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Title: Labour and the Popular Welfare
Author: Mallock, W. H. (William Hurrell)
Language: English
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*** Start of this LibraryBlog Digital Book "Labour and the Popular Welfare" ***
Transcriber’s Note
In the following transcription, italic text is denoted by _underscores_.
Small capitals in the original text have been transcribed as ALL
CAPITALS.
Numbered markers (◆¹, ◆², etc.) have been added to this transcription
to indicate the line in a paragraph at which the text of the
corresponding marginal note (sidenote) started.
The corresponding marginal notes are numbered ◆1, ◆2, etc. They are
enclosed in square brackets and prefixed with the word ‘Sidenote’. They
are placed immediately above the paragraph to which they were attached
in the book.
See end of this document for details of corrections and other changes.
————————————— Start of Book —————————————
LABOUR
AND THE
POPULAR WELFARE
BY
W. H. MALLOCK
AUTHOR OF ‘IS LIFE WORTH LIVING?’ ‘SOCIAL EQUALITY,’ ETC.
SIXTH THOUSAND
LONDON
ADAM AND CHARLES BLACK
1895
PREFACE TO NEW EDITION
In republishing this work at a low price, I wish to reiterate
emphatically what is said of it in the opening chapter,—namely, that
any clearheaded Radical, as distinct from the New Unionist, the
Socialistic dreamer, and the Agitator, will find nothing in it to jar
against his sympathies, or to conflict with his opinions, any more than
the most strenuous Conservative will. If the word “party” is used in
its usual sense, this is a volume absolutely free from any party bias.
It has, however, since its first publication, some nine months ago,
been attacked continually, not by Socialistic writers only (whose
attack was natural), but by Radicals also, who, apparently quite
mistaking the drift of it, have done their best to detect in it flaws,
fallacies, and inaccuracies. As any work like the present, whose aim is
essentially practical, is worse than useless unless the reader is able
to feel confidence in it, let me say a few words as to the degree of
confidence which is claimed, after nine months of criticism, for the
facts and arguments set forth in the following pages.
Let the reader emphasise in his mind the division between facts and
arguments, for they stand on a different footing. In estimating the
truth of any general arguments, the final appeal is to the common
sense of the reader. The reader is himself the judge of them; and the
moment he understands and assents to them, they belong to himself as
much as they ever did to the writer. On the other hand, the historical
facts, or statistics, by which arguments are illustrated, or on which
they are based, claim acceptance on the authority, not of our internal
common sense, but of external evidence. Let me speak separately, then,
of the arguments of this book, and of the facts quoted in it.
Of the arguments, whether taken individually or as a whole, it will be
enough here to say that no hostile critic of these has been able in any
way to meet them. The only writers who have affected to do so have,
either intentionally or unintentionally, entirely failed to understand
them; and when they have seemed to be refuting anything, they have
been refuting only their own misconceptions or misrepresentations. It
is impossible in a short preface to say more than this; but in order
to illustrate the truth of the foregoing statement, a paper published
by me in the _Fortnightly Review_ is (by kind permission of Messrs.
Chapman and Hall) reprinted as an Appendix to the present volume. That
paper consists of an examination of the criticisms made, on behalf
of the Fabian Society, by Mr. Bernard Shaw on two previous papers of
my own published (also in the _Fortnightly Review_) under the title
of “Fabian Economics,” in which the main arguments of this book were
condensed. It is true that many of these arguments are here stated
merely in outline, and in a popular rather than in a philosophical
form, as is explained more fully in the Preface to the First Edition.
But it may be safely asserted that there is hardly a single Socialistic
argument used by the Socialistic party in this country to which this
present book does not contain a reply, or at all events a clear
indication of the grounds on which a reply is to be founded.
With regard to the historical facts, and especially the statistics
here brought forward, it is necessary to speak more particularly. The
broad historical facts—facts connected with the development of wealth
in this country—are incapable of contradiction, and have never been
contradicted. Hostile critics have directed their principal attacks
against the statistics, endeavouring to show that certain of the
figures were inaccurate, and arguing that, this being so, the whole
contents of the book were unreliable.
The most minute attack of this kind which has been brought to my notice
dealt with certain figures which were no doubt erroneous, and indeed
unmeaning; but had the critic examined the volume with more care, he
would have seen that every one of these figures was a misprint, and was
corrected in a list of errata which accompanied the first edition.
Other critics have confined themselves almost entirely to the figures
given by me with regard to two questions—the landed rental of this
country, as distinct from the rent of houses; and the growth of the
national income during the past hundred years.
With regard to both of these questions it should be distinctly
understood that absolute accuracy is impossible; and I have given the
statistics in round numbers only. But, for the purpose for which the
figures are quoted, approximate accuracy is as useful as absolute
accuracy, even were the latter attainable; and every attempt to correct
the figures as given in this volume has only served to show how
substantially accurate these figures are, and how totally unaffected
would be the argument, even were any of the suggested corrections
accepted.
The landed rental of the country is given by me as something under
_a hundred million pounds_. It has been asserted that were the
ground-rents in towns properly estimated, the true rental would be
found to be _a hundred and fifty million pounds_ or _a hundred and
eighty million pounds_. It is no doubt difficult to differentiate in
town properties the total rental from the ground rental; but the most
recent investigations made into this question, so far as it affects
London, will throw light on the question as a whole. The highest
estimate of the present ground-rental of London as related to the total
rental gives the proportion of the former to the latter as _fifteen_
to _forty_. Now house rent in London is higher than in any other town
in the kingdom; therefore, if we assume the same proportion to obtain
in all other towns, we shall be over-estimating the ground-rent of the
country as a whole, instead of underestimating it. If we take this
extreme calculation—which is obviously too great—it will be found to
yield a result as to the total landed rental exceeding only by ten per
cent that given in this volume. It will therefore be easily seen that
the figures given by me are substantially accurate, and sufficiently
accurate for all purposes of political and social argument.
Precisely the same thing is to be said with regard to the figures given
as to the growth of the national income and the capitalised value of
the country. The estimates of various statisticians will be found to
differ from one another by something like ten per cent; but these
differences do not in the least affect the essential character and
meaning of the great facts in question. Let us take, for instance, two
facts stated in this volume—that the capital of the country during the
past century has increased in the proportion of _two_ to _ten_; and
the income per head of the country in the proportion of _fourteen_ to
_thirty-four_ or _thirty-five_. We will suppose some critic to prove
that these proportions should be _three_ to _eleven_, or _twelve_ to
_thirty-three_. Now, large as the error thus detected might be from
some points of view, it would be absolutely immaterial to the large
and general question in connection with which the figures are quoted in
this volume.
The enormous increase in our national income and our national capital
is doubted or denied by no one. Now let us express the increase in
income as a supposed increase in the average height of the rooms
inhabited by the population. According, then, to the figures given by
me, we might say in this case that at the beginning of the century the
average house was _seven feet_ high—only high enough for tall men to
stand up in; and that now houses have been so improved that the average
height of a living-room is _seventeen feet_. If any one, dwelling on
the fact of such a change as this, were inquiring into its causes, and
were basing arguments on its assumed reality, what difference would it
make if some opponent were to prove triumphantly that the height of
the average room now was not _seventeen feet_, but _sixteen feet six
inches_, and that four generations ago it had been _six feet_ instead
of _seven_? The difference in the estimates of our national income
during the past ninety or a hundred years are not more important for
the purpose of any general argument than the difference just supposed
with regard to the height of two living-rooms; and readers may rest
assured that the round numbers given by me with regard to the growth of
the national income and the national capital are so near the admitted
and indisputable truth of things, that no possible correction of them
would substantially alter any one of the arguments which they are here
quoted to illustrate.
_September 1894._
PREFACE TO FIRST EDITION
Nearly all the general truths of Economic Science are, directly or
indirectly, truths about the character or the actions of human beings.
It is, consequently, always well to warn the readers of economic
works, that in Political Economy, more than in any other science,
every general rule is fringed with exceptions and modifications; and
that instances are never far to seek which seem to prove the reverse
of what the general rule states, or to make the statement of it appear
inaccurate. But such general rules need be none the less true for this;
nor for practical purposes any the less safe to reason from. They
resemble, in fact, these general truths with regard to the seasons,
which we do and must reason from, even in so uncertain a climate as our
own. It is, for instance, a truth from which we all reason, that summer
is dryer and warmer than winter; and yet there is a frequent occurrence
of individual days, which, taken by themselves, contradict it. So, too,
those economic definitions, the subjects of which are human actions or
faculties, can be entirely accurate only in the _majority_ of cases to
which they apply; and these cases will be fringed always by a margin
of doubtful ones. But the definitions, for all that, need be none the
less practically true. Day and night are fringed with doubtful hours
of twilight; but our clear knowledge of how midnight differs from noon
is not made less clear by our doubts as to whether a certain hour at
sunrise ought to be called an hour of night or morning.
It is especially desirable to prefix this warning to a work as short
as the present. In larger and more elaborate works, the writer can
particularise the more important exceptions and modifications to which
his rules and definitions are subject. But in a short work this task
must be left to the common sense of the reader. For popular purposes,
however, brevity of statement has one great advantage, namely, that
of clearness; and, as the significance of the exceptions cannot be
understood without the rules, it is almost essential first to state the
rules without obscuring them by the exceptions. There are few readers
probably who will not see that the general propositions and principles
laid down in the following pages, require, in order to fit them to
certain cases, various additions and qualifications. It is necessary
only for the reader to bear in mind that these propositions need be
none the less broadly and vitally true, because any succinct statement
of them is unavoidably incomplete.
CONTENTS
BOOK I
THE DIVISIBLE WEALTH OF THE UNITED KINGDOM
CHAP. PAGE
I. The Welfare of the Home, as the Logical End of
Government—
A Ground of Agreement for all Parties 3
Facts and Principles which are the same for everybody 6
The Income of the Individual as the Aim and Test of
Government 8
Private Income and the Empire 10
Patriotism and the Home 11
Cupidity as a motive in Politics 12
The right Education of Cupidity 13
II. The Conditions involved in the idea of a Legislative
Redistribution of Wealth; and the Necessary
Limitations of the Results—
Cupidity and the Poorer Classes 14
The Limits of Sane Cupidity as fixed by the Total
Production 16
Unforeseen Results of an Equal Division of Wealth 18
Contemporary Agitator on Slavery 20
Workmen as their own Masters 21
Ownership of the Means of Labour impossible for
Modern Workman 22
Equality possible only under a Universal Wage-System 24
Equality and Universal Labour 26
III. The Pecuniary Results to the Individual of an Equal
Division, first of the National Income, and secondly
of certain parts of it—
The Income of Great Britain 27
Division of the National Income 29
How to divide the Income equally 30
Shares of Men, Women, and Children 31
The Maximum Income of a Bachelor 32
Smallness of the result 33
Maximum Income of a Married Couple 34
Practical absurdity of an Equal Division of Income 36
A complete Redivision of Property advocated by nobody 38
The attack on Landed Property 40
Popular ignorance as to the Real Rental of the
Landlords 42
The Landed Aristocracy 44
Multitude of Small Landowners 45
Owners of Railway Shares and Consols 46
Inappreciable cost of the Monarchy 47
Forcible Redistribution impossible 48
IV. The Nature of the National Wealth: first, of the
National Capital; second, of the National Income.
Neither of these is susceptible of Arbitrary
Division—
Difference between Wealth and Money 49
Wealth as a whole not divisible like Money 52
More luxurious forms of Wealth incapable of division 54
The Wealth of Great Britain considered as Capital 56
The elements which compose the National Capital 58
Ludicrous results of an Equal Division of Capital 60
Division of Income, not of Capital, alone worth
considering 62
Elements which compose the National Income 64
Material Goods and Services 66
Home-made Goods and Imports 67
Two-thirds of the Population dependent on Imported
Food 68
Variation of the National Income relatively to the
Population 70
Incomes of other countries compared with that of
our own 72
Productivity of Industry not determined by Time 74
Unperceived increase of the Income of the United
Kingdom 76
Immense Possible Shrinkage in our National Income 78
The Great Problem 80
BOOK II
THE CHIEF FACTOR IN THE PRODUCTION OF THE
NATIONAL INCOME
I. Of the various Factors in Production, and how to
distinguish the Amount produced by each—
The Cause of Production generally 84
The Production of Given Quantities 85
Production a Century Ago 86
Amount of Capital employed in it 87
Land, Capital, and Human Exertion 88
How much produced by each 89
The chief Practical Problem in Contemporary Economics 90
II. How the Product of Land is to be distinguished
from the Product of Human Exertion—
Rent the Product of Land 93
The Accepted Theory of Rent illustrated by an
Example 94
The Product of Agricultural Labour 96
The Product of Land 97
Maximum Produce of Labour 98
Surplus produced by Land 99
Land a Producing Agent as distinct from Labour 100
The Existence of Rent not affected by Socialism 102
Rent necessarily the Property of whoever owns the
Land 104
The Argument of this Volume embodied in the case
of Rent 106
III. Of the Products of Machinery or Fixed Capital,
as distinguished from the Products of Human
Exertion—
Capital of Two Kinds 108
The part of the Product produced by Machinery or
Fixed Capital 110
Example of Product of Machinery as distinct from
that of Labour 112
The Products of a Machine necessarily the Property
of Owner 114
The Cotton Industry in the Last Century 116
Arkwright’s Machinery 118
The Iron Industry of Great Britain 119
Machinery and Production of Iron 120
Machinery and Wage Capital 121
IV. Of the Products of Circulating Capital, or Wage
Capital, as distinguished from the Products of
Human Exertion—
Simplest Function of Wage Capital 122
Distinguishing Function of Modern Wage Capital 124
Wage Capital mainly productive as a means of
directing Labour 126
Slaves and Free Labourers 128
Wage Capital and Progress 129
Wage Capital as related to the production of New
Inventions 130
Capital the Tool of Knowledge 132
Wage Capital and Arkwright 133
Wage Capital as Potential Machinery 134
How to discriminate the amount produced by Wage
Capital 136
V. That the Chief Productive Agent in the modern world
is not Labour, but Ability, or the Faculty which
directs Labour—
The best Labour sometimes useless 138
Labour not the same faculty as the faculty which
directs Labour 140
Extraordinary confusion in current Economic
Language 142
Labour a Lesser Productive Agent 144
Ability a Greater Productive Agent 145
The Vital Distinction between Ability and Labour 146
Ability not a form of Skilled Labour 148
Capital applied successfully the same thing as
Ability 150
Obvious Exceptions 152
Ability the Brain of Capital 153
Ability as the Force behind Capital the Cause of
all Progress 154
VI. Of the Addition made during the last Hundred Years
by Ability to the Product of the National Labour.
This Increment the Product of Ability—
Production in the Last Century 156
Growth of Agricultural Products 158
Growth of Production of Iron 159
Ability and Agriculture in the Last Century 160
The Maximum Product that can be due to Labour
alone 162
Present Annual Product of Ability in the United
Kingdom 164
The Product of Capital virtually Product of the
Ability of the Few 166
BOOK III
AN EXPOSURE OF THE CONFUSIONS IMPLIED IN SOCIALISTIC
THOUGHT AS TO THE MAIN AGENT IN MODERN PRODUCTION.
I. The Confusion of Thought involved in the
Socialistic Conception of Labour—
A confusing Socialistic Formula 171
A Plausible Argument 173
A Plausible Argument analysed 174
Its implied meaning considered 175
The real Taskmaster of Labour not an Employing
Class, but Nature 176
Different position of Ability 178
The Organist and Bellows-blower 179
The Picture and the Canvas 180
The Qualifying Factor 181
Do all men possess Ability 182
Labour itself non-progressive 183
Ancient Labour equal to Modern 184
A Remarkable Illustration 185
Labour as trained by Watt 186
Labour as assisted by Maudslay 187
II. That the Ability which at any given period is a
Producing Agent, is a Faculty residing in and
belonging to living Men—
A Socialistic Criticism 188
Primæval Progress and Labour 190
Rudimentary Ability 191
Primæval and Modern Inventions 192
A more Important Point 193
The necessity for Managing Ability increased by
Inventive Ability 194
The main results of Past Ability inherited by
Living Ability 196
Productive Ability the Ability of Living Men 198
Fresh demonstration of the Productivity of Ability 200
III. That Ability is a natural Monopoly, due to the
congenital Peculiarities of a Minority. The
Fallacies of other Views exposed—
An Error of Mr. Herbert Spencer’s 202
A Philosophic Truth, but an Economic Falsehood 204
Whole body of Successful Inventors a very small
Minority 206
Ability and Opportunity 208
Ability not produced by Opportunity 209
Ability the Maker of its own Opportunities 210
Ability as a matter of Character 212
Function of such Ability 213
Characters not equalised by Education or
Opportunity 214
Progress due solely to the Few 216
Progress in the Iron Industry 217
Early Applications of Ability to British
Iron Production 218
Ability opposed by the Age instead of
representing it 220
Isolated Action of Ability 222
Arkwright and his associates 223
The Value of Watt’s Patent as estimated by
his Contemporaries 224
Industrial Progress the work of the Few
only 226
IV. The Conclusion arrived at in the preceding Book
restated. The Annual Amount produced by
Ability in the United Kingdom—
Grades of Ability 228
Proportion of Able Men to Labourers 230
A Rough Calculation 231
More than half our National Income produced by
a Small Minority 232
BOOK IV
THE REASONABLE HOPES OF LABOUR—THEIR MAGNITUDE,
AND THEIR BASIS
I. How the Future and Hopes of the Labouring
Classes are bound up with the Prosperity of
the Classes who exercise Ability—
Short Summary of the preceding Arguments 237
The preceding Arguments from the Labourer’s Point
of View 240
The Share of Labour in the growing Products of
Ability 242
The amount produced by Labour 244
The amount taken by Labour 245
Continuous Recent Growth of the Receipts of Labour 246
Growth of the Receipts of Labour during Queen
Victoria’s Reign 248
Actual Gains of Labour beyond the Dreams of Socialism 250
Two Points to be considered 252
II. Of the Ownership of Capital, as distinct from its
Employment by Ability—
Land and its Owners 253
Passive Ownership of Capital 255
The Class that Lives on Interest 256
The Hope of Interest as a Motive 257
Capital created and saved mainly for the sake
of Interest 258
Family Feeling 260
The Bequest of Capital 261
Interest a Necessary Incident as the Price of
the Use of Capital 262
A Part of the Interest of Capital constantly
appropriated by Labour 264
Interest not to be confused with Large Profits 266
Interest not to be confused with the Profits of
Sagacity 268
Enormous gains of Labour at the expense of
Ability 270
Labour and the Existing System 272
III. Of the Causes owing to which, and the Means by
which Labour participates in the Growing Products
of Ability—
A Miserable Class co-existing with General
Progress 273
Relative Decrease of Poverty 276
Two Causes of Popular Progress 277
The Riches of a Minority 278
How they are produced 279
The Rich Man’s Progress 280
The Rivalry of the Rich 282
The Gain of Labour 283
Popular Progress and Growth of Population 284
The Gain of Labour limited by the Power of
Ability 286
The Natural Gain of Labour 288
Its relation to Politics 289
Self-Help and State Help 290
IV. Of Socialism and Trade Unionism—the Extent
and Limitation of their Power in increasing the
Income of Labour—
So-called Socialism in England different from
Formal Socialism 291
An Element of Socialism necessary to every State 294
The Socialistic question entirely a question of
degree 296
Socialism not directly operative in increasing the
Income of Labour 298
Trade Unionism 300
How it strengthens Labour 301
How the power of striking grows with the growth of
Wages 302
Natural Limits of the Powers of Trade Unionism 304
Labour and Ability 306
Higgling on Equal Terms 307
The Power represented by Strikes not Labour, but
Labouring Men 308
Leaders of Labouring Men rarely Leaders of Labour 310
The Power of Trade Unionism important, though
limited 312
Certain remaining points 314
V. Of the enormous Encouragement to be derived
by Labour from a true View of the Situation;
and of the Connection between the Interests of
the Labourer and Imperial Politics—
A Recapitulation 315
The Practical Moral 317
The True Functions of Trade Unionism and Socialism 318
The Natural Progress of Labour a Stimulus to Effort 320
The Future of Labour judged from its Past Progress 322
The one thing on which the Hopes of Labour depend 324
The Real Bargain of Labour not with Capital but
Ability 326
Subordination to Ability no Indignity to Labour 328
The Moral Debt of Ability to Labour 330
Labour, Nature, and Ability 332
The Home and Foreign Food 333
Imperial Politics and the National Income 334
The Labourer’s home 336
———————————————————————————————————————————————————————
BOOK I
THE DIVISIBLE WEALTH OF THE
UNITED KINGDOM
———————————————————————————————————————————————————————
CHAPTER I
_The Welfare of the Home, as the Logical End of Government._
[Sidenote ◆1 The subject of this book, but has nothing to do with
party politics.]
◆¹ I wish this book to be something which, when the subject of it is
considered, the reader perhaps will think it cannot possibly be. For
its subject—to describe it in the vague language of the day—is the
labour question, the social question, the social claims of the masses;
and it is these claims and questions as connected with practical
politics. Their connection with politics is close at the present
moment; in the immediate future it is certain to become much closer;
and yet my endeavour will be to treat them in such a way that men of
the most opposite parties—the most progressive Radical and the most
old-fashioned Tory—may find this book equally in harmony with their
sympathies, and equally useful and acceptable from their respective
points of view.
[Sidenote ◆1 An example of the order of facts it deals with.]
[Sidenote ◆2 Such facts as these not generally known; but when
once ascertained, necessarily the same for all parties:]
[Sidenote ◆3 And it is equally to the advantage of all parties to
understand such facts.]
◆¹ But if the reader will consider the matter further, he will see
that my endeavour is not necessarily so impracticable as it seems
to be. A very little reflection must be enough to show anybody that
many of the political problems about which men differ most widely are
concerned with an order of truths which, when once they have been
examined properly, are the same for all of us; and that a preliminary
agreement with regard to them is the only possible basis for any
rational disagreement. I will give one example—the land-question.
About no political problem is there more disagreement than about this;
and yet there are many points in it, about which men may indeed be
ignorant, but about which, except for ignorance, there cannot be any
controversy. Such for instance is the acreage of the United Kingdom,
the number of men by whom the acres are owned, the respective numbers
of large and of small properties, together with their respective
rentals, and the proportion which the national rent bears to the
national income. ◆² The truth about all these points is very easily
ascertained; and yet not one man in a hundred of those by whom the
land-question is discussed, appears to possess the smallest accurate
knowledge of it. A curious instance of this ignorance is to be found
in the popular reception accorded some years ago to the theories of
Mr. Henry George. If Mr. George’s reasonings were correct as applied
to this country, the rental of our titled and untitled aristocracy
would be now about _eight hundred millions_: and few of his admirers
quarrelled with this inference. But if they had only consulted official
records, and made themselves masters of the real facts of the case,
they would have seen at once that this false and ludicrous estimate
was wrong by no less a sum than _seven hundred and seventy millions_;
that the _eight hundred millions_ of Mr. George’s fancy were in reality
not more than _thirty_; and that the rent, which according to him was
two-thirds of the national income, was not in reality more than two
and a quarter per cent of it. Now here is a fact most damaging to the
authority of a certain theorist with whom many Radicals are no doubt
in sympathy; but it none the less is a fact which any honest Radical is
as much concerned to know as is any honest Tory, and which may easily
supply the one with as many arguments as the other. ◆³ The Tory may
use it against the Radical rhetorician who denounces the landlords as
appropriating the whole wealth of the country. The Radical may use
it against the Tory who is defending the House of Peers, and may ask
why a class whose collective wealth is so small, should be specially
privileged to represent the interests of property: whilst those who
oppose protection may use it with equal force as showing how the
diffusion of property has been affected by free trade.
Here is a fair sample, so far as particular facts are concerned, of
the order of truths with which I propose to deal: and if I can deal
with them in the way they ought to be dealt with, they will be as
interesting—and many will be as amusing—as they are practically useful.
It may indeed be said, without the smallest exaggeration, that the
salient facts which underlie our social problems of to-day, would, if
properly presented, be to the general reader as stimulating and fresh
as any novel or book of travels, besides being as little open to any
mere party criticism.
[Sidenote ◆1 Besides such facts, this book deals with general
truths and principles, equally independent of party.]
◆¹ But there are other truths, besides particular facts, which I
propose to urge on the reader’s attention also. There are general
truths, general considerations, and principles: and these too, like
the facts, will be found to have this same characteristic—that though
many of them are not generally realised, though many of them are often
forgotten, and though some of them are supposed to be the possession of
this or that party only, they do but require to be fairly and clearly
stated, to command the assent of every reflecting mind, and to show
themselves as common points from which, like diverging lines, all
rational politicians, whatever may be their differences, must start.
[Sidenote ◆1 The proposition with which the argument starts is an
example of a truth of this kind.]
◆¹ The very first principle to which I must call attention, and which
forms a key to my object throughout this entire book, will at once be
recognised by the reader as being of this kind. The Radical perhaps may
regard it as a mere truism; but the most bigoted Tory, on reflection,
will not deny that it is true. The great truth or principle of which I
speak is as follows.
[Sidenote ◆1 The conditions of private happiness are the end of
all Government.]
[Sidenote ◆2 These conditions are principally a question of
private income.]
[Sidenote ◆3 The end of Government is therefore to secure adequate
incomes for the greatest possible number.]
◆¹ The ultimate end of Government is to secure or provide for
the greatest possible number, not indeed happiness, as is often
inaccurately said, but the external conditions that make happiness
possible. As for happiness, that must come from ourselves, or at all
events from sources beyond the control of Governments. But though no
external conditions are sufficient to make it come, there are many
which are sufficient to drive it or to keep it permanently away; and
it is the end of all Government to minimise conditions such as these.
Now these conditions, though their details vary in various cases, are
essentially alike in all. They are a want of the necessaries, or a want
of the decencies of life, or an excessive difficulty in obtaining them,
or a recurring impossibility of doing so. ◆² They are conditions in
fact which principally, though not entirely, result from an uncertain
or an insufficient income. The ultimate duty of a Government is
therefore towards the incomes of the governed; ◆³ and the three chief
tests of whether a Government is good or bad, are first the number of
families in receipt of sufficient incomes, secondly the security with
which the receipt of such incomes can be counted on, and lastly the
quality of the things which such incomes will command.
[Sidenote ◆1 This view not necessarily materialistic, nor
unpatriotic:]
◆¹ Some people however—perhaps even some Radicals—may be tempted to
say that this is putting the case too strongly, and is caricaturing
the truth rather than fairly stating it. They may say that it excludes
or degrades to subordinate positions all the loftier ends both of
individual and of national life, such as moral and mental culture, and
the power and greatness of the country: but in reality it does nothing
of the kind.
[Sidenote ◆1 For income is necessary for mental as well as
physical welfare,]
[Sidenote ◆2 And the complete welfare of the citizens is what
gives meaning to patriotism.]
◆¹ In the first place, with regard to moral and mental culture, if
these are really desired by the individual citizen, they will be
included amongst the things which his income will help him to obtain:
and an insufficient income certainly tends to deprive him of them.
If he wishes to have books, he must have money to buy books: and if
he wishes his children to be educated, there must be money to pay
for teaching them. In the second place, with regard to the power and
greatness of the country, though for many reasons ◆² we are apt
to forget the fact, it is the material welfare of the home, or the
maintenance of the domestic income, that really gives to them the whole
of their fundamental meaning. Our Empire and our power of defending
it have a positive money value, which affects the prosperity of every
class in the country: and though this may not be the only ground on
which our Empire can be justified, it is the only ground on which,
considering what it costs, its maintenance can be justified in the eyes
of a critical democracy. Supposing, it could be shown to demonstration
that the loss of our Empire and our influence would do no injury to
our trade, or make one British household poorer, it is impossible to
suppose that the democracy of Great Britain would continue for long,
from mere motives of sentiment, to sanction the expense, or submit to
the anxiety and the danger, which the maintenance of an Empire like our
own constantly and necessarily involves.
[Sidenote ◆1 Further, patriotism will only flourish in a country
which secures for its citizens the conditions of a happy
life.]
◆¹ But let us waive this argument, and admit that a sense of our
country’s greatness, quite apart from any thought of our own material
advantage, enlarges and elevates the mind as nothing else can—that
to be proud of our country and proud of ourselves as belonging to it,
to feel ourselves partners in the majesty of the great battle-ship,
in the menace of Gibraltar stored with its sleeping thunders, or the
boastful challenge of the flag that floats in a thousand climates, is
a privilege which it is easier to underrate than exaggerate. Let us
admit all this. But these large and ennobling sentiments are all of
them dependent on the welfare of the home in this way:—they are hardly
possible for those whose home conditions are miserable. Give a man
comfort in even the humblest cottage, and the glow of patriotism may,
and probably will, give an added warmth to that which shines on him
from his fireside. But if his children are crying for food, and he is
shivering by a cold chimney, he will not find much to excite him in the
knowledge that we govern India. Thus, from whatever point of view we
regard the matter, the welfare of the home as secured by a sufficient
income is seen to be at once the test and the end of Government; and it
ceases to be the end of patriotism only when it becomes the foundation
of it.
[Sidenote ◆1 Cupidity, therefore, or the desire for sufficient
income, is a legitimate basis for popular interest in
politics;]
◆¹ Here, then, is the principle which I assume throughout this volume.
And now, I think that, having explained it thus, I may, without offence
to either Tory or Radical, venture to condemn, as strongly as its
stupidity deserves, the way in which politicians are at present so
often attacked for appealing to what is called the cupidity of the
poorer classes. Cupidity is in itself the most general and legitimate
desire to which any politician or political party can appeal. It is
illegitimate only when it is excited by illegitimate methods: and
these methods are of two obvious kinds. One is an exaggeration of the
advantages which are put before the people as obtainable: the other is
the advocacy of a class of measures as means to them, by which not even
a part of them could be, in reality, obtained. Everybody must see that
a cupidity which is excited thus is one of the most dangerous elements
by which the prosperity of a country can be threatened. But a cupidity
which is excited in the right way, which is controlled by a knowledge
of what wealth really exists, and of the fundamental conditions on
which its distribution depends—is merely another name for spirit,
energy, and intelligence.
[Sidenote ◆1 The aim of this book is to educate popular cupidity.]
◆¹ My one aim then, in writing this book, is to educate the cupidity of
voters, no matter what their party, by popularising knowledge of this
non-controversial kind. And such knowledge will be found, as I have
said already, to be composed partly of particular facts, and partly
of general truths. We will begin with the consideration of certain
particular facts, which must, however, be prefaced by a few general
observations.
CHAPTER II
_The Conditions involved in the idea of a Legislative
Redistribution of Wealth; and the Necessary
Limitations of the Results._
[Sidenote ◆1 All men ask of a Government either the increase or
the maintenance of their incomes.]
◆¹ Let me then repeat that we start with assuming cupidity as not only
the general foundation, but also as the inevitable, the natural, and
the right foundation, of the interest which ordinary men of all classes
take in politics. We assume that where the ordinary man, of whatever
class or party, votes for a member of Parliament, or supports any
political measure, he is primarily actuated by one of two hopes, or
both of them—the first being the hope of securing the continuance of
his present income, the second being the hope of increasing it. Now, to
secure what they have already got is the hope of all classes; but to
increase it by legislation is the hope of the poorer only. It is of
course perfectly true that the rich as well as the poor are anxious, as
a rule, to increase their incomes when they can; but they expect to do
so by their own ability and enterprise, and they look to legislation
for merely such negative help as may be given by affording their
abilities fair play.
[Sidenote ◆1 The poor alone look for an increase of income by
direct legislative means. They are right in doing this.]
[Sidenote ◆2 The cupidity which this book chiefly deals with is
the cupidity of the poorer classes.]
◆¹ But with the poorer classes the case is entirely different. They
look to legislation for help of a direct and positive kind, which
may tend to increase their incomes, without any new effort of their
own: and not only do they do this themselves, but the richer classes
sympathise with the desire that makes them do so. It is, for instance,
by no means amongst the poorer classes only that the idea of seizing
on the land, without compensating the owners, has found favour as a
remedy for distress and poverty generally. Owners of every kind of
property, except land, have been found to advocate it; whilst as to
such vaguer and less startling proposals, as the “restoration of the
labourer to the soil,” the limitation of the hours of labour, or the
gradual acquirement by the State of many of our larger industries—the
persistent way in which these are being kept before the public, is due
quite as much to men of means as to poor men. ◆² It is then with the
cupidity of the poorer classes that we are chiefly concerned to deal;
and the great question before us may briefly be put thus: By what sort
of social legislation may the incomes of the poorer classes—or, in
other words, the incomes of the great mass of the community—be, in the
first place, made more constant; and, in the second place, increased?
[Sidenote ◆1 The first question to ask is: What is the maximum
amount which it would be theoretically possible for them
to obtain? For this is much exaggerated.]
◆¹ But before proceeding to this inquiry, there is a preliminary
question to be disposed of. What is the maximum increase which any
conceivable legislation could conceivably secure for them out of the
existing resources of the country? Not only unscrupulous agitators, but
many conscientious reformers, speak of the results to be hoped for from
a better distribution of riches, in terms so exaggerated as to have
no relation to facts; and ideas of the wildest kind are very widely
diffused as to the degree of opulence which it would be possible to
secure for all. The consequence is that at the present moment popular
cupidity has no rational standard. It will therefore be well, before
we go further, to reduce these ideas—I do not say to the limits
which facts will warrant—but to the limits which facts set on what is
theoretically and conceivably possible.
[Sidenote ◆1 An ascertainable limit is placed to this amount by
circumstances.]
[Sidenote ◆2 And this amount would be obtainable only under
certain conditions,]
◆¹ Let me then call attention to the self-evident truth, that the
largest income which could possibly be secured for everybody, could not
be more than an equal share of the actual gross income enjoyed by the
entire nation. Now it happens that we know with substantial accuracy
what the gross amount of the income of the nation now is, and I will
presently show what is the utmost which each individual could hope for
from the most successful attempt at a redistribution of everything. ◆²
But the mere pecuniary results of a revolution of this kind are not the
only results of which we must take account. There are others which it
will be well to glance at before proceeding to our figures.
[Sidenote ◆1 One of which would entirely change the existing
character of wealth.]
◆¹ Though an equal division of wealth would, as we soon shall see,
bring a large addition to the income of a considerable majority of
the nation, the advantages which the recipients would gain from this
addition, would be very different from the advantages which an
individual would gain now, from the same annual sum coming to him from
invested capital. In other words, if wealth were equally distributed,
it would, from the very necessity of the case, lose half the qualities
for which it is at present most coveted.
[Sidenote ◆1 Were wealth equally distributed, nobody would have an
independence.]
◆¹ At present wealth suggests before all things what is commonly called
“an independence”—something on which a man can live independently
of his own exertions. But the moment a whole nation possessed it in
equal quantities this power of giving an independence would go from
it suddenly and for ever. If a workman who at present makes _seventy
pounds_ a year, would receive, by an equal division, an additional
_forty pounds_, it is indeed true that no additional work could be
entailed on him. The work which at present gets him _seventy pounds_,
would in that case get him _a hundred and ten_. But he would never be
able, if he preferred leisure to wealth, to forego the _seventy pounds_
and live in idleness on the _forty pounds_; as he would be able to do
now if the additional _forty pounds_ were the interest of a legacy left
him by his maiden aunt. Unless he continued to work, as he had worked
hitherto, he would lose not only the first sum, but the second.
[Sidenote ◆1 Every one would have to work as hard as he does now;]
This is self-evident, when we consider what is the essence of such a
situation, namely that the position of everybody is identical. For if
everybody preferred to be idle, no wealth could be produced at all.
However great nominally might be the value of our national property,
it is perfectly clear that everybody could not live at leisure in
it: and from the very nature of the case, in a nation where all are
equal, what cannot be done by all, could not be done by anybody. ◆¹
If, therefore, we estimate the income possible for each individual
as an equal fraction of the present income of the nation, it must be
remembered that, to produce the total out of which these fractions are
to come, everybody would have to work as hard as he does now. And more
than that, it would be the concern of all to see that his share of
work was not being shirked by anybody. This is at present the concern
of the employer only: but under the conditions we are now considering,
everybody would be directly interested in becoming his neighbour’s
taskmaster.
[Sidenote ◆1 And be even more under the dominion of the employer
than he is now;]
These last considerations lead us to another aspect of the subject,
with which every intelligent voter should make himself thoroughly
familiar, and which every honest speaker would force on the attention
of his hearers. A large number of agitators, who are either ignorant or
entirely reckless, but who nevertheless possess considerable gifts of
oratory, ◆¹ are constantly endeavouring to associate, in the popular
mind, the legitimate hope of obtaining an increased income, with an
insane hostility to conditions which alone make such an increase
possible. These men[1] are accustomed to declaim against the slavery of
the working classes, quite as much as against their inadequate rate of
payment. By slavery they mean what they call “enslavement to capital.”
Capital means the implements and necessaries of production. These, they
argue, are no longer owned by the workmen as they were in former times:
and thus the workers are no longer their own masters. They must work
under the direction of those who can give them the means of working;
and this, they are urged to believe, reduces them to the condition of
slaves.
[Sidenote ◆1 Nor could any one hope to own the instruments of
production used by him.]
[Sidenote ◆2 Self-contradictions of agitators, who say that
capitalism means slavery, and that socialism would make
the worker free.]
[Sidenote ◆3 The industrial discipline of the State would
necessarily be much harder than that of the private
employer.]
Of course, in these representations there is a certain amount of truth:
but it is difficult to conceive of anything more stupidly and more
wantonly misleading, than the actual meaning which they are employed by
the agitators to convey. For that meaning is nothing else than this—◆¹
that under improved conditions, when wealth is better distributed, the
so-called slavery will disappear, the workers will be their own masters
again, and will each own, as formerly, the implements and the materials
of his work. But, as no one knows better than the extreme socialists,
and as any intelligent man can see easily for himself, such a course of
events is not only not possible, but is the exact reverse of that on
which the progress of the workers must depend. ◆² The wildest agitator
admits, and the most ignorant agitator knows, that the wealth of the
modern world, on the growth of which they insist, and which, for the
very reason that its growth has been so enormous, is declared by them
to offer so rich a prize to the workers, mainly owes its existence
to improved conditions of production. Such persons know also that of
these conditions the chief have been the development of machinery, the
increased subdivision of employments, and the perfected co-operation
of the workers. But the development of machinery necessarily means
this—the transformation of (say) each thousand old-fashioned implements
into a single vast modern one of a hundred times their aggregate
power: and it means that at this single implement a thousand men shall
work. The increased subdivision of labour means that no man shall
make an entire thing, but merely some small part of it; and perfected
co-operation is another name for perfected discipline. It will be thus
seen that the conditions which the agitator calls those of slavery
are essential to the production of the wealth which is to constitute
the workers’ heritage. ◆³ It will be seen that the workers’ hope of
bettering their own position is so far from depending on a recovery
of any former freedom, that it involves yet further elaboration of
industrial discipline; and puts the old ownership of his own tools
by the individual farther and further away into the region of dreams
and impossibilities: and that no redistribution of wealth would even
tend to bring it back again. The weaver of the last century was the
owner of his own loom: and a great cotton-mill may now be owned by one
capitalist. But a co-operative cotton-mill that was owned by all the
workers, in the old sense of the word would not be owned by anybody.
