Richard Schüller’s German-language article, published in its original version in 1911, examines labor demand through employers’ calculations of profitability. It challenges explanations that move directly from the marginal value of a worker to the determination of wages and employment. Its starting point is an analytical gap:
Der Einfluß der Nachfrage und des Angebotes auf den Arbeitslohn ist bisher nur in den allgemeinsten Umrissen erkannt und dargestellt worden.
English translation: The influence of demand and supply upon wages has hitherto been recognized and presented only in the most general outlines.
Schüller specifies what demand means within an enterprise before addressing its aggregate effects. The argument moves from the valuation of productive labor to the quantities employers seek at different wages, testing marginal-value theory against the interdependence of workers and other productive factors. A concluding announcement reserves aggregate demand for a subsequent article.
The employer ordinarily compares anticipated receipts with expenditures, including the wage bill. This calculation does not generally assign each worker a separately measurable contribution to output. Specialization and cooperation make individual services mutually dependent:
Für weitaus den größten Teil aller Arbeiter ist die Berechnung des Wertes, den jeder einzelne für den Gesamtbetrieb hat, undurchführbar.
English translation: For by far the greatest part of all workers, the calculation of the value which each individual one has for the enterprise as a whole is impracticable.
This is a structural difficulty, not merely an accounting limitation. An enterprise may require a coordinated workforce to use machinery, maintain production schedules, and realize purchasing advantages. Losing workers can therefore reduce profits disproportionately. Conversely, the gain secured by completing a workforce cannot simply be attributed to the final workers as their independent product.
Overhead costs sharpen the argument. Reduced employment does not automatically bring a corresponding reduction in expenditure. Buildings, management, and other commitments may remain necessary even when output falls:
Diese Bestandteile der Kosten sinken erst, wenn die Betriebseinschränkung so weit geht, daß dadurch Gebäude frei und zu anderen Zwecken verwendbar, Angestellte überflüssig und daher entlassen werden.
English translation: These components of costs fall only when the curtailment of operations goes so far that buildings are thereby freed and become usable for other purposes, and employees become superfluous and are therefore dismissed.
Business calculations and census evidence support Schüller’s emphasis on the costs of operating below an economical scale. He distinguishes these losses from restrictions warranted by weak sales or cartel policy. Under otherwise unchanged conditions, missing workers can impair the profitability of the entire establishment, rather than merely subtracting a proportional share of output.
Labor’s total value to the employer is assessed through expected output value after allowing for other productive factors, including entrepreneurial activity and capital. These allowances depend on alternative uses, not automatically on customary remuneration. An owner with specialized machinery and few opportunities elsewhere may continue production at returns another entrepreneur would reject. Labor demand consequently varies with product prices, technical conditions, costs, and each business’s alternatives.
Schüller nevertheless recognizes circumstances in which particular services can be valued separately. Expansion into unfavorable production or sales conditions may outweigh economies of scale, while machinery may offer an economical substitute for labor. Substitution must, however, be practically available: finance, knowledge, adaptability, and risk constrain employers’ choices. Differences in workers’ qualifications likewise matter through their consequences for receipts and costs.
The analysis separates the quantity demanded at prevailing wages from the intensity of demand: how much an employer would pay before relinquishing particular workers or abandoning production. Hiring additional workers at higher wages may require raising the remuneration of existing workers performing equivalent services. The contribution of the last worker therefore cannot straightforwardly determine everyone’s wage.
Where labor forms a complementary whole, wage increases may initially reduce profit without making partial dismissal economical. Beyond a threshold, closure rather than gradual contraction becomes the relevant response. Lower wages similarly need not enlarge employment if sales, capital, materials, or managerial capacity constrain production. Where services are separable or replaceable, employment can instead change at particular wage thresholds.
The closing critique acknowledges Menger’s treatment of complementary productive goods while disputing generalizations associated with Clark and Wieser. The value of losing one worker does not reveal the consequences of losing several workers or the entire workforce. Identical marginal valuations can thus coexist with different substitution possibilities and closure thresholds. Schüller presents labor demand as a structured set of conditional decisions in which complementarity, overhead costs, and entrepreneurial alternatives mediate the relationship between productive value, wages, and employment.
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