in plant form as food and then, through plants, in the form of animals for food and for toil. Another early form of releasing the plant-stored energy was the burning of wood and other plant materials for cooking food and heating abodes. And later it was found that these plant materials of bygone days lay stored in the form of coal, oil, and gas. Because of the highly concentrated energy in these deposits, new uses eventually were developed whereby the heat was used for more direct sources of power.

Motive Power

Most important among these new uses of deposited plant-energy were methods of converting, first, heat energy and then other forms of energy into motion with which to propel vehicles and to drive moving parts. The heat from this stored energy also came to be used to reform and blend chemical materials into forms useful as tools. Thus it became possible to invent things like the steam engine and internal combustion engine. And in a somewhat different and new way, energy supplies were harnessed by using the water wheel to generate electricity, and more recently by the development of atomic energy.

These marvelous developments have now become commonplace in our lives. These, rather than the earlier forms of energy use, account for the major part of the increase in our productivity, from which higher and higher wages have been paid. These are responsible for almost all of the great difference in economic welfare between a huntsman or a man with a hoe—or even a man working with a horse or a buffalo—as compared with the income of the average wage earner in the United States today.

Yet all this has been accomplished with tools far from perfect in energy efficiency. Their efficiency is far superior, however, to that of the sun’s energy going through plants to feed a horse, and then being turned into horse-fuel for plowing land on which to grow more plants for man to eat directly. By these newer means the quantity of harnessed energy that may become used to do man’s work is all but limitless. It is limited only by his foresight and restraint from immediate consumption, so as to be able to store his productivity in the form of more and still more tools. Then these can be put to work using more and still more of the limitless supply of the sun’s energy.

This has been a simple description of the energy sources for man’s food and for his other wants over eons of time. It traces the development of the miracle of productivity in the United States and in other economically advanced countries. They are the result of ingenuity, savings, and the workpower of harnessed energy.

The Simple Idea of Tools

In essence, the formula is as simple as this: If a man can create a tool that makes it possible for him to produce in a day of work, say, twice as much of something as he could without the tool, he can have twice as much to enjoy. Or more accurately, he can have twice as much to enjoy on a sustaining basis, provided the machine makes it possible for him to produce double the output in enough less than a day’s time so that he can also rebuild and replace whatever part of the machine was used up or worn out by the day’s use.

If in addition to replacing the part of the machine he has worn out with the day’s work he can also develop another tool that will further increase his output per hour, he can have even more to enjoy tomorrow. And so on, ad infinitum. If he is to accomplish this progressive improvement, he must restrain his current joys of consumption enough to make possible the development and accumulation of tools.

Output does not automatically increase, of course, merely because there have been some savings and their investment in new tools. If it were to take a day of work to make a tool which, by its use, would add only as much production as could have been produced in a day without the tool, then there would be no net gain in output. Tools are not productive per se. They are beneficial only if they add a net increase in output from human effort.

Energy Output, United States

Horsepower-hours per man-hour of work

Source: Calculations based on data in America’s Needs and Resources by J. Frederic Dewhurst and Associates. New York: The Twentieth Century Fund. pp. 23 and 787. Also, Bureau of the Census, United States.

Some misjudgments occur, of course, in efforts to develop tools in a free economy of private initiative. But errors there are at a minimum because the cost of the mistake can’t be passed along to innocent bystanders as can be done in a controlled society.

So in a free society the growth in the development of energy-use measures, in a rough way, the harnessing of productive power. Horsepower-hours of energy output is one common measure.

In thinking of the effect of harnessed energy as an aid to men in their work, note that one horsepower is roughly equivalent to the energy of ten able-bodied men working strenuously—i.e., each man working an equivalent of lifting 55 pounds one foot a second, continuously. Or to illustrate its power another way, only one 75-watt light bulb in use represents as much energy as that of one man turning the crank on the generator.

The growth in energy output for the last century is shown in the accompanying table. A hundred years ago there was about half a horsepower of energy output for each hour of work, in addition to the energy of the worker himself. This—mostly by work animals—was equivalent to the help of five men. By 1950 the figure for horsepower-hours of additional help had risen to 3 1/3, or equivalent to the help of 33 men.

The use of nonliving sources of energy started to become important during the late nineteenth century, largely displacing work animals which now account for less energy than human labor itself. Nonlife sources now comprise the prime form of energy.

This help is not all clear gain in output, of course, because the efficiency is not 100 per cent. Some of the energy must go to produce and replace the tools themselves. But after taking account of all that, it is a vital reason why wages are now five times what they were a century ago.

How much better it is to have these silent, nonsuffering servants in the form of energy-using machines working for us than to have 33 human slaves! They far surpass slaves in efficiency of output, and with minimum upkeep costs. They don’t rebel or run away. They are as willing to work as not to work.

This remarkable harnessing of energy, along with the idea of wage payments among specialists under relative freedom of exchange, accounts in great measure for the rise in wages in the United States over the decades.

Foot Notes

1. Estimate by the late Professor Raymond Lindeman of the University of Minnesota.

2. E. Parmalee Prentice. Hunger and History. Caldwell, Idaho: The Caxton Printers, Ltd., 1951. p. 50.

3. See “Why Wages Rise: 1″ in The Freeman, March 1956.

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