Could any one of these thousand or more men say that any part of the
mill was his own personal property? Could he treat a single bolt, or
a brick, or a wheel, or a door-nail, as he might have treated a loom
left to him in his cottage by his father? Obviously not. No part of
the mill would be his own private property, any more than a train
starting from Euston Station is the property of any shareholder in
the London and North-Western Railway. His ownership would mean merely
that he was entitled to a share of the profits, and that he had one
vote out of a thousand in electing the managers. But however the
managers were elected, he would have to obey their orders; and their
discipline would be probably stricter than that of any private owner.
Much more would this be the case if the dream of the Socialist were
fulfilled, and if instead of each factory or business being owned by
its own workers, all the workers of the country collectively owned all
the businesses—all the machinery, all the raw materials, and all the
capital reserved for and spent in wages. For though the capital of
the country would be owned by the workers nominally, their use of it
would have to be regulated by a controlling body, namely the State. The
managers and the taskmasters would all be State officials, and be armed
with the powers of the State to enforce discipline. The individual
under such an arrangement, might gain in point of income; but if he is
foolish enough to adopt the view of the agitator, and regard himself as
the slave to capital now, he would be no less a slave to it were all
capitals amalgamated, and out of so many million shares he himself were
to own one.
[Sidenote ◆1 For it must always be remembered that the idea of an
equal distribution of wealth necessarily presupposes the
State as sole employer and capitalist.]
◆¹ It is particularly desirable in this particular place to fix
the reader’s attention on this aspect of the question, because
it is inseparably associated with the point we are preparing to
consider—namely, the pecuniary position in which the individual would
be placed by an equal division, were such possible, of the entire
national income. For we must bear in mind that not even in thought or
theory is an equal division of the national income possible, unless
all the products of the labour of every citizen are in the first place
taken by the State as sole employer and capitalist, and are then
distributed as wages in equal portions. Under no other conditions
could equality be more than momentary. If each worker himself sold his
own products to the consumer,—which he could not do, because no one
produces the whole of anything,—the strong and industrious would soon
be richer than the idle; and the man with no children richer than the
man with ten. Inequality would have begun again as soon as one day’s
work was over. Equality demands, as the Socialists are well aware, that
all incomes shall be wages paid by the State; and it implies further,
as we shall presently have occasion to observe—that equal wages shall
be paid to all individuals, not because they are equally productive,
but because they are all equally human. When therefore I speak, as I
shall do presently, of what each individual would receive, if wealth
were divided equally, I must be understood as meaning that he would
receive so much from the State.
[Sidenote ◆1 A redistribution of wealth, if it increased the
incomes of some, would lessen the labour of nobody.]
[Sidenote ◆2 The next chapter contains an examination of the
amount of income which would theoretically result from
an equal distribution in this country.]
◆¹ Let us remember then that a redistribution of wealth would have in
itself no tendency to alter the existing conditions of the workers in
any respect except that of wages only. It would not tend to relieve
any man of a single hour of labour, to give him any more freedom in
choosing the nature of his work or the method of it, or make him less
liable to fines or other punishments for disobedience or unpunctuality.
◆² His only gain, if any, would be a simple gain in money. Let us now
proceed to deal with the pounds, shillings, and pence; and see what is
the utmost that this gain could come to.
CHAPTER III
_The Pecuniary Results to the Individual of an Equal
Division, first of the National Income, and
secondly of certain parts of it._
[Sidenote ◆1 The gross income of the United Kingdom.]
[Sidenote ◆2 The whole amount attributed to the rich would not be
available for distribution.]
[Sidenote ◆3 A certain deduction must therefore be made from the
estimated total.]
◆¹ The gross income of the United Kingdom—the aggregate yearly amount
received by the entire population—is computed to be in round numbers
some _thirteen hundred million pounds_. But though this estimate may
be accepted as true under existing circumstances, we should find it
misleading as an estimate of the amount available for distribution.
So far as it relates to the income of the poorer classes, it would
be indeed still trustworthy; but the income of the richer—which is
the total charged with income-tax—we should find to be seriously
exaggerated, as considerable sums are included in it which are counted
twice over. ◆² For instance, the fee of a great London doctor for
attending a patient in the South of France would be about _twelve
hundred pounds_. Let us suppose this to be paid by a patient whose
income is _twelve thousand pounds_. The doctor pays income-tax on his
fee; the patient pays income-tax on his entire income; and thus the
whole sum charged with income-tax is _thirteen thousand two hundred
pounds_. But if we came to distribute it, we should find that there
was _twelve thousand pounds_ only. And there are many other cases of a
precisely similar nature. According to the calculations of Professor
Leone Levi, the total amount which was counted twice over thus,
amounted ten years ago to more than a _hundred million pounds_.[2] ◆³
In order, therefore, to arrive at the sum which we may assume to be
susceptible of distribution, it will be necessary, therefore, to deduct
at least as much as this from the sum which was just now mentioned of
_thirteen hundred million pounds_.[3] Accordingly the income of the
country, if we estimate it with a view to dividing it, is in round
numbers, _twelve hundred million pounds_.
[Sidenote ◆1 This, divided amongst all, would yield _thirty-two
pounds_ per head:]
[Sidenote ◆2 But different sexes and ages would require different
amounts,]
[Sidenote ◆3 The proportions of which are readily ascertainable.]
◆¹ And now let us glance at our problem in its crudest and most
rudimentary form, and see what would be the share coming to each
individual, if these millions were divided equally amongst the entire
population. The entire population of the United Kingdom numbers a
little over _thirty-eight millions_; so our division sum is simple.
The share of each individual would be about _thirty-two pounds_. But
this sort of equality in distribution would satisfy nobody. It is not
worth talking about. For a quarter of the population are children
under ten years of age,[4] and nearly two-fifths are under fifteen:
and it would be absurd to assign to a baby seeking a pap-bottle, or
even to a boy—voracious as boys’ appetites are—the same sum that
would be assigned to a full-grown man or woman. ◆² In order to give
our distribution even the semblance of rationality, the shares must
be graduated according to the requirements of age and sex. The sort
of proportion to each other which these graduated shares should bear
might possibly be open to some unimportant dispute: but we cannot go
far wrong if we take for our guide the amount of food which scientific
authorities tell us is required respectively by men, women, and
children; together with the average proportion which actually obtains
at present, both between their respective wages and the respective
costs of their maintenance. ◆³ The result which we arrive at from
these sources of information is substantially as follows, and every
fresh inquiry confirms it. For every _pound_ which is required or
received by a man, _fifteen shillings_ does or should go to a woman,
_ten shillings_ to a boy, _nine shillings_ to a girl, and _four and
sixpence_ to an infant.[5]
[Sidenote ◆1 The problem best approached by taking the family as
the unit:]
[Sidenote ◆2 And then we can arrive at the share of each member.]
[Sidenote ◆3 The maximum income that an equal distribution would
give a bachelor.]
◆¹ So much, then, being admitted, we shall make our calculations best
by starting with the family as our unit, and coming to the individual
afterwards. The average family consists of four and a half persons; and
the families in the United Kingdom number _eight and a half millions_.
_Twelve hundred millions_—the sum we have to divide—would give each
family an income of _a hundred and forty pounds_. From this, however,
we should have to deduct taxes; and, since if all classes were equal,
all would have to be taxed equally,—the amount due from each family
would be considerable. Public expenditure, if the State directed
everything, would of necessity be larger than it is at present; but
even if we assume that it would remain at its present figure, each
family would have to contribute at least _sixteen pounds_.[6] Therefore
_sixteen pounds_ must be deducted from the _hundred and forty pounds_.
Accordingly we have for four and a half persons a net income of _a
hundred and twenty-six pounds_. Now these persons would be found to
consist on an average of a man and his wife, a youth, a girl, and a
half of a baby,—for when we deal with averages we must execute many
judgments like Solomon’s,—and if we distribute the income among them
in the proportion I just now indicated, the result we shall arrive at
will, in round numbers, be this. ◆² The man will have _fifty pounds_,
the woman _thirty-six pounds_, the youth _twenty-five pounds_, the girl
_twenty-four pounds_, and the half of the infant _five pounds_. And now
let us scrutinise the result a little further, and see how it looks in
various familiar lights. An equal distribution of the whole wealth of
the country would give every adult male about _nineteen shillings and
sixpence_ a week, and every adult female about _fourteen shillings_.
These sums would, however, be free of taxes; so in order to compare
them with the wages paid at present, we must add to them _two shillings
and sixpence_ and _two shillings_ respectively, which will raise them
respectively to _twenty-two shillings_, and to _sixteen shillings_: ◆³
but a bachelor who is earning the former sum now, or an unmarried woman
who is now earning the latter, would neither of them, under any scheme
of equal distribution conceivable, come in for a penny of the plunder
taken from the rich. They already are receiving all that, on principles
of equality, they could claim.
The smallness of this result is likely to startle anybody; but none the
less is it true: and it is well to consider it carefully, because the
reason why it startles us requires to be particularly noticed. Of the
female population of the country that is above fifteen years old, the
portion that works for wages is not so much as a half;[7] and of the
married women that do so, the portion is much smaller. The remainder
work, no doubt, quite as hard as the rest; but they work as wives and
mothers; and whatever money they have comes to them through their
husbands. Thus when the ordinary man considers the question of income,
he regards income as something which belongs exclusively to the man,
his wife and his children being things which the man maintains as he
pleases. But the moment the principle of equality of distribution is
accepted, all such ideas as these have to be rudely changed: for if
all of us have a claim to an equal share of wealth, just as the common
man’s claim is as good as that of the uncommon man, so the woman’s
claim is as good as the claim of either; and whatever her income might
be under such conditions, it would be hers in her own right, not in
that of anybody else. Accordingly it happens that an equal distribution
of wealth, though it would increase the present income of the ordinary
working man’s family, might actually, so far as the head of the family
was concerned, have the paradoxical result of making him feel that
personally he was poorer than before—not richer.[8]
[Sidenote ◆1 The highest possible standard of living would be
represented by a man and wife without children.]
◆¹ The man’s personal share, then, would be _twenty-two shillings_ a
week, and the woman’s _sixteen shillings_; and they could increase
their income in no way except by marrying. As many of their expenses
would be greatly diminished by being shared, they would by this
arrangement both be substantial gainers: but if the principle of
equality were properly carried out, they would gain very little further
by the appearance of children; for though we must assume that a certain
suitable sum would be paid them by the State for the maintenance of
each child, that would have to be spent for the child’s benefit. We
may, therefore, say that the utmost results which could possibly be
secured to the individual by a general confiscation and a general
redistribution of wealth, would be represented by the condition of a
childless man and wife, with _thirty-eight shillings_ a week, which
they could spend entirely on themselves: for all the wealth of the
nation that was not absorbed in supplying such incomes to men and women
who were childless, would be absorbed in supporting the children of
those who had them; thus merely equalising the conditions of large and
of small families, and enabling the couple with ten or a dozen children
to be personally as well off as the couple with none. Could such a
condition of wellbeing be made universal, many of the darkest evils of
civilisation would no doubt disappear: but it is well for a man who
imagines that the masses of this country are kept by unjust laws out of
the possession of some enormous heritage, to see how limited would be
the result, if the laws were to give them everything; and to reflect
that the largest income that would thus be assigned to any woman, would
be less than the income enjoyed at the present moment by multitudes of
unmarried girls who work in our Midland mills—girls whose wages amount
to _seventeen shillings_ a week, who pay their parents _a shilling_ a
day for board, and who spend the remainder, with a most charming taste,
on dress.
He will have to reflect also that such a result as has been just
described could be produced only by an equality that would be
absolutely grotesque in its completeness—by every male being treated as
equal to every other male of the same age, and by every female being
treated similarly. The prime minister, the commander-in-chief, the most
important State official, would thus, if they were unmarried, be poorer
than many a factory-girl is at present; whilst if they were married,
they and their wives together would have but _four shillings_ a week
more than is at present earned by a mason, and _six shillings_ a week
less than is earned by an overlooker in a cotton-mill.
[Sidenote ◆1 Absolute pecuniary equality, however, is not thought
possible by anybody;]
[Sidenote ◆2 As the salaries asked for Members of Parliament by
the Labour Party show.]
◆¹ But an equality of this kind, from a practical point of view, is
worth considering only as a means of reducing it to an absurdity.
Even were it established to-morrow, it could not be maintained for a
month, owing to the difficulty that would arise in connection with the
question of children: as unless a State official checked the weekly
bills of every parent, parents inevitably would save out of their
children’s allowances; and those with many children would be very soon
founding fortunes. And again it is obvious that different kinds of
occupation require from those engaged in them unequal expenditures; so
that the inevitable inequality of needs would make pecuniary equality
impossible. Indeed every practical man in our own country owns this,
however extreme his views; ◆² as is evidenced by the amounts which have
been suggested by the leaders of the Labour Party as a fit salary for
a paid Member of Parliament. These amounts vary from _three hundred
pounds_ a year to _four hundred pounds_; so that the unmarried Member
of Parliament, in the opinion of our most thoroughgoing democrats,
deserves an income from six to eight times as great as the utmost
income possible for the ordinary unmarried man. And there are many
occupations which will, if this be admitted, deserve to be paid on the
same or on even a higher scale. We may therefore take it for granted
that the most levelling politicians in the country, with whom it is
worth while to reason as practical and influential men, would spare
those incomes not exceeding _four hundred pounds_ a year, and would
probably increase the number of those between that amount and _a
hundred and fifty pounds_. Now the total amount of the incomes between
these limits is not far from _two hundred million pounds_: so if this
be deducted from the _twelve hundred million pounds_ which we just
now took as the sum to be divided equally, the incomes of the people
at large will be less by sixteen per cent than the sums at which they
were just now estimated; and the standard of average comfort will be
represented by a childless man and wife having _thirty-one shillings
and eightpence_ instead of _thirty-eight shillings_ a week.
[Sidenote ◆1 General redistribution, then, is not thought possible
by any English party;]
[Sidenote ◆2 But it is still instructive to consider the
theoretical results of it.]
◆¹ We need not, however, dwell upon such details longer: for there
are few people who conceive even a redistribution like this to be
possible; and there would probably be fewer still who would run the
risk of attempting it, if they realised how limited would be the
utmost results of it to themselves. My only reason for dealing with
these schemes at all is that, ◆² whilst they are felt to be impossible
as soon as they are considered closely, they are yet the schemes
which invariably suggest themselves to the mind when first the idea
of any great social change is presented to it; and a knowledge of
their theoretical results, though it offers no indication of what may
actually be attainable, will sober our thoughts, and at the same time
stimulate them, by putting a distinct and business-like limit to what
is conceivable.
[Sidenote ◆1 But there are certain parts of the national income
the redistribution of which has been actually advocated,
_i.e._: (1) the rent of the land; (2) the interest of
the National Debt; (3) the sums spent on the Monarchy.]
[Sidenote ◆2 We will consider what the nation would gain by
confiscating the above.]
[Sidenote ◆3 Absurd ideas as to the amount of the landed rental of
the country.]
◆¹ And for this reason, before I proceed further, I shall ask the
reader to consider a few more theoretical estimates. The popular
agitator, and those whose opinions are influenced by him, do not
propose to seize upon all property; they content themselves with
proposing to appropriate certain parts of it. The parts generally fixed
upon are as follows:—First and foremost comes the landed rental[9]
of the country—the incomes of the iniquitous landlords. Second comes
the interest on the National Debt; third, the profits of the railway
companies; and last, the sum that goes to support the Monarchy. All
these annual sums have been proposed as subjects of confiscation,
though the process may generally be disguised under other names. ◆²
Let us take each of these separately, and see what the community at
large would gain by the appropriation of each. And we will begin with
the income of the landlords; for not only is this the property which is
most frequently attacked, but it is the one from the division of which
the largest results are expected. ◆³ It is indeed part of the creed of
a certain type of politician that, if the income of the landlords could
be only divided amongst the people, all poverty would be abolished, and
the great problem solved.
[Sidenote ◆1 The popular conception of the wealth of the larger
landlords.]
◆¹ In the minds of most of our extreme reformers, excepting a few
Socialists, the income of the landlords figures as something limitless;
and the landlords themselves as the representatives of all luxury. It
is not difficult to account for this. To any one who studies the aspect
of any of our rural landscapes, with a mind at all occupied with the
problem of the redistribution of wealth, the things that will strike
his eye most and remain uppermost in his mind, are the houses and parks
and woods belonging to the large landlords. Small houses and cottages,
though he might see a hundred of them in a three-miles’ drive, he
would hardly notice; but if in going from York to London he caught
glimpses of twelve large castles, he would think that the whole of
the Great Northern Railway was lined with them. And from impressions
derived thus two beliefs have arisen—first that the word “landlord” is
synonymous with “large landlord”; and secondly that large landlords own
most of the wealth of the kingdom. But ideas like these, when we come
to test them by facts, are found to be ludicrous in their falsehood.
If we take the entire rental derived from land, and compare it with
the profits derived from trade and capital, we shall find that, so far
as mere money is concerned, the land offers the most insignificant,
instead of the most important question[10] that could engage us. Of the
income of the nation, the entire rental of the land does not amount to
more than one-thirteenth; and during the last ten years it has fallen
about thirteen per cent. The community could not possibly get more than
all of it; and if all of it were divided in the proportions we have
already contemplated, it would give each man about twopence a day and
each woman about three half-pence.[11]
[Sidenote ◆1 The landed aristocracy are not the chief
rent-receivers.]
[Sidenote ◆2 A multitude of small proprietors receive twice as
much in rent as the entire landed aristocracy.]
[Sidenote ◆3 The entire rental of the landed aristocracy is so
small that its confiscation would benefit no one.]
◆¹ But the more important part of the matter still remains to be
noticed. The popular idea is, as I just now said, that we should, in
confiscating the rental of the kingdom, be merely robbing a handful
of rich men, who would be probably a deserving, and certainly an easy
prey. The facts of the case are, however, singularly different. It is
true, indeed, if we reckon the land by area, that the large landlords
own a preponderating part of it: but if we reckon the land by value,
the whole case is reversed; ◆² and we find that classes of men who are
supposed by the ordinary agitator to have no fixed interest in the
national soil at all, really draw from it a rental twice as great as
that of the class which is supposed to absorb the whole. I will give
the actual figures,[12] based upon official returns; and in order that
the reader may know my exact meaning, let me define the term that I
have just used—namely “large landlords”—as meaning owners of more than
_a thousand_ acres. No one, according to popular usage, would be called
a large landlord, who was not the owner of at least as much as this;
indeed the large landlord, as denounced by the ordinary agitator, is
generally supposed to be the owner of much more. Out of the aggregate
rental, then—that total sum which would, if divided, give each man
twopence a day—what goes to the large landlords is now considerably
less than _twenty-nine million pounds_. By far the larger part—namely
something like _seventy million pounds_—is divided amongst _nine
hundred and fifty thousand_ owners, of whose stake in the country the
agitator seems totally unaware; and in order to give to each man the
above daily dividend, it would be necessary to rob all this immense
multitude whose rentals are, on an average, _seventy-six pounds_ a
year.[13] Supposing, then, this nation of smaller landlords to be
spared, ◆³ and our robbery confined to peers and to country gentlemen,
the sum to be dealt with would be less than _twenty-nine million
pounds_; and out of the ruin of every park, manor, and castle in the
country, each adult male would receive less than three-farthings daily.
[Sidenote ◆1 Were the National Debt and the Railways confiscated,
the results would likewise be hardly perceptible to the
nation as a whole.]
◆¹ And now let us turn to the National Debt and to the railways. The
entire interest of the one and the entire profits of the other, would,
if divided equally amongst the population, give results a little, but
only a little, larger than the rental of the large landlords. But here
again, if the poorer classes were spared, and the richer investors
alone were singled out for attack, the small dividend of perhaps
one penny for each man daily, would be diminished to a sum yet more
insignificant. How true this is may be seen from the following figures
relating to the National Debt. Out of the _two hundred and thirty-six
thousand_ persons who held consols in 1880, _two hundred and sixteen
thousand_, or more than nine-tenths of the whole, derived from their
investments less than _ninety pounds_ a year; whilst nearly half of the
whole derived less than _fifteen pounds_.
[Sidenote ◆1 The Monarchy costs so small a sum, that no one would
be the richer for its abolition.]
◆¹ And lastly, let us consider the Monarchy, with all its pomp and
circumstance, the maintenance of which is constantly represented as
a burden seriously pressing on the shoulders of the working-class. I
am not arguing that in itself a Monarchy is better than a Republic.
I am considering nothing but its cost in money to the nation. Let
us see then what its maintenance actually costs each of us, and how
much each of us might conceivably gain by its abolition. The total
cost of the Monarchy is about _six hundred thousand pounds_ a year;
but ingenious Radicals have not infrequently argued that virtually,
though indirectly, it costs as much as _a million pounds_. Let us take
then this latter sum, and divide it amongst _thirty-eight million_
people. What does it come to a head? It comes to something less than
_sixpence halfpenny_ a year. It costs each individual less to maintain
the Queen than it would cost him to drink her health in a couple of
pots of porter. The price of these pots is the utmost he could gain
by the abolition of the Monarchy. But does any one think that the
individual would gain so much—or indeed, gain anything? If he does,
he is singularly sanguine. Let him turn to countries that are under a
Republican government; and he will find that elected Presidents are apt
to cost more than Queens.
[Sidenote ◆1 All such schemes of redistribution are illusory, not
only on account of the insignificance of their results,]
[Sidenote ◆2 But also on account of a far deeper reason, on which
the whole problem depends.]
◆¹ All these schemes, then, for attacking property as it exists, for
confiscating and redistributing by some forcible process of legislation
the whole or any part of the existing national income, are either
obviously impracticable, or their result would be insignificant. Their
utmost result indeed would not place any of the workers in so good a
position as is at present occupied by many of them. This is evident
from what has been seen already. ◆² But there is another reason which
renders such schemes illusory—a far more important one than any I have
yet touched upon, and of a far more fundamental kind. We will consider
this in the next chapter; and we shall find, when we have done so, that
it has brought us to the real heart of the question.
CHAPTER IV
_The Nature of the National Wealth: first, of the
National Capital; second, of the National
Income. Neither of these is susceptible of
Arbitrary Division._
[Sidenote ◆1 A legislative division of the national income is not
only disappointing in its theoretical results, but
practically impossible,]
◆¹ We have just seen how disappointing, to those even who would gain
most by it, would be the results of an equal division of the national
income of this country, and how intolerable to all would be the general
conditions involved in it. In doing this, we have of course adopted,
for argument’s sake, an assumption which underlies all popular ideas of
such a process; namely, that if a Government were only strong enough
and possessed the requisite will, it could deal with the national
income in any way that might be desired; or, in other words, that the
national income is something that could be divided and distributed,
as an enormous heap of sovereigns could, according to the will of
any one who had them under his fingers. I am now going to show that
this assumption is entirely false, and that even were it desirable
theoretically that the national income should be redivided, it is not
susceptible of any such arbitrary division.
[Sidenote ◆1 As will be shown in this chapter.]
◆¹ To those who are unaccustomed to reflecting on economic problems,
and who more or less consciously associate the qualities of wealth
with those of the money in whose terms its amount is stated, I cannot
introduce this important subject better than by calling their attention
to the few following facts, which, simple and accessible as they are,
are not generally known.
[Sidenote ◆1 Wealth is utterly unlike money in its divisible
qualities.]
[Sidenote ◆2 The money of the United Kingdom is an imperceptible
fraction of its wealth.]
◆¹ The capital value of the wealth of the United Kingdom is estimated
at something like _ten thousand million pounds_; but the entire amount
of sovereigns and shillings in the country does not exceed _a hundred
and forty-four million pounds_, nor that of the uncoined bullion, _a
hundred and twenty-two million pounds_. That is to say, for every
nominal _ten thousand_ sovereigns there does not exist in reality more
than _two hundred and twenty-six_. Were this sum divided amongst the
population equally, it would give every one a share of exactly _seven
pounds_. Again, this country produces every year wealth which we
express by calling it _thirteen hundred million pounds_. ◆² The amount
of gold and silver produced annually by the whole world is hardly
so much as _thirty-eight million pounds_. If the whole of this were
appropriated by the United Kingdom, it would give annually to each
inhabitant only ten new shillings and a single new half-sovereign.
The United Kingdom, however, gets annually but a tenth of the world’s
money, so its annual share in reality is not so much as _four million
pounds_. Accordingly, that vast volume of wealth which we express by
calling it _thirteen hundred million pounds_, has but _four million
pounds_ of fresh money year by year to correspond to it. That is to
say, there is only one new sovereign for every new nominal sum of
_three hundred and twenty-five_.
[Sidenote ◆1 The nature of wealth, as a whole, is quite
misconceived by most people;]
[Sidenote ◆2 As we see by the metaphors they use to describe it.]
◆¹ Wealth as a whole, therefore, is something so totally distinct from
money that there is no ground for presuming it to be divisible in the
same way. What is wealth, then, in a country like our own? To some
people this will seem a superfluous question. They will say that every
one knows what wealth is by experience—by the experience of possessing
it, or by the experience of wanting it. And in a certain sense this
is true, but not in any sense that concerns us here. In precisely the
same sense every one knows what health is; but that is very different
from knowing on what health depends; and to know the effects of wealth
on our own existence is very different from knowing the nature of the
thing that causes them. Indeed, as a matter of fact, what wealth really
consists of is a thing which very few people are ever at the trouble to
realise; and nothing shows that such is the case more clearly than the
false and misleading images which are commonly used to represent it.
◆² The most familiar of these are: “a treasure,” “a store,” “a hoard,”
or, as the Americans say, “a pile.” Now any one of these images is not
only not literally true, but embodies and expresses a mischievous and
misleading falsehood. It represents wealth as something which could be
carried off and divided—as a kind of plunder which might be seized by
a conquering army. But the truth is, that the amount of existing wealth
which can be accurately described, or could be possibly treated in this
way, is, in a country like ours, a very insignificant portion; and,
were social conditions revolutionised to any serious degree, much of
that portion would lose its value and cease to be wealth at all.
[Sidenote ◆1 Many kinds of wealth that are considered typical
would become almost valueless if divided: for instance,
a great house and its contents.]
◆¹ Let us take, for instance, some palatial house in London, which
catches the public gaze as a monument of wealth and splendour; and we
will suppose that a mob of five hundred people are incited to plunder
it by a leader who informs them that its contents are worth _two
hundred thousand pounds_. Assuming that estimate to be correct, would
it mean that of these five hundred people each would get a portion to
him worth _four hundred pounds_? Let us see what would really happen.
They would find enough wine, perhaps, to keep them all drunk for a
week; enough food to feed thirty of them for a day; and sheets and
blankets for possibly thirty beds. But this would not account for
many thousands out of the _two hundred thousand pounds_. The bulk of
that sum would be made up—how? _A hundred thousand pounds_ would be
probably represented by some hundred and fifty pictures, and the rest
by rare furniture, china, and works of art. Now all these things to
the pillagers would be absolutely devoid of value; for if such pillage
were general there would be nobody left to buy them; and they would
in themselves give the pillagers no pleasure. One can imagine the
feelings of a man who, expecting _four hundred pounds_, found himself
presented with an unsaleable Sèvres broth-basin, or a picture of a
Dutch burgomaster; or of five such men if for their share they were
given a buhl cabinet between them. We may be quite certain that the
broth-basin would be at once broken in anger; the cabinet would be
tossed up for, and probably used as a rabbit-hutch; and the men as a
body would endeavour to make up for their disappointment by ducking or
lynching the leader who had managed to make such fools of them.
[Sidenote ◆1 Wealth, as a whole, even less susceptible of
division.]
◆¹ And now let us consider the wealth of the kingdom as a whole.
Much as the bulk of it differs from the contents of a house of this
kind, it would, if seized on in any forcible way, prove even more
disappointing and elusive.
[Sidenote ◆1 Wealth, as a whole, has two aspects: that of capital,
and that of income.]
[Sidenote ◆2 We will first consider the national capital.]
◆¹ We may consider it under two aspects. We may consider it as so much
annual income, or else as so much capital. In the last chapter we were
considering it as so much income, and presently we shall be doing so
again. But as capital may possibly strike the imagination of many as
something more tangible and easily seized, and likely to yield, if
redistributed, more satisfactory results, ◆² we will see first of what
items the estimated capital of this country is composed. To do so will
not only be instructive: it will also be curious and amusing.
[Sidenote ◆1 This capital consists not of money;]
◆¹ As I said just now, its value, expressed in money, is according to
the latest authorities about _ten thousand million pounds_.[14] As
actual money, however, forms so minute a portion of this,—the reader
will see that it is hardly more than one-fortieth,—we may, for our
present purpose, pass it entirely over; and our concern will be solely
with the things for which our millions are a mere expression.
[Sidenote ◆1 But of three classes of things: the two first
comprising things not susceptible of division;]
◆¹ It will be found that these things divide themselves into three
classes. The first consists of things which, from their very nature,
are not susceptible of any forcible division at all; the second
consists of things which are susceptible of division only by a process
of physically destroying them and pulling them into pieces; and each
of these two classes, in point of value, represents, roughly speaking,
nearly a quarter of the total. The third class alone, which represents
little more than a half, consists of things which, even theoretically,
could be divided without being destroyed.
[Sidenote ◆1 The third class comprising all those things that
could be divided without destroying them; and forming
about half of the total.]
◆¹ We will consider this third class first, which represents in the
estimates of statisticians _five thousand seven hundred million
pounds_. The principal things comprised in it are land, houses,
furniture, works of art, clothing, merchandise, provisions, and
live-stock; and such commodities in general as change hands over the
shopman’s counter, or in the market.[15] Of these items, by far the
largest is houses, which make up a quarter of the capital value of
the country, or _two thousand five hundred million pounds_. But more
than half this sum stands for houses which are much above the average
in size, and which do not form more than an eighth part of the whole;
and were they apportioned to a new class of occupants, they would lose
at least three-fourths of their present estimated value. So too with
regard to furniture and works of art, a large part of their estimated
value would, as we have seen already, disappear in distribution
likewise: and their estimated value is about a tenth of the whole we
are now considering. Land, of course, can, at all events in theory,
be divided with far greater advantage; and counts in the estimates
as _fifteen hundred million pounds_—or something under a sixth of the
whole. Merchandise, provisions, and movable goods in general can be
divided yet more readily; and so one would think could live-stock,
though this is hardly so in reality: but of the whole these three last
items form little more than a twentieth.
[Sidenote ◆1 The results of dividing these would be ridiculous.]
◆¹ And now, supposing all these divisible things to be divided, let us
see what the capital would look like which would be allotted to each
individual. Each individual would find himself possessed of a lodging
of some sort, together with clothes and furniture worth about _eight
pounds_. He would have about _eight pounds_’ worth of provisions and
miscellaneous movables, and a ring, a pin, or a brooch, worth about
_three pounds ten shillings_. He would also be the proprietor of one
acre of land, which would necessarily in many cases be miles away from
his dwelling, whilst as to stocking his acre, he would be met by the
following difficulty. He would find himself entitled to the twentieth
part of a horse, to two-thirds of a sheep, the fourth part of a cow,
and the tenth part of a pig.
[Sidenote ◆1 The second class of things, comprising the national
capital, could not be divided without destroying them.]
[Sidenote ◆2 The remaining class of things could not be divided at
all.]
◆¹ Such then would be the result to the individual of dividing the
whole of our capital that could be divided without destroying it. This
is, as we said, a little more than half of the total; and now let
us turn to the two other quarters; beginning with the things which
could be indeed divided, but which would obviously be destroyed in
the process. Their estimated value is more than _two thousand million
pounds_: half of which sum is represented by the railways and shipping
of the kingdom; _six hundred million pounds_, by gasworks and the
machinery in our factories; and the rest, by roads and streets and
public works and buildings. ◆² These, it is obvious, are not suitable
for division; and still less divisible are the things in the class that
still remains. For of their total value, which amounts to some _two
thousand five hundred million pounds_, more than _a thousand million
pounds_, according to Mr. Giffen, represent the good-will of various
professions of business; and the whole of the remainder—nearly _fifteen
hundred million pounds_—represents nothing that is in the United
Kingdom at all, but merely legal claims on the part of particular
British subjects to a share in the proceeds of enterprise in other
countries.
This last class consists of things which are merely rights and
advantages secured by law, and dependent on existing social conditions;
and it can be easily understood how they would disappear under any
attempt to seize them. But the remaining three quarters of our capital
consists of material things; and what we have seen with regard to them
may strike many people as incredible; for the moment we imagine them
violently seized and distributed, they seem to dwindle and shrivel up;
and the share of each individual suggests to one’s mind nothing but a
series of ludicrous pictures—pictures of men whose heritage in all this
unimaginable wealth is an acre of ground, two wheels of a steam-engine,
a bedroom, a pearl pin, and the tenth part of a pig.
[Sidenote ◆1 Capital has no value at all, except when vivified by
use;]
◆¹ The explanation, however, of this result is to be found in the
recognition of an exceedingly simple fact: that the capital of a
country is of hardly any value at all, and is, as capital, of no value
at all, when regarded merely as an aggregate of material things, and
not as material things made living by their connection with life. The
land, which is worth _fifteen hundred million pounds_, depends for its
value on the application of human labour to it, and the profitable
application of labour depends on skill and intelligence. The value
of the houses depends on our means of living in them—depends not on
themselves, but on the way in which they are inhabited. What are
railways or steamships, regarded as dead matter, or all the machinery
belonging to all the manufacturing companies? Nothing. They are no
more wealth than a decomposing corpse is a man. They become wealth
only when life fills them with movement by a power which, like all
vital processes, is one of infinite complexity: when multitudes are
massed in this or in that spot, or diffused sparsely over this or that
district; when trains move at appropriate seasons, and coal finds its
way from the mine to the engine-furnace. The only parts of the capital
in existence at any given moment, which deserve the name of capital
as mere material things, are the stores of food, fuel, and clothing
existing in granaries, shops, and elsewhere; and not only is the value
of these proportionately small, but, if not renewed constantly, they
would in a few weeks be exhausted.
[Sidenote ◆1 And it obviously cannot be used if it is equally
distributed.]
[Sidenote ◆2 Income is all that could conceivably be thus divided.]
◆¹ It is plain then that, under the complicated system of production
to which the wealth of the modern world is due, an equal division of
the capital of a country like our own is not the way to secure an equal
division of wealth. ◆² The only thing that could conceivably be divided
is income. If, however, it is true that capital is, as we have seen
it is, in its very nature living, and ceases to be itself the moment
that life goes out of it, still more emphatically must the same thing
be said of income, for the sake of producing which capital is alone
accumulated. Agitators talk of the national income as if it were a dead
tree which a statesman like Mr. Gladstone could cut into chips and
distribute. It is not like a dead tree; it is like the living column
of a fountain, of which every particle is in constant movement, and of
which the substance is never for two minutes the same.
[Sidenote ◆1 The national income consists of money no more than
the national capital does.]
[Sidenote ◆2 It consists of other things, or rights to other
things;]
[Sidenote ◆3 Namely, of perishable goods, durable goods, and
services.]
◆¹ Let us examine the details of this income, and the truth of what
has been said will be apparent. The total amount, as we have seen, is
estimated at _thirteen hundred million pounds_; it is not, however,
made up of sovereigns, but of things of which sovereigns are nothing
more than the measure. ◆² The true income of the nation and the true
income of the individual consist alike of things which are actually
consumed or enjoyed; or of legal rights to such things which are
accumulated for future exercise. Of these last, which, in other words,
are savings, and are estimated to amount to _a hundred and thirty
million pounds_ annually, we need not speak here, except to deduct them
from the total spent. The total is thus reduced to _eleven hundred and
seventy million pounds_—or to things actually consumed or enjoyed,
which are valued at that figure. Now what are these things? That is
our present question. ◆³ By far the larger part of them comes under
the following heads: Food, Clothing, Lodging, Fuel and Lighting, the
attendance of Servants, the Defence of the Country and Empire, and the
Maintenance of Law and Order. These together represent about _eight
hundred million pounds_. Of the remaining _three hundred and seventy
million pounds_, about a third is represented by the transport of goods
and travelling; and not much more than a quarter of the total income,
or about _two hundred and seventy million pounds_, by new furniture,
pictures, books, plate, and other miscellaneous articles. The furniture
produced annually counts for something like _forty million pounds_; and
the new plate for not more than _five hundred thousand pounds_.
And now let us examine these things from certain different points of
view, and see how in each case they group themselves into different
classes.
In the first place, they may be classified thus: into things that
are wealth because they are consumed, things that are wealth because
they are owned, and things that are wealth because they are used or
occupied. Under the first heading come food, clothing, lighting, and
fuel; under the second, movable chattels; and under the third, the
occupation of houses,[16] the services of domestics, the carrying of
letters by the Post Office, transport and travelling, and the defences
and administration of the country. In other words, the first class
consists of new perishable goods, the second of new durable goods, and
the third not of goods at all, but of services and uses. The relative
amounts of value of the three will be shown with sufficient accuracy by
the following rough estimates.
Of a total of _eleven hundred and seventy million pounds_, perishable
goods count for _five hundred and twenty million pounds_, durable goods
and chattels for _two hundred and fifty million pounds_, and services
and uses for _four hundred million pounds_. Thus, less than a quarter
of what we call the national income consists of material things which
we can keep and collect about us; little less than half consists of
material things which are only produced to perish, and perish almost
as fast as they are made; and more than a third consists of actions
and services which are not material at all, and pass away and renew
themselves even faster than food and fuel.
[Sidenote ◆1 A large part of the national income consists of
things that are imported.]
[Sidenote ◆2 Most of our food is imported.]
◆¹ This is how the national income appears, as seen from one point
of view. Let us change our ground, and see how it appears to us from
another. We shall see the uses and the services—to the value of
_four hundred million pounds_—still grouped apart as before. But the
remaining elements, representing nearly _eight hundred million pounds_,
and consisting of durable and perishable material things, we shall
see dividing itself in an entirely new way—into material things made
at home, and material things imported. We shall see that the imported
things come to very nearly half;[17] and we shall see further that
amongst these imported things food forms incomparably the largest
item. But the significance of this fact is not fully apparent till we
consider what is the total amount of food consumed by us; and when we
do that, we shall see that, exclusive of alcoholic drinks, actually
more than half come to us from other countries.[18] The reader perhaps
may think that this imported portion consists largely of luxuries,
which, on occasion, we could do without. If he does think so, let him
confine his attention to those articles which are most necessary, and
most universally consumed—namely bread, meat, tea, coffee, and sugar—◆²
and he will see that our imports are to our home produce as _ninety_ to
_seventy-three_. If we strike out the last three, our position is still
more startling;[19] and most startling if we confine ourselves to the
prime necessary—bread. The imported wheat is to the home-grown wheat
as _twenty-six_ to _twelve_: that is to say, of the population of this
kingdom _twenty-six millions_ subsist on wheat that is imported, and
only _twelve millions_ on wheat that is grown at home; or, to put the
matter in a slightly different way, we all subsist on imported wheat
for eight months of the year.
[Sidenote ◆1 Thus the national income is a product of infinite
complexity.]
◆¹ And now let the reader reflect on what all this means. It means that
of the material part of the national income half consists, not of goods
which we ourselves produce, but of foreign goods which are exchanged
for them; and are exchanged for them only because, by means of the most
far-reaching knowledge, and the most delicate adaptation of skill, we
are able to produce goods fitted to the wants and tastes of distant
nations and communities, many of which are to most of us hardly even
known by name. On every workman’s breakfast-table is a meeting of all
the continents and of all the zones; and they are united there by a
thousand processes that never pause for a moment, and thoughts and
energies that never for a moment sleep.
[Sidenote ◆1 Its amount also varies owing to infinitely
complicated causes,]
◆¹ A consideration of these facts will be enough to bring home to
anybody the accuracy of the simile of which I made use just now, when
I compared the income of the nation to the column thrown up by a
fountain. He will see how, like such a column, it is a constant stream
of particles, taking its motion from a variety of complicated forces,
and how it is a phenomenon of force quite as much as a phenomenon of
matter. He will see that it is a living thing, not a dead thing: and
that it can no more be distributed by any mechanical division of it,
than the labour of a man can be distributed by cutting his limbs to
pieces.
This simile of the fountain, though accurate, is, like most similes,
incomplete. It will, however, serve to introduce us to one peculiarity
more by which our national income is distinguished, and which has an
even greater significance than any we have yet dealt with.
In figuring the national income as the water thrown up by a fountain,
we of course suppose its estimated amount or value to be represented
by the volume of the water and the height to which it is thrown. What
I am anxious now to impress on the attention of the reader is that the
height and volume of our national fountain of riches are never quite
the same from one year to another; whilst we need not extend our view
beyond the limits of one generation to see that they have varied in
the most astonishing manner. The height and volume of the fountain are
now very nearly double what they were when Mr. Gladstone was in Lord
Aberdeen’s Ministry.[20]
[Sidenote ◆1 Which are quite independent of the growth of
population;]
◆¹ Some readers will perhaps be tempted to say that in this there is
nothing wonderful, for it is due to the increase of population. But the
increase of population has nothing to do with the matter. It cannot
have anything to do with what I am now stating. For when I say that
within a certain period the income of the nation has doubled itself,
I mean that it has doubled itself in proportion to the population; so
that, no matter how many more millions of people there may be in the
country now than there were at the beginning of the period in question,
there is annually produced for each million of people now nearly
twice the income that was produced for each million of people then.
Or in other words, an equal division now would give each man nearly
double the amount that it would have given him when Mr. Gladstone was
beginning to be middle-aged.
[Sidenote ◆1 As we may see by comparing the income of this country
with the income of others.]
◆¹ But we must not be content with comparing our national income with
itself. Let us compare it also with the incomes of other countries;
and let it in all cases be understood that the comparison is between
the income as related to the respective populations, and not between
the absolute totals. We will begin with France. It is estimated
that, within the last hundred and ten years, the income of France
has, relatively to the population, increased more than fourfold. A
division of the income in 1780 would have given _six pounds_ a head to
everybody: a similar division now would give everybody _twenty-seven
pounds_. And yet the income of France, after all this rapid growth,
is to-day twenty-one per cent less than that of the United Kingdom.
Other comparisons we shall find even more striking. Relatively to the
respective populations, the income of the United Kingdom exceeds that
of Norway in the proportion of _thirty-four_ to _twenty_; that of
Switzerland, in the proportion of _thirty-four_ to _nineteen_; that
of Italy, in the proportion of _thirty-four_ to _twelve_; and that of
Russia, in the proportion of _thirty-four_ to _eleven_. The comparison
with Italy and Russia brings to light a remarkable fact. Were all the
property of the upper classes in those countries confiscated, and the
entire incomes distributed in equal shares, the share of each Russian
would be fifty per cent less, and of each Italian forty per cent less
than what each inhabitant of the United Kingdom would receive from a
division of the income of its wage-earning classes only.
We find, therefore, that if we take equal populations of
men,—populations, let us say, of a million men each,—either belonging
to the same nation at different dates, or to different civilised
nations at the same date, that the incomes produced by no two of them
reach to the same amount; but that, on the contrary, the differences
between the largest income and the others range from twenty to two
hundred per cent.
[Sidenote ◆1 The causes of these differences in income are not
differences of race,]
◆¹ Now what is the reason of this? Perhaps it will be said that
differences of race are the reason. That may explain a little, but
it will not explain much; for these differences between the incomes
produced by equal bodies of men are not observable only when men are of
different races; but the most striking examples,—namely, those afforded
by our own country and France—are differences between the incomes
produced by the same race during different decades—by the same race,
and by many of the same individuals.
[Sidenote ◆1 Nor of soil or climate,]
◆¹ Perhaps then it will be said that they are due to differences of
soil and climate. But again, that will not explain the differences, at
various dates, between the incomes of the same countries; and though
it may explain a little, it will not explain much, of the differences
at the same date between the incomes of different countries. The soil
and climate, for instance, of the United Kingdom, are not in themselves
more suited for agriculture than the soil and climate of France and
Belgium; and yet for each individual actually engaged in agriculture,
this country produces in value twenty-five per cent more than France,
and forty per cent more than Belgium. I may add that it produces
forty-six per cent more than Germany, sixty-six per cent more than
Austria, and sixty per cent more than Italy.[21]
[Sidenote ◆1 Nor of hours of labour,]
◆¹ Perhaps then a third explanation will be suggested. These
differences will be said to be due to differences in the hours of
labour. But a moment’s consideration will show that that has nothing to
do with the problem; for when a million people in this country produced
half what they produce to-day, they had fewer holidays, and they worked
longer hours. Now that they have doubled the annual produce, they take
practically four weeks less in producing it.[22] Again, the hours of
labour for the manufacturing classes are in Switzerland twenty-six
per cent longer at the present time than in this country; and yet
the annual product, in proportion to the number of operatives, is
twenty-eight per cent less.[23]
Agriculture gives us examples of the same discrepancy between the
labour expended and the value of the result obtained. In France, the
agricultural population is three times what it is in this country, but
the value of the agricultural produce is not so much as double.[24]
[Sidenote ◆1 But are causes of some other kind which lie below the
surface,]
Plainly, therefore, the growth of a nation’s income, under modern
conditions, does not depend on an increased expenditure of labour.
There might, indeed, seem some ground for leaping to the contrary
conclusion—that it grows in proportion as the hours of labour
are limited: but whatever incidental truth there may be in that
contention, it does not explain the main facts we are dealing with; for
some of the most rapid changes in the incomes of nations we find have
occurred during periods when the hours of labour remained unaltered;
and we find at the present moment that countries in which the hours of
labour are the same, differ even more, in point of income, from one
another than they differ from countries in which the hours of labour
are different. ◆¹ Whatever, therefore, the causes of such differences
may be, they are not simple and superficial causes like these.
[Sidenote ◆1 And which requires to be carefully searched for.]
I have alluded to the incomes of foreign countries only for the sake
of throwing more light on the income of our own. Let us again turn
to that. Half of that income, as we have seen, consists to-day of an
annual product new since the time when men still in their prime were
children; and this mysterious addition to our wealth has rapidly and
silently developed itself, without one person in a thousand being
aware of its extent, or realising the operation of any new forces that
might account for it. Let people of middle age look back to their own
childhood; and the England of that time, in aspects and modes of life,
will not seem to them very different from what it seems now. Let them
turn over a book of John Leech’s sketches, which appeared in _Punch_
about the time of the first Exhibition; and, putting aside a few
changes in feminine fashion, they will see a faithful representation
of the life that still surrounds them. The street, the drawing-room,
the hunting-field, the railway-station—nothing will be obsolete,
nothing out-of-date. Nothing will suggest that since these sketches
were made any perceptible change has come over the conditions of our
civilisation. And yet, somehow or other, some changes have taken place,
owing to which our income has nearly doubled itself. ◆¹ In other words,
the existence of one-half of our wealth is due to causes, the nature,
the presence, and the operation of which, are hidden so completely
beneath the surface of life as to escape altogether the eye of ordinary
observation, and reveal themselves only to careful and deliberate
search.
[Sidenote ◆1 For, unless we understand the causes which have made
our national income grow, we may, by interfering with
them unknowingly, make our income decrease:]
◆¹ The practical moral of all this is obvious: that just as our income
has doubled itself without our being aware of the causes, and almost
without our being aware of the fact, so unless we learn what the causes
are, and are consequently able to secure for them fair play, or, at all
events, to avoid interfering with their operation, we may lose what we
have gained even more quickly than we have gained it, and annihilate
the larger part of what we are desirous to distribute. We have seen
that the national income is a living thing; and, as is the case with
other living things, the principles of its growth reside in parts of
the body which are themselves not sensitive to pain, but which may for
the moment be deranged and injured with impunity, and will betray their
injury only by results which arise afterwards, and which may not be
perceived till it is too late to remedy them.
[Sidenote ◆1 And this is the danger of reckless social
legislation.]
◆¹ Here lies the danger of reckless social legislation, and even of
the reckless formation of vague public opinion; for public opinion, in
a democratic country like ours, is legislation in its nebular stage:
and hence the only way to avert this danger is, first to do what we
have just now been doing,—to consider the amount and character of the
wealth with which we have to deal,—and secondly, to examine the causes
to which the production of this wealth has been due, and on which the
maintenance of its continued production must depend.
[Sidenote ◆1 We will therefore, in the following Book, examine
what these causes are.]
◆¹ Let the social reformer lay the following reflections to his heart.
Some of the more ardent and hopeful of the leaders of the Labour
Party to-day imagine that considerable changes in the distribution of
the national income may be brought about by the close of the present
century. In other words, they prophesy that the Government will seven
years hence do certain things with that year’s national income. But
the national income of that year is not yet in existence; and what
grounds have those sanguine persons for thinking that when it is
produced it will be as large, or even half as large, as the national
income is to-day? What grounds have they for believing that, if the
working-classes then take everything, they will be as rich as they are
now when they take only a part? The only ground on which such a belief
can be justified is the implied belief that the same conditions and
forces which have swelled the national income to its present vast
amount, will still continue in undisturbed operation.
We will now proceed to consider what these conditions and forces are.
———————————————————————————————————————————————————————
BOOK II
THE CHIEF FACTOR IN THE PRODUCTION
OF THE NATIONAL INCOME
———————————————————————————————————————————————————————
CHAPTER I
_Of the various Factors in Production, and how to
distinguish the Amount produced by each._
The inquiry on which we are entering really comprises two. I will
explain how.
Although, as we have seen, of the yearly income of the nation a part
only consists of material things, yet the remainder depends upon these,
and its amount is necessarily in proportion to them. Accordingly, when
we are dealing with the question of how the income is produced, we may
represent the whole of it as a great heap of commodities, which every
year disappears, and is every year replaced by a new one. Here then we
have a heap of commodities on one side, and on the other the subjects
of our inquiry—namely, the conditions and forces which produce that
heap.
[Sidenote ◆1 Land, Capital, and Human Exertion are the three
factors in production; but at present we may omit
Capital.]
Now, as to what these conditions and forces are, there is a familiar
answer ready for us—◆¹ Land, Labour, and Capital; and, with a certain
reservation, we may take this to be true. But as Capital is itself the
result of Land and Labour, we need not, for the moment, treat Capital
separately; but we may say that the heap is produced by Land and Labour
simply. I use this formula, however, only for the purpose of amending
it. It will be better, for reasons with which I shall deal presently,
instead of the term Labour to use the term Human Exertion. And further,
we must remember this—the heap of commodities we have in view is no
mere abstraction, but represents the income of this country at some
definite date; so that when we are talking of the forces and conditions
that have produced it, we mean not only Human Exertion and Land, but
Human Exertion of a certain definite amount applied to Land of a
definite extent and quality.
[Sidenote ◆1 The first point we notice is that the exertion of the
same number of men applied to the same land does not
always produce the same amount of wealth.]
[Sidenote ◆2 This must be due to some varying element in the Human
Exertion in question.]
[Sidenote ◆3 Let us compare production in this country 100 years
ago with production now.]
◆¹ Now, as I pointed out in the last Book, one of the most remarkable
things about our national production of commodities, is that the yearly
exertion of the same number of men, applied to land of the same extent
and quality, has been far from producing always a heap of the same
size. On the contrary, the heap which it produces to-day is twice as
large as that which it produced in the days of our fathers; and nearly
three times as large as that which it produced in the days of our
grandfathers. Here then is the reason why the inquiry that is before
us is twofold. For we have at first to take some one of such heaps
singly—on several accounts it will be convenient to take the smallest,
namely that produced about a hundred years ago—and to analyse the parts
which Land and Human Exertion played respectively in the production of
_it_. Then, having seen how Land and Human Exertion produced in the
days of our grandfathers a heap of this special size, we must proceed
to inquire why three generations later the same land and the exertions
of a similar number of men produce a heap which is nearly three times
as large. For the difference of result cannot be due to nothing. ◆²
It must be due to some difference in one of the two causes—to the
presence in this cause of some varying element: and it is precisely
here—here in this varying element—that the main interest of our inquiry
centres. For if it is owing to a variation in this element that our
productive powers have nearly trebled themselves in the course of
three generations, nearly two-thirds of the income which the nation
enjoys at present depends on the present condition of this element
being maintained, and not being suffered—as it very easily might be—to
again become what it was three generations back. ◆³ Let us begin then
with taking the amount of commodities produced in this country at the
end of the last century, which is at once the most convenient and the
most natural period to select; for production was then entering on its
present stage of development, and its course from then till now is more
or less familiar to us all.
We will start therefore with the fact that, about a hundred years ago,
our national income, if divided equally amongst the inhabitants of
the kingdom, would have yielded to each inhabitant a share of about
_fourteen pounds_; so that if we confine ourselves to Great Britain,
the population of which was then about _ten millions_, we have a
national income of _a hundred and forty million pounds_, or a heap of
commodities produced every year to an amount that is indicated by that
money value. Let us take then any one of the closing years of the last
century, and consider for a moment the causes at work in this island to
which the production of such a heap of commodities was due.
In general language, these causes have been described already as Human
Exertion of a certain definite amount applied to Land of a certain
definite extent and quality; but it will now be well to restore to
its traditional place the accumulated result of past exertion—namely
Capital, and to think of it as a separate cause, according to the usual
practice. For everybody knows that at the close of the last century,
many sorts of machinery, and stores of all sorts of necessaries, were
made and accumulated to assist and maintain Labour; and it is of such
things that Capital principally consists. The Capital of Great Britain
was at that time about _sixteen hundred million pounds_.[25] We will
accordingly say that about a hundred years ago, the Land of this
island, the Capital of this island, and the Exertions of a population
of _ten million_ people produced together, every twelve months, a heap
of commodities worth _a hundred and forty million pounds_. We need
not, however, dwell, till later, on these details. For the present our
national production at this particular period may be taken to represent
the production of wealth generally.
[Sidenote ◆1 How much in each case did Land, Capital, and Human
Exertion produce respectively?]
◆¹ Now the question, let it be remembered, with which we are concerned
ultimately, is how wealth, as produced in the modern world, may be
distributed. Accordingly, since the distribution of it presupposes its
production, and since we are agreed generally as to what the causes of
its production are,—namely, Land, Capital, and Human Exertion,—our next
great step is to inquire what proportion of the product is to be set
down as due to each of these causes separately; for it is by this means
only that we can see how and to what extent our social arrangements
may be changed, without our production being diminished. And I cannot
introduce the subject in a better way than by quoting the following
passage from John Stuart Mill, in which he declares such an inquiry to
be both meaningless and impossible to answer; for that it _can_ be
answered, and that it is full of meaning, and that to ask and answer it
is a practical and fundamental necessity, will be made all the plainer
by the absurdity of Mill’s denial.
[Sidenote ◆1 Mill declares this question to be meaningless;]
[Sidenote ◆2 But his argument is answered, and is refuted both by
practical life and by his own writings.]
◆¹ “Some writers,” he says, “have raised the question whether Nature
(or, in the language of economics, Land) gives more assistance to
Labour in one kind of industry or another, and have said that in some
occupations Labour does most; in others, Nature most. In this, however,
there seems much confusion of ideas. The part which Nature has in any
work of man is indefinite and immeasurable. It is impossible to decide
that in any one thing Nature does more than in any other. One cannot
even say that Labour does less. Less Labour may be required; but if
that which is required is absolutely indispensable, the result is just
as much the product of Labour as of Nature. When two conditions are
equally necessary for producing the effect at all, it is unmeaning to
say that so much of it is produced by one and so much by the other.
It is like attempting to decide which half of a pair of scissors has
most to do with the act of cutting; or, which of the factors—five or
six—has most to do with the production of thirty.” So writes Mill in
the first chapter of his _Principles of Political Economy_; and if what
he says is true with regard to Land and Labour (or, as we are calling
it, Human Exertion), it is equally true with regard to Human Exertion
and Capital; for without Human Exertion, Capital could produce nothing,
and without Capital modern industry would be impossible: and thus,
according to Mill’s argument, we cannot assign to either of them a
specific portion of the product. ◆² But Mill’s argument is altogether
unsound; and the actual facts of life, and a large part of Mill’s own
book, little as he perceived that it was so, are virtually a complete
refutation of it.
To understand this, the reader need only reflect on those three
principal and familiar parts into which the annual income of every
civilised nation is divided, not only in actual practice, but
theoretically by Mill himself—namely Rent, Interest, and Wages.[26]
For these—what are they? The answer is very simple. They are portions
of the income which correspond, at all events in theory, to the amounts
produced respectively by Land, Capital, and Human Exertion; and which
are on that account distributed amongst three sets of men—those who own
the Land, those who own the Capital, and those who have contributed
the Exertion. There are many causes which in practice may prevent the
correspondence being complete; but that the general way in which the
income is actually distributed is based on the amount produced by these
three things respectively,—Land, Capital, and Human Exertion,—is a fact
which no one can doubt who has once taken the trouble to consider it.
It is thus perfectly clear that, contrary to what Mill says, though two
or more agencies may be equally indispensable to the production of any
wealth at all, it is not only not “unmeaning to say that so much is
produced by one and so much by the other,” but it is possible to make
the calculation with practical certainty and precision; and I will now
proceed to explain the principles on which it is made.
CHAPTER II
_How the Product of Land is to be distinguished from
the Product of Human Exertion._
The question before us will be most easily understood if we begin
with once again waiving any consideration of Capital, and if we deal
only with what Mill, in the passage just quoted, calls “Nature and
Labour”—or, in other words, with Land and Human Exertion. We will
also, for simplicity’s sake, confine ourselves to one use of land—its
primary and most important use, namely its use in agriculture or
food-production.
[Sidenote ◆1 Rent is the proportion of the produce produced not by
Human Exertion, but by the Land itself;]
◆¹ Now a British tenant-farmer who lives solely by his farming
obviously derives his whole income from the produce of the soil he
occupies; but the whole of this produce does not go to himself. Part is
paid away in the form of rent to his landlord, and part in the form
of wages to his labourers. We may however suppose, without altering
the situation, that he has no labourers under him—that he is his own
labourer as well as his own manager, and that the whole of the produce
that is not set aside as rent goes to himself as the wages of his own
exertion. The point on which I am going to insist is this—that whilst
the exertion has produced the product that is taken as wages, the
soil—or to speak more accurately—a certain quality in the soil has just
as truly produced the produce that goes in rent—in fact that “Nature
and Labour, though equally necessary for producing the effect at all,”
each produce respectively a certain definite part of it.
[Sidenote ◆1 As will be shown in this chapter by reference to the
universally accepted theory of Rent.]
◆¹ In order to prove this it will be enough to make really clear to
the reader the explanation of rent which is given by all economists—an
explanation in which men of the most opposite schools agree—men like
Ricardo, and men like Mr. Henry George; and of which Mill himself
is one of the most illustrious exponents. I shall myself attempt to
add nothing new to it, except a greater simplicity of statement and
illustration, and a special stress on a certain part of its meaning,
the importance of which has been hitherto disregarded.
Now, as we are going to take the industry of agriculture for our
example, we shall mean by rent a portion of the agricultural products
derived from Human Exertion applied to a given tract of soil. Of such
products let us take corn, and use it, for simplicity’s sake, as
representing all the rest; and that being settled, let us go yet a
step further; and, for simplicity’s sake also, let us represent corn
by bread; and imagine that loaves develop themselves in the soil like
potatoes, and, when the ground is properly tilled, are dug up ready
for consumption. We shall figure rent therefore as a certain number
of loaves that are dug up from a given tract of soil. Now everybody
knows that all soils are not equally good. That there is good land and
that there is poor land is a fact quite familiar even to people who
have never spent a single day in the country. And this means, if we
continue the above supposition, that different fields of precisely the
same size, cultivated by similar men and with the same expenditure of
exertion, will yield to their respective cultivators different numbers
of loaves.
[Sidenote ◆1 We will illustrate this by the case of three men of
equal power tilling three fields of unequal fertility.]
◆¹ Let us take an example. Tom, Dick, and Harry, we will say, are three
brothers, who have each inherited a field of twelve acres. They are all
equally strong, and equally industrious: we may suppose, in fact, that
they all came into the world together, and are as like one another as
three Enfield rifles. Each works in his field for the same time every
day, digs up as many loaves as he can, and every evening brings them
home in a basket. But when they come to compare the number that has
been dug up by each, Tom always finds that he has fifteen loaves, Dick
that he has twelve, and Harry that he has only nine; the reason being
that in the field owned by Harry fewer loaves develop themselves than
in the fields owned by Tom and Dick. Harry digs up fewer, because there
are fewer to dig up. Let us consider Harry’s case first.
[Sidenote ◆1 Labour must be held to produce so much as is
absolutely necessary for its own support.]
◆¹ Each of the loaves is, we will say, worth fourpence; therefore
Harry, with his nine loaves, makes three shillings a day, or eighteen
shillings a week. This is just enough to support him, according to the
ideas and habits of his class. If his field were such that it yielded
him fewer loaves, or if he had to give even one of the loaves away,
the field would be useless; it would not be cultivated at all, either
by him, or by anybody, nor could it be; for the entire produce, which
would then go to the cultivator, would not be enough to induce, or
perhaps even to make him able, to cultivate it. But, as matters stand,
so long as the entire produce does go to him, and to no one else, we
must take it for granted that his exertion and his field between them
yield him a livelihood which, according to his habits, is sufficient;
for otherwise, as I have said, this field neither would nor could be
cultivated. And it will be well here to make the general observation
that whenever we find a class of men cultivating the utmost area of
land which their strength permits, and taking for themselves the entire
produce, their condition offers the highest standard of living that
can possibly be general amongst peasant cultivators: from which it
follows that, unless no land is cultivated except the best, the general
standard of living must necessarily require less than the entire
produce which the best land will yield. We assume then that Harry,
with his nine loaves a day, represents the highest standard of living
that is, or that can be, general amongst his class.
And now let us turn from Harry’s case to the case of Tom and Dick. They
have been accustomed to precisely the same standard of living as he has
been; and they require for their support precisely the same amount of
produce. But each day, after they have all of them fared alike, each
taking the same quantity from his own particular basket, the baskets
of Tom and Dick present a different appearance to that of Harry. There
is in each of the two first a something which is not to be found in
his. There is a surplus. In Dick’s basket there are three extra loaves
remaining; and in Tom’s basket there are six. To what then is the
production of these extra loaves due? Is it due to land, or is it due
to the exertions of Tom and Dick? Mill, as we have seen, would tell us
that this was an unmeaning question; but we shall soon see that it is
not so.
[Sidenote ◆1 But whatever is beyond this is the product not of
Labour, but of Land;]
It is perfectly true that it would be an unmeaning question if we
had to do with one of the brothers only—say with Harry, and only
with Harry’s field. Then, no doubt, it would be impossible to say
which produced most—Harry or the furrows tilled by him,—whether Harry
produced two loaves and the furrows seven, or Harry seven and the
furrows two. And as to Harry’s case more must be said than this. Such
a calculation with regard to it would be not only impossible, but
useless; for even if we convinced ourselves that the land produced
seven loaves, and Harry’s exertion only two, all the loaves would
still of necessity go to Harry. In a case like this, therefore, it is
quite sufficient to take account of Human Exertion only. Agricultural
labour, in fact, must be held to produce whatever product is necessary
for the customary maintenance of the labourer. ◆¹ But if this is the
entire product obtained from the worst soil cultivated, it cannot be
the entire product obtained from the best soil; and the moment we have
to deal with a second field,—a field which is of a different quality,
and which, although it is of exactly the same size, and is cultivated
every day with precisely similar labour, yields to that labour a
larger number of loaves,—twelve loaves, or fifteen loaves, instead of
nine,—then our position altogether changes. We are not only able, but
obliged to consider Land as well as Labour, and to discriminate between
their respective products. A calculation which was before as unmeaning
as Mill declares it to be, not only becomes intelligible, but is forced
on us.
[Sidenote ◆1 As we shall see by comparing the case of the man
tilling the best field with that of the man tilling the
worst.]
◆¹ For if we start with the generalisation derived from Harry’s case,
or any other case in which the land is of a similar quality that one
man’s labour produces nine loaves daily, and then find that Tom and
Dick, for the same amount of labour, are rewarded respectively by
fifteen loaves or by twelve, we have six extra loaves in one case,
and three in the other, which cannot have been produced by Labour,
and which yet must have been produced by something. They cannot have
been produced by Labour; for the very assumption with which we start
is that the Labour is the same in the last two cases as in the first;
and according to all common-sense and all logical reasoning, the same
cause cannot produce two different results. When results differ, the
cause of the difference must be sought in some cause that varies, not
a cause that remains the same; and the only cause that here varies
is the Land. Accordingly, just as in Harry’s case we are neither able
nor concerned to credit the Land with any special part, or indeed any
part, of the product, but say that all the nine loaves are produced by
Harry’s Labour, so too in the case of Tom and Dick we credit Labour
with a precisely similar number; but all loaves beyond that number
we credit not to their Labour, but to their Land—or, to speak more
accurately, to certain qualities which their Land possesses, and which
are not possessed by Harry’s. In Dick’s case these superior qualities
produce three loaves; in Harry’s case, they produce six.
[Sidenote ◆1 The men themselves would be the first to understand
this.]
If any one doubts that such is the case, let him imagine our three
brothers beginning to quarrel amongst themselves, and Tom and Dick
boasting that they were better men than Harry, on the ground that they
always brought home more loaves than he. Every one can see what Harry’s
retort would be, and see also that it is unanswerable. ◆¹ Of course he
would say, “I am as good a man as either of you, and my labour produces
quite as much as yours. Let us only change fields, and you will see
that soon enough. Let Tom take mine, and let me take his, and I then
will bring home fifteen loaves; and he, work as he may, will only
bring home nine. It is your b——y land that produces more than mine,
not you that produce more than I; and if you deny it, stand out you
——s and I’ll fight you.” We may also appeal to one of the commonest
of our common phrases, in which Harry’s supposed contention is every
day reiterated. If a farmer is transferred from a bad farm to a good
one, and the product of his farming is thereby increased, as it will
be, everybody will say, “The good farm _makes_ all the difference.”
This is merely another way of saying, the superior qualities in the
soil _produce_ all the increase, or—to continue our illustration—the
increased number of loaves.
And all the world is not only asserting this truth every day, but is
also acting on it; for these extra loaves, produced by the qualities
peculiar to superior soils, are neither more nor less than Rent. Rent
is the amount of produce which a given amount of exertion obtains
from rich land, beyond what it obtains from poor land. Such is the
account of rent in which all economists agree; indeed, when once it is
understood, the truth of it is self-evident. Mr. Henry George’s entire
doctrines are built on it; whilst Mill calls it the _pons asinorum_ of
economics. I have added nothing in the above statement of it to what is
stated by all economists, except weight and emphasis to a truth which
they do not so much state as imply, and whose importance they seem to
have overlooked. This truth is like a note on a piano, which they have
all of them sounded lightly amongst other notes. I have sounded it
by itself, and have emphasised it with the loud pedal—the truth that
rent is for all practical purposes not the product of Land and Human
Exertion combined, but the product of Land solely, as separate from
Human Exertion and distinct from it.
[Sidenote ◆1 The above doctrine of Rent is not a landlord’s
doctrine. It would hold true of a Socialistic State as
well as of any other.]
◆¹ And here let me pause for a moment to point out a fact which, though
it illustrates the above truth further, I should not mention here if
it were not for the following reason. Rent forms the subject of so
much social and party prejudice that what I have just been urging may
be received by certain readers with suspicion, and regarded as some
special pleading on behalf of landlords. I wish therefore to point
out clearly that the existence of rent and the payment of rent is
not peculiar to our existing system of landlordism. Rent must arise,
under any social arrangement, from all soils which are better than the
poorest soil cultivated: it must be necessarily paid to somebody; and
that somebody must necessarily be the owner. If a peer or a squire is
the owner, it is paid to the peer or squire; if the cultivator is the
owner, the cultivator pays it to himself; if the land were nationalised
and the State were to become the owner, the cultivator would have to
pay it away to the State.
[Sidenote ◆1 It is easy to see how Rent arises, under any
conditions, from all superior soils.]
◆¹ In order that the reader may fully realise this, let us go back to
our three brothers, of whom the only two who paid rent at all, paid
it, according to our supposition, to themselves; and let us imagine
that Harry—the brother who pays no rent to anybody, because his field
produces none, has a sweetheart who lives close to Tom’s field, or
who sits and sucks blackberries all day in its hedge; and that Harry
is thus anxious to exchange fields with Tom, in order that he may be
cheered at his work by the smiles of the beloved object. Now if Tom
were to assent to Harry’s wishes without making any conditions, he
would be not only humouring the desire of Harry’s heart, but he would
be making him a present of six loaves daily; and this, we may assume,
he certainly would not do; nor would Harry, if he knew anything of
human nature, expect or even ask him to do so. If Tom, however, were on
good terms with his brother, he might quite conceivably be willing to
meet his wishes, could it be but arranged that he should be no loser
by doing so; and this could be accomplished in one way only—namely,
by arranging that, since Harry would gain six loaves each day by
the exchange, and Tom would lose them, Harry should send these six
loaves every day to Tom; and thus, whilst Harry was a gainer from a
sentimental point of view, the material circumstances of both of them
would remain what they were before. Or we may put the arrangement
in more familiar terms. The loaves in question we have supposed to
be worth fourpence each; so we may assume that instead of actually
sending the loaves, Harry sends his brother two shillings a day, or
twelve shillings a week, or thirty pounds a year. Tom’s field, as we
have said, is twelve acres; therefore, Harry pays him a rent of fifty
shillings an acre. And Tom’s case is the case of every landlord, no
matter whether the landlord is a private person or the State—a peer who
lets his land, a peasant like Tom who cultivates it, or a State which
allows the individual to occupy but not to own it. Rent represents an
advantage which is naturally inherent in certain soils; and whoever
owns this advantage—either the State or the private person—must of
necessity either take the rent, or else make a present of it to certain
favoured individuals.
It should further be pointed out that this doctrine of Rent, though
putting so strict a limit on the product that can be assigned to
Labour, interferes with no view that the most ardent Socialist or
Radical may entertain with regard to the moral rights of the labourer.
If any one contends that the men who labour on the land, and who pay
away part of the produce as rent to other persons, ought by rights to
retain the whole produce for themselves, he is perfectly at liberty to
do so, for anything that has been urged here. For the real meaning
of such a contention is, not that the labourers do not already keep
everything that is produced by their labour, but that they ought to
own their land instead of hiring it, and so keep everything that is
produced by the land as well.
[Sidenote ◆1 The doctrine of Rent is the fundamental example of
the reasoning by which to each agent in production a
definite portion of the product is attributed.]
This doctrine of Rent, then, which I have tried to make absolutely
clear, involves no special pleading on behalf either of landlord or
tenant, of rich or poor. It can be used with equal effect by Tory,
Radical, or Socialist, and it would be as true of a Socialistic State
as it is of any other. I have insisted on it here for one reason only.
◆¹ It illustrates, and is the fundamental example of, the following
great principle—that in all cases where Human Exertion is applied to
Land which yields only enough wealth to maintain the man exerting
himself, practical logic compels us to attribute the entire product to
his exertion, and to take the assumption that his exertion produces
this much as our starting-point. But in all other cases—that is to say
in all cases where the same exertion results in an increased product,
we attribute the increase—we attribute the added product—not to Human
Exertion, which is present equally in both cases, but to some cause
which is present in the second case, and was not present in the first:
that is to say, to some superior quality in the soil.
And now let us put this in a more general form. When two or more
causes produce a given amount of wealth, and when the same causes with
some other cause added to them produce a greater amount, the excess
of the last amount over the first is produced by the added cause; or
conversely, the added cause produces precisely that proportion of the
total by which the total would be diminished if the added cause were
withdrawn.
It is on this principle that the whole reasoning in the present book is
based; and having seen how it enables us to discriminate between the
amounts of wealth produced respectively by Human Exertion and Land, let
us go on to see how it will enable us likewise to discriminate what is
produced by Capital.
CHAPTER III
_Of the Products of Machinery or Fixed Capital, as distinguished
from the Products of Human Exertion._
[Sidenote ◆1 To understand how much of the gross product is made
by Capital, it will be well to turn from agriculture to
manufactures;]
[Sidenote ◆2 As Capital plays in manufactures a more obvious part.]
◆¹ Land, which in economics means everything that the earth produces
and the areas it offers for habitation, is of course in a sense at
the bottom of every industry. But if we wish to understand the case
of Capital, it will be well to turn from agriculture to industry of
another kind; the reason being that the part which Capital plays in
agriculture is not only, comparatively speaking, small, but is also a
part which, when we are first approaching the subject, is comparatively
ill fitted for purposes of illustration. ◆² What is best fitted for
the purpose of illustration is Capital applied to manufactures; and it
is best at first not to consider all such Capital, but to confine our
attention to one particular part of it. I must explain to the reader
exactly what I mean.
[Sidenote ◆1 Capital, when actually employed, is of two kinds:]
[Sidenote ◆2 Fixed Capital, such as plant and machinery; and Wage
Capital.]
[Sidenote ◆3 The Capital embodied in machinery is what, for our
present purpose, we must first consider.]
◆¹ People constantly speak of Capital as being a sensitive thing—a
movable thing—a thing that is easily driven away—that can be
transferred from one place to another by a mere stroke of the pen.
We all of us know the phrases. But though they express a truth, it
is partial truth only. Capital before it is employed, when it is
lying, let us say, in a bank, to the credit of a Company that has not
yet begun operations—Capital, under such circumstances, is no doubt
altogether movable; for before it is employed it exists as credit only.
◆² But the moment it is employed in manufacture, a very considerable
part of it is converted into things that are very far from movable—into
such things as buildings and heavy machinery; and only a part remains
movable—namely that reserved for wages. For example, M’Culloch
estimates that the average cost of a factory is about _one hundred
pounds_ for every operative to be employed in it; whilst the yearly
wages of each adult male would now on the average, be about _sixty
pounds_. Thus, if a factory is started which will employ _one thousand_
men, and if the wages of all of them have to be paid out of Capital
for a year, the amount reserved for wages will be _sixty thousand
pounds_, whilst _a hundred thousand pounds_ will have been converted
into plant and buildings. Most people are familiar with the names given
by economists to distinguish the two forms into which employed capital
divides itself. The part which is reserved for, and paid in wages, is
called “Circulating Capital”; that which is embodied in buildings and
machinery is called “Fixed Capital.” Of Circulating Capital—or, as we
may call it, Wage Capital—we will speak presently. ◆³ We will speak
at first of Fixed Capital only; and of this we will take the most
essential part, namely machinery; and for convenience sake we will omit
the accidental part, namely buildings, which render merely the passive
service of shelter.
[Sidenote ◆1 We shall see that machinery adds to the product of
Labour in the same way that a superior soil adds to it;]
Now in any operation of manufacturing raw material, or—what means the
same thing—conveying raw material, say water or coal or fish, to the
places where they are to be consumed, certain machines or appliances
are necessary to enable the operation to take place well. Thus fish
or coal could hardly be carried without a basket, whilst water could
certainly not be carried without some vessel, nor in many places raised
from its source without a rope and pail. For all purposes therefore of
practical argument and calculation, appliances of these most simple and
indispensable kinds are merged in Human Exertion, just as is the case
with the poorest kind of Land, and are not credited separately with
any portion of the result. We do not say the man raised so much water,
and the rope and the pail so much. We say the man raised the whole. ◆¹
But the moment we have to deal with appliances of an improved kind, by
which the result is increased, whilst the labour remains the same, the
case of the appliances becomes analogous to that of superior soils;
and a portion of the result can be assigned to them, distinct from the
result of Labour.
[Sidenote ◆1 As a certain simple instance will show.]
◆¹ Let us suppose, for instance, that a village gets all its water
from a cistern, to keep which replenished takes the labour of ten men
constantly raising the water by means of pails and ropes, and then
carrying it to the cistern, up a steep wearisome hill. These men, we
will say, receive each _one pound_ a week, the village thus paying
for its water _five hundred pounds_ a year, the whole of which sum
goes in the remuneration of labour. We will suppose, further, that the
amount of water thus obtained is _a thousand_ gallons daily, each man
raising and carrying _a hundred_ gallons; and that this supply, though
sufficient for the necessities of the villagers, is not sufficient for
their comfort. They would gladly have twice that amount; but they are
not able to pay for it. Such is the situation with which we start. We
have _a thousand_ gallons of water supplied daily by the exertion of
ten men, or _a hundred_ gallons by the exertion of each of them.
And now let us suppose that the village is suddenly presented with a
pumping-engine, having a handle or handles at which five of these men
can work simultaneously, and by means of which they, working no harder
than formerly, can raise twice the amount of water that was formerly
raised by ten men—namely _two thousand_ gallons daily, instead of _one
thousand_. The villagers, therefore, have now _a thousand_ gallons
daily which they did not have before; and to what is the supply of
this extra quantity due? It is not due to Labour. The Labour involved
can produce no more than formerly; indeed it must produce less; for
its quality is unchanged, and it is halved in quantity. Obviously,
then, the extra _thousand_ gallons are due to the pumping-engine, and
this not in a mere theoretical sense, but in the most practical sense
possible; for this extra supply appears in the cistern as soon as the
engine is present, and would cease to appear if the engine were taken
away.
[Sidenote ◆1 It may be also observed that the added product will
go to the owner of the machine, just as rent goes to the
owner of the land.]
◆¹ And here let me pause for a moment, as I did when I was discussing
land, to point out a fact which at the present stage of argument has
no logical place, but which should be realised by the reader, in order
to avoid misconception: namely, the fact that the extra water-supply
which is due to the pumping-engine, will necessarily be the property of
whoever owns the engine, just as rent will be the property of whoever
owns the land that yields it. We supposed just now that the owner of
the engine was the village. We supposed that the engine was presented
to it. Consequently the village owned the whole extra _thousand_
gallons. It had not to pay for them. But let us suppose instead that
the engine was the property of some stranger. Just as necessarily in
that case the gallons would belong to him; and he could command payment
for them, just as if he had carried them to the cistern himself. We
supposed that the village was able to pay _five hundred pounds_ for
its water; and that it really wanted, for its convenience, twice
as much as it could obtain for that sum expended on human labour.
The owner of the pumping-engine, by allowing the village to use it,
doubles the water-supply, and halves the labour bill. The expenditure
on labour sinks from _five hundred pounds_ to _two hundred and fifty
pounds_; and the owner of the pumping-engine can, it is needless to
say, command the _two hundred and fifty pounds_ which is saved to the
village by its use. In actual life, no doubt, the bargain would be
less simple; because in actual life there would be a number of rival
pumping-engines, whose owners would reduce, by competition, the price
of the extra water; but whatever the price might be, the principle
would remain the same. The price or the value of the water would go to
the owner of the engine; and it would fail to do so only if one thing
happened—if the owner refused to receive it, and, for some reason
or other, made the village a free gift of what the village would be
perfectly willing to buy. In this truth there is nothing that makes for
or against Socialism. The real contention of the Socialist is simply
this—not that labour makes what is actually made by machinery; but that
labourers ought to own the machinery, and for that reason appropriate
what is made by it. A machine or engine, in fact, which is used to
assist labour is, in its quality of a producing agent, just as separate
from the labour with which it co-operates, as a donkey, in its quality
of a carrying agent, is distinct from its master, if the master is
walking along carrying one sack of corn, and guiding the donkey who
walks carrying seven.
[Sidenote ◆1 A machine, then, as a productive agent, is as
distinct from human labour as are the efforts of an
animal.]
◆¹ And this brings us back into the line of our main argument; the
comparison just made being a very apt and helpful illustration of it.
Every machine may be looked on as a kind of domestic animal, and each
new machine as an animal of some new species; which animals co-operate
with men in the production of certain products: and the point I am
urging on the reader may accordingly be put thus. When a man, or a
number of men, without one of these animals to assist them, produce a
certain amount of some particular product, and with the assistance of
one of these animals produce a much larger amount, the added quantity
is produced not by the men, but by the animal—or, to drop back again
into the language of fact, by the machine.
[Sidenote ◆1 The history of the cotton industry is a remarkable
illustration of this.]
◆¹ I have taken an imaginary case of drawing and pumping water, because
the operation is of an exceedingly simple kind. We will now turn from
the imaginary world to the real, and clench what has been said by an
illustration from the history of our own country—and from that period
which at present we specially have in view—namely the close of the last
century.
From the year 1795 to the year 1800, the amount of cotton manufactured
in this country was on the average about _thirty-seven million pounds_
weight annually: ten years before it was only _ten million pounds_;
ten years before that, only _four million pounds_; and during the
previous fifty years it had been less than _two and a half million
pounds_. The amount manufactured, up to the end of this last-named
period, was limited by the fact that spinning was a much slower
process than weaving. It was performed by means of an apparatus known
as “the one-thread wheel.” No other spinning-machine existed; and it
was the opinion of experts, about the year 1770, that it would hardly
be possible in the course of the next thirty years, by collecting and
training to the spinning trade every hand that could be secured for
such a purpose, to raise the annual total to so much as _five million
pounds_. As a matter of fact, however, _five million pounds_ were spun
in the year 1776. In six years’ time, the original product had been
doubled. In ten years, it had been more than quadrupled; in twenty
years, it had increased nearly elevenfold; and in five and twenty
years, it had increased fifteenfold.[27]
[Sidenote ◆1 For every pound of cotton spun by labour, Arkwright’s
machinery spun fourteen pounds.]
◆¹ To what, then, was this extraordinary increase due? It was due to
the invention and introduction of new spinning machinery—especially to
the machines invented by Hargreaves and Arkwright, and the successive
application of horse-power, water-power, and lastly of steam-power, to
driving them. Previous to the year 1770, such a thing as a cotton-mill
was unknown. During the ten following years, about forty were erected
in Great Britain; in the six years following there were erected a
hundred more; and from that time forward their number increased
rapidly, till they first absorbed, and then more than absorbed, the
whole population that had previously conducted the industry in their
own homes. As we follow the history of the manufacture into the present
century, a large part of the increasing gross produce is to be set down
to the increase in the employed population; but during the twenty-five
years with which we have just been dealing, the number of hands
employed in spinning had not more than doubled,[28] whilst the amount
of cotton manufactured had increased by fifteen hundred per cent. It
is therefore evident that the increase during this period is due almost
entirely, not to human exertion, but to machinery.[29]
[Sidenote ◆1 The manufacture of iron offers a similar example.]
◆¹ And next, with more brevity, let us consider the manufacture of
iron. By and by we shall come back to the subject; so it will be enough
here to mention a single fact connected with it. From about the year
1740, when a careful and comprehensive inquiry into the matter was
made, up to the year 1780, the average produce of each smelting furnace
in the country was _two hundred and ninety-four tons_ of iron annually.
Towards the close of this period machinery had been invented by which a
blast was produced of a strength that had been unknown previously; and
in the year 1788, the average product of each of these same furnaces
was _five hundred and ninety-five tons_, or very nearly double what it
had been previously. An extra _two hundred and fifty tons_ was produced
from each furnace annually: and if we attribute the whole of the former
product to human exertion, _two hundred and fifty tons_ at all events
was the product of the new machinery; since if that had been destroyed,
the product, in proportion to the expenditure of exertion, would at
once have sunk back to what it had been forty-eight years earlier.
[Sidenote ◆1 The products, then, of Capital embodied in machinery
are easily distinguishable from the products of Labour.]
◆¹ Here, then, we have before us the two principal manufactures of this
country, as they were during the closing years of the last century; and
we have seen that in each a definite portion of the product was due to
a certain kind of capital, as distinct from human exertion—distinct
from human exertion in precisely the same way, as we have already seen
land to be, when we find it producing rent; and we have seen further
that the products both of this kind of Capital and of Land, are to
be distinguished from those of Human Exertion on precisely similar
principles.[30]
[Sidenote ◆1 In the next chapter we will consider the products of
Wage Capital.]
◆¹ Machinery, however,—or fixed capital, of which we have taken
machinery as the type,—is only a part of Capital considered as a whole.
We have still to deal with the part that is reserved for and spent in
wages; and this will introduce us to an entirely new subject—a subject
which as yet I have not so much as hinted at—namely human exertion
considered in an entirely new light.
CHAPTER IV
_Of the Products of Circulating Capital, or Wage
Capital, as distinguished from the Products
of Human Exertion._
[Sidenote ◆1 Wage Capital enables men to undertake work which will
not support them till a considerable time has elapsed.]
◆¹ Circulating Capital, or, as it is better to call it, Wage Capital,
is practically a store of those things which wages are used to buy—that
is to say the common necessaries of subsistence. And the primary
function—the simplest and most obvious function—which such Capital
performs is this: it enables men, by supplying them with the means
of living, to undertake long operations, which when completed will
produce much or be of much use, but which until they are completed will
produce nothing and be of no use, and will consequently supply nothing
themselves to the men whilst actually engaged in them.
[Sidenote ◆1 A tunnel is a good instance of such work.]
◆¹ Let us imagine, for instance, a tunnel which pierces a range of
mountains, and facilitates communication between two populous cities.
Five hundred navvies, we will say, have to work five years to make it.
Now if two yards of tunnel were made every day, and if each yard could
be used as soon as made, the tolls of passengers would at once yield
a daily revenue which would provide the navvies with subsistence, as
their work proceeded. But as a matter of fact until the last day’s
work is done, and the end of the fifth year sees the piercing of the
mountain completed, the tunnel is as useless as it was when it was
only just begun, and when it was nothing more than a shallow cavity
in a rock. Five years must elapse before a single toll is paid, and
before the tunnel itself supplies a single human being with the means
of providing bread for even a single day. The possibility then of the
tunnel being made at all, depends on the existence of a five-years’
supply of necessaries, for which indirectly the tunnel will pay
hereafter, but in producing or providing which, it has had no share
whatever.
[Sidenote ◆1 But the above-mentioned function of Wage Capital is
not its principal function in the modern world.]
Wage Capital, in fact, imparts to industry the power of waiting for its
own results. This is its simplest, its most obvious, and its primeval
function. ◆¹ It has been the function of such capital from the days
of the earliest civilisations; and it is, indeed, its fundamental
function still: but in the modern world it is far from being its
principal function. I call its principal functions in the modern world
the functions by which during the past century and a quarter it has
produced results so incomparably, and so increasingly greater, than
were ever produced by it in the whole course of preceding ages.
[Sidenote ◆1 Its principal function now is to enable a few men
of exceptional powers to assist by these powers the
exertions of the ordinary labourers.]
[Sidenote ◆2 The modern employer in this respect differs from the
ancient.]
[Sidenote ◆3 Wage Capital in the modern world is the means by
which exceptional intellect is lent to Labour.]
◆¹ What this function is must be explained very clearly and carefully.
It is not to enable labourers to wait for the results of their labours.
It is to enable the exceptional knowledge, ingenuity, enterprise, and
productive genius of a few men so to animate, to organise, and direct
the average physical exertions of the many, as to improve, to multiply,
or to hasten the results of that exertion without increasing its
quantity. All civilisations, ancient as well as modern, have involved,
in a certain sense, the direction by the few of the many. The temples
and palaces of early Egypt and Assyria, which excite the wonder of
modern engineers and architects by the size of the blocks of stone used
in their astounding structure, are monuments of a control, absolute and
unlimited and masterly, exercised by a few human minds over millions of
human bodies. But in that control, as exercised in the ancient world,
one element was wanting which is the essence of modern industry. When
the masters of ancient labour wished to multiply commodities, or to
secure an increase of power for accomplishing some single work, the
sole means known to them was to increase the number of labourers; and
when one thousand slaves were insufficient, to reinforce them with
(let us say) four thousand more. The masters of modern labour pursue
a new and essentially opposite course. Instead of seeking in such a
case to secure four thousand new labourers, they seek to endow one
thousand with the industrial power of five. ◆² If Nebuchadnezzar had
set himself to tunnel a mountain, he could have hastened the work only
by flogging more slaves to it. The modern contractor, in co-operation
with the modern inventor, instead of flogging labour, would assist it
with tram-lines, trucks, and boring engines. In other words, whereas
in former ages the aim of the employing class was simply to secure the
service of an increasing quantity of labour, the aim of the employing
class in the present age is to increase the productive power of the
same quantity. The employing class in former ages merely forced the
employed to exert their own industrial faculties, and appropriated what
those faculties produced. The employing class of the present age not
only commands the employed, but it co-operates with them by lending
them faculties which they do not themselves possess. ◆³ It applies to
the guidance of the muscles of the most ordinary worker the profoundest
knowledge of science, all the strength of will, all the spirit of
enterprise, and the exceptional aptitude for affairs, that distinguish
the most gifted and the vigorous characters of the day. And it is the
peculiar modern function of Capital, as spent in Wages, to enable this
result to take place.
[Sidenote ◆1 Wage Capital does this in a way which the socialistic
definition of Capital altogether ignores.]
◆¹ Let us consider how it does so. Socialists tell us that Capitalism
in the modern world means merely the appropriation by the few of all
the materials of production, so that the many must either work as
the few bid them, or must starve. But this is a very small part of
what modern Capitalism means, and it is not the essential part, nor
does it even suggest the essential part. The majority of men must
always work or starve. Nature, not modern Capitalism, is responsible
for that necessity. The essential difference which modern Capitalism
has introduced into the situation is this—and it is an enormous
difference—that whereas in former ages the livelihood of a man was
contingent on his working in the best way that the average man knew,
modern Capitalism has made his livelihood contingent on his working in
the best way that exceptional men know. Now this best way, as we shall
see more clearly presently, does not involve the forcing of each man
to work harder, or the exacting from him any more difficult effort.
It involves merely the supplying him with a constant external guide
for even his minutest actions—a guide for every movement of arm and
hand, or a pattern of each of the objects which are the direct result
of these movements; and consequently the one thing which before all
others it requires is constant obedience or conformity to such guides
and patterns. The entire industrial progress of the modern world has
depended, and depends altogether on this constant obedience being
secured; and the possession of Wage Capital by the employing class is
the sole means which is possible in the modern world of securing it. In
the ancient world the case would no doubt have been different. The lash
of the taskmaster, the fear of prison, of death, of torture, were then
available for the stimulation and organisation of Labour. But they are
available no longer. The masses of civilised humanity have taken this
great step—they have risen from the level on which they could be driven
to industrial obedience, to the level on which they must be induced
to it. Obedience of some sort is a social necessity now as ever, and
always must be: but social necessity spoke merely to the fear of the
slave; it speaks to the will and the reason of the free labourer. The
free labourer may be, and must be, in one or other of two positions.
He may work for himself, consuming or selling his own produce; or he
may work for an employer, who pays him wages, and exacts in return for
them not work only, but work performed in a certain prescribed way.
The first position is that of the peasant proprietor or the hand-loom
weaver. The second is that of the employee in a mill or factory. In
both cases, the voice of social necessity, or of society, speaks to
the man’s reason, informing him of the homely fact that he cannot live
unless he labours: but in the first case, the voice of society cries to
him out of the ground, “You will get no food unless you labour in some
way”; and in the second case it cries to him from the mouths of the
wisest and strongest men, “You will get no food unless you consent to
labour in the best way.”[31]
[Sidenote ◆1 Wage Capital is merely the means by which intellect
impresses itself as Labour;]
◆¹ In other words, Wage Capital in the modern world promotes that
growth of wealth by which the modern world is distinguished, simply
because Wage Capital is the vehicle by which the exceptional qualities
of the few communicate themselves to the whole industrial community.
The real principle of progress and production is not in the Capital,
but in the qualities of the men who control it; just as the vital
force which goes to make a great picture is not in the brush, but in
the great painter’s hand; or as the skill which pilots a coach and
four through London is not in the reins, but in the hand of the expert
coachman.
[Sidenote ◆1 As we can see by following the steps by which a
company would introduce some new machine.]
◆¹ This can easily be seen by turning our attention once again to
machinery, and supposing that a company is floated for the improved
manufacture of something by means of some new invention. The directors
must of course begin with securing a site for the factory; but with
this exception their entire initial expenditure will directly or
indirectly consist in the payment of wages—in purchasing the services
of a certain number of men by whose exertions certain masses of raw
material are to be produced and fashioned into certain definite
forms—that is to say, into the new machinery and a suitable building to
protect it.
[Sidenote ◆1 The whole success of such a company depends on the
amount of intellect used in the expenditure of the Wage
Capital.]
◆¹ Now, the powers of these men resemble a mass of fluid metal which
is capable of being run into any variety of mould. If the directors
were bound by no articles of association, and if, at their first
board meeting, before they had entered into any contract for the
machinery, some other invention for the manufacture of some other
commodity were suddenly brought to their notice, and happened to take
their fancy, the men they were on the point of employing to produce
one kind of machinery might, with equal ease, be employed to produce
another. We will assume that the machinery which the men are set to
produce actually is a great improvement on anything of the kind used
hitherto, and ends in adding greatly to the productive powers of the
nation; but, so far as the men are concerned whose exertions are paid
for out of the capital of the company, the machinery might just as
well have been absolutely valueless—a mere aggregation of wheels and
axles, as meaningless as a madman’s dream. What makes their exertions
not only useful instead of useless, but more useful than any exertion
similarly applied had ever been hitherto, is, firstly, the ingenuity
of the inventor of the new machine; secondly, the judgment of the
promoters and directors of the company; and lastly, the confidence in
their judgment felt by the subscribing public. Or, we may suppose
the inventor to have himself supplied the Capital, and to unite in
himself the parts of the directors and the shareholders. In that case
the exertions of the men employed derive their value entirely from the
talent of this one man. The men employed by him, we will say, number
a thousand, and the Wage Capital he owns and administers aids and
increases production only because it is the means by which the one man
induces the thousand to accept him as the steersman of their exertions,
and to allow him to direct their course towards new and remote results
which for them lie hidden behind the horizon of contemporary habit or
ignorance.
[Sidenote ◆1 The case of Arkwright’s spinning-frame illustrates
this.]
◆¹ Let us take an actual case—the case of Arkwright’s spinning-frame.
This invention, which was destined to influence the prosperity of so
many millions, was in great danger of being altogether lost, simply
on account of the difficulty experienced by the inventor in securing
sufficient capital to construct and perfect his machine, and, what was
equally necessary, to exhibit it in actual use. After many rebuffs and
disappointments, a sum was at last advanced him by a certain firm of
bankers—the Messrs. Wright of Nottingham; but before the preliminary
experiments had advanced far their courage failed them, they repented
of what they had done, and they passed the inventor on to two other
capitalists whose insight was fortunately keener, and whose characters
were more courageous. These gentlemen, Mr. Need and Mr. Strutt of
Derby, took Arkwright into partnership, and by means of the Capital
which they placed at his disposal, his machine, which till now had
existed only in his own brain and in a few unfinished models, was
before long in operation, and a new industrial era was inaugurated.
Now, to the accomplishment of this result Wage Capital was essential;
but it was essential only as the means of giving effect to the genius
and strong character of certain specially gifted persons—Arkwright
with his marvellous inventive genius, Messrs. Need and Strutt with
their sagacity and spirit and enterprise. If it had not been for the
qualities of these three men, the wages paid to the labourers who made
the machine of Arkwright would have probably been paid indeed to the
very same labourers, but their exertions would have been directed to
producing some different product—some product which added nothing to
the existing powers of the community.
[Sidenote ◆1 Now machinery is necessarily Wage Capital congealed;]
◆¹ Machinery, therefore, or Fixed Capital, though it differs as soon
as it is made from Capital employed in wages, is the result of the use
of such Capital, and is indeed but another form of it. And now comes
the point on which I am concerned to insist here: that conversely Wage
Capital, when employed so as to increase the productivity of labour,—in
other words when employed by men with the requisite capacity,—is in
its essence but another form of machinery. Machinery may be called
congealed Wage Capital. Wage Capital may be called fluid machinery.
For the function of both—namely, to increase wealth—is the same, and
they fulfil this function by means of the same virtue residing in them.
It is easy to see the truth of this. The increase of wealth means
the improvement and multiplication of commodities which reward the
exertions of the same number of men. The number and quality of these
commodities are increased by application of Capital, because Capital
enables persons who are exceptionally gifted to control and direct
the exertions of the majority; and Capital, as embodied in machinery,
differs from Capital continuously employed in wages, only because the
former gives us machinery which is inanimate, and the latter, machinery
which is living. For a thousand men so organised as to produce some
given product or result, and to produce it with the greatest precision
or in the least possible time, are to all intents and purposes as much
an invention and a machine as a thousand wheels or rollers adjusted for
a similar purpose.
[Sidenote ◆1 And therefore all Capital, equally with Wage Capital,
represents the control of Intellect over Labour—or one
kind of Human Exertion over another.]
◆¹ All Capital, therefore, in all its distinctively modern
applications—all those applications which have caused what is called
industrial progress—is virtually this, and this only: it is the
exceptional capacities of one set of men applied to the average
capacities of another set. We may accordingly include all Capital—fixed
and circulating—under one head, and say of it as a whole what in the
last chapter was said of machinery: that when by its application to
the exertions of a given number of men a larger product results than
resulted from them before it was applied, Capital is to be credited
with producing the amount of the increase; or—to put the same thing in
another way—with the amount of the decrease which would result if its
application were withdrawn.
[Sidenote ◆1 This aspect of the question will be considered
further in the next chapter.]
How this is the case with machinery I have already illustrated by
examples. It is less easy to illustrate by examples, but equally easy
to see how it is the case with Capital continuously employed as wages.
It is less easy to select illustrations, because the whole of modern
progress is itself one great, though infinitely complex example of it;
and it will be enough here as we shall recur to the subject presently,
to consider one obvious and very familiar fact. Many new commodities,
and many new methods of production, depend on the invention not of new
machines, but of new processes. The Capital employed in working a new
process is mainly employed as wages, by the administration of which the
actions of the workmen are guided, controlled, and organised. Thus if
fifty men, working independently and selling their own produce, produce
a hundred articles of a certain sort weekly, and another fifty men,
◆¹ working for a wage-paying employer, produce, owing to the way in
which their labour is guided and organised, just double the number of
such articles in the same time, we shall say that the hundred extra
articles are the product of Wage Capital, just as we should say, if the
increased production had been due to the introduction of a machine,
that these extra hundred articles were the product of Fixed Capital.
And in both cases we should mean, as I am now going to insist more
particularly, that they were really the product of the capacities which
each kind of Capital represents. This brings us to the heart of the
whole problem.
CHAPTER V
_That the Chief Productive Agent in the modern world
is not Labour, but Ability, or the Faculty which
directs Labour._
[Sidenote ◆1 What was said in the last chapter shows that
productive Human Exertion is of two kinds, and does not
consist only of what is meant by Labour,]
[Sidenote ◆2 As familiar instances will show us.]
◆¹ I said in the last chapter that machinery or Fixed Capital was
congealed Wage Capital. But as Wage Capital is metamorphosed into
machinery only owing to the fact that it is at once the instrument and
the guide of Human Exertion, machinery may be called congealed exertion
also. This description of it is but half original; for Socialistic
writers have for a long time called it “congealed Labour.” But between
the two phrases there is a great and fundamental difference, and I
now bring them thus together to show what the difference is. The
first includes the whole meaning of the second, whereas the second
includes only a part of the meaning of the first. Let us take the
finest bronze statue that was ever made, and also the worst, the
feeblest, the most ridiculous. ◆² Both can with equal accuracy be
called congealed Labour; but to call them this is just as useless a
truism as to call them congealed bronze. It describes the point in
which the two statues resemble each other; it tells us nothing of what
is far more important—the points in which the two statues differ.
They differ because, whilst both are congealed Labour, the one is
also congealed imagination of the highest order, the other is also
congealed imagination of the lowest. The excellence of the metal and
of the casting may be the same in both cases. Or again, let us take
a vessel like the _City of Paris_, and let us take also the vessel
that was known as the _Bessemer Steamer_. The _Bessemer Steamer_ was
fitted with a sort of rocking saloon, which, when the vessel rolled,
was expected to remain level. The contrivance was a complete failure.
The hundreds of thousands of pounds spent on it were practically thrown
away, and the structure ended by being sold as old iron. Now these
two vessels were equally congealed Labour, and congealed Labour of
precisely the same quality; for the workmen employed on the _Bessemer
Steamer_ were as skilful as those employed on the _City of Paris_. And
yet the Labour in the one case was congealed into a piece of lumber,
and in the other case it was congealed into one of the most perfect
of those living links by which the lives of two worlds are united.
To call both the vessels, then, congealed Labour, only tells us how
success resembles failure, not how it differs from it. The _City of
Paris_ differs from the _Bessemer Steamer_ because the _City of Paris_
was congealed judgment, and the _Bessemer Steamer_ was congealed
misjudgment.
It is therefore evident that in _using_ Capital so as to make Labour
more efficacious, as distinct from _wasting_ Capital so as to make
Labour nugatory, some other human faculties are involved distinct from
the faculty of Labour; and I have employed, except when it would have
been mere pedantry to do so, the term “Human Exertion” instead of the
term “Labour,” because the former includes those other faculties, and
the latter does not; or, if it includes them, it entirely fails to
distinguish them, and merely confounds them with faculties from which
they fundamentally differ. Thus, when I pointed out in the last chapter
that Capital, in so far as it increased the productivity of Labour,
was mental and moral energy as applied to muscular energy, I might have
said with equal propriety, had my argument advanced far enough, that it
was one kind of Human Exertion guiding and controlling another kind.
Here we come to the great central fact which forms the key to the whole
economic problem: the fact that in the production of wealth two kinds
of Human Exertion are involved, and not, as economists have hitherto
told us, one—two kinds of exertion absolutely distinct, and, as we
shall see presently, following different laws.
[Sidenote ◆1 Economic writers vaguely recognise this fact, but
have never formally expressed it, or made it a part of
their systems.]
[Sidenote ◆2 They confuse all productive exertion together under
the heading of Labour.]
◆¹ Economic writers, like the world in general, do indeed recognise,
in an unscientific way, that productive exertion exhibits itself under
many various forms; but their admissions and statements with regard to
this point are entirely confused and stultified by the almost ludicrous
persistence with which they classify all these forms under the single
heading of Labour. Mill, for instance, says that a large part of
profits are really wages of the labour of superintendence. He speaks of
“the labour of the invention of industrial processes,” “the labour of
Watt in contriving the steam-engine,” and even of “the labour of the
savant and the speculative thinker.” ◆² He employs the same word to
describe the effort that invented Arkwright’s spinning-frame, and the
commonest muscular movement of any one of the mechanics who assisted
with hammer or screwdriver to construct it under Arkwright’s direction.
He employs the same word to describe the power that perfected the
electric telegraph, and the power that hangs the wires from pole to
pole, like clothes-lines. He confuses under one heading the functions
of the employer and the employed—of the men who lead in industry, and
of the men who follow. He calls them all labourers, and he calls their
work Labour.
[Sidenote ◆1 But practically, Labour means muscular or manual
exertion.]
[Sidenote ◆2 Mental and moral exertion, as applied to production,
must therefore be given another name:]
Now were the question merely one of literary or philosophical
propriety, this inclusive use of the word Labour might be defensible;
but we have nothing to do here with the niceties of such trivial
criticism. We are concerned not with what a word might be made to mean,
but what it practically does mean; and if we appeal to the ordinary
use of language,—not only its use by the mass of ordinary men, but
its most frequent use by economic writers also,—we shall find that
the word Labour has a meaning which is practically settled; and we
shall find that this meaning is not an inclusive one, but exclusive.
◆¹ We shall find that Labour practically means muscular Labour, or
at all events some form of exertion of which men—common men—are as
universally capable, and that it not only never naturally includes any
other idea, but distinctly and emphatically excludes it. For instance,
when Mill in his _Principles of Political Economy_ devotes one of his
chapters to the future of the “Labouring Classes,” he instinctively
uses the phrase as meaning manual labourers. When, as not unfrequently
happens, some opulent politician says to a popular audience, “I, too,
am a labouring man,” he is either understood to be saying something
which is only true metaphorically, or is jeered at as saying something
which is not true at all. Probably no two men in the United Kingdom
have worked harder or for longer hours than Mr. Gladstone and Lord
Salisbury; yet no one could call Mr. Gladstone a labour member, or
say that Lord Salisbury was an instance of a labouring man being a
peer. The Watts, the Stevensons, the Whitworths, the Bessemers, the
Armstrongs, the Brasseys, are, according to the formal definition of
the economists, one and all of them labourers. But what man is there
who, if, in speaking of a strike, he were to say that he supported or
opposed the claims of Labour, would be understood as meaning the claims
of employers and millionaires like these? It is evident that no one
would understand him in such a sense; and if he used the word _Labour_
thus, he would be merely trifling with language. The word, for all
practical purposes, has its meaning unequivocally fixed. It does not
mean all Human Exertion; it emphatically means a part of it only. It
means muscular and manual exertion, or exertion of which the ordinary
man is capable, as distinct from industrial exertion of any other
kind; and not only as distinct from it, but as actively opposed to and
struggling with it. Since, then, we have to deal with distinct and
opposing things, it is idle to attempt to discuss them under one and
the same name. ◆² To do so would be like describing the Franco-Prussian
War with only one name for both armies—the soldiers; or like attempting
to explain the composition of water, with only one name for oxygen and
hydrogen—the gas. Accordingly, for the industrial exertion—exertion
moral and mental—which is distinct from Labour and opposed to it, we
must find some separate and some distinctive name; and the name which I
propose to use for this purpose is Ability.
[Sidenote ◆1 In this book it will be called Ability.]
[Sidenote ◆2 There is, however, a deeper distinction between the
two than the fact of one being mental and the other
muscular.]
◆¹ Human Exertion then, as applied to the production of wealth, is of
two distinct kinds: Ability and Labour—the former being essentially
moral or mental exertion, and only incidentally muscular; the latter
being mainly muscular, and only moral or mental in a comparatively
unimportant sense. ◆² This difference between them, however, though
accidentally it is always present, and is what at first strikes the
observation, is not the fundamental difference. The fundamental
difference is of quite another kind. It lies in the following fact:
That Labour is a kind of exertion on the part of the individual, which
begins and ends with each separate task it is employed upon, whilst
Ability is a kind of exertion on the part of the individual which is
capable of affecting simultaneously the labour of an indefinite number
of individuals, and thus hastening or perfecting the accomplishment of
an indefinite number of tasks.
[Sidenote ◆1 The vital distinction is that the Labour of one man
affects one task only; the Ability of one man may affect
an indefinite number.]
◆¹ This vital distinction, hitherto so entirely neglected, should be
written in letters of fire on the mind of everybody who wishes to
understand, to improve, or even to discuss intelligibly, the economic
conditions of a country such as ours. Unless it is recognised, and
terms are found to express it, it is impossible to think clearly about
the question; much more is it impossible to argue clearly about it: for
men’s thoughts, even if for moments they are correct and clear, will be
presently tripped up and entangled in the language they are obliged to
use. Thus, we constantly find that when men have declared all wealth
to be due to Labour, more or less consciously including Ability in the
term, they go on to speak of Labour and the labouring classes, more
or less consciously excluding it; and we can hardly open a review or
a newspaper, or listen to a speech on any economic problem, without
finding the labouring classes spoken of as “the producers,” to the
obvious and intentional exclusion of the classes who exercise Ability;
whereas it can be demonstrated, as we shall see in another chapter,
that of the wealth enjoyed by this country to-day, Labour produces
little more than a third.
Let us go back then to the definitions I have just now given, and
insist on them and enlarge them and explain them, so as to make them
absolutely clear.
[Sidenote ◆1 Familiar examples will show the truth of this.]
Labour, I said, is a kind of exertion on the part of the individual,
which begins and ends with each separate task it is employed upon;
whilst Ability is a kind of exertion on the part of the individual
which is capable of affecting simultaneously the labour of an
indefinite number of individuals. ◆¹ Here are some examples. An
English navvy, it is said, will do more work in a day than a French
navvy; he will dig or wheel away more barrow-loads of earth; but
the greater power of the one, if the two work together, has no
tendency to communicate itself to the other. The one, let us say,
will wheel twelve barrow-loads, whilst the other will wheel ten. We
will imagine, then, a gang of ten French navvies, who in a given time
wheel a hundred barrow-loads. One of them dies, and his place is
taken by an Englishman. The Englishman wheels twelve loads instead
of ten; but the rest of the gang continue to wheel ten only. Let us
suppose, however, that the Englishman, instead of being a navvy, is
a little cripple who has this kind of ability—that he can show the
navvies how to attack with their picks each separate ton of earth
in the most efficacious way, and how to run their barrows along the
easiest tracks or gradients. He might quite conceivably enable the
nine Frenchmen to wheel fifteen barrow-loads in the time that they
formerly consumed in wheeling ten; and thus, though the gang contained
one labourer less than formerly, yet owing to the presence of one
man of ability, the efficacy of its exertions would be increased by
fifty per cent. Or again, let us take the case of some machine, whose
efficiency is in proportion to the niceness with which certain of its
parts are finished. The skilled workman whose labour finishes such
parts contributes by doing so to the efficiency of that one machine
only; he does nothing to influence the labour of any other workman,
or facilitate the production of any other machine similar to it. But
the man who, by his inventive ability, makes the machine simpler, or
introduces into it some new principle, so that, without requiring so
much or such skilled labour to construct it, it will, when constructed,
be twice as efficient as before, may, by his ability, affect individual
machines without number, and increase the efficiency of the labour
of many millions of workmen. Such a case as this is specially worth
considering, because it exposes an error to which I shall again refer
hereafter—the error often made by economic writers, of treating Ability
as a species of Skilled Labour. For Skilled Labour is itself so far
from being the same thing as Ability, that it is in some respects more
distinct from it than Labour of more common kinds; for the secret
of it is less capable of being communicated to other labourers. For
instance, one of the most perfect chronometers ever made—namely, that
invented by Mudge in the last century—required for its construction
Labour of such unusual nicety, that though two specimens, made under
the direct supervision of the inventor, went with an accuracy that has
not since been surpassed, the difficulty of reproducing them rendered
the invention valueless. But the great example of this particular truth
is to be found in a certain fact connected with the history of the
steam-engine—a fact which is little known, whose significance has never
been realised, and which I shall mention a little later on. It may thus
be said with regard to the production of wealth generally, that it
will be limited in proportion to the exceptionally skilled labour it
requires, whilst it will be increased in proportion to the exceptional
ability that is applied to it.
[Sidenote ◆1 We shall now be able to describe Capital accurately
as _Ability_ controlling _Labour_.]
◆¹ The difference, then, between Ability and Labour must be now
abundantly clear. As a general rule, there is the broad difference
on the surface, that the one is mainly mental and the other mainly
muscular; but to this rule there are many exceptions, and the
difference in question is accidental and superficial. The essential,
the fundamental difference from a practical point of view is, that
whilst Labour is the exertion of a single man applied to a single
task, Ability is the exertion of a single man applied to an indefinite
number of tasks, and an indefinite number of individuals.
[Sidenote ◆1 It is, of course, understood that this definition
applies only to Capital used so as actually to make
Labour more productive, not to Capital wasted.]
◆¹ And now let us go back to the subject of Capital. I have said that
Capital is one kind of Human Exertion guiding and controlling another
kind. We can at last express this with more brevity, and say that
Capital is Ability guiding and controlling Labour. This is no mere
rhetorical or metaphorical statement. It is the accurate expression of
what is at once a theoretical truth and an historical fact; and to show
the reader that it is so, let me remove certain objections which may
very possibly suggest themselves. In the first place, it may be said
that Capital belongs constantly to idle and foolish persons, or even
indeed to idiots, to all of whom it yields a revenue. This is true; but
such an objection altogether ignores the fact that though such persons
own the Capital, they do not administer it. An idiot inherits shares in
a great commercial house; but the men who manage the business are not
idiots. They only pay the idiot a certain sum for allowing his Capital
to be made use of by their Ability. It may, however, be said further
that many men, neither idle nor idiotic, had administered Capital
themselves, and had succeeded merely in wasting it. This again is true;
but where Capital is wasted the productive powers of the nation are
not increased by it. It is, however, a broad historical fact that, by
the application of Capital the productive powers of the nation have
been increasing continually for more than a hundred years, and are
increasing still; and this is the fact, or the phenomenon, which we
are engaged in studying. Capital for us, then, means Capital applied
successfully; and when I say that Capital is Ability guiding and
controlling Labour, it is of Capital applied successfully, and not of
Capital wasted, that I must in every case be understood to be speaking;
just as if it were said that a battle was won by British bayonets, the
bayonets meant would be those that the combatants used, not those that
deserters happened to throw away. The fact, indeed, that in certain
hands so much Capital is thrown away and wasted, is nothing but a proof
of what I say, that as a productive agent Capital represents, and
practically _is_, Ability.
[Sidenote ◆1 Capital is to Ability something like what the brain
is to the mind.]
It may, however, be said—and the objection is worth noticing—that
Capital is a material thing, and Ability a mental thing; and it may be
asked how, except metaphorically, the one can be said to be the other?
◆¹ An answer may be given by the analogy of the mind and brain. So long
as the mind inhabits and directs a human body, mind and matter are
two sides of the same thing. It is only through the brain that mind
has power over the muscles; and the brain is powerful only because
it is the organ of the mind. Now Ability is to Capital what mind is
to the brain; and, like mind and brain, the two terms may be used
interchangeably. Capital is that through which the Ability of one set
of men acts on the muscles—that is to say, the Labour—of another set,
whether by setting Labour to produce machinery, or by so organising
various multitudes of labourers that each multitude becomes a single
machine in itself, or by settling or devising the uses to which these
machines shall be put.
[Sidenote ◆1 And this would be as true of Capital in a Socialistic
State as in any other.]
And it will be well, in case any Socialist should happen to read these
pages, to point out that my insisting on this fact is no piece of
special pleading on behalf of the private capitalist. ◆¹ The whole of
the above argument would apply to Capital, no matter who owned it:
individuals, or the community as a whole. For no matter who owned it,
or who divided the proceeds of it, the entire control of it would
have to be in the hands of Ability. In what, or how many, individuals
Ability may be held to reside; how such individuals are best found,
tested, and brought forward; and how their power over Capital may be
best attained by them—whether as owners, or as borrowers, or as State
officials,—is a totally different question, and is in this place beside
the point.
At present, it will be enough to sum up what we have seen thus far. The
causes of wealth are not, as is commonly said, three: Land, Labour, and
Capital. This analysis omits the most important cause altogether, and
makes it impossible to explain, or even reason about, the phenomenon
of industrial progress. The causes of wealth are four—Land, Labour,
Capital, and Ability: the two first being the indispensable elements in
the production of any wealth whatsoever; the fourth being the cause of
all progress in production; and the third, as it now exists, being the
creation of the fourth, and the means through; which it operates. These
two last, as we shall see presently, may, except for special purposes,
be treated as only one, and will be best included under the one term
Ability.
And now let us turn back to the condition of this country at the close
of the last century, and the reader will see why, at the outset of the
above inquiry, I fixed his attention on that particular period.
CHAPTER VI
_Of the Addition made during the last Hundred Years
by Ability to the Product of the National Labour.
This Increment the Product of Ability._
[Sidenote ◆1 Let us now turn to the history of production in this
country during the past hundred years;]
◆¹ I have already said something—but in very general terms—of what,
at the close of the last century, the wealth of this country was.
Let us now consider the subject a little more in detail, though we
need not trouble ourselves with a great many facts and figures. The
comparatively backward state of Ireland makes it easier to deal with
Great Britain only; and the income of Great Britain was then, as I have
said already, about _a hundred and forty million pounds_ annually.
This amount was, as has been said already, also produced by Land,
Capital, and Human Exertion, or, as we are now able to put it, by Land,
Labour, Capital, and Ability; and according to the principles which I
have already carefully explained, had the statistics of industry been
recorded as fully as they are now, we should be able to assign to each
cause a definite proportion of the product. Of what the Land produced,
as distinct from the three other causes, we are indeed able to speak
with sufficient accuracy as it is. It was practically the amount taken
in rent; and the amount taken in rent was about _twenty-five million
pounds_, or something between a fifth and sixth of the total. But the
proportion produced respectively by Labour, Capital, and Ability cannot
be determined with the same ease or exactness. There are, however,
connected with this question, a number of well-known and highly
significant facts, to a few of which I will call the reader’s attention.
[Sidenote ◆1 And consider the enormous increase both in
agricultural production,]
◆¹ Between the years 1750 and 1800, the population of Great Britain
increased by barely so much as twenty-five per cent. It rose from about
eight millions to about ten. Now during that period the number of hands
employed in manufactures increased proportionally far faster than the
total population. The cotton-spinners, for instance, increased from
_forty_ to _eighty thousand_.[32] Such being the case, it is of course
evident that the increase of agricultural labourers cannot have been
very great. It can hardly have been, at the utmost, so much as eighteen
per cent.[33] And now let us glance at the history of agricultural
products, as indicated by a few typical facts. In the year 1688, the
number of sheep in Great Britain was estimated at _twelve millions_.
In the year 1774, the number was estimated at almost the same figure;
but between the years 1774 and 1800, this _twelve millions_ had risen
to _twenty millions_. During the same twenty-six years, the number of
cattle had increased in almost the same proportion. That is to say,
live-stock had increased by seventy-five per cent. Between the years
1750 and 1780 there was an average annual increase in agricultural
capital of _seven million three hundred thousand pounds_. But from
the years 1780 and 1800 there was an average annual increase of
_twenty-six million pounds_; whilst between the years 1750 and 1800
the farmer’s income had very nearly doubled,[34] and the total products
of agriculture had increased sixty per cent.
[Sidenote ◆1 And in manufactures,]
[Sidenote ◆2 That had recently taken place at the close of the
last century.]
◆¹ And now let us turn to manufactures. These, as a whole, had advanced
more slowly; but the advance of certain of them had been yet more
rapid and striking. It will be enough to mention two: the manufacture
of cotton, to which I have called attention already; and an industry
yet more important—the manufacture of iron. ◆² The amount of pig-iron
produced annually in Great Britain during the earlier part of the last
century was not more than _twenty thousand tons_;[35] at the close of
the century it was more than _a hundred and eighty thousand_. What may
have been the increase in the amount of labour employed, cannot be said
with certainty; but it cannot have been comparable to the increase of
the product, which was, as we have just seen, eight hundred per cent;
and it may again be mentioned that one single set of inventions, in the
course of eight years, nearly doubled the product of each individual
smelting furnace.[36] As to the cotton industry, our information is
more complete. The amount of labour was doubled in forty years. The
product was increased fifteen-fold in twenty-five.
[Sidenote ◆1 We shall see how obviously a part at least of this
increase must have been due to Ability and Capital.]
[Sidenote ◆2 And that Labour cannot really have produced the
whole.]
◆¹ My present aim, however, is to make no exact calculation respecting
the extent to which production, taken as a whole, had during the
period in question outstripped the increase of Labour; but merely to
show the reader that the extent was very large; and that, according
to the principles explained already, it was due altogether to the
operation of Capital and Ability—or, to speak more exactly, of Ability
operating through Capital. The truth of this statement with regard
to the increase of manufactures has been shown and illustrated by
the instance of Arkwright and the cotton industry. It will be well
to mention at this point several analogous instances taken from the
history of agriculture. ◆² Elkington, who inaugurated a new system
of drainage, will supply us with one. One still more remarkable is
supplied by Bakewell, who may be said to have played in practical life
a part resembling that which Darwin has played in speculation. He
discovered the method of improving the breeds of sheep and cattle by
a system of selection and crossing that was not before known; and it
was owing to the ability of this one man that “the breed of animals in
England,” as Mr. Lecky points out, “was probably more improved in the
course of a single fifty years than in all the recorded centuries that
preceded it.” The close connection of such improvements with Capital
is the constant theme of Arthur Young, though he was not consciously
anything of a political economist, nor did he attempt to express his
opinion in scientific language. But a still more effective witness is
a distinguished modern Radical, Professor Thorold Rogers, who, though
always ready, and, as many people would say, eager to espouse the
side of Labour as against Capital and Ability,—especially when the
two last belonged to the landed class—is yet compelled to assert as
emphatically as Young himself, that the Ability and the Capital of
this very class were in the last century “the pioneers of agricultural
progress”—a progress which he illustrates by these picturesque
examples: that it raised the average weight of the fatted ox from 400
lbs. to 1200 lbs., and increased the weight of the average fleece
fourfold.
[Sidenote ◆1 Therefore it is plain that Labour would not have
created the whole of the national income a hundred years
ago. But for argument’s sake we will concede that it
produced the whole.]
◆¹ It will therefore be apparent to every reader, that of the income of
Great Britain at the close of the last century, Ability and Capital, as
distinct from Labour, created a considerable part, though we need not
determine what part. Accordingly, since the income of Great Britain,
with a population of _ten millions_, was at that time about _a hundred
and forty million pounds_, or _fourteen pounds_ per head,[37] it is
evident that the Labour of a population of _ten millions_ was quite
incapable, a hundred years ago, of producing by itself as much as
_fourteen pounds_ per head.[38] I will, however, merely for the sake of
argument, and of keeping a calculation I am about to make far within
the limits which strict truth would warrant, make a preposterous
concession to any possible objector. I will concede that Labour by
itself produced the entire value in question, and that Ability, as
distinct from Labour, had nothing at all to do with it. I will concede
that the faculties which produced the machines of Arkwright, which
had already turned steam into an infant Hercules of industry, and
was pouring into this island the wealth of the farthest Indies, were
faculties of the same order as those which were possessed by any
waggoner who had driven the same waggon along the same ruts for a
lifetime. And I will now proceed to the calculation I spoke of. I shall
state it first, and establish its truth afterwards.
[Sidenote ◆1 The whole income of Great Britain at that time was _a
hundred and forty million pounds_, and the population
_ten millions_. Hence, as will be shown in the next
Book, we get an indication of the utmost that Labour
alone can produce. Now, a population of _ten millions_
at present produces _three hundred and fifty millions_
annually.]
◆¹ It will be seen, from what has just been said, that a hundred
years ago the utmost that Labour could produce in the most advanced
country of Europe was _a hundred and forty million pounds_ annually
for a population of _ten millions_, or—let me repeat—_fourteen pounds_
per head. The production per head is now _thirty-five pounds_; or, for
each ten millions of population, _three hundred and fifty millions_.
The point on which presently I shall insist at length is this: that
if Labour is to be credited with producing the whole of the smaller
sum, the entire difference between the smaller sum and the larger is
to be credited to Ability operating on industry through Capital. That
is to say, for every _three hundred and fifty millions_ of our present
national income, Labour produces only _a hundred and forty millions_
whilst Ability and Capital produce _two hundred and ten_. But the
fact may be put yet more clearly than this. Of our present national
income of _thirteen hundred millions_, Labour produces about _five
hundred_, whilst Ability and Capital produce about _eight hundred_.
It could indeed be shown, as I just now indicated, that Labour in
reality produces less than this, and Ability and Capital more; but for
argument’s sake we will let the calculation stand thus, in order that
Labour shall be at all events credited with not less than its due.
[Sidenote ◆1 And it will accordingly be shown in the next Book
that the whole of this increment is produced by Ability,
and not by Labour.]
◆¹ And now as to Capital and Ability, and the _eight hundred millions_
produced by them, what has just been said can be put in a simpler way.
Capital is not only the material means through which Ability acts on
and assists Labour, but it is a material means which Ability has itself
created. So long as Labour alone was the principal productive agent,
those vast accumulations which are distinctive of the modern world were
unknown and impossible. Professor Thorold Rogers has pointed out how
small was the Capital of this country at so late a date as the close of
the seventeenth century. Labour alone was unable to supply a surplus
from which any such accumulation as we now call Capital could be taken.
These became possible only by the increasing action of Ability. They
were taken from the products which Ability added to the products of
Labour, Capital therefore _is_ Ability in a double sense—not only
in the sense that as a productive agent it represents Ability, but
in the sense that Ability has created it. We may therefore for the
present leave Capital entirely out of our discussion, regarding it as
comprehended under the term and the idea of Ability; although when we
come to consider the question of distribution, we shall have to take
account of the distinction between the two. But for the present we are
concerned with the problem of production only; and in dealing with that
part of it which alone is now before us, we have to do only with two,
and not three forces—not with Labour, Ability, and Capital, but with
Labour and Ability only.
The calculation, therefore, which was put forward just now may be
expressed in yet simpler terms. Of our present national income of
_thirteen hundred millions_, Labour produces _five hundred millions_
and Ability _eight hundred_. And now comes another point which yet
remains to be mentioned. When we speak of Labour, we mean not an
abstract quality: what we mean is labouring men. Similarly, when we
talk of Ability, we do not mean an abstract quality either: we mean
men who possess and exercise it. But whereas when we talk of Labour
we mean an immense number of men, when we talk of Ability—as I shall
show presently—we mean a number that by comparison is extremely small.
The real fact then on which I am here insisting, and which I shall
now proceed to substantiate and explain further, is that, whilst the
immense majority of the population of this country produce little more
than one-third of the income, a body of men who are comparatively a
mere handful actually produce little less than two-thirds of it.
———————————————————————————————————————————————————————
BOOK III
AN EXPOSURE OF THE CONFUSIONS IMPLIED IN SOCIALISTIC
THOUGHT AS TO THE MAIN AGENT IN MODERN PRODUCTION
———————————————————————————————————————————————————————
CHAPTER I
_The Confusion of Thought involved in the Socialistic
Conception of Labour._
[Sidenote ◆1 After what has now been said, every one will admit
that Ability, as distinct from Labour, is as truly a
productive agent as Labour is.]
[Sidenote ◆2 But Socialists, even if they admit this fact, by
their inaccurate thought and language obscure the
meaning of the fact;]
◆¹ There is one point which now must be quite plain to every reader,
and on which there is no need to insist further; namely, that Ability
is as truly a productive agent as Labour, and that if Labour produces
any part of contemporary wealth, Ability just as truly produces another
part. This proposition, when put in a general way, will, after what
has been said, not be disputed by anybody; but there are various
arguments which readers of socialistic sympathies will probably invoke
as disproving it in the particular form just given to it. Certain of
these arguments require to be discussed at length; but the rest can be
disposed off quickly, and we will get them out of the way first. ◆²
They are, indeed, not so much arguments as confusions of thought, due
largely to an inaccurate use of language.
These confusions are practically all comprehended in the common
socialistic formula which declares all production, under modern
conditions, to be what Socialists call “socialised.” By this is meant
that the whole wealth of the community is produced by the joint
action of all the classes of men and of all the faculties employed
in its production; and the formula thus includes, as Socialists will
be careful to tell us, all those faculties which are here described
as Ability. Now such a doctrine, if we consider its superficial
sense merely, is so far from being untrue that it is a truism. But
if we consider what it implies, if we consider the only meaning
which gives it force as a socialistic argument, or indeed invests it
with the character of any argument at all, we shall find it to be a
collection of fallacies for which the truism is only a cloak. For the
implied meaning is not the mere barren statement that the exertions
of all contribute to the joint result, but that the exertions of all
contribute to it in an equal degree; the further implication being that
all therefore should share alike in it.
[Sidenote ◆1 Making use of the same fallacy as that of Mill, which
has been already criticised.]
◆¹ This is really Mill’s argument with respect to Land and Labour, put
into different language and applied to Labour and Ability. It says in
effect precisely what was said by Mill, that when two causes are both
necessary to producing a given result, it is absurd to say that the one
produces more or less of it than the other: only here the argument can
be used with greater apparent force. For the Socialists may say that
if the principle which has been explained in this book is admitted,
and if Ability is held to produce all that part of the product which
is over and above what Labour could produce by itself, Labour, by the
same reasoning, could be proved to produce the whole of the product,
since, without the assistance of Labour, Ability could produce nothing.
Accordingly, they will go on to say, this conclusion being absurd,
the reasoning which leads to it must be false, and we must fall back
again on the principle set forth by Mill. Labour and Ability are both
necessary to the result, and being equally necessary must be held to
contribute equally to producing it.
This argument, as I have said, has great apparent force; but again we
have a plausibility which is altogether upon the surface. If Labour
and Ability were here conceived of as faculties, without regard to
the number of men possessing them, the argument would, whatever its
logical value, coincide broadly with one great practical fact, to which
by and by I shall call the reader’s attention; namely, that Labour
and Ability do in this country divide between them the joint product
in nearly equal portions. But those who make use of the socialistic
formula use it with a meaning very different from the above. When they
say that Ability and Labour contribute equally to producing a given
amount of wealth, they mean not that the men who exercise one faculty
produce collectively as much as the men who exercise the other; for
that might mean that _five hundred men of Ability_ produced as much as
_five hundred thousand labourers_; and that is the very position which
the Socialists desire to combat. They mean something which is the exact
reverse of this: not that one faculty produces as much as the other
faculty, but that one man produces as much as, and no more than another
man, no matter which faculty he exercises in the producing process.
They mean not that the faculty of Labour which an ordinary ploughman
represents, produces as much as the faculty represented by an Arkwright
or by a Stevenson, but that the individual ploughman, by the single
task which he himself performs, adds as much to his country’s wealth as
the creators of the spinning-frame and the locomotive.
[Sidenote ◆1 Their meaning needs only to be clearly stated to show
its absurdity.]
◆¹ As soon as we realise that this is what the argument means, its
apparent plausibility turns into a sort of absurdity which common sense
rejects, even before seeing why it does so. We will not, however, be
content with dismissing the argument as absurd: there is an idea at the
back of it which requires and deserves to be examined. It is an idea
which rests upon the fact already alluded to, that though Ability can
make nothing without Labour, Labour can make something without Ability;
and that thus the labourers who work under the direction of an able man
each contribute a kind of exertion more essential to the result than
he does. Each can say to him, “I am something without you. You, on the
contrary, are nothing without me.” Thus there arises a more or less
conscious idea of Labour as a force which, if only properly organised,
will be able at any moment, by refusing to exert itself, to render
Ability helpless, and so bring it to terms and become its master,
instead of being, as now, its servant.
[Sidenote ◆1 But in it there is, indeed, a plausible view as to
Labour, which must be refuted, not only ridiculed.
According to this view, Labour can always bring Ability
to terms by refusing to exert itself.]
[Sidenote ◆2 But Labour cannot refuse to exert itself for long,
and never except with the assistance of Capital.]
[Sidenote ◆3 Nature, not the men of ability, forces the majority
of men to Labour.]
◆¹ But this idea, which is suggested, and seems to be supported, by the
modern development of labour-organisation and strikes, really ignores
the most fundamental facts of the case. In the first place, it may
be observed that though Ability, regarded as a faculty, is no doubt
helpless unless there is Labour for it to act upon, Ability, if we
take it to mean the men possessing the faculty, is, whatever happens,
in as good a position as Labour; for the average man of ability can
always become a labourer. But the principal point to realise is far
more important than this. We are perfectly right in saying, as was said
just now, that if Labour should refuse to exert itself, Ability could
produce nothing; but it seems completely to escape the notice of those
who use this argument that to refuse to exert itself is what Labour
can never do, except for very short times, and to a quite unimportant
extent; and it can only do thus much when Ability indirectly helps it.
The ideas of the power of Labour which are suggested by the phenomenon
of the strike are, as I shall by and by show more fully, curiously
fallacious. ◆² Men can strike—that is to say, cease to labour—only when
they have some store on which to live when they are idle; and such a
store is nothing but so much Capital. A strike, therefore, represents
the power not of Labour, but of Capital.[39] The Capital which is
available in the present day for supporting strikes would never have
been in existence but for the past action of Ability; and what is
still more important, a widespread strike would very quickly exhaust
it. Further, a strike, no matter what Capital were at the back of it,
could never be more than partial for even a single day; for there are
many kinds of Labour, such as transport and distribution of food, the
constant performance of which is required by even the humblest lives.
But it is not necessary to dwell on such small matters as these. It
is enough to point to the fact, which does not require proving—the
broad fact that men, taken as a whole, can no more refuse to labour
than they can refuse to breathe. ◆³ What compels them to labour is
not the employing class, but Nature. The employing class—the men of
ability—merely compel them to labour in a special way.
[Sidenote ◆1 But Nature forces no one to exert Ability; therefore
Ability is, in the long run, in a stronger position than
Labour.]
But Ability itself stands on an entirely different footing. Whereas
Labour, as a whole, cannot cease to exert itself, Ability can. Indeed,
for long periods of history it has hardly exerted itself at all; whilst
its full industrial power, as we know it now, only began to be felt a
century and a half ago. Labour, in other words, represents a necessary
kind of exertion, which can always be counted on as we count on some
force of Nature: Ability represents a voluntary kind of exertion,
which can only be induced to manifest itself under certain special
circumstances. Accordingly, ◆¹ whilst Labour can make no terms with
Nature, Ability in the long run can always make terms with Labour. It
will thus be seen that the set of arguments founded on the conception
of Labour as stronger than Ability, because more necessary, are
arguments founded on a complete misconception of facts. I speak of them
as arguments; but they hardly deserve the name. Rather they are vague
ideas that float in the minds of many people, and suggest beliefs or
opinions to which they can give no logical basis. At all events, after
what has been said, we may dismiss them from our thoughts, and turn to
another fallacy that lurks in the socialistic formula.
[Sidenote ◆1 Let us now test the socialistic view by examples:]
[Sidenote ◆2 By the case of an organist and the man who blows the
bellows;]
[Sidenote ◆3 Or of a great painter and the man who stretches his
canvas.]
◆¹ I said of that formula that, the moment its meaning was realised,
it struck the mind as an absurdity, even before the mind knew why. Let
us now apply it to two simple cases, which will show its absurdity in
a yet more striking manner. ◆² There is an old story commonly told of
Handel. The great composer had been playing some magnificent piece
of music on the organ; and as soon as the last vibration of inspired
sound had subsided, he was greeted by the voice of the man who blew
the bellows, saying, “I think that we two played that beautifully.”
“_We!_” exclaimed Handel. “What had you to do with it?” He turned
again to the keys, and struck them, but not a note came. “Ha!” said
the bellows-blower, “what have I to do with it? Admit that I have as
much to do with it as you have, or I will not give you the power to
sound a single chord.” The whole point of this story lies in the fact
that the argument of the bellows-blower, though possessed of a certain
plausibility, is at the same time obviously absurd. But according to
the principles of the Socialists, it is absolutely and entirely true.
It exhibits those principles applied in the most perfect way. ◆³ With
just the same force, it may be said about a great picture by the man
who has woven the canvas, or tacked it to its wooden frame. This man
may, according to the socialistic theory of production, call the
picture the socialised product of the great painter and himself, and,
though no more able to draw than a child of four years old, may put
himself on a level with a Millais or an Alma Tadema. To the production
of the result the canvas is as necessary as the painter.
[Sidenote ◆1 The socialistic view of production would be true only
were a certain fact of life quite different to what it
is.]
The nature of the fallacy which leads us to such conclusions as these
is revealed almost instantly by the light such conclusions throw on it.
It consists in ignoring the fact that whilst anybody, not a cripple
or idiot, can blow the bellows of an organ, or stretch the canvas for
a picture, only one man in a million can make music like Handel, or
cover the canvas with pictures like Millais or Alma Tadema. The nature
of the situation will be understood most accurately if we imagine the
bellows-blower at the key-board of the organ, and the canvas-stretcher
with the painter’s brushes. The one, no doubt, could elicit a large
volume of sound; the other could cover the canvas with daubs of
unmeaning colour. These men, then, when they work for the artists of
whom we speak, may very properly be credited with a share in as much
of the result as would have been produced if they had been in the
artists’ places. That is to say, to the production of mere sound the
bellows-blower may be held to contribute as much as the great musician;
and the canvas-stretcher as much as the painter to the mere laying on
of colour. But all the difference between an unmeaning discord and
music, all the difference between an unmeaning daub and a picture, is
due to qualities that are possessed by no one except the musician and
the painter.[40] ◆¹ The socialistic theory of production would be true
only on the supposition that the faculties employed in production were
all equally common, and that everybody is equally capable of exertion
of every grade. Now is this supposition true, or is it not true? A
moment ago I spoke of it, assuming it to be obviously false; and many
people will think it is hardly worth discussion. That, however, is far
from being the case. It is a supposition which, as we have seen, lies
at the very root of Socialism: the question it involves is a broad
question of fact; and it is necessary, by an appeal to fact, to show
that it is as false as I have assumed it to be.
[Sidenote ◆1 The great feature in modern production is the
progress in the productivity of the same number of men.]
◆¹ Let me once again, then, state the great proposition which I am
anxious to put beyond the reach of all denial or misconception. A
given number of people, a hundred years ago, produced yearly in this
country _a hundred and forty million pounds_. The same number of
people to-day produce two and a half times as much. Labour, a hundred
years ago, could not have produced more than the total product of the
community—that is to say, _a hundred and forty million pounds_; and, if
it produced that then, it produces no more now. The whole added product
is produced by the action of Ability. The proposition is a double one.
Let us take the two parts in order.
[Sidenote ◆1 History shows us that Labour is not progressive,
except within very narrow limits that were reached long
ago, or, at all events, by the end of the last century.]
◆¹ I have already here and there pointed out in passing how certain
special advances in the productive powers of the community were due
demonstrably to Ability, not to Labour; but I have waited till our
argument had arrived at its present stage to insist on the general
truth that, except within very narrow limits, Labour is, in its very
nature, not progressive at all. If we cast our eyes backwards as far
into the remote past as any records or relics of human existence will
carry us, we can indeed discern three steps in industrial progress,
which we may, if we please, attribute to the self-development of
Labour—the use of stone, the use of bronze, and the use of iron. But
these steps followed each other slowly, and at immeasurable intervals;
and though the last was taken in the early morning of history, yet
Labour even then had, in certain respects, reached for thousands
of years an efficiency which it has never since surpassed. In the
lake-dwellings of Switzerland, which belong to the age of stone,
objects have been found which bear witness to a manual skill equal to
that of the most dexterous workmen of to-day. No labour, again, is
more delicate than that of engraving gems; and yet the work of the
finest modern gem-engravers is outdone by that of the ancient Greeks
and Romans. It was even found, when the unburied ship of a Viking was
being reproduced for the International Exhibition at Chicago, that
in point of mere workmanship, with all our modern appliances, it was
impossible to make the copy any better than the original; whilst, if
we institute a comparison with times nearer our own—especially if we
come to the close of the last century—it is hardly necessary to say
that in every operation which depended on training of eye and hand, the
great-grandfathers of the present generation were the equals of their
great-grandsons.
[Sidenote ◆1 Let us then compare the workers of that period with
their great-grandsons of to-day.]
◆¹ We will therefore content ourselves with comparing the labourers of
to-day with the labourers of the days of Pitt; and with regard to those
two sets of men, we may safely say this, that in whatever respect the
latter seem able to do more than the former, their seemingly increased
power can be definitely and distinctly traced to some source outside
themselves, from which it has been taken and lent to them—in other
words, to the ability of some one able man, or else to the joint action
of a body of able men. A single illustration is sufficient to prove
this. It consists of a fact to which I have alluded in general terms
already. It is as follows:—
[Sidenote ◆1 We shall see that in Labour itself there has been
no progress whatsoever. Ability has been the sole
progressive agent.]
When Watt had perfected his steam-engine in structure, design, and
principle, and was able to make a model which was triumphantly
successful in its working, he encountered an obstacle of which
few people are aware, and which, had it not been overcome, would
have made the development of steam-power, as we know it now, an
utter impossibility. It was indeed, in the opinion of the engineer
Smeaton, fatal to the success of Watt’s steam-engine altogether.
This obstacle was the difficulty of making cylinders, of any useful
size, sufficiently true to keep the pistons steam-tight. Watt, with
indomitable perseverance, endeavoured to train men to the degree of
accuracy required, by setting them to work at cylinders, and at nothing
else; and by inducing fathers to bring up their sons with them in the
workshop, and thus from their earliest youth habituate them to this
single task. By this means, in time, a band of labourers was secured
in whom skill was raised to the highest point of which it is capable.
◆¹ But not even all the skill of those carefully-trained men—men
trained by the greatest mechanical genius of the modern world—was equal
to making cylinders approaching the standard of accuracy which was
necessary to render the steam-engine, as we now know it, a possibility.
But what the Labour of the cleverest labourer could never be brought
to accomplish, was instantly and with ease accomplished by the action
of Ability. Henry Maudslay, by introducing the slide-rest, did at a
single stroke for all the mechanics in the country what Watt, after
years of effort, was unable to do for any of them. The Ability of
Maudslay, congealed in this beautiful instrument, took the tool out of
the hands of Labour at the turning-lathe, and held it to the surface
of the cylinder, whilst Labour looked on and watched. With this iron
“mate” lent to him,—this child of an alien brain,—the average mechanic
was enabled to accomplish wonders which no mechanic in the world by his
own skill could approach. The power of one man descended at once on a
thousand workshops, and sat on each of the labourers like the fire of
an industrial Pentecost; and their own personal efficiency, which was
the slowly-matured product of centuries, was, by a power acting outside
themselves, increased a hundredfold in the course of a few years.
[Sidenote ◆1 There is, however, a plausible objection to this view
which we must consider.]
◆¹ Illustrations of this kind might be multiplied without limit; but
nothing could add to the force of the one just given, or show more
clearly how the productivity of Labour is fixed, and the power of
Ability, and of Ability alone, is progressive. There is, however, a
very important argument which objectors may use here with so much
apparent force that, although it is entirely fallacious, it requires to
be considered carefully.
CHAPTER II
_That the Ability which at any given period is a
Producing Agent, is a Faculty residing in
and belonging to living Men._
It may amuse the reader to hear this argument stated—forcibly, if not
very fully—by an American Socialist, in an anonymous letter to myself.
I had published an article in _The North American Review_, giving a
short summary of what I have said in the preceding chapters with regard
to the part played by Ability in production; and the letter which I
will now give was sent me as a criticism on this:
[Sidenote ◆1 The objection is thus put by an American Socialist:
that it is absurd to say that primæval inventors, such
as the inventor of the plough, are still producing
wealth by their ability; and if absurd in this case,
then in all cases.]
◆¹ Sir—Your article in the current number of _The North American
Review_ on “Who are the Chief Wealth Producers?” in my judgment is
the crowning absurdity of the various effusions that parade under the
self-assumed title of political economy. In the vulgar parlance of
some newspapers, it is hog-wash. It is utterly senseless, and wholly
absurd and worthless. You propose to publish a book in which you will
elaborate your theory. Well, if the book has a large sale, it will
not be because the author has any ability as a writer on economical
subjects, but rather that the buyers are either dupes or fools. All
the increase in wealth that has resulted by reason of men using
ploughs was produced by the man who invented the plough—eh? The total
amount of the wealth produced by men by reason of their using certain
appliances in the form of tools or machines is produced by the man
who invented the tool or machine—eh? perhaps some one in Egypt
thousands of years ago? Such stuff is not only worthless hog-wash: it
is nauseating, is worthy of the inmate of Bedlam.
[Sidenote ◆1 To this there are two answers. The first is that the
simpler inventions are probably due, not to Ability at
all, but to the common experience of the average man;]
[Sidenote ◆2 And, like Labour itself, they have remained unchanged
up till quite recent times.]
[Sidenote ◆3 But even if invented by Ability, we should still
attribute the wealth now produced by them to Labour;]
Now the argument implied in this charming letter, so far as it goes, is
sound; and I will put it presently in a more comprehensive form. Its
fault is that it goes a very little way, and does not even approach
the position it is adduced to combat. To say that if one man who lived
thousands of years ago could be shown to be the sole and only inventor
of the plough, then all the increase of wealth that has since been
produced by ploughing ought to be credited to the Ability of this one
man, is practically no doubt as absurd[41] as the writer of the letter
thinks it; and were such the result of the reasoning in this volume,
it would reduce that reasoning to an absurdity. ◆¹ That reasoning,
however, leads to no result of the kind; and it is necessary to explain
to the reader exactly why it fails to do so. It fails to do so because
ploughs, and other implements equally simple, instead of representing
those conditions of production to which alone the reasoning in this
volume applies, represent conditions which are altogether opposed to
them. The plough, or at least such a plough as was in use in ancient
Egypt, is the very type and embodiment of the non-progressive nature of
Labour, as opposed to, and contrasted with, the progressive nature of
Ability. The plough, indeed, in its simplest form, was probably not the
result of Ability at all, but rather of the experience of multitudes
of common men, acting on the intelligence which common men possess;
just as, even more obviously, was the use of a stick to walk with,
or of a flail for thrashing corn. It will perhaps, however, be said
that in that case, according to the definition given by me, the plough
would be the result of Ability all the same, only that it would prove
Ability to be a faculty almost as universal as Labour. And no doubt
it would prove this of Ability of a low kind; indeed, we may admit
that it does prove it. Everybody has a little Ability in him, just as
everybody has a little poetry; but in cases of this kind everything
is a question of degree; and for practical purposes we are compelled
to classify men not according to faculties which, strictly speaking,
they possess, but according to the degree in which they possess them.
Cold, strictly speaking, is merely a low degree of heat; but for all
practical purposes winter is opposed to summer. Similarly, a man who
has just enough poetry in him to be able—as most men can—to scribble
a verse of doggerel, is for all practical purposes opposed to a
Shakespeare or a Dante; and similarly also the man who has just enough
Ability in him to discover the use of a stick, a flail, or a plough,
is for all practical purposes opposed to the men who are capable of
inventing implements of a higher and more complicated order. Nor is the
line which we thus draw drawn arbitrarily. It is a line drawn for us
by the whole industrial history of mankind; ◆² and never was there a
division more striking and more persistent. For the simpler implements
in question, from the first days when they were invented,—“thousands of
years ago,” as my American correspondent says,—remained what they then
were up to the beginning of the modern epoch; and in many countries,
such as India, they remain the same to-day. The simpler industrial
arts, then, and the simpler implements of industry are sharply marked
off from the higher and more complicated by the fact that, whilst
the latter are demonstrably due to individuals, have flourished only
within the area of their influence, and have constituted a sudden and
distinct advance on the former, the former have apparently been due
to the average faculties of mankind, and have remained practically
unchanged from the days of their first discovery. Accordingly, the
distinction between the two being so marked and enormous, the faculties
to which they are respectively due, even if differing only in degree,
yet differ in degree so much that they are for practical purposes
different faculties, and must be called by different names. ◆³ The
simple inventions, then, to which my correspondent refers, together
with the wealth produced by them, are to be credited to Labour, the
non-progressive character of which they embody and represent, and
have nothing to do with that Ability which is the cause of industrial
progress.
My correspondent’s letter, however, whether he saw it himself or
not, really raises a point far more important than this. For even
if the invention of the plough had been the work of one man only,
if it had involved as much knowledge and genius as the invention of
the steam-engine, and if, but for this one man, ploughs would never
have existed, yet to attribute to the Ability of this one man all the
wealth that has been subsequently produced by ploughing would still be
practically as absurd as my correspondent implies it would be.
[Sidenote ◆1 Because the commonest labourer, when once he has seen
them, can make and use them.]
◆¹ Now why is this? The reason why is as follows. Although, according
to such an hypothesis, if a plough had not been made by this one able
man, no ploughs would ever have been made by anybody, yet when such a
simple implement has once been made and used, anybody who has seen it
can make and use others like it; so that the Ability of the inventor of
the plough increases the productivity of every labourer who uses it,
not by co-operating with him, but by actually passing into him. Thus,
so far as this particular operation is concerned, the simplest labourer
becomes endowed with all the powers of the inventor; and the inventor
thenceforward is, in no practical sense, the producer of the increased
product of what he has enabled the labourer to produce, any more than a
father is the producer of what is produced by his son.
[Sidenote ◆1 But the inventions by which Ability in the modern
world has increased production are the very opposite of
these inventions of earlier days; for they require as
much Ability to use them to the best advantage as they
required to make them.]
And if the productivity of Labour were increased by inventions alone,
and if all inventions were as simple as the primæval plough—if, when
once seen, anybody were able to make them, and, having once made them,
to use them to the utmost advantage—then, though Ability might still
be the sole cause of every fresh addition to the productive powers
of exertion, these added powers would be all made over to Labour, and
be absorbed and appropriated by it, just as Lear’s kingdom was made
over to his daughters; and whatever increased wealth might be produced
thenceforward through their agency would be the true product of Labour,
which had in itself become more effective. ◆¹ But, as a matter of
fact, this is not the case; and it is not so for two reasons. In the
first place, such implements as the primæval plough differ from the
implements on which modern industry depends, in the complexity alike
of their structure, and of the principles involved in it; so that
without the guidance of Ability of many kinds, Labour alone would
be powerless to reproduce them; and, in the second place, as these
implements multiply, not only is Ability more and more necessary
for their manufacture, but is more and more necessary also for the
use of them when manufactured. One of the principal results of the
modern development of machinery, or of the use, by new processes, of
newly discovered powers of Nature, is the increasing division and
subdivision of Labour; so that the labourers, as I have said before,
by the introduction of this mass of machinery, become themselves the
most complicated machine of all, each labourer being a single minute
wheel, and Ability being the framework which alone keeps them in their
places. It may be said, therefore, that each modern invention or
discovery by which the productivity of human exertion is increased has
upon Labour an effect exactly opposite to that which was produced on
it by such inventions as the primæval plough. Instead of making Labour
more efficacious in itself, they make it less and less efficacious,
unless it is assisted by Ability.
[Sidenote ◆1 They do not become, as is vulgarly said, common
property. They belong to those who can use them;]
[Sidenote ◆2 And more and more is living Ability required to
maintain and use the powers left to it by the Ability of
the past.]
◆¹ And here we have the answer to the real argument which lies at the
bottom of my American correspondent’s letter—an argument which, in
some such words as the following, is to be found repeated in every
Socialistic treatise: “When once an invention is made, it becomes
common property.” So it does in a certain theoretical sense; but only
in the sense in which a knowledge of Chinese becomes common property
in England on the publication of a Chinese grammar. For all practical
purposes, such a statement is about as true as to say that because
anybody can buy a book on military tactics, everybody is possessed of
the genius of the Duke of Wellington. ◆² The real truth is, that to
utilise modern inventions, and to maintain the conditions of industry
which these inventions subserve, as much Ability is required as was
required to invent them; though, as I shall have occasion to point out
later on, the Ability is of a different kind.
[Sidenote ◆1 We must, then, here note that when Ability is said to
produce so much of the national income, what is meant is
the Ability of men alive at the time,]
These considerations bring us to another important point, which must
indeed from the beginning have been more or less obvious, but which
must now be stated explicitly. ◆¹ That point is, that when we speak
of Ability as producing at any given time such and such a portion
of the national income, as distinguished from the portion which is
produced by Labour, we are speaking of Ability possessed by living men,
who possess it either in the form of their own superior faculties,
assimilating, utilising, and adding to the inventions and discoveries
of their predecessors; or in the form of inherited Capital, which those
predecessors have produced and left to them. Thus, though dead men
like Arkwright, or Watt, or Stevenson may, in a certain theoretical
sense, be considered as continuing to produce wealth still, they cannot
be considered to do so in any sense that is practical; because they
cannot as individuals put forward any practical claims, or influence
the situation any further by their actions. For all practical purposes,
then, their Ability as a productive force exists only in those living
men who inherit or give effect to its results. Now, of the externalised
or congealed Ability which is inherited in the form of Capital, as
distinguished from the personal Ability by which Capital is utilised,
we need not speak here, though we shall have to do so presently. For
this inherited Capital would not only be useless in production, but
would actually disappear and evaporate like a lump of camphor, if
it were not constantly used, and, in being used, renewed, by that
personal Ability which inherits it, and is inseparable from the living
individual; and, though it will be necessary to consider Capital apart
from this when we come to deal with the problem of distribution,
all that we need consider when we are dealing with the problem of
production is this personal Ability, which alone makes Capital live.
[Sidenote ◆1 Who are practically the monopolists not only of their
own special powers, but of the complicated discoveries
of their predecessors.]
◆¹ So far, then, as modern production is concerned, all the results
of past Ability, instead of becoming the common property of Labour,
become on the whole, with allowance for many exceptions, more and more
strictly the monopoly of living Ability; because these results becoming
more and more complicated, Ability becomes more and more essential to
the power of mastering and of using them. As, however, I shall point
out by and by, in more than one connection, the Ability that masters
and uses them differs much in kind from the Ability that originally
produced them: one difference being that, whereas to invent and perfect
some new machine requires Ability of the highest class in, let us
say, one man, and Ability of the second class in a few other men, his
partners; to use this machine to the best advantage, and control and
maintain the industry which its use has inaugurated or developed, may
require perhaps Ability of only the second class in one man, but will
require Ability of the third and fourth class in a large number of men.
[Sidenote ◆1 And the monopoly of Ability grows stricter at each
fresh stage of progress.]
◆¹ Ability therefore—the Ability of living men—constantly tends, as the
income of the nation grows, to play a larger part in its production,
or to produce a larger part of it; whilst Labour, though without it
no income could be produced at all, tends to produce a part which
is both relatively and absolutely smaller. We assume, for instance,
that the Labour of this country a hundred years ago was capable of
producing the whole of what was the national income then. If it could
by itself, without any Ability to guide it, have succeeded then, when
production was so much simpler, in just producing the yearly amount
in question,—which, as a matter of fact, it could not have done even
then,—the same amount of Labour, without any Ability to guide it, could
certainly not succeed in producing so much now, when all the conditions
of production have become so much more complicated, and when elaborate
organisation is necessary to make almost any effort effective.
[Sidenote ◆1 Thus the argument above quoted against the claims of
Ability, when examined, only throws additional light on
their strength.]
◆¹ Thus the argument, which was fermenting in my American
correspondent’s mind, and which he regarded as reducing the claims of
Ability to “hog-wash,” really affords the means, if examined carefully
and minutely, of establishing yet more firmly the position it was
invoked to shatter, and of making the claims of Ability not only
clearer but more extensive.
CHAPTER III
_That Ability is a natural Monopoly, due to the
congenital Peculiarities of a Minority. The
Fallacies of other Views exposed._
[Sidenote ◆1 But the Socialists have yet another fallacy with
which they will attempt to neutralise the force of what
has just been said.]
[Sidenote ◆2 They will say that Ability is the creation of special
opportunity, and that everybody at birth is potentially
an able man.]
◆¹ But the socialistic theorist will not even yet have been silenced.
Even if he is constrained to admit the truth of all that has just been
said, we shall find that he still possesses in his arsenal of error
another set of arguments by which he will endeavour to do away with its
force. These are generally presented to us in mere loose rhetorical
forms; but however loosely they may be expressed, they contain a
distinct meaning, which I will endeavour to state as completely and
as clearly as is possible. ◆² Put shortly, it is as follows. Though
Ability and Labour may both be productive faculties, and though it may
be allowed that the one is more productive than the other, it is on the
whole a mere matter of social accident—a matter depending on station,
fortune, and education—which faculty is exercised by this or that
individual. Thus, though it may be allowed that a great painter and the
man who stretches his canvas, or an inventor like Watt and the average
mechanic who works for him, do, by the time that both are mature men,
differ enormously in the comparative efficacy of their faculties, yet
the difference is mainly due to circumstances posterior to their birth;
that the circumstances which developed the higher faculties in one
man might equally well have developed them in the other; and that the
circumstances in question, even if only a few can profit by them, are
really created by the joint action of the many.
[Sidenote ◆1 This is sometimes expressed in saying that “the great
man is made by his age,” i.e. by the opportunities
others have secured for him.]
[Sidenote ◆2 But this, though true psychologically, is absolutely
false in the practical sphere of economics.]
The above contention contains several different propositions, which we
will presently examine one by one. We will, however, take its general
meaning first. One of the chief exponents of this, strange as the
fact may seem, is that vehement anti-Socialist, Mr. Herbert Spencer.
Mr. Spencer disposes of the claims of the man of ability as a force
distinct from the generation at large to which he belongs, by saying
that ◆¹ “Before the great man can remake his society, his society
must make him.” Thus, to take an example from art, the genius of a man
like Shakespeare is explained by reference to the condition of the
civilised world, and of England more especially, during the reign of
Queen Elizabeth. The temper of the human mind caused by centuries of
Catholicism, the stir of the human mind shown in the Reformation or the
Renaissance, and the sense of the new world then being conquered in
America, are all dwelt on as general or social causes which produced
in an individual poet a greatness which has been since unequalled. ◆²
Now this reasoning, if used to combat a certain psychological error, no
doubt expresses a very important truth; but if it is transferred to the
sphere of economics its whole meaning vanishes. It was originally used
in opposition to the now obsolete theory according to which a genius
was a kind of spiritual aerolite, fallen from heaven, and related in
no calculable way to its environment. It was used, for instance, to
prove with regard to Shakespeare that had he lived in another age he
would have thought and written differently, and that he might have been
a worse poet under circumstances less exciting to the imagination.
But when we leave the psychological side of the case, and look at its
practical side, a set of facts is forced on us which are of quite a
different order. We are forced to reflect that though Shakespeare’s
mind may have been what it was because the age acted on it, the age was
acting on all Shakespeare’s contemporaries, and yet it produced one
Shakespeare only. If Queen Elizabeth had been told that it was the age
which produced Shakespeare, and in consequence had ordered that three
or four more Shakespeares should be brought to her, her courtiers, do
what they would, would have been unable to find them; and the reason is
plain. The age acts on, or sets its stamp on, the character of every
single mind that belongs to it; but the effect in each case depends
on the mind acted on; and it is only one mind amongst ordinary minds
innumerable, that this universal action can fashion into a great poet.
And what is true of poetic genius is true of industrial Ability.
The great director of Labour is as rare as a great poet is; and
though Ability of lower degrees is far commoner than Ability of the
highest, yet the fact that it is the age which elicits and conditions
its activities does nothing to make it commoner than it would be
otherwise, nor affects the fact that its possessors are relatively
a small minority. For the psychologist, the action of the age is an
all-important consideration; for the economist, it is a consideration
of no importance at all.
But it is by no means my intention to dismiss the Socialistic argument
with this simple demonstration of the irrelevance of its general
meaning. I am going to call the attention of the reader to the
particular meanings that are attached to it, and show how absolutely
false these are, by comparing them with historical facts.
[Sidenote ◆1 Again, Socialists urge that no perfected invention is
the work of a single man, but that many men have always
co-operated to produce it.]
[Sidenote ◆2 This is true; but the class of men referred to is
that very minority who are the monopolists of Ability.
It is this class only, not the community in general.]
◆¹ In the first place, then, the claims of the age, or of society as
a whole, to be the author of industrial progress, in opposition to
the claims of a minority, are supported by many writers on the ground
that no invention or discovery is in reality the work of any single
man. Such writers delight to multiply—and they can do so without
difficulty—instances of how the most important machines or processes
have been perfected only after a long lapse of time, by the efforts
of many men following or co-operating with one another. Thus the
electric telegraph, and the use of gas for lighting, were not the
discoveries of those who first introduced them to the public; and
Stevenson described the locomotive as the “invention of no one man,
but of a race of mechanical engineers.” Further, it is frequently
urged that the same discoveries and inventions are arrived at in
different places, by different minds, simultaneously; and this fact
is put forward as a conclusive proof and illustration of how society,
not the individual, is the true discoverer and inventor. ◆² But these
arguments leave out of sight entirely the fact that, in the first
place, the whole body of individuals spoken of—such as the race of
engineers who produced the locomotive, or the astronomers in different
countries who are discovering the same new star—form a body which
is infinitesimally small itself; and secondly, that even the body
of persons they represent,—namely, all of those who are engaged in
the same pursuits, and have even so much as attempted any step in
industrial progress,—though numerous in comparison with those who have
actually succeeded in taking one, are merely a handful when compared
with society as a whole, and instead of representing society, offer the
strongest contrast to it. The nature of the assistance which Ability
gives to Ability is an interesting question, but it is nothing to the
point here. To prove that progress is the joint product of Ability and
Ability, does not form a proof, but on the contrary a disproof of the
proposition, that it is the joint product of Ability and Labour—or, in
other words, that it is the product of the age, or the entire community.
[Sidenote ◆1 Further, Socialists contend that Ability is the
product of education, and that an equal education would
equalise faculties.]
[Sidenote ◆2 But this wild theory is in absolute opposition to the
most notorious facts;]
◆¹ The socialistic theorist, however, even if he admits the above
answer, will by no means admit that it is fatal to his own position. He
will still take refuge in the proposition already alluded to, that the
Ability of individuals is the child of opportunity, and that Ability
is rarer than Labour, and able men are a minority, only because, under
existing social circumstances, the opportunities which enable it to
develop itself are comparatively few. And if he is pressed to say
what these opportunities are, he will say that they may be described
generally by the one word education. This argument can be answered in
one way only, namely, an appeal to facts; and it is hard to conceive
of anything which facts more conclusively disprove. Indeed, of much
industrial Ability, it can not only be shown to be false, but it is
also, on the very surface of it, absurd. It is plausible as applied
to Ability of one kind only, namely, that of the inventor or the
discoverer; but this, as we shall see presently, is so far from being
Ability as a whole, that it is not even the most important part of it.
Let us, however, suppose it to be the whole for a moment, and ask how
far the actual facts of life warrant us in regarding it as the child
of opportunity and education. Let us first refer to that general kind
of experience which is recorded in the memory of everybody who has
ever been at a school or college, and which, in the lives of tutors
and masters, is repeated every day. Let a hundred individuals from
childhood be brought up in the same school, let them all be devoted
to the study of the same branch of knowledge, let them enjoy to the
fullest what is called “equality of opportunity,” and it will be found
that not only is there no equality in the amount of knowledge they
acquire, but that there is hardly any resemblance in the uses to which
they will be able to put it. Two youths may have worked together in
one laboratory. One will never do more than understand the discoveries
of others. The other will discover, like Columbus, some new world of
mysteries. ◆² Indeed, equality of opportunity, as all experience shows,
instead of tending to make the power of all men equal, does but serve
to exhibit the extent to which they differ.
[Sidenote ◆1 As may be seen by a glance at the lives of some of
the most distinguished inventors of the world.]
◆¹ But particular facts are more forcible than general facts. Let us
consider the men who, as a matter of history, have achieved by their
Ability the greatest discoveries and inventions, and let us see if it
can be said of these men, on the whole, that their Ability has been
due to any exceptional education or opportunity. Speaking generally,
the very reverse is the case. If education means education in the
branch of work or knowledge in which the Ability of the able man is
manifested, the greatest inventors of the present century have had no
advantages of educational opportunity at all. Dr. Smiles observes that
our greatest mechanical inventors did not even have the advantage of
being brought up as engineers. “Watt,” he writes, “was a mathematical
instrument-maker; Arkwright was a barber; Cartwright, the inventor of
the power-loom, was a clergyman; Bell, who afterwards invented the
reaping-machine, was a Scotch minister; Armstrong, the inventor of the
hydraulic engine, was a solicitor; and Wheatstone, inventor of the
electric telegraph, was a maker of musical instruments.” That knowledge
is necessary to mechanical invention is of course a self-evident truth;
and the acquisition of knowledge, however acquired, is education:
education, therefore, was necessary to the exercise of the Ability of
all these men. But the point to observe is, that they had none of them
any special educational opportunity; they were placed at no advantage
as compared with any of their fellows; many of them, indeed, were at
a very marked disadvantage; and though, when opportunity is present,
Ability will no doubt profit by it, the above examples show, and the
whole course of industrial history shows,[42] that Ability is so far
from being the creature of opportunity, that it is, on the contrary,
in most cases the creator of it.
[Sidenote ◆1 The theory is still further refuted by the fact that
moral Ability is a matter of character and temperament,
rather than of intellect.]
[Sidenote ◆2 A business started by Ability of intellect is
maintained by Ability of character.]
◆¹ The mental power, however, which is exercised by the inventor and
discoverer, as I have said, is but one kind of industrial Ability out
of many. Ability—or the faculty by which one man assists the Labour of
an indefinite number of men—consists in what may be called exceptional
gifts of character, quite as much as in exceptional gifts of intellect.
A sagacity, an instinctive quickness in recognising the intellect of
others, a strength of will that sometimes is almost brutal, and will
force a way for a new idea, like a pugilist forcing himself through
a crowd, these are faculties quite as necessary as intellect for
giving effect to what intellect discovers or creates; and they do not
always, or even generally, reside in the same individuals. The genius
which is capable of grappling with ideas and principles, and in the
domain of thought will display the sublimest daring, often goes with
a temperament of such social timidity as to unfit its possessor for
facing and dealing with the world. It is one thing to perfect some
new machine or process, it is another to secure Capital which may
put it into practical operation; and again, if we put the difficulty
of securing Capital out of the question by supposing the inventor
to be a large capitalist himself, there is another difficulty to be
considered, more important far than this—the difficulty dealt with
in the last chapter—namely, the conduct of the business when once
started. Here we come to a number of complicated tasks, in which the
faculty of invention or discovery offers no assistance whatsoever. We
come to tasks which have to do, not with natural principles, but with
men—the thousand tasks of daily and of hourly management. A machine
or process is invented by intellect—there is one step. It is put into
practical operation with the aid of Capital—there is another. When
these two steps are taken, they do not require to be repeated, but the
tasks of management are tasks which never cease; on the contrary, as
has been said already, they tend rather to become ever more numerous
and complicated. ◆² Nor do they consist only of the mere management of
labourers, the selection of foremen and inspectors, and the minutiæ
of industrial discipline. They consist also of what may be called the
policy of the whole business—the quick comprehension of the fluctuating
wants of the consumer, the extent to which these may be led, the
extent to which they must be followed, the constant power of adjusting
the supply of a commodity to the demand. On the importance of these
faculties there is a great deal to be said; but I will only observe
here that it is embodied and exemplified in the fact that successful
inventors and discoverers are nearly always to be found in partnership
with men who are not inventors, but who are critics of inventions, who
understand how to manage and use them, and who supplement the Ability
that consists of gifts of intellect by that other kind of Ability that
consists of gifts of character.
[Sidenote ◆1 Equality of education and opportunity, instead of
equalising characters, displays their differences.]
[Sidenote ◆2 Ability, then, is a natural monopoly; because few
people are born with it.]
Now if, as we have seen, it is entirely contrary to experience to
suppose that inventive Ability is produced by educational opportunity,
much more is it contrary to experience—it is contrary even to common
sense—to suppose that Ability of character can be produced in the same
way. ◆¹ Education, as applied to the rousing and the training of the
intellect, is like a polishing process applied to various stones, which
may give to all of them a certain kind of smoothness, but brings to
light their differences far more than their similarity. Education may
make all of us write equally good grammar, but it will not make all of
us write equally good poetry, any more than cutting and polishing will
turn a pebble into an emerald. And if this is true of education applied
to intellect, of education applied to character it is truer still.
Character consists of such qualities as temperament, strength of will,
imagination, perseverance, courage; ◆² and it is as absurd to expect
that the same course of education will make a hundred boys equally
brave or imaginative, as it is to expect that it will make them equally
tall or heavy, or decorate all of them with hair of the same colour.
[Sidenote ◆1 And now let us again compare its action with that of
the mass of men surrounding it.]
Ability, then, is rare as compared with Labour, not because the
opportunities are rare which are favourable or necessary to its
development, but because the minds and characters are rare which can
turn opportunity to account. ◆¹ And now let us turn again to the more
general form of the Socialistic fallacy—the general proposition that
the Age, or Society, or the Human Race is the true inventor, and let us
test this by a new order of facts.
[Sidenote ◆1 Do able men in any sense represent the tendencies and
intelligence of their average contemporaries? Let
us turn for an answer to the history of the three
chief industrial triumphs of this country: (1) the
iron manufacture, (2) the cotton manufacture, (3) the
steam-engine.]
I have already alluded to the stress laid by Socialists on the fact
that different individuals in different parts of the world often make
the same discoveries at almost the same time; and I pointed out that
whatever this might teach us, applied only to a small minority of
persons, and had no reference whatever to the great mass of the race.
But Socialists very frequently put their view in a form even more
exaggerated than that which I thus criticised. ◆¹ They use language
which implies that the whole mass of society moves forward together
at the same intellectual pace; and that discoverers and inventors
merely occupy the position of persons who chance to be walking a few
paces in advance of the crowd, and who thus light upon new processes
or machines like so many nuggets lying and glittering on the ground,
which those who follow would have presently discovered for themselves;
or, again, they are represented as persons who are merely the first
to utter some word or exclamation which is already on the lips of
everybody. Let us, then, take the three great elements which go to make
up the industrial prosperity of this country—the manufacture of iron,
the manufacture of cotton, and the development of the steam-engine,
and see how far the history of each of these lends any support to the
theory just mentioned.
[Sidenote ◆1 The modern development of the iron industry dependent
on the use of coal in place of wood.]
[Sidenote ◆2 The discovery of how to use coal for this purpose due
to a few individuals, whose labours were either secret,
or bitterly opposed by all who knew of them. Chief
amongst these were]
We will begin with the manufacture of iron. Ever since man was
acquainted with the use of this metal till a time removed from our own
by a few generations only, ◆¹ its production from the ore was dependent
entirely upon wood, which alone of all fuels—so far as knowledge then
went—had the chemical qualities necessary for the process of smelting.
The iron industry in this country was therefore, till very recently,
confined to wooded districts, such as parts of Sussex and Shropshire;
and so large, during the seventeenth century, was the consumption of
trees and brushwood, that the smelting furnace came to be considered by
many statesmen as the destroyer of wood, rather than as the producer
of metal. ◆² This view, indeed, can hardly be called exaggerated; for
by the beginning of the century following the wood available for the
furnaces was becoming so fast exhausted that the industry had begun
to dwindle; and but for one great discovery it would have soon been
altogether extinguished. This was the method of smelting iron with
coal. Now to what cause was this discovery due? The answer can be given
with the utmost completeness and precision. It was due to the Ability
of a few isolated individuals, whose relation to their contemporaries
and to their age we will now briefly glance at.
[Sidenote ◆1 Dud Dudley,]
[Sidenote ◆2 The two Darbys,]
[Sidenote ◆3 Reynolds and the two Craneges, and others;]
◆¹ The first of these was a certain Dud Dudley, who procured a patent
in the year 1620 for smelting iron ore “with coal, in furnaces with
bellows”; and his process was so far successful, that at length from a
single furnace he produced for a time seven tons of iron weekly. For
reasons, however, which will be mentioned presently Dudley’s invention
died with himself; and for fifty years after his death the application
of coal to smelting was as much a lost art as it would have been had he
never lived. ◆² Between the years 1718 and 1735 it was again discovered
by a father and son—the Darbys of Coalbrookdale. A further step,
and one of almost equal importance, ◆³ was achieved by two of their
foremen—brothers of the name of Cranege—assisted by Reynolds, who had
married the younger Darby’s daughter, and this was the application of
coal to the process which succeeds smelting, namely, the conversion of
crude iron into bar-iron, or iron that is malleable. Other inventors
might be mentioned by whom these men were assisted, but it will be
quite enough to consider the case of these. As related to the age, as
related to the society round him, the one thing most striking in the
life of each of them is not that he represented that society, but that
he was in opposition to it, and had to fight a way for his inventions
through neglect, ridicule, and persecution. The nation at large was
absolutely ignorant of the very nature of the objects which these men
had in view; whilst the ironmasters of the day, as a body, though not
equally ignorant, disbelieved that the objects were practicable until
they were actually accomplished. It is true that these great inventors
were not alone in their efforts; for where they succeeded, others
attempted and failed: but these failures do but show in a stronger
light how rare and how great were the faculties which success demanded.
[Sidenote ◆1 The details of whose several lives are signal
illustrations of what has just been said.]
◆¹ Let us take each case separately. Dudley’s life as an ironmaster was
one long succession of persecution at the hands of his brothers in the
trade. They petitioned the king to put a stop to his manufacture; they
incited mobs to destroy his bellows and his furnaces; they harassed him
with law-suits, ruined him with legal expenses; they succeeded at last
in having him imprisoned for debt; and by thus crippling the inventor,
they at last killed his invention. It is true that meanwhile a few
men—a very few—believed in his ideas, and attempted to work them out
independently; and amongst these was Oliver Cromwell himself. He and
certain partners protected themselves with a patent for the purpose,
and actually bought up the works of the ruined Dudley; but all their
attempts ended in utter failure. Two more adventurers, named Copley
and Proger, were successively granted patents during the reign of
Charles II. for this same purpose, and likewise failed ignominiously.
One man alone in the whole nation had proved himself capable of
accomplishing this new conquest for industry; whilst the nation as a
whole, and the masters of the iron trade in particular, remained as
they were—stationary in their old invincible ignorance. The two Darbys,
the two Craneges, and Reynolds, though not encountering, as Dudley did,
the hostility of their contemporaries, yet achieved their work without
the slightest encouragement or assistance from them. The younger Darby,
solitary as Columbus on his quarter-deck, watched all night by his
furnace as he was bringing his process to perfection. His workmen, like
the sailors of Columbus, obeyed their orders blindly; and in hardly a
brain but his own did there exist the smallest consciousness that one
man was laying, in secret, the foundation of his country’s greatness.
With regard to Reynolds and the Craneges, who imitated, though they did
not perfect, the further use of coal for the production of iron that
is malleable, we have similar evidence that is yet more circumstantial.
Reynolds distinctly declares in a letter written to a friend that the
conception of this process was so entirely original with the Craneges
that it had never for a moment occurred to himself as being possible,
and that they had had to convince him that it was so, against his own
judgment. But when once his conversion was completed, he united his
Ability with theirs; and within a very short time the second great step
in our iron industry had been taken triumphantly by these three unaided
men.
Were it necessary, and would space permit of it, we might extend this
history further. We might cite the inventions of Huntsman, of Onions,
of Cort, and Neilson, and show how each of these was conceived, was
perfected, and was brought into practical use, whilst the nation as
a whole remained inert, passive, and ignorant, and the experts of
the trade were hostile, and sometimes equally ignorant. Huntsman
perfected his process in a secrecy as carefully guarded as that of a
mediæval necromancer hiding himself from the vigilance of the Church;
whilst James Neilson, the inventor of the hot-blast, had at first to
encounter the united ridicule and hostility of all the shrewdest and
most experienced iron-masters in the kingdom.
[Sidenote ◆1 The history of the cotton manufacture does so with
equal force;]
◆¹ The history of the cotton manufacture offers precisely similar
evidence. Almost every one of those great improvements made in it, by
which Ability has multiplied the power of Labour, had to be forced
by the able men on the acceptance of adverse contemporaries. Hay was
driven from the country; Hargreaves from his native town; Arkwright’s
mill, near Chorley, was burnt down by a mob; Peel, who used Arkwright’s
machinery, was at one time in danger of his life. Nor was it only
the hostility of the ignorant that the inventors had to encounter.
They had to conquer Capital before they could conquer Labour; for
the Capitalists at the beginning were hardly more friendly to them
than the labourers. The first Capitalists who assisted Arkwright, and
had Ability enough to discover some promise in his invention, had
not enough Ability to see their way through certain difficulties,
and withdrew their help from him at the most critical moment. The
enterprising men who at last became his partners, and with the aid
of whose Capital his invention became successful, represented their
age just as little as Arkwright did. He and they, indeed, had the same
opportunities as the society round them; but they stand contrasted to
the society by the different use they made of them.
[Sidenote ◆1 Also the history of the steam-engine, as a very
curious anecdote will show.]
◆¹ And now, lastly, let us come to the history of the steam-engine.
We need not go over ground we have already trodden, and prove once
more that in this case, as in the others, the age, in the sense of the
majority of the community, had as little to do with the work of the
great inventors as Hannibal had to do with the beheading of Charles I.
It will be enough to insist on the fact that the scientific minority
amongst whom the inventors lived, and who were busied with the same
pursuits, were, as a body, concerned in it just as little. The whole
forward movement, the step after step of discovery by which the
power of steam has become what it now is, was due to individuals—to
a minority of a minority; and this smaller minority was so far from
representing the larger, or from merely marching a few steps ahead of
it, that the large minority always hung back incredulous, till, in
spite of itself, it was converted by the accomplished miracle. One
example is enough to illustrate this. Watt, when he was perfecting
his steam-engine, was in partnership with Dr. Roebuck, who advanced
the money required to patent the invention, and whose energy and
encouragement helped him over many practical difficulties. When the
engine was almost brought to completion, Roebuck found himself so much
embarrassed for money, on account of expense incurred by him in an
entirely different enterprise, that he was forced to sell a large part
of his property; and amongst other things with which he parted was
his interest in Watt’s patent. This he transferred to the celebrated
engineer Boulton; and the patent for that invention which has since
revolutionised the world was valued by Roebuck’s creditors at only one
farthing.
[Sidenote ◆1 The average man, if cross-examined at the Day of
Judgment, would be forced to give his testimony to the
same effect.]
◆¹ These facts speak plainly enough for themselves; and the conscience
of most men will add its own witness to what they teach us—which is
this. So far as industrial progress is concerned, the majority of
mankind are passive. They labour as the conditions into which they are
born compel them to labour; but they do nothing, from their cradle to
their grave, so to alter these conditions that their own labour, or
Labour generally, shall produce larger or improved results. The most
progressive race in the world—or in other words the English race—has
progressed as it has done only because it has produced the largest
minority of men fitted to lead, and has been quickest in obeying their
orders; but apart from these men it has had no appreciable tendency to
move. Let the average Englishman ask himself if this is not absolutely
true. Let him imagine himself arraigned before the Deity at the Day
of Judgment, and the Deity saying this to him: “You found when you
entered the world that a man’s labour on the average produced each year
such and such an amount of wealth. Have you done anything to make the
product of the same labour greater? Have you discovered or applied any
new principle to any branch of industry? Have you guided industry into
any new direction? Have the exertions of any other human being been
made more efficacious owing to your powers of invention, of enterprise,
or of management?” There is not one man in a hundred who, if thus
questioned at the Judgment-seat, would be able, on examining every
thought and deed of his life, to give the Judge any answer but, “No. So
far as I am concerned, the powers of Labour, are as I found them.”
CHAPTER IV
_The Conclusion arrived at in the preceding Book
restated. The Annual Amount produced by Ability
in the United Kingdom._
[Sidenote ◆1 The more, then, that we examine the question, the
more clearly do we see the magnitude of the work
performed by Ability of the few.]
◆¹ In spite, then, of the arguments which Socialists have borrowed
from psychology, and with which, by transferring them to the sphere of
economics, and so depriving them of all practical meaning, they have
contrived to confuse the problem of industrial progress, the facts
of the case, when examined from a practical point of view, stand out
hard and clear and unambiguous. Industrial progress is the work not of
society as a whole but of a small part of it, to the entire exclusion
of the larger part; the reason of this being that the faculties to
which this progress is due—the faculties which I have included under
the name of Industrial Ability—are found to exist only in a small
percentage of individuals, and are practically absent from the minds,
characters, and temperaments of the majority of the human race. Ability
is, in fact, a narrow natural monopoly.
[Sidenote ◆1 But it must not be supposed that Ability is rarer
than it is.]
[Sidenote ◆2 A rough indication of the number of able men in this
country is found in the incomes earned that are above
the average wages of Labour.]
[Sidenote ◆3 The highest Ability very rare. Of all grades of
Ability below the highest, there is always a plentiful
supply.]
◆¹ Ability, however, is of different kinds and grades, some kinds
being far commoner than others; and before summing up what has been
said in this chapter, it will be well to give the reader some more
or less definite idea of the numerical proportion which, judging by
general evidence, the men of Ability bear to the mass of labourers.
Such evidence, not indeed very exact, but still corresponding broadly
to the underlying facts of the case, is to be found in the number of
men paying income-tax on business incomes, as compared with the number
of wage-earners whose incomes escape that tax; in the number of men,
that is, who earn more than _one hundred and fifty pounds_ a year, as
compared with the number of men who do not earn so much. It may seem at
first sight that this division is purely arbitrary; but we shall see,
on consideration, that it is not so. ◆² We shall find that, allowing
for very numerous exceptions, men in this country do as a rule receive
less than _one hundred and fifty pounds_ a year for Labour, and that
when they receive for their exertions a larger income than this they
receive it for the direction of Labour, or for the exercise of some
sort of Ability. Now if we take the males who are over sixteen years
of age, and who are actually engaged in some industrial occupation, we
shall find that those who earn more than _one hundred and fifty pounds_
a year form of the entire number something like six per cent. We may
therefore say that out of every thousand men there are, on an average,
sixty who are distinctly superior to their fellows, who each add more
to the gross amount of the product by directing Labour, than any one
man does by labouring, and who possesses Ability to a greater or less
extent. ◆³ The commoner kinds of Ability, however, depend as a rule
on the higher kinds, and are efficacious only as working under their
direction; and if we continue our estimate on the basis we have just
adopted, and accept the amount that a man makes in industry as being on
the whole an evidence of the amount of his Ability, we consider that,
all allowance being made for mere luck or speculation, a business
income of _fifty thousand pounds_ means, as a rule, Ability of the
first class, of _fifteen thousand pounds_ Ability of the second, and
_five thousand pounds_ Ability of the third, we shall find that men
possessing these higher degrees of the faculty are, in comparison to
the mass of employed males, very few indeed. We shall find that Ability
of the third class is possessed by but one man out of two thousand; of
the second class by but one man out of four thousand; and of the first
class by but one man out of a hundred thousand. This is, as I have
said, a very rough method of calculation, but it is not a random one;
and there is reason to believe that it affords us an approximation to
truth. At all events, taking it as a whole, it does not err by making
Ability too rare; and we shall be certainly within the mark if, taking
Ability as a whole, and waiving the question of its various classes and
their rarity, we say that of the men in this country actively engaged
in production, the men of Ability constitute one-sixteenth.
[Sidenote ◆1 We may now repeat the conclusions arrived at in
the last Book, that Ability produces at _least_
eight-thirteenths of the present income of this country;
and Labour, at the utmost, five-thirteenths.]
And now we are in a position to repeat with more precision and
confidence the conclusion which we reached at the end of the last
chapter. ◆¹ It was there pointed out that of our present national
income, consisting as it does of about _thirteen hundred million
pounds_, Labour demonstrably produced not more than _five hundred
million pounds_, whilst _eight hundred million pounds_ at least was
demonstrably the product of Ability. In the present chapter, I have
substantiated that proposition: I have exposed the confusions and
fallacies which have been used to obscure its truth; I have shown that
Ability and Labour are two distinct forces, in the sense that whilst
the latter represents a faculty common to all men, the possession of
the former is the natural monopoly of the few; that the labourer and
the man of Ability play such different parts in production that a given
amount of wealth is no more their joint product than a picture is the
joint product of a great painter and a canvas-stretcher; and I have
now pointed to some rough indication of the respective numbers of the
men of Ability and of the labourers. Instead, therefore, of contenting
ourselves with the general statement that Ability makes so much of
the national income, and Labour so much, we may say that ninety-six
per cent of the producing classes produce little more than a third
of our present national income, and that a minority, consisting of
one-sixteenth of these classes, produces little less than two-thirds of
it.
———————————————————————————————————————————————————————
BOOK IV
THE REASONABLE HOPES OF LABOUR — THEIR MAGNITUDE,
AND THEIR BASIS
———————————————————————————————————————————————————————
CHAPTER I
_How the Future and Hopes of the Labouring Classes
are bound up with the Prosperity of the Classes
who exercise Ability._
[Sidenote ◆1 The foregoing conclusions not yet complete; but first
let us see the lesson which it teaches us as it stands.]
◆¹ The conclusion just arrived at is not yet completely stated; for
there are certain further facts to be considered in connection with it
which have indeed already come under our view, but which, in order to
simplify the course of our argument, have been put out of sight in the
two preceding chapters. I shall return to these facts presently; but it
will be well, before doing so, to take the conclusion as it stands in
this simple and broad form, and see, by reference to those principles
which were explained at starting, and in which all classes and parties
agree, what is the broad lesson which it forces on us, underlying all
party differences.
[Sidenote ◆1 If we sum up all that has been said thus far, it may
seem at first sight that it teaches nothing but the
negative lesson, that we should let Ability have its own
way unchecked.]
◆¹ I started with pointing out that, so far as politics are concerned,
the aim of all classes is to maintain their existing incomes; and that
the aim of the most numerous class is not only to maintain, but to
increase them. I pointed out further that the income of the individual
is necessarily limited by the amount of the income of the nation; and
that therefore the increase, or at all events the maintenance, of the
existing income of the nation is implied in all hopes of social and
economic progress, and forms the foundation on which all such hopes
are based. I then examined the causes to which the existing income of
the nation is due; and I showed that very nearly two-thirds of it is
due to the exertions of a small body of men who contribute thus to
the productive powers of the community, not primarily because they
possess Capital, but because they possess Ability, of which Capital is
merely the instrument; that it is owing to the exercise of Ability only
that this larger part of the income has gradually made its appearance
during the past hundred years; and that were the exercise of Ability
interfered with, the increment would at once dwindle, and before long
disappear.
Thus the two chief factors in the production of the national income—in
the production of that wealth which must be produced before it can
be distributed—are not Labour and Capital, which terms, as commonly
used, mean living labourers on the one hand, and dead material on the
other; but they are two distinct bodies of living men—labourers on the
one hand, and on the other men of Ability. The great practical truth,
then, which is to be drawn from the foregoing arguments is this—and it
is to be drawn from them in the interest of all classes alike—that the
action of Ability should never be checked or hampered in such a way as
to diminish its productive efficacy, either by so interfering with its
control of Capital, or by so diminishing its rewards, as to diminish
the vigour with which it exerts itself; but that, on the contrary, all
these social conditions should be jealously maintained and guarded
which tend to stimulate it most, by the nature of the rewards they
offer it, and which secure for it also the most favourable conditions
for its exercise. By such means, and by such means only, is there any
possibility of the national wealth being increased, or even preserved
from disastrous and rapid diminution.
[Sidenote ◆1 But this is very far from being the whole lesson
taught, or indeed the chief part of it.]
◆¹ This, however, is but one half of the case; and, taken by itself,
it may seem to have no connection with the problem which forms the
main subject of this volume, namely, the social hopes and interests,
not of Ability, but of Labour. For, taken by itself, the conclusion
which has just been stated may strike the reader at first sight as
amounting merely to this: that the sum total of the national income
will be largest when the most numerous minority of able men produce the
largest possible incomes,—incomes which they themselves consume; and
that, unless they are allowed to consume them, they will soon cease
to produce them. From the labourer’s point of view, such a conclusion
would indeed be a barren one. It might show him that he could not
better himself by attacking the fortunes of the minority; but it would,
on the other hand, fail to show him that he was much interested in
their maintenance, since, if Ability consumes the whole of the annual
wealth which it adds to the wealth annually produced by Labour, the
total might be diminished by the whole of the added portion, and
Labour itself be no worse off than formerly. But when I said just
now that it was to the interest of all classes alike not to diminish
the rewards which Ability may hope for by exerting itself, this was
said with a special qualification. I did not say that it was to the
interest of the labourers to allow Ability to retain the whole of what
it produced, or to abstain themselves from appropriating a certain
portion of it; but what I did say was that any portion appropriated
thus should not be so large, nor appropriated in such a way, as to make
what remains an object of less desire, or the hope of possessing it
less powerful as a stimulus to producing it. This qualification, as the
reader will see presently, gives to the conclusion in question a very
different meaning from that which at first he may very naturally have
attributed to it.
[Sidenote ◆1 The chief lesson to be learnt is that, whilst Ability
is the chief producer of wealth, Labour may appropriate
a large share of its products.]
◆¹ For the precise point to which I have been leading up, from the
opening page of the present volume to this, is that a considerable
portion of the wealth produced by Ability may be taken from it and
handed over to Labour, without the vigour of Ability being in the
least diminished by the loss; that such being the case, the one great
aim of Labour is to constantly take from Ability a certain part of its
product; and that this is the sole process by which, so far as money
is concerned, Labour has improved its position during the past hundred
years, or by which it can ever hope to improve it further in the future.
[Sidenote ◆1 The question is, How much may it appropriate without
paralysing the Ability which produces it?]
◆¹ The practical question, therefore, for the great mass of the
population resolves itself into this: What is the extent to which
Ability can be mulcted of its products, without diminishing its
efficacy as a productive agent? An able man’s hopes of securing _nine
hundred thousand pounds_ for himself would probably stimulate his
Ability as much as his hopes of securing a _million_. Indeed the fact
that, before he could secure a _million pounds_ for himself, he had to
produce a _hundred thousand_ for other people, might tend to increase
his efforts rather than to relax them. But, on the other hand, if,
before he could secure a _hundred thousand pounds_ for himself, he had
to produce a _million_ for other people, it is doubtful whether either
sum would ever be produced at all. There must therefore be, under any
given set of circumstances, some point somewhere between these two
extremes up to which Labour can appropriate the products of Ability
with permanent advantage to itself, but beyond which it cannot carry
the process, without checking the production of what it desires to
appropriate. But how are we to ascertain where that precise point is?
[Sidenote ◆1 This is a question which can be answered only by
experience; and we have the experience of a century to
guide us.]
◆¹ To this question it is altogether impossible to give any answer
based upon _à priori_ reasoning. The very idea of such a thing is
ridiculous; and to attempt it could, at the best, result in nothing
better than some piece of academic ingenuity, having no practical
meaning for man, woman, or child. But what reasoning will not do,
industrial history will. Industrial history will provide us with an
answer of the most striking kind—general, indeed, in its character;
but not, for that reason, any the less decided, or less full of
instruction. For industrial history, in a way which few people realise,
will show us how, during the past hundred years, Labour has actually
succeeded in accomplishing the feat we are considering; how, without
checking the development and the power of Ability, it has been able to
appropriate year by year a certain share of what Ability produces. When
the reader comes to consider this,—which is the great industrial object
lesson of modern times,—when he sees what the share is which Labour
has appropriated so triumphantly, he will see how the conclusions we
have here arrived at, with regard to the causes of production, afford
a foundation for the hopes and claims of Labour, as broad and solid as
that by which they support the rights of Ability.
Let us turn, then, once more to the fact which I have already so
often dwelt upon, that during the closing years of the last century
the population of Great Britain was about _ten millions_, and the
national income about a _hundred and forty million pounds_. It has been
shown that to reach and maintain that rate of production required the
exertion of an immense amount of Ability, and the use of an immense
Capital which Ability had recently created. But let me repeat what
I have said already: that we will, for the purpose of the present
argument, attribute the production of the whole to average human
Labour. It is obvious that Labour did not produce more, for no more
was produced; and it is also obvious that if, since that time, it
had never been assisted and never controlled by Ability, the same
amount of Labour would produce no more now. We are therefore, let me
repeat, plainly understating the case if we say that British Labour
by itself—in other words, Labour shut out from, and unassisted by the
industrial Ability of the past ninety years—can, at the utmost, produce
annually a _hundred and forty million pounds_ for every _ten millions_
of the population.
[Sidenote ◆1 In 1860 Labour took at least twenty-five per cent
more than it produced itself, out of the products of
Ability; and it now takes about forty-five per cent.]
And now let us turn from what Labour produces to what the labouring
classes[43] have received at different dates within the ninety or
hundred years in question. ◆¹ At the time of which we have just been
speaking, they received about half of what we assume Labour to have
produced. A labouring population of _ten million_ people received
annually about _seventy million pounds_.[44] Two generations later,
the same number of people received in return for their labour about a
_hundred and sixty million pounds_.[45] They were twenty-five per cent
richer than they possibly could have been if, in 1795, they had seized
on all the property in the kingdom and divided it amongst themselves.
In other words, Labour in 1860, instead of receiving, as it did two
generations previously, half of what we assume it to have produced,
received twenty-five per cent more than it produced. If we turn from
the year 1860 to the present time, we find that the gains of Labour
have gone on increasing; and that each _ten millions_ of the labouring
classes to-day receives in return for its labour _two hundred million
pounds_, or over forty per cent more than it produces. And all these
calculations are based, the reader must remember, on the ridiculously
exaggerated assumption which was made for the sake of argument, that
in the days of Watt and Arkwright, Capital, Genius, and Ability had no
share in production; and that all the wealth of the country, till the
beginning of the present century, was due to the spontaneous efforts of
common Labour alone.
[Sidenote ◆1 The gains of Labour are put in a yet more striking
light by comparing the present income of Labour with the
total income of the country fifty years ago.]
◆¹ And now let us look at the matter from a point of view slightly
different, and compare the receipts of Labour not with what we assume
it to have itself produced, but with the total product of the community
at a certain very recent date.
In 1843, when Queen Victoria had been six or seven years on the throne,
the gross income of the nation was in round numbers _five hundred and
fifteen million pounds_. Of this, _two hundred and thirty-five million
pounds_ went to the labouring classes, and the remainder, _two hundred
and eighty million pounds_, to the classes that paid income-tax. Only
fifty years have elapsed since that time, and, according to the best
authorities, the income of the labouring classes now is certainly not
less than _six hundred and sixty million pounds_.[46] That is to say,
it exceeds, by a _hundred and forty-five million pounds_, the entire
income of the nation fifty years ago.
An allowance, however, must be made for the increase in the number of
the labourers. That is of course obvious, and we will at once proceed
to make it. But when it is made, the case is hardly less wonderful.
The labouring classes in 1843 numbered _twenty-six millions_; at the
present time they number _thirty-three millions_.[47] That is to say,
they have increased by _seven million_ persons. Now assuming, as we
have done, that Labour by itself produces as much as _fourteen pounds_
per head of the population, this addition of _seven million_ persons
will account for an addition of _ninety-eight million pounds_ to the
_five hundred and fifteen million pounds_ which was the amount of
the national income fifty years ago. We must therefore, to make our
comparisons accurate, deduct _ninety-eight million pounds_ from the
_hundred and forty-five million pounds_ just mentioned, which will
leave us an addition of _forty-seven million pounds_. We may now say,
without any reservation, that the labouring classes of this country, in
proportion to their number, receive to-day _forty-seven million pounds_
a year more than the entire income of the country at the beginning of
the reign of Queen Victoria.
[Sidenote ◆1 Every labourer anxious for his own welfare should
reflect on these facts.]
◆¹ To any labourer anxious for his own welfare, to any voter or
politician of any kind, who realises that the welfare of the labourers
is the foundation of national stability, and who seeks to discover by
what conditions that welfare can be best secured and promoted, this
fact which I have just stated is one that cannot be considered too
closely, too seriously, or too constantly.
Let the reader reflect on what it means.
[Sidenote ◆1 They show him that the existing system has done, and
is doing for him far more than any Socialist ever
promised.]
Dreams of some possible social revolution, dreams of some division of
property by which most of the riches of the rich should be abstracted
from them and divided amongst the poor—these were not wanting fifty
years ago. ◆¹ But even the most sanguine of the dreamers hardly
ventured to hope that the then riches of the rich could be taken
away from them completely; that a sum equal to the rent of the whole
landed aristocracy, all the interest on Capital, all the profits of
our commerce and manufactures, could be added to what was then the
income of the labouring classes. No forces of revolution were thought
equal to such a change as that. But what have the facts been? What has
happened really? Within fifty years the miracle has taken place, or,
indeed, one greater than that. The same number of labourers and their
families as then formed the whole labouring population of the country
now possess among them every penny of the amount that then formed the
income of the entire nation. They have gained every penny that they
possibly could have gained if every rich man of that period—if duke,
and cotton lord, and railway king, followed by all the host of minor
plutocrats, had been forced to cast all they had into the treasury
of Labour, and give their very last farthing to swell the labourer’s
wages. The labourers have gained this; but that is not all. They have
gained an annual sum of _forty-seven million pounds_ more. And they
have done all this, not only without revolution, but without any
attack on the fundamental principles of property. On the contrary, the
circumstances which have enabled Labour to gain most from the proceeds
of Ability, have been the circumstances which have enabled Ability to
produce most itself.
[Sidenote ◆1 But before proceeding with this argument, there are
two side points to dispose of.]
◆¹ Before, however, we pursue these considerations further, it is
necessary that we should deal with two important points which have
perhaps already suggested themselves to the reader as essential to the
problem before us. They are not new points. They have been discussed in
previous chapters; but the time has now arrived to turn to them once
again.
CHAPTER II
_Of the Ownership of Capital, as distinct from its
Employment by Ability._
[Sidenote ◆1 In the foregoing argument, all mention of Land has
been omitted, for simplicity’s sake.]
[Sidenote ◆2 But rent, especially the rent of the large owners, is
so small a part of the national income that the omission
is of no practical importance.]
The first of the points I have alluded to can be disposed of very
quickly. It relates to Land. In analysing the causes to which our
national income is due, I began with showing that Land produced a
certain definite part of it. ◆¹ For the sake, however, of simplicity,
in the calculation which I went on to make, I ignored Land, and the
fact of its being a productive agent; and treated the whole income as
if produced by Labour, Capital, and Ability. I wish, therefore, now to
point out to the reader that this procedure has had little practical
effect on the calculation in question, and that any error introduced
by it can be easily rectified in a moment. ◆² The entire landed rental
of this country is, as I have already shown, not so much as one
thirteenth of the income; whilst that of the larger landed proprietors
is not so much as one thirty-ninth. Now my sole object in dealing with
the national income at all is to show how far it is susceptible of
redistribution; and it is perfectly certain that no existing political
party would attempt, or even desire, to redistribute the rents of any
class except the large proprietors only. The smaller proprietors,—_nine
hundred and fifty thousand_ in number,—who take between them two-thirds
of the rental, are in little immediate danger of having their rights
attacked. The only rental therefore—namely, that of the larger
proprietors—which can be looked on, even in theory, as the subject of
redistribution, is too insignificant, being less than _thirty million
pounds_, to appreciably affect our calculations when we are dealing
with _thirteen hundred millions_. The theory of Land as an independent
productive agent, and of rent as representing its independent product,
is essential to an understanding of the theory of production generally;
but in this country the actual product of the Land is so small, as
compared with the products of Labour, Capital, and Ability, that for
purposes like the present it is hardly worth considering. Its being
redistributed, or not redistributed, would, as we have seen already,
make to each individual but a difference of three farthings a day.
[Sidenote ◆1 Capital, as distinct from the Ability that uses it,
has been omitted also.]
[Sidenote ◆2 We must now again consider it in connection with the
classes which never themselves employ it, but live on
the interest of it.]
[Sidenote ◆3 What place do these classes hold in the productive
system?]
◆¹ The second point I alluded to must be considered at greater length.
In dealing with Capital and Ability, I first treated them separately. I
then showed that, regarded as a productive agent, Capital _is_ Ability,
and must be treated as identical with it. But it is necessary, now that
we are dealing with distribution, to disunite them for a moment, and
treat them separately once more. ◆² For even though it be admitted that
Ability, working by means of Capital, produces, as it has been shown to
do, nearly two-thirds of the national income, and though it be admitted
further that a large portion of this product should go to those able
men who are actively engaged in producing it,—the men whose Ability
animates and vivifies Capital,—it may yet be urged that a portion of it
which is very large indeed goes, as a fact, to men who do not exert
themselves at all, or who, at any rate, do not exert themselves in
the production of wealth. These men, it will be said, live not on the
products of Ability, but on the interest of Capital which they have
come accidentally to possess; ◆³ and it will be asked on what grounds
Labour is interested in forbearing to touch the possessions of those
who produce nothing? If it has added to its income, as it has done,
during the past hundred years, why should it not now add to it much
more rapidly, by appropriating what goes to this wholly non-productive
class?
To this question there are several answers. One is that a leisured
class—a class whose exertions have no commercial value, or no
value commensurate with the cost of its maintenance—is essential
to the development of culture, of knowledge, of art, and of mental
civilisation generally. But this is an answer which we need not dwell
on here; for, whatever its force, it is foreign to our present purpose.
We will confine ourselves solely to the material interests that are
involved, and consider solely how the plunder of a class living on
the interest of Capital would tend to affect the actual production of
wealth.
It would affect the production of wealth in just the same way as would
a similar treatment of that class on whose active Ability production is
directly dependent; and it would do this for the following reasons.
[Sidenote ◆1 They are the heirs of Ability, and represent, by
their possession of Capital, the main object with which
that Capital was originally created.]
[Sidenote ◆2 For Capital is created and saved in order that it may
yield interest, firstly, to the man who himself created
and saved it;]
◆¹ The greater part of the Capital that has been accumulated in the
modern world is the creation of active Ability, as I have pointed out
already. It has been saved not from the product of Labour, but from
the product which Ability has added to this. It is Ability congealed,
or Ability stored up. And the main motive that has prompted the men
of Ability to create it has not consisted only of the desire of
enjoying the income which they are enabled to produce by its means,
when actually employing it themselves, but the desire also of enjoying
some portion of the income which will be produced by its means if it
is employed by the Ability of others. ◆² In a word, the men who create
and add to our Capital are motived to do so by expectation that the
Capital shall be their own property; that it shall, when they wish
it, yield them a certain income independent of any further exertions
of their own. Were this expectation rendered impossible, were Capital
by any means prevented from yielding interest either to the persons
who made and saved it, or those to whom the makers might bequeath it,
the principal motive for making or saving it would be gone. If a man,
for instance, makes _one thousand pounds_ he can, as matters stand, do
three things with it, any one of which will gratify him. He can spend
it as income, and enjoy the whole of it in that way; he can use it
himself as Capital, and so enjoy the profits; or he can let others use
it as Capital, and so enjoy the interest. But if he were by any means
precluded from receiving interest for it, and desired for any reason
to retire from active business, he could do with his _thousand pounds_
one of two things only—he could spend it as income, in which case it
would be destroyed; or let others use it as Capital, in which case he
himself could derive no benefit whatever from it, and would, in effect,
be giving it or throwing it away. Were the first course pursued, no
Capital would be saved; were the second course obligatory, no Capital
would be created.[48]
[Sidenote ◆1 And secondly, to his family and his immediate heirs.]
[Sidenote ◆2 The bulk of the Capital owned now by those who do not
employ it themselves has come to them from their fathers
or grandfathers who created it;]
[Sidenote ◆3 As the history of the growth of Capital during the
present century shows.]
[Sidenote ◆4 A man’s desire to leave money to his family is shown
by history to be as strong a motive as the desire to
enjoy it himself.]
I have spoken thus far as though in creating Capital a man’s motive
were the hope of enjoying the interest of it himself. ◆¹ But there is
another motive almost equally powerful—in some cases more powerful—and
that is the hope of transferring or transmitting it to his family or to
his children. ◆² Now four-fifths of the Capital of the United Kingdom
has been created within the last eighty years. The total Capital in
1812 amounted to about _two thousand millions_; now it amounts to
almost _ten thousand millions_. Therefore _eight thousand millions_
of the Capital of this country has been created by the Ability of
the parents and of the grandparents of those who now possess it,
supplemented by the Ability of many who now possess it themselves. The
most rapid increase in it took place between 1840 and 1875. ◆³ If we
regard men of fifty as representing the present generation of those
actively engaged in business, we may say that their grandfathers made
_two thousand millions_ of our existing Capital, their parents _four
thousand millions_, and themselves _two thousand millions_. It will
thus be easily realised how those persons who own Capital which they
leave others to employ, and which personally they have had no hand in
making, are for the most part relatives or representatives of the very
persons who made it, and who made it actuated by the hope that their
relations or representatives should succeed to it. ◆⁴ All history shows
us that one of the most important and unalterable factors in human
action is a certain solidarity of interest between men—even selfish
men—and those nearly connected with them; and just as parents are, by
an almost universal instinct, prompted to rear their children, so are
they prompted to bequeath to them—or, at all events, to one of them—the
greater part of their possessions. We might as well try to legislate
against the instincts of maternity, as against the instinct of bequest.
Therefore, that the ownership of much of the Capital of the country
should be separated from the actual employment of it, is a necessary
result of the forces by which it was called into existence; and in
proportion as such a result was made impossible in the future, the
continued operation of these forces would be checked.
[Sidenote ◆1 Further, it is impossible to prevent interest being
both offered and taken for the use of Capital.]
◆¹ But interest depends also on a reason that is yet stronger and more
simple than these. The owner of Capital receives interest for the use
of it, because it is, in the very nature of things, impossible to
prevent its being offered him, and impossible to prevent his taking it.
If a man who possesses _one hundred thousand pounds_, by using it as
Capital makes _ten thousand pounds_ a year, and could, if he had the
use of another _one hundred thousand pounds_, add another _ten thousand
pounds_ to his income, no Government could prevent his making a bargain
with a man who happened to possess the sum required, by which the
latter, in return for lending him that sum, would obtain a part of the
income which the use of it would enable him to produce.
The most practical aspect of the matter, however, yet remains to be
considered. I have spoken of interest as of a thing with whose nature
we are all familiar. But let us pause and ask, What is it? It is merely
a part of the product which active Ability is enabled to produce by
means of its tool, Capital. It is the part given by the man who uses
the tool to the man who owns it. But the tool, or Capital, is, as we
have seen already, itself the product of the Ability of some man in the
past; so that the payment of interest, whether theoretically just or
no, is a question which concerns theoretically two parties only: the
possessor of living Ability, and the possessor of the results of past
Ability. Thus, whatever view we may happen to take about it, Labour,
in so far as theoretical justice goes, has no concern in the matter,
one way or the other. For if interest is robbery, it is Ability that is
robbed, not Labour.
[Sidenote ◆1 And whether interest be just or no, it at all events
represents no injustice to Labour.]
[Sidenote ◆2 For it will modify, though not extinguish, their
desire to appropriate a part of what is paid as
interest.]
◆¹ It is important to take notice of this truth; for a knowledge of
what is theoretically just, though it can never control classes so
far as to prevent their seizing on whatever they can obtain and keep,
exercises none the less a very strong influence on their views as to
how much of the wealth of other classes is obtainable, and also on
the temper in which, and the entire procedure by which, they will
endeavour to obtain it. ◆² For this reason it is impossible to insist
too strongly on the fact that, as a matter of theoretical justice,
Labour, as such, has no claim whatever on any of the interest paid
for the use of Capital; and that if it succeeds in obtaining any part
of this interest, it will be obtaining what has been made by others,
not what has been made by itself. It is not that such arguments as
these will extinguish the desire of Labour to increase its own wages
at the expense of interest, if possible; for might—the might that can
sustain itself, not the brute force of the moment—will always form in
the long run the practical rule of right; but they will disseminate a
dispassionate view of what the limits of possibility are, and on what
these limits depend.
[Sidenote ◆1 History shows us that they have been doing this
already,]
◆¹ And now let us turn to the facts of industrial history, and see
what light they throw on what has just been said. I have pointed out
that if Capital is to be made or used at all, it must necessarily,
for many reasons, be allowed to yield interest to its owners; but the
amount of interest it yields has varied at various times; and, although
to abolish it altogether would be impossible, or, if possible, fatal
to production, it is capable, under certain circumstances, of being
reduced to a minimum, without production being in any degree checked;
and every _pound_ which the man who employs Capital is thus relieved
from paying to the man who owns it constitutes, other things being
equal, a fund which may be appropriated by Labour. To say this is to
make no barren theoretical statement. The fund in question not only
may, under certain circumstances, be appropriated by Labour; but these
circumstances are the natural result of our existing industrial system;
and the fund, as I will now show, has been appropriated by Labour
already, and forms a considerable part of that additional income which
Labour, as we have seen, has secured from the income created by Ability.
[Sidenote ◆1 to an increasing extent.]
[Sidenote ◆2 Interest now forms but a small part of the income of
the nation,]
◆¹ In days preceding the rise of the modern industrial system, the
average rate of interest was as high as ten per cent. As the modern
system developed itself, as Ability more and more was diverted from
war, and concentrated on commerce and industry, and produced by the use
of Capital a larger and more certain product, ◆² the price it paid for
the use of Capital fell, till by the middle of this century it was not
more than five per cent. During the past forty years it has continued
to sink still further, and can hardly be said now to average much more
than three.
[Sidenote ◆1 In spite of appearances to the contrary;]
◆¹ This fact is sufficiently well known to investors; but there are
other facts known equally well which tend to confuse popular thought
on the subject, and which accordingly, in a practical work like this,
it is very necessary to place in their true light. For, in spite of
what has been said of the fall in the rate of interest from ten to six,
and to five, and from five to three per cent, it is notorious that
companies, when successful, often pay to-day dividends of from ten to
twenty per cent, or even more; and founders’ shares in companies are
constantly much sought after, which are merely shares in such profits
as result over and above a return of at least ten per cent on the
capital.
[Sidenote ◆1 As much of what is vulgarly considered interest is
something quite different.]
But the explanation of this apparent contradiction is simple. Large
profits must not be confounded with high interest. ◆¹ Large profits are
a mixture of three things, as was pointed out by Mill, though he did
not name two of them happily. He said that profits consisted of wages
of superintendence, compensation for risk, and interest on Capital. If,
instead of wages of superintendence, we say the product of Ability, and
instead of compensation for risk, we say the reward of sagacity, which
is itself a form of Ability, we shall have an accurate statement of the
case. A large amount of the Capital in the kingdom is managed by the
men who own it; and when they manage it successfully, the returns are
large. Sometimes a man with a Capital of _a hundred thousand pounds_
will make as much as _fifteen thousand pounds_ a year; but that does
not mean that his Capital yields fifteen per cent of interest. Let such
a man be left another _hundred thousand pounds_, which he determines
not to put into his own business, but invests in some security held to
be absolutely safe, and he will find that interest on Capital means not
more than three and a half per cent. If he is determined to get a large
return on his Capital, and if he does this by investing it in some
new and speculative enterprise, this result, unless it be the mere
good luck of a gambler, is mainly the result of his own knowledge and
judgment, as the following facts clearly enough show.
Between the years 1862 and 1885 there were registered in the United
Kingdom about _twenty-five thousand_ joint stock companies, with an
aggregate Capital of about _two thousand nine hundred million pounds_.
Of these companies, by the year 1885, more than _fifteen thousand_
had failed, and less than _ten thousand_ were still existing. During
the following four years the proportion of failures was smaller; but
a return published in 1889 shows that of all the companies formed
during the past twenty-seven years, considerably more than half had
been wound up judicially. Therefore a man who secures a large return
on money invested in a business not under his own control, does so by
an exercise of sagacity not only beneficial to himself, but in a still
higher degree beneficial to the country generally; for he has helped
to direct human exertion into a profitable and useful channel, whereas
those who are less sagacious do but help it to waste itself.[49]
Of large returns on Capital, then, only a part is interest; the larger
part being merely another name for what we have shown to be the actual
creation of Ability—either the Ability with which the Capital has
been employed in directing Labour, or the Ability with which some new
method of directing Labour has been selected. There is accordingly no
contradiction in the two statements that Capital may often bring more
than fifteen per cent to the original investors; and yet that interest
on Capital in the present day is not more than three or three and a
half per cent. Here is the explanation of shares rising in value. A man
who at the starting of a business takes _a hundred one pound shares_
in it, and, when it is well established, gets _twenty pounds_ a year
as a dividend, will be able to sell his shares for something like _six
hundred pounds_; which means that little more than three per cent is
the interest which will be received by the purchaser.
[Sidenote ◆1 Interest, then, has decreased, and the whole sum thus
saved has gone to the labouring classes.]
◆¹ Interest, then, or the sum which those who use Capital pay to
those who own it, having decreased, as we have seen it has done, with
the development of our industrial system, it remains to show the
reader where the sum thus saved has gone. It must have gone to one
or other of two classes of people: to the men of Ability, or to the
labourers. If it had gone to the former,—that is, to the employers of
Labour,—their gains now would be greater, in proportion to the Capital
employed by them, than they were fifty years ago; but if their gains
have not become greater, then the sum in question must obviously have
found its way to the labourers. And that such is the case will be made
sufficiently evident by the fact that Mr. Giffen has demonstrated in
the most conclusive way that, if rent and the interest taken by the
classes that pay income-tax had increased as fast as the sum actually
taken by Labour, the sum assessed to income-tax would be _four hundred
million pounds_ greater than it is, and the sum taken by Labour _four
hundred million pounds_ less.[50] In this case the wealthier classes
would be now taking _one thousand and sixty million pounds_, instead
of the _six hundred million pounds_ which they actually do take;[51]
and the labouring classes, instead of taking, as they do, _six hundred
and sixty million pounds_, or, as Mr. Giffen maintains, more, would be
taking only _two hundred and sixty million pounds_.[52] In fact, as Mr.
Giffen declares, “It would not be far short of the mark to say that the
whole of the great improvement of the last fifty years has gone to the
masses.” And the accuracy of this statement is demonstrated in a very
striking way by the fact that had the whole improvement, according to
the contrary hypothesis, gone not to the labourers, but to the classes
that pay income-tax, the remainder, namely, _two hundred and sixty
million pounds_, would correspond, almost exactly, allowing for the
increase of their numbers, with what the labouring classes received at
the close of the last century.
[Sidenote ◆1 What the social reformer should study is not the
dreams of Socialists, but the forces actually at work,
through which Labour has already gained, and is gaining
so much.]
◆¹ What, then, the social reformer, what the labourer, and the friend
of Labour, ought to study with a view to improving the condition of
the labouring classes, is not the theories and dreams of those who
imagine that the improvement is to be made only by some reorganisation
of society, but the progress, and the causes of the progress, that
these classes have actually been making, not only under existing
institutions, but through them, because of them, by means of them.
CHAPTER III
_Of the Causes owing to which, and the Means by
which Labour participates in the growing
Products of Ability._
Let me repeat in other words what I have just said. The labouring
classes, under the existing condition of things, have acquired more
wealth in a given time than the most sanguine Socialist of fifty
years ago could have promised them; and this increased wealth has
found its way into their pockets owing to causes that are in actual
operation round us. These causes, therefore, should be studied for two
reasons: firstly, in order that we may avoid hindering their operation;
secondly, in order that we may, if possible, accelerate it; and I shall
presently point out, as briefly, but as clearly as I can, what the
general character of these causes is.
[Sidenote ◆1 It is true that there are notorious facts that may
make the superficial or excitable observer doubt the
reality of this great progress of the labouring classes.]
◆¹ But before doing this,—before considering the cause of this
progress,—I must for a moment longer dwell and insist upon the reality
of it; because unhappily there are certain notorious facts which
constantly obtrude themselves on the observation of everybody, and
which tend to make many people deny, or at least doubt it. These facts
are as follows.
[Sidenote ◆1 But when these facts—viz. facts relating to the very
poor—are reduced to their true proportions,]
Speaking in round numbers, there exists in this country to-day a
population consisting of about _seven hundred thousand_ families,
or _three million_ persons, whose means of subsistence are either
insufficient, or barely sufficient, or precarious, and the conditions
of whose life generally are either hard or degrading, or both. A
considerable portion of them may, without any sentimental exaggeration,
be called miserable; and all of them may be called more or less
unfortunate. There is, further, this observation to be made. People who
are in want of the bare necessaries of life can hardly be worse off
absolutely at one period than another; but if, whilst their own poverty
remains the same, the riches of other classes increase, they do, in
a certain sense, become worse off relatively. The common statement,
therefore, that the poor are getting constantly poorer is, in this
relative sense, true of a certain part of the population; and that
part is now nearly equal in numbers to the entire population of the
country at the time of the Norman Conquest. Such being the case, it is
of course obvious that persons who, for purposes of either benevolence
or agitation, are concerned to discover want, misfortune, and misery,
find it easier to do so now than at any former period. London alone
possesses an unfortunate class which is probably as large as the whole
population of Glasgow; and an endless procession of rags and tatters
might be marched into Hyde Park to demonstrate every Sunday. But if
the unfortunate class in London is as large as the whole population of
Glasgow, we must not forget that the population of London is greater
by nearly a _million_ than the population of all Scotland; ◆¹ and the
truth is that, although the unfortunate class has, with the increase
of population, increased in numbers absolutely, yet relatively, for
at least two centuries, it has continued steadily to decrease. In
illustration of this fact, it may be mentioned that, whereas in 1850
there were _nine_ paupers to every _two hundred_ inhabitants, in 1882
there were only _five_; whilst, to turn for a moment to a remoter
period, so as to compare the new industrial system with the old, in
the year 1615, a survey of Sheffield, already a manufacturing centre,
showed that the “begging poor,” who “could not live without the charity
of their neighbours,” actually amounted to one-third of the population,
or _seven hundred and twenty-five_ households out of _two thousand two
hundred and seven_. Further, although, as I observed just now, it is
in a certain sense true to say that, relatively to other classes, the
unfortunate class has been getting poorer, the real tendency of events
is expressed in a much truer way by saying that all other classes have
been getting more and more removed from poverty.
[Sidenote ◆1 We shall find that they have no such significance,
nor disprove in any way the extraordinary progress of
the vast majority.]
[Sidenote ◆2 What then are the causes of this progress?]
◆¹ What the presence, then, and the persistence of this class really
shows us is not that the progress of the labouring classes as a whole
has been less rapid and less remarkable than it has just been said to
be, but that a certain fraction of the population, for some reason or
other, has always remained hitherto outside this general progress; and
the one practical lesson which its existence ought to force on us is
not to doubt the main movement, still less to interfere with it, but to
find some means of drawing these outsiders into it. ◆² This great and
grave problem, however, requires to be treated by itself, and does not
come within the scope of the present volume. Our business is not with
the causes which have shut out one-tenth of the poorer classes from the
growing national wealth, but with those which have so signally operated
in making nine-tenths of them sharers in it.
[Sidenote ◆1 They are of two kinds: spontaneous tendencies, and
the deliberate and concerted actions of men.]
We will accordingly return to these, and consider what they are. ◆¹ We
shall find them to be of two kinds: firstly, those which consist of
the natural actions of men, each pursuing his own individual interest;
and secondly, their concerted actions, which represent some general
principle, and are deliberately undertaken for the advantage not of an
individual but of a class. We will begin with considering the former;
as not only are they the most important, but they also altogether
determine and condition the latter, and the latter, indeed, can do
little more than assist them.
[Sidenote ◆1 We will begin with the spontaneous tendencies—_i.e._
the natural actions of individuals, each pursuing his
own interest.]
[Sidenote ◆2 There are two ways of getting rich: (1) by
abstracting from an existing income, or (2) by adding to
it. The rich class of the modern world have, as a whole,
become rich in the second way.]
◆¹ The natural causes that tend to distribute amongst Labour a large
portion of the wealth produced by Ability will be best understood if we
first consider for a moment the two ways—and the two only ways—in which
a minority can become wealthy. ◆² What these are can be easily realised
thus. Let us imagine a community of eight labouring men, who make each
of them _fifty pounds_ a year, and who represent Labour; and let us
imagine a ninth man,—a man of Ability,—who represents the minority. The
ninth man might, if he were strong enough, rob each of the eight men
of _twenty-five pounds_, compelling them each to live on _twenty-five
pounds_ instead of on _fifty pounds_, and appropriate to himself an
annual _two hundred pounds_. Or he might reach the same result in a
totally different way. He might so direct and assist the Labour of
the eight men, that without any extra effort to themselves they each,
instead of _fifty pounds_ produced _seventy-five pounds_, and if,
under these circumstances, he took _twenty-five pounds_ from each, he
would gain the same sum as before, namely _two hundred pounds_, but,
as I said, in a totally different way. It would represent what he had
added to the original product of the labourers, instead of representing
anything he had taken from it. Now whatever may have been true of rich
classes in former times and under other social conditions, the riches
now enjoyed by the rich class in this country have, with exceptions
which are utterly unimportant, been acquired by the latter of these two
methods, not by the former. They represent an addition to the product
of Labour, not an abstraction from it. This is, of course, clear from
what has been said already; but it is necessary here to specially bear
it in mind.
[Sidenote ◆1 Let us consider the nature of the process,]
[Sidenote ◆2 By first representing Labour and Ability in their
simplest imaginable forms; Ability, or the employing
class, being represented as one man.]
◆¹ Let us then take a community of eight labourers, each producing
commodities worth _fifty pounds_ a year, and each consuming—as he
easily might—the whole of them. These men represent the productive
power of Labour; ◆² and now let us suppose the advent of Ability in
the person of the ninth man, by whose assistance this productive power
is multiplied, and consider more particularly what the ninth man does.
There is one thing which it is quite plain he does not do. He does
not multiply the power of Labour for the sake of merely increasing
the output of those actual products which he finds the labourers
originally producing and consuming, and of appropriating the added
quantity; for the things he would thus acquire would be of no possible
good to him. He would have more boots and trousers than he could wear,
more bread and cheese than he could eat, and spades and implements
which he did not want to use. He would not want them himself, and
the labourers are already supplied with them. They would be no good
to anybody. He does not therefore employ his Ability thus, so as to
increase the output of the products that have been produced hitherto;
but he enables first, we will say, four men, then three, then two, and
lastly one, to produce the same products that were originally produced
by eight; and he thus liberates a continually increasing number, whom
he sets to produce products of new and quite different kinds.
Let us see how he does this. The eight labourers, when he finds
them, make each _fifty pounds_ a year, or _four hundred pounds_ in
the aggregate; and this represents the normal necessaries of their
existence. He, by the assistance which his Ability renders Labour,
enables at last, after many stages of progress, these same necessaries
to be produced by one single man, who, instead of producing, as
formerly, goods worth _fifty pounds_, finds himself, with the
assistance of Ability, producing goods worth _four hundred pounds_.
There is thus an increase of _three hundred and fifty pounds_, and this
increment the man of Ability takes.
Meanwhile, seven men are left idle, and with them the man of Ability
makes the following bargain. Out of the _three hundred and fifty
pounds_ worth of necessaries which he possesses, he offers each of
them _fifty pounds_ worth—the amount which originally they each made
for themselves, on condition that they will make other things for him,
or put their time at his disposal. They accordingly make luxuries for
him, or become his personal servants. For the _three hundred and fifty
pounds_ he pays them in the shape of necessaries, they return him
another _three hundred and fifty pounds_ in the shape of commodities or
of service; and this new wealth constitutes the able man’s income.
[Sidenote ◆1 In this case, there being no competition of
employers, there would be no natural distribution of the
increasing products amongst the labourers.]
Such, reduced to its simplest elements, is the process on which the
riches of the rich in the modern world depend. ◆¹ It will be seen,
however, that in the case we have just supposed, the labourers, by the
process in question, gain absolutely nothing. Each of them originally
made _fifty pounds_ a year. He now receives the same sum in wages. But
the total product has increased by _three hundred and fifty pounds_,
and of this the labourers acquire no share whatever. Nor, supposing
them to be inexperienced in the art of combination, is there any means
by which they could ever do so. And if our imaginary community were a
complete representation of reality, the same would be the case with the
labourers in real life.
[Sidenote ◆1 But let us introduce a second man of Ability
competing with the first, and the process of
distribution of the increased product amongst the
labourers begins at once.]
◆¹ But it must now be pointed out that in one important respect, as a
representation of reality, our community is incomplete. It represents
the main process by which the riches of the rich are produced; but it
offers no parallel to one factor in the real situation, owing to which
the labourers inevitably acquire a share in them. In that community the
rich classes are represented by a single person, who has no conflicting
interests analogous to his own to contend against. But in actual
life, so far as this point is concerned, the condition of the rich is
different altogether. As looked at from without, they are, indeed, a
single body, which may with accuracy be represented as one man; but
as looked at from within, they are a multitude of different bodies,
whose interests, within certain limits, are diametrically opposed to
each other. In order, therefore, to make our illustration complete,
instead of one man of Ability we must imagine two. The first, whose
fortunes we have just followed, and whom, for the sake of distinctness,
we will christen John, has already brought production to the state
that has been just described. He has managed to get seven men out of
eight to produce luxuries for himself,—luxuries, we will say, such
as wine, cigars, and butter,—paying these seven men with the surplus
necessaries which, with his assistance, are produced by the eighth man.
But of these luxuries the seven men keep none; nor can they give any
of them to the eighth man, their fellow. John takes all. But now let
us suppose that a second man of Ability, whom we will christen James,
appears upon the scene, just as anxious as John to direct Labour by
his Ability, and just as capable of making Labour productive. But all
the labourers are at present in the pay of John. James therefore must
set himself to detach them from John’s service; and he accordingly
engages that if they will work for him they shall not only each receive
the necessaries that John gives them, but a share of the other things
that they produce—of the butter, of the cigars, and of the wine—as
well. The moment this occurs, John has to make a similar offer; and
thus the wages of Labour at once begin to rise. When they have been
forced up to a certain point, James and John cease to bid against one
another, and each employs a certain number of labourers, till one or
other of them makes some new discovery which enables the same amount
of some commodity—we will say cigars—as has hitherto been produced by
two men, to be produced by one; and thus a new labourer is set free,
and is available for some new employment. We must assume that James and
John could both employ this man profitably—that is, that they could
set him to produce some new object of desire—let us say strawberries;
and, this being so, there is again a competition for his labour. He
is offered by both employers as much as he has received hitherto, and
as the other labourers receive; and he is offered besides a certain
number of strawberries. Whichever employer ultimately secures his
services, the man has secured some further addition to his income. He
has some share in the increasing wealth of the community; and, as John
and James continue to compete in increasing the production of all other
commodities, some share of each increase will in time go to all the
labourers.
[Sidenote ◆1 And nothing can stop this process except an increase
of population _in excess of the increase_ in the
productive powers of Ability.]
◆¹ One thing only could interfere with this process; and that has
been excluded from our supposed community: namely, an increase in its
numbers. And a mere increase in the numbers would in itself not be
enough. It must be an increase which outstrips the discovery of new
ways in which labour may be employed profitably. Let us suppose that
to our original eight labourers, eight new labourers are added, who
if left to themselves could do just what the first eight could do,
namely, produce annual subsistence for themselves to the value of
_fifty pounds_ each. If, under the management of James or John, the
productivity of these men could be multiplied eight-fold, as was the
case with the first eight, James and John would be soon competing for
their services, and the second eight, like the first eight, would share
in the increased product. But if, owing to all the best land being
occupied, and few improvements having been discovered in the methods of
any new industries, the productivity of the new men could be increased
not eight-fold, but only by one-eighth—that is to say, if what each man
produces by his unaided Labour could be raised by Ability from _fifty
pounds_, not to _four hundred pounds_, but to no more than _fifty-six
pounds ten shillings_,—_fifty-six pounds ten shillings_ would be the
utmost these men would get, even if the Ability of James or John got
no remuneration whatever. Meanwhile, however, the first set of workmen
are, as we have seen, receiving much more than this. They are receiving
each, we will say, _one hundred pounds_. The second set, therefore,
naturally envy them their situations, and endeavour to secure these
for themselves by offering their Labour at a considerably lower price.
They offer it at _ninety pounds_, at _seventy pounds_, or even at
_sixty pounds_; for they would be bettering their present situation by
accepting even this last sum. This being the case, the original eight
labourers have necessarily to offer their Labour at reduced terms also;
and thus the wages of Labour are diminished all round.
Such is the inevitable result under such circumstances, if each
man—employer and employed alike—follows his own interest at the bidding
of common sense. One man is not more selfish than another; indeed, in
a bad sense, nobody is selfish at all; and for the result nobody is
to blame. The average wages of Labour are diminished for this simple
reason, and for no other—that the average product is diminished which
each labourer assists in producing. The community is richer absolutely;
but it is poorer in proportion to its numbers.[53] Let us see how
this works out. The original product of the first eight labourers was
_fifty pounds_ a head, or _four hundred pounds_ in the aggregate. This
was raised by the co-operation of Ability to _four hundred pounds_ a
head, or _three thousand two hundred pounds_ in the aggregate. But the
second set of labourers, whatever Ability may do for them, cannot be
made to produce more than _fifty-six pounds ten shillings_ a head, or
an aggregate of _four hundred and fifty-two pounds_; and thus, whereas
eight labourers produced _three thousand two hundred pounds_, sixteen
labourers produce only _three thousand six hundred and fifty-two
pounds_, and the average product is lowered from _four hundred pounds_
to _two hundred and twenty-eight pounds_.[54]
[Sidenote ◆1 This natural power, however, can be regulated by
deliberate action, political and other, and made more
beneficial to the labourers;]
[Sidenote ◆2 Which action takes two chief forms—legislation, and
combinations amongst the labourers. We will discuss both
in the next chapter.]
Wages naturally decline then, owing to an increase of population, when
relatively to the population wealth declines also; but only then. ◆¹ On
the other hand,—and this is the important point to consider,—so long as
a country, under the existing system of production, continues, like our
own, to grow richer in proportion to the number of labourers, of every
fresh increase in riches the labourers will obtain a share, without any
political action or corporate struggle on their part, merely by means
of a natural and spontaneous process. And we have now seen in a broad
and general way what the character of this process is. It may seem,
however, to many people that a study of it and of its results can teach
no lesson but the lesson of _laisser faire_, which practically means
that the labourers have no interest in politics at all, and that all
social legislation and corporate action of their own is no better than
a waste of trouble, and is very possibly worse. But to think this is
to completely misconceive the matter. Even a study of this process of
natural distribution by itself would be fruitful of suggestions of a
highly practical kind; but if we would understand the actual forces
to which distribution is due, it must, as I have said already, not
be studied by itself, but taken in connection with others by which
its operation has been accelerated. I spoke of these as consisting of
deliberate and concerted actions in contradistinction to individual
and spontaneous actions; ◆² and these, speaking broadly, have been of
two kinds—the one represented by the organisation of Labour in Trade
Unions, the other by certain legislative measures, which, in a vague
and misleading way, are popularly described as “Socialistic.” Let us
proceed to consider these.
CHAPTER IV
_Of Socialism and Trade Unionism—the Extent and
Limitation of their Power in increasing the
Income of Labour._
[Sidenote ◆1 Legislation of the kind just alluded to is commonly
called Socialistic:]
[Sidenote ◆2 But this way of describing it is inaccurate;]
◆¹ I will speak first of the kind of legislation, popularly called
Socialistic, which certain people now regard with so much hope, and
others with corresponding dread; and I shall show that both of these
extreme views rest on a complete misconception of what this so-called
Socialism is. For what is popularly called Socialism in this country,
so far as it has ever been advocated by any political party, or has
been embodied in any measure passed or even proposed in Parliament, ◆²
does not embody what is really the distinctive principle of Socialism.
Socialism, regarded as a reasoned body of doctrine, rests altogether
on a peculiar theory of production, to which already I have made
frequent reference—a theory according to which the faculties of men
are so equal that one man produces as much wealth as another; or, if
any man produces more, he is so entirely indifferent as to whether
he enjoys what he produces or no, that he would go on producing it
just the same, if he knew that the larger part would at once be taken
away from him. Hence Socialists argue that the existing rewards of
Ability are altogether superfluous, and that the existing system of
production, which rests on their supposed necessity, can be completely
revolutionised and made equally efficacious without them.
[Sidenote ◆1 As all the so-called Socialistic legislation in this
country rests on the very system of production which
professed Socialists aim at destroying.]
But whatever may be the opinions of a few dreamers or theorists, or
however in the future these opinions may spread, the fundamental
principle of Socialism, up to the present time, has never been embodied
in any measure or proposal which has been advocated in this country by
any practical party. ◆¹ On the contrary, the proposals and measures
which are most frequently denounced as Socialistic—even one so extreme
as that of free meals for children at Board Schools—all presuppose
the system of production which is existing, and thus rest on the
very foundation which professed Socialists would destroy.[55] They
merely represent so many ways—wise or unwise—of distributing a public
revenue, which consists almost entirely of taxes on an income produced
by the forces of Individualism.
Now, so far as the matter is a mere question of words, we may call such
proposals or measures Socialistic if we like. On grounds of etymology
we should be perfectly right in doing so; but we shall see that in
that case, with exactly the same propriety, we may apply the word to
the institution of Government itself. The Army, the Navy, and more
obviously still the Police Force, are all Socialistic in this sense of
the word; nor can anything be more completely Socialistic than a public
road or a street. In each case a certain something is supported by a
common fund for the use of all; and every one is entitled to an equal
advantage from it, irrespective of his own deserts, or the amount he
has contributed to its support.
[Sidenote ◆1 What is called Socialism in this country is a
necessary part of every State;]
[Sidenote ◆2 And the principle may probably be extended with good
results, if not pushed too far.]
◆¹ If, then, we agree to call those measures Socialistic to which the
word is popularly applied at present, Socialism, instead of being
opposed to Individualism, is its necessary complement, as we may see
at once by considering the necessity of public roads and a police
force; for the first of these shows us that private property would be
inaccessible without the existence of social property; and the second
that it would be insecure without the existence of social servants.
The good or evil, then, that will result from Socialism, as understood
thus, depends altogether on questions of degree and detail. There is
no question as to whether we shall be Socialistic or no. ◆² We must be
Socialistic; and we always have been, though perhaps without knowing
it, as M. Jourdain talked prose. The only question is as to the precise
limits to which the Socialistic principle can be pushed with advantage
to the greatest number.
[Sidenote ◆1 That it can easily be pushed too far is obvious.]
What these limits may be it is impossible to discuss here. Any general
discussion of such a point would be meaningless. Each case or measure
must be discussed on its own merits. But, though it is impossible to
state what the limits are, it is exceedingly easy to show on what
they depend. They depend on two analogous and all-important facts,
one of which I have already explained and dwelt upon, and which
forms, indeed, one of the principal themes of this volume. This is
the fact, that the most powerful of our productive agents, namely
Ability, cannot be robbed, without diminishing its productivity, of
more than a certain proportion of the annual wealth produced by it;
and, as it is from this wealth that most of the Socialistic fund must
be appropriated, Socialistic distribution is limited by the limits of
possible appropriation. The other fact—the counterpart of this—is as
follows. Just as Ability is paralysed by robbing it of more than a
certain portion of its products, Labour may equally be paralysed by
an unwise distribution of them; and thus their continued production
be at last rendered impossible. ◆¹ For instance, quite apart from any
initial difficulty in raising the requisite fund from the wealthier
class of tax-payers, the providing of free meals for children in
Board Schools is open to criticism, on account of the effect which it
might conceivably have upon parents, of diminishing their industry
by diminishing the necessity for its exercise. Whether such would be
the effect really in this particular case, it is beside my purpose
to consider; but few people will doubt that if such a provision were
extended, and if, even for so short a time as a single six months,
free meals were provided for the parents also, half the Labour of
the country would be for the time annihilated. Labour, however, is
as necessary to production as is Ability, even though, under modern
conditions, it does not produce so much; and it is therefore perfectly
evident that there is a limit somewhere, beyond which to relieve the
individual labourer of his responsibilities by paying his expenses out
of a public fund will be, until human nature is entirely changed, to
dry up the sources from which that fund is derived.
[Sidenote ◆1 The sort of natural limit that there is to its
beneficial effects is shown by the history of our Poor
Laws.]
[Sidenote ◆2 Such Socialism, whatever good it may do, can never do
much in the way of raising money wages.]
As I have said already, it is impossible, in any general way, to give
any indication of what this limit is; but the industrial history of
this country supplies a most instructive instance in which it was
notoriously overpassed, and what was meant as a benefit to Labour,
under circumstances of exceptional difficulty, ended by endangering
the prosperity of the whole community. I refer to our Poor Law at the
beginning of this century, the effects of which form one of the most
remarkable object-lessons by which experience has ever illustrated a
special point in economics. ◆¹ That Poor Law, as Professor Marshall
well observes, “arranged that part of the wages [of the labourers]
should be given in the form of poor relief; and that this should be
distributed amongst them in the inverse proportion to their industry,
thrift, and forethought. The traditions and instincts,” he adds, “which
were fostered by that evil experience are even now a great hindrance to
the progress of the working classes.”[56] Now that particular evil on
which Professor Marshall comments,—namely, that the part of the wages
coming through this Socialistic channel were in the inverse proportion
to what had really been produced by the labourer—is inherent in all
Socialistic measures, the principal object of which is to raise or
supplement wages; as is clearly enough confessed by the Socialistic
motto, “To every man according to his needs.” ◆² It may accordingly be
said that, absolutely necessary as the Socialistic principle is, and
much as may be hoped from its extension in many directions, it neither
has been in the past, nor can possibly be in the future, efficacious to
any great extent in increasing the actual income of the labourer.[57]
[Sidenote ◆1 Trade Unionism in this way can do far more. We will
see first how, and then within what limits.]
◆¹ Such being the case, then, let us now turn our attention to another
principle of an entirely different kind, which, so far as regards
this object, is incalculably more important, and which has constantly
operated in the past, and may operate in the future, to increase the
labourer’s income, without any corresponding disadvantages. I mean
that principle of organisation amongst the labourers themselves which
is commonly called Trade Unionism; and which directly or indirectly
represents the principal means by which Labour is attempting,
throughout the civilised world, to accelerate and regulate the natural
distribution of wealth. I will first, in the light of the conclusions
we have already arrived at, point out to the reader what, speaking
generally, is the way in which Trade Unionism strengthens the hands
of Labour; and then consider what is the utmost extent to which the
strength which Labour now derives from it may be developed.
[Sidenote ◆1 The operation of Trade Unionism in raising wages can
be easily seen at a glance by reference to the simple
community which was imagined in the last chapter.]
◆¹ If the reader has not already forgotten our imaginary community,—our
eight labourers with John and James directing them,—our easiest
course will be to turn again to that. We saw that when the labourers
were employed by John only,—John who found them each making _fifty
pounds_ a year, and enabled them by his Ability each to make _four
hundred pounds_—we saw that the whole of this increase, in the natural
course of things, would be kept by John himself, by whose Ability it
was practically created; for it would not be to John’s advantage to
part with any of it, and the labourers, so long as they all acted
separately, would have no means of extracting any of it from him. It
would be useless for one of them at a time to strike for higher wages.
The striker and the employer would meet on wholly unequal terms;
because the striker, whilst the strike lasted, would be sacrificing the
whole of his income, whilst depriving the employer of only an eighth
part of his. But let us alter the supposition. Let us suppose that
the labourers combine together, and that the whole eight strike for
higher wages simultaneously. The situation is now completely changed;
and the loss that the struggle will entail on both parties is equal.
The employer, like the labourer, will for a time lose all his income.
It is true that if the employer has a reserve fund on which he can
support himself whilst production is suspended, and if the labourer has
no such fund, the employer may still be sure of an immediate victory,
should he be resolved at all costs to resist the labourers’ demand.
But, in any case, the cost of resisting it will be appreciable: it is
a loss which the labourers will be able to inflict on him repeatedly;
and he may see that they would be able, by their strikes, to make him
ultimately lose more than he would by assenting to their demands, or,
at all events, making some concessions to them. It is therefore obvious
that the labourers, in such a case, will be able to extract extra wages
in the inverse proportion to the loss which the employer will sustain
if he concedes them, and in direct proportion to the loss which would
threaten him should he refuse to do so.[58]
[Sidenote ◆1 Combination amongst labourers puts them at an
advantage as against competing employers, until their
demands grow so unreasonable as to force the employers
to combine.]
There is, however, much more to be said. With each increase of their
wages which the labourers succeed in gaining, they will be better
equipping themselves for any fresh struggle in the future; for they
will be able to set aside a larger and larger fund on which to support
themselves without working, and thus be in a position to make the
struggle longer, or, in other words, to inflict still greater injury
on the employer. ◆¹ And if such will be the case when there is one
employer only, much more will it be the case when there are two—when
John and James, as we have seen, are forced by the necessities of
competition to grant part of the labourers’ demands, even before they
are formulated. It might thus seem that there is hardly any limit
to the power which a perfected system of Trade Unionism may one day
confer upon the labourers. There are, however, two which we will
consider now, in addition to others at which we will glance presently.
One is the limit with which we are already familiar, and of which in
this connection I shall again speak, namely, the limit of the minimum
reward requisite as a stimulus to Ability. The other is a limit closely
connected with this, which is constituted by the fact that if the
demands of Labour are pushed beyond a certain point against disunited
employers, the employers will combine against Labour, as Labour has
combined against them, and all further concessions will be, at all
costs, unanimously refused.
[Sidenote ◆1 The ultimate tendency of Trade Unionism is to make
any conflict between the employer and employed like a
conflict between two individuals.]
[Sidenote ◆2 The limit to which it can raise wages is fixed by the
minimum reward that suffices to make Ability operative.]
◆¹ Now a situation like this is the ultimate situation which all Trade
Unionism tends to bring about. It tends, by turning the labourers into
a single body on the one hand, and the employers into a single body on
the other, to make the dispute like one between two individuals; and
though for many reasons this result can never be entirely realised,[59]
the limits of the power of Trade Unionism can be best seen by
imagining it. What, then, is the picture we have before us? We have
Labour and Ability in the character of two men confronting each other,
each determined to secure for himself the largest possible portion of
a certain aggregate amount of wealth which they produce together. Now
we will assume, though this is far from being the case, that neither
of them would shrink, for the sake of gaining their object, from
inflicting on the other the utmost injury possible; and we shall see
also, if we make our picture accurate, that Labour is physically the
bigger man of the two. It happens, however, that the very existence
of the wealth for the possession of which they are prepared to fight
is entirely dependent on their peacefully co-operating to produce it;
so that if in the struggle either disabled the other, he would be
destroying the prize which it is the object of his struggle to secure.
Thus the dispute between them, however hostile may be their temper,
must necessarily be of the nature not of a fight, but of a bargain;
and will be settled, like other bargains, by the process of compromise
which Adam Smith calls “the higgling of the market.” ◆² When such a
bargain is struck, there will be a limit on both sides: a maximum limit
to what Ability will consent to give, and a minimum limit to what
Labour will consent to receive. There will be a certain minimum which
Ability must concede in the long run; because if it did not give so
much, it would indirectly lose more: and conversely there is a certain
maximum more than which Labour will never permanently obtain; because
if it did so the stimulus to Ability would be weakened, and the total
product would in consequence be diminished, out of which alone the
increased share which Labour demands can come.
[Sidenote ◆1 Thus the possible power of Trade Unionism in raising
wages is far more limited than it seems.]
[Sidenote ◆2 If we judge hastily by the magnitude of modern Labour
combinations, and the extent to which they can terrorise
the community.]
◆¹ Thus the extent to which Trade Unionism can assist in raising
wages, no matter how wide and how complete its development, is far
more limited than appearances lead many people to suppose. For the
labourers, not only in this country, but all over the world, are
growing yearly more expert in the art of effective combination, and
are increasing their strength by a vast network of alliances; ◆²
and from time to time the whole civilised world is startled at the
powers of resistance and destruction which they show themselves to
have acquired, and which they have called into operation with a view
to enforcing their demands. The gas-strikes and the dock-strikes in
London, and the great railway-strikes, and the strike at Homestead in
America, are cases in point, and are enough to illustrate my meaning.
They impress the imagination with a sense that Labour is becoming
omnipotent. But in all these Labour movements there is one unchanging
feature, which seems never to be realised either by those who take part
in them or by observers, but on which really their entire character
depends, and which makes their actual character entirely different
from what it seems to be. That this feature should have so completely
escaped popular notice is one of the most singular facts in the history
of political blindness, and can be accounted for only by the crude
and imperfect state in which the analysis of the causes of production
has been left hitherto by economists. The feature I allude to is as
follows.
[Sidenote ◆1 The imperfect state of economic science has allowed a
totally false idea to be formed as to the force which
Trade Unionism represents.]
[Sidenote ◆2 The force which it represents is not Labour at all,
but a power of combining in order to abstain from
labour.]
[Sidenote ◆3 And even this power could never be universal, nor
last long; and whilst it lasts it depends on Capital.]
◆¹ These great developments of Trade Unionism which are commonly called
Labour movements do not really, in any accurate sense, represent
Labour at all. ◆² All that they represent in themselves is a power to
abstain from labouring. In other words, the increased command of the
labourers over the machinery of combination, and even their increased
command of the tactics of industrial warfare, represents no increased
command over the smallest of industrial processes, nor puts them in a
better position, without the aid of Ability, to maintain—still less
to increase by the smallest fraction—the production of that wealth in
which they are anxious to share farther. A strike therefore, however
great or however admirably organised, no more represents any part of
the power of Labour than the mutiny organised amongst the crew of
Columbus, with a view to making him give up his enterprise, represented
the power which achieved the discovery of America. And this is not
true of the average labourers only; it is yet more strikingly true of
the superior men who lead them. From the ranks of the labourers, men
are constantly rising whose abilities for organising resistance are
remarkable, and indeed admirable; but it is probably not too much to
say that no leader who has devoted himself to organising the labourers
for resistance has ever been a man capable, to any appreciable degree,
of giving them help by rendering their labour more productive. Those
who have been most successful in urging their fellows to _ask_ for
more, have been quite incompetent to help them to _make_ more. Thus
these so-called Labour leaders, no matter how considerable may be
many of their intellectual and moral qualities, are indeed leaders of
labourers; but they are no more leaders of Labour than a sergeant who
drilled a volunteer corps of art students could be called the leader
of a rising school of painting; and a strike is no more the expression
of the power of Labour than Byron’s swimming across the Hellespont was
an expression of the power of poetry, or than Burns’s poetry was an
expression of the power of ploughing. A strike is merely an expression
of the fact that the labourers, for good or ill, can acquire, under
certain circumstances, the power to cease from labouring, and can use
this as a weapon not of production, but of warfare. ◆³ The utmost that
the power embodied in Trade Unionism could accomplish would be to bring
about a strike that was universal; and although no doubt it might do
this theoretically, it could never do so much as this practically, for
the simple reason that, as I have already pointed out, Labour could
not be entirely suspended for even a single day. Further, the more
general the suspension was, the shorter would be the time for which it
could be maintained; and to mention yet another point to which I have
referred already, it could be maintained only, for no matter how short
a time, by the assistance of the very thing against which strikes are
ostensibly directed, namely Capital; and not even Capital could make
that time long. Nature, who is the arch-taskmaster, and who knows no
mercy, would soon smash like matchwood a Trade Union of all the world,
and force the labourers to go back to their work, even if no such body
as an employing class existed.
All the ideas, then, derived from the recent developments of Trade
Unionism, that Labour, through its means, will acquire any greatly
increasing power of commanding an increasing share of the total income
of the community, rests on a total misconception of the power that
Trade Unionism represents, and a total failure to see the conditions
and things that limit it. It is limited firstly by Nature, who makes
a general strike impossible; secondly by Capital, without which any
strike is impossible; and lastly by the fact that the labourers of the
present day already draw part of their wages from the wealth produced
by Ability; that any further increase they must draw from this source
entirely; and that, being thus dependent on the assistance of Ability
now, Trade Unionism, as we have seen, has not the slightest tendency to
make them any the less dependent on it in the future.
When the reader takes into account all that has just been said, he
will be hardly disposed to quarrel with the following conclusions of
Professor Marshall, who derives them from history quite as much as from
theory, and who expresses himself with regard to Trade Unions thus:
“Their importance,” he says, “is certainly great, and grows rapidly;
but it is apt to be exaggerated: for indeed many of them are little
more than eddies such as have always fluttered over the surface of
progress. And though they are now on a larger and more imposing scale
in this age than before, yet much as ever the main body of the movement
depends on the deep, silent, strong stream of the tendencies of Normal
Distribution and Exchange.”
[Sidenote ◆1 Trade Unionism, in raising wages, can do little more
than accelerate or regulate a rise that would take place
owing to other causes.]
[Sidenote ◆2 But none the less it may be of great benefit to the
labourers, and remove many evils which a general rise in
wages has not removed, and could not remove by itself.]
◆¹ But in the case of Trade Unionism, just as in that of Socialism,
because the extent is limited to which it can raise the labourers’
income, it does not follow that within these limits its action may
not be of great and increasing benefit. ◆² Thus Mill, whose general
view of the subject coincides broadly with that of Professor Marshall,
points out that though a Union will never be able permanently to raise
wages above the point to which in time they would rise naturally, nor
permanently to keep them above a point to which they would naturally
fall, it can hasten the rise, which might otherwise be long delayed,
and retard the fall, which might otherwise be premature; and the gain
to Labour may thus in the long run be enormous. Unions have done this
for Labour in the past; and with improved and extended organisation,
they may be able to do it yet more effectively in the future; and
they have done, and may continue to do many other things besides—to do
them, and to add to their number. It is beyond my purpose to speak of
these things in detail. In the next chapter, I shall briefly indicate
some of them; but the main points on which I am concerned to insist are
simpler; and the next chapter—the last—will be devoted principally to
these.
CHAPTER V
_Of the enormous Encouragement to be derived by
Labour from a true View of the Situation;
and of the Connection between the Interests
of the Labourer and Imperial Politics._
[Sidenote ◆1 Let me again remind the reader of the object of this
book.]
[Sidenote ◆2 It is to show that the labourer’s income depends on
the general forces of production firstly, and secondly
on those of distribution.]
◆¹ The object of this work, as I explained in the opening chapter, is
to point out to the great body of the people—that is to say, to the
multitude of average men and women, whose incomes consist of the wages
of ordinary Labour—the conditions which determine the possibility of
these incomes being increased, and so to enable them to distinguish
the true means from the false, which they may themselves adopt with a
view to obtaining this result. ◆² And in order to show them how their
present incomes may be increased, I have devoted myself to showing
the reader how their present incomes have been obtained. I have done
this by fixing his attention on the fact that their present incomes
obviously depend upon two sets of causes: first, the forces that
produce the aggregate income of the country; and secondly, the forces
that distribute a certain portion of this amongst the labourers. And
these last I have examined from two points of view; first exhibiting
their results, and then indicating their nature. Let me briefly
recapitulate what I have said about both subjects.
[Sidenote ◆1 I have just shown how the normal forces of
distribution are all in favour of the labourer, contrary
to the vulgar view of the matter.]
◆¹ I have shown that, contrary to the opinion which is too commonly
held, and which is sedulously fostered by the ignorance alike of the
agitator and the sentimentalist, the forces of distribution which
are actually at work around us, which have been at work for the past
hundred years, and which are part and parcel of our modern industrial
system, have been and are constantly securing for Labour a share of
every fresh addition to the total income of the nation; and have, for
at all events the past fifty years, made the average income of the
labouring man grow faster than the incomes of any other members of the
community. They have, in fact, been doing the very thing which the
agitator declared could be done only by resisting them; and they have
not only given Labour all that the agitator has promised it, but they
have actually given it more than the wildest agitator ever suggested to
it. I have shown the reader this; and I have shown him also that the
forces in question are primarily the spontaneous forces—“deep, strong,
and silent,” as Professor Marshall calls them—“of normal distribution
and exchange”; how that these have been, and are seconded by the
deliberate action of men: by extended application of what is called the
Socialistic principle, and to a far greater extent by combinations of
the labourers amongst themselves.
[Sidenote ◆1 This should encourage, and not discourage, political
action on behalf of the labourers.]
The practical moral of all this is obvious. As to the normal and
spontaneous forces of distribution, what a study of them inculcates on
the labourer is not any principle of political action, but a general
temper of mind towards the whole existing system. It inculcates general
acquiescence, instead of general revolt. Now temper of mind, being
that from which policies spring, is quite as important as the details
of any of the policies themselves. Still it must be admitted that
were the normal forces of distribution the only forces that had been
at work for the labourer’s benefit, the principal lesson they would
teach him would be the lesson of _laisser aller_. But though these
forces have been the primary, they have not been the only forces; and
the deliberate policies by which men have controlled their operation,
and have applied them, have been equally necessary in producing the
desired results. The normal forces of distribution may be compared
to the waters of the Nile, which would indeed, as the river rises,
naturally fertilise the whole of the adjacent country, but which would
do as much harm as good, and do but half the good they might do, if
it were not for the irrigation works devised by human ingenuity. And
what these works are to the Nile, deliberate measures have been to the
normal forces of distribution. The growing volume of wealth, which is
spreading itself over the fields of Labour, even yet has failed to
reach an unhappy fraction of the community; the tides and currents flow
with intermittent force, which is often destructive, still more often
wasted, rarely husbanded and applied to the best advantage. Had it not
been for the deliberate action of men,—for legislation in favour of the
labourers, and their own combinations amongst themselves,—these evils
which have accompanied their general progress would have been greater.
◆¹ Wise action in the future will undoubtedly make them less; and may,
though it is idle to hope for Utopias in this world, cause the larger
and darker part of them to disappear.
[Sidenote ◆1 Much is to be done beyond the mere raising of the
labourers’ wages; and Trade Unionism and so-called
Socialism vary much.]
The lesson, then, to be drawn from what I have urged in the preceding
chapter is, taken as a whole, no lesson of _laisser faire_. Though
neither Socialism nor Trade Unionism may have much, or perhaps any,
efficacy in raising the maximum of the labourer’s actual income,—though
this must depend on forces which are wholly different,—yet Trade
Unionism, and the principle which is called Socialism, may be of
incalculable service in bringing about conditions under which that
income may be earned with greater certainty, and under improved
circumstances, and, above all, be able to command more comforts,
conveniences, and enjoyments. Thus many of these measures which I have
called Socialistic under protest, may be regarded as an interception
of a portion of the labourer’s income, and an expenditure of it on his
account by the State in a way from which he derives far more benefit
than he would, or could have secured if he had had the spending of it
himself; whilst Trade Unionism, though it cannot permanently raise his
wages beyond a maximum determined by other causes, may, as has been
said before, raise them to this earlier than they would have risen
otherwise, and prevent what might otherwise occur—a fall in them before
it was imperative. ◆¹ Trade Unionism, however, has many other functions
besides the raising of wages. It aims—and aims successfully—at
diminishing the pain and friction caused amongst the labourers by the
vicissitudes alike of industry and of life. It has done much in this
direction already; and in the future it may do more.
The fact then that the normal forces of distribution must, if things
continue their present course, increase the income of the labourer,
even without any action on their own part, though it is calculated
to change the temper in which the labourers approach politics,
is, instead of being calculated to damp their political activity,
calculated to animate it with far more hope and interest than the
wild denunciations and theories of the contemporary agitator, which
those who applaud them do but half believe. It will to the labourer
be far more encouraging to feel that the problem before him is not
how to undermine a vast system which is hostile to him, and which,
though often attacked, has never yet been subverted, but merely to
accommodate more completely to his needs a system which has been, and
is, constantly working in his favour.
[Sidenote ◆1 Whilst as to mere wages, if the labourers will judge
of the possible near future from the actual near past,
the prospects before them must exceed their wildest
dreams hitherto.]
◆¹ Let him consider the situation well. Let him realise what that
system has already done for him. In spite of the sufferings which,
owing to various causes, were inflicted on the labouring classes
during the earlier years of the century,—many of them of a kind whose
recurrence improved policy may obviate,—the income of Labour has, on
the aggregate, continued to rise steadily. Let him consider how much.
I have stated this once, let me state it now again. During the first
sixty years of this century the income of the labouring classes rose
to such an extent that in the year 1860 it was equal (all deductions
for the increase of population being made) to the income of all classes
in the year 1800. But there is another fact, far more extraordinary,
to follow; and that is, that a result precisely similar has been
accomplished since in one-half of the time. In 1880 the income of the
labouring classes was (all deductions for the increase of population
being made) more than equal to the income of all classes in the year
1850. Thus the labouring classes in 1860 were in precisely the same
pecuniary position as the working classes in 1800 would have been had
the entire wealth of the kingdom been in their hands; and the working
classes of to-day are in a better pecuniary position than their fathers
would have been could they have plundered and divided between them the
wealth of every rich and middle-class man at the time of the building
of the first Great Exhibition. I repeat what I have said before—that
this represents a progress, which the wildest Socialist would never
have dreamed of promising.
And now comes what is practically the important deduction from these
facts. What has happened in the near past, will, other things being
equal, happen in the near future. If the same forces that have been
at work since the year 1850 continue to be at work, and if, although
regulated, they are not checked, the labourers of this country will in
another thirty years have nearly doubled the income which they enjoy
at present. Their income will have risen from something under _seven
hundred millions_ to something over _thirteen hundred millions_. The
labourers, in fact, will, so far as money goes, be in precisely the
same position as they would be to-day if, by some unheard-of miracle,
the entire present income of the country were suddenly made over to
them in the form of wages, and the whole of the richer classes were
left starving and penniless. This is no fanciful calculation. It is
simply a plain statement of what must happen, and will happen, if only
the forces of production continue to operate for another thirty years
as they have been operating steadily for the past hundred. Is not this
enough to stimulate the labourer’s hopes, and convince him that for him
the true industrial policy is one that will adjust his own relations
with the existing system better, and regulate better the flow of the
wealth which it promises to bring him, rather than a policy whose aim
is to subvert that system altogether, and in especial to paralyse the
force from which it derives its efficacy?
[Sidenote ◆1 But the one point to remember is that all their
prosperity depends on the continued action of Ability,
and the best conditions being secured for its operation,]
◆¹ And this brings me back to that main, that fundamental truth which
it is the special object of this volume to elucidate. The force which
has been at the bottom of all the labourers’ progress during the past,
and on the continued action of which depends all these hopes for their
future—that force is not Labour but Ability; it is a force possessed
and exercised not by the many but by the few. The income which Labour
receives already is largely in excess of what Labour itself produces.
Were Ability crippled, or discouraged from exerting itself, the entire
income of the nation would dwindle down to an amount which would not
yield Labour so much as it takes now; whilst any advance, no matter how
small, on what Labour takes now must come from an increasing product,
which Ability only can produce.
[Sidenote ◆1 Labour must remember that Ability is a living force
which cannot be appropriated as Capital might be; but
that it must be encouraged and propitiated.]
◆¹ Hitherto this truth, though more or less apparent to economic
writers and thoughtful persons generally, has been apparent to them
only by fits and starts, and has never been assigned any definite
or logical place in their theories of production, or has ever been
expressed clearly; and, owing to this cause, not only has it been
entirely absent from the theories of the public generally, but its
place has been usurped by a meaningless and absurd falsehood. In place
of the living force Ability, residing in living men, popular thought,
misled by a singular oversight of the economists, has substituted
Capital—a thing which, apart from Ability, assists production as
little as a dead or unborn donkey; and hence has arisen that dangerous
and ridiculous illusion—sometimes plainly expressed, often only
half-conscious—to the effect that if the labourers could only seize
upon Capital they would be masters of the entire productive power of
the country. The defenders of the existing system have been as guilty
of this error as its antagonists; and the attack and defence have
been conducted on equally false grounds. Thus in a recent strike,
the final threat of the employers—men who had created almost the
whole of their enormous business—was that, if the strikers insisted
upon certain demands, the Capital involved in the business would be
removed to another country; and a well-known journal, professing to be
devoted to the interest of Labour, conceived that it had disposed of
this threat triumphantly by saying that, of the Capital a large part
was not portable, and that the employers might go if they chose, and
leave this behind. A great musician, who conceived himself to have been
ill-treated in London, might just as well have threatened that he would
remove his concert-room to St. Petersburg, when the principal meaning
of his threat would be that he would remove _himself_; and the journal
referred to might just as well have said, had the business in question
been the production of a great picture, “The painter may go if he
likes—what matter? We can keep his brushes.”
The real parties, then, to the industrial disputes of the modern
world are not active labourers on one side, and idle, perhaps idiotic
owners of so much dead material on the other side: but they are, on
the one side, the vast majority of men, possessed of average powers
of production, and able to produce by them a comparatively small
amount; and, on the other, a minority whose powers of production are
exceptional, who, if we take the product of the average labourer as a
unit, are able to multiply this to an almost indefinite extent, and who
thus create an increasing store of Capital to be used by themselves, or
transmitted to their representatives, and an increasing income to be
divided between these and the labourers. In other words, the dispute is
between the many who desire to increase their incomes, and the few by
whose exceptional powers it is alone possible to increase them. Such
has been the situation hitherto; it is such at the present moment; and
the whole tendency of industrial progress is not to change, but to
accentuate it. As the productivity of Human Exertion increases, the
part played by Ability becomes more and more important. More and more
do the average men become dependent on the exceptional men. So long as
the nation at large remembers this, no reforms need be dreaded. If the
nation forgets this, it will be in danger every day of increasing, by
its reforms, the very evils it wishes to obviate, and postponing or
making impossible the advantages it wishes to secure.
[Sidenote ◆1 In this view there is nothing derogatory to Labour.]
[Sidenote ◆2 Ability does not _improve_ the products of Labour,
but multiplies them.]
◆¹ And now let me pause to point out to the reader that to insist thus
on the subordinate position of Labour as a productive agent is to
insist on nothing that need wound the self-love of the labourers. In
asserting that a man who can produce wealth only by Labour is inferior
to a man who can produce ten times the amount by Ability, we assert
his inferiority in the business of production only. In other respects
he may be the better, even the greater man of the two. Shakespeare or
Turner or Beethoven, if employed as producers of commodities, would
probably have been no better than the ordinary hands in a factory, and
far inferior to many a vulgar manufacturer. Again,—and it is still
more important to notice this,—if we confine our attention to single
commodities, many commodities produced by Labour[60] alone are better
and more beautiful than any similar ones produced by Labour under the
direction of Ability. ◆² Of some the reverse is true—notably those
whose utility depends on their mechanical precision; but of others, in
which beauty or even durability is of importance, such as fine stuffs
or carpets, fine paper and printing, carved furniture, and many kinds
of metal work, it is universally admitted that the handicraftsman,
working under his own direction, was long ago able to produce results
which Labour, directed by Ability, has never been able to improve
upon, and is rarely able to equal. What Ability does is not to improve
such commodities, but to multiply them, and thus convert them from
rare luxuries into generally accessible comforts. A paraffin lamp, for
instance, cast or stamped in metal, and manufactured by the thousand,
might not be able to compare for beauty with a lamp of wrought iron,
made by the skill and taste of some single unaided craftsman; but
whereas the latter would probably cost several guineas, and be in reach
only of the more opulent classes, the former would probably cost about
half a crown, and, giving precisely as much light as the other, would
find its way into every cottage home, and take the place of a tallow
dip or of darkness. Now since what the labouring classes demand in
order to improve their position is not _better_ commodities than can be
produced by hand, but _more_ commodities than can be produced by hand,
Ability is a more important factor in the case than Labour; but none
the less, from an artistic and moral point of view, the highest kind
of Labour may stand higher than many of the most productive kinds of
Ability.
[Sidenote ◆1 Ability, in yielding up part of its proceeds to
Labour, is discharging a moral debt.]
◆¹ Nor, again, do we ascribe to Labour any undignified position in
insisting that much of its present income, and any possible increase
of it, is and must be taken from the wealth produced by Ability. For
even were there nothing more to be said than this, Labour is in a
position, or we assume it will be, to command from Ability whatever
sum may be in question, and can be neither despised nor blamed for
making the best bargain for itself that is possible. But its position
can be justified on far higher grounds than these. In the first place,
Labour, by submitting itself to the guidance of Ability,—no matter
whether the submission was voluntary, which it was not, or gradual,
unconscious, and involuntary, which it was,—surrendered many conditions
of life which were in themselves desirable, and has a moral claim on
Ability to be compensated for having done so; whilst Ability, for its
part, owes a moral debt to Labour, not upon this ground only, but on
another also—one which thus far has never been recognised nor insisted
on, but out of which arises a yet deeper and stronger obligation. I
have shown that of the present annual wealth of the nation Ability
creates very nearly two-thirds. But it may truly be said to have
created far more than this. It may be said to have created not only
two-thirds of the income, but also to have created two-thirds of the
inhabitants. If the minority of this country, in pursuit of their own
advantage, had not exercised their Ability and increased production as
they have done, it is not too much to say that of our country’s present
inhabitants _twenty-four millions_ would never have been in existence.
Those, then, who either contributed to this result themselves, or
inherit the Capital produced by those who did so, are burdened by the
responsibility of having called these multitudes into life; and thus
when the wages of Labour are augmented out of the proceeds of Ability,
Ability is not robbed, nor does Labour accept a largess, but a duty is
discharged which, if recognised for what it is, and performed in the
spirit proper to it, will have the effect of really uniting classes,
instead of that which is now so often aimed at—of confusing them.
[Sidenote ◆1 But Labour must not forget that it owes a debt to
Ability;]
[Sidenote ◆2 And that this debt will grow heavier as the national
wealth increases.]
◆¹ The labourers, on the other hand, must remember this: that having
been called into existence, no matter by what means, and presumably
wishing to live rather than be starved to death, they do not labour
because the men of Ability make them, but—as I have before pointed
out—because imperious Nature makes them; ◆² and that the tendency of
Ability is in the long run to stand as a mediator between them and
Nature, and whilst increasing the products of their Labour, to diminish
its duration and severity.
There are two further points which yet remain to be noticed.
I have hitherto spoken of the increase of wealth and wages, as if that
were the main object on which the labourers should concentrate their
attention, and which bound up their interests so indissolubly with
those of Ability. But it must also be pointed out that were Ability
unduly hampered, and its efficacy enfeebled either by a diminution of
its rewards, or by interference with its action, the question would
soon arise, not of how to increase wages, but of how to prevent their
falling. This point I have indeed alluded to already; but I wish now
to exhibit it in a new light. As I mentioned in an earlier chapter, of
the inhabitants of this country, who are something like _thirty-eight
millions_ in number, _twenty-six millions_ live on imported corn,
and about _thirteen millions_ live on imported meat; or, to put it
in another way, we all of us—the whole population—live on imported
meat for nearly _five months_ of the year, and on imported corn for
_eight months_; and were these foreign food supplies interfered with,
there are possibilities in this country of suffering, of famine, and
of horror for all classes of society, to which the entire history of
mankind offers us no parallel. This country, more than any country in
the world, is an artificial fabric that has been built up by Ability,
half of its present wealth being,—let me repeat once more,—the
marvellous product of the past fifty years; and the constant action
of Ability is just as necessary to prevent this from dwindling as
it is to achieve its increase. But in order that Ability may exert
itself, something more is needed than mere freedom from industrial
interference, or security for its natural rewards; and that is the
maintenance of the national or international position which this
country has secured for itself amongst the other countries of the world.
[Sidenote ◆1 And this brings us round to what is commonly called
Politics; which have, as this book will show, a far
closer interest for the labourer than is commonly
thought.]
◆¹ And this brings us to that class of questions which, in ordinary
language, are called questions of policy, and amongst which foreign
policy holds a chief place. Successful foreign policy means the
maintenance or the achievement of those conditions that are most
favourable to the industries of our own nation; and this means the
conditions that are most favourable to the homes of our own people. It
is too commonly supposed that the greatness and the ascendancy of our
Empire minister to nothing but a certain natural pride; and natural
pride, in its turn, is supposed by some to be an immoral and inhuman
sentiment peculiar to the upper classes. No one will be quicker to
resent this last ludicrous supposition than the great masses of the
British people; but, all the same, they are apt to think the former
supposition correct,—to regard the mere glory of the country as the
principal result of our Empire; and such being the case, they are, on
occasion, apt to be persuaded that glory can be bought at too dear
a price, in money, struggle, or merely international friction. At
all events, they are constantly tempted to regard foreign politics
as something entirely unconnected with their own immediate, their
domestic, their personal, their daily interests.
I am going to enter here on no debatable matter, nor discuss the value
of this or that special possession, or this or that policy. It is
enough to point out that, to a very great extent, on the political
future of this country depends the magnitude of its income, and on the
magnitude of its income depends the income of the working classes—the
warmth of the hearth, the supply of food on the breakfast-table, of
every labourer’s home,—and that when popular support is asked for some
foreign war, the sole immediate aim of which seems the defence of some
remote frontier, or the maintenance of British prestige, it may well be
that our soldiers will be really fighting for the safety and welfare
of their children and wives at home—fighting to keep away from British
and Irish doors not the foreign plunderer and the ravisher, but enemies
still more pitiless—the want, the hunger, and the cold that spare
neither age nor sex, and against which all prayers are unavailing.
APPENDIX
_Early in this year [1894] I published in the_ Fortnightly Review _two
articles under the title of “Fabian Economics.” These articles were
not written or published until some months after the first publication
of the present volume. I wrote them then, because then, for the first
time, I happened to see a volume from which previously I had seen some
extracts only—a volume entitled_ Fabian Essays, _in which the doctrines
of contemporary English Socialism are set forth; and my aim was to
apply the general arguments embodied in_ Labour and the Popular Welfare
_to the position of the Socialists, as definitely stated by themselves.
One of the Fabian Essayists—Mr. Bernard Shaw—came forward in the_
Fortnightly Review _to attach my arguments, with what success will be
shown by the subjoined reply to him, which was originally published in
the same Review, under the title of “A Socialist in a Corner.” A few
paragraphs which would be here superfluous are omitted._
A SOCIALIST IN A CORNER
_Fortnightly Review, May 1894_
Magazine controversy on complicated and serious subjects, though it
can never be exhaustive, may yet be of great use, if it calls the
attention of the public to the main points at issue, if it helps men
to judge for themselves of the character and weight of the arguments
which are capable of being employed on one side and the other; and,
above all, if by elucidating the points on which opponents agree, the
area of actual dispute be narrowed down and defined. For this reason it
seems to me not useless to examine briefly the answer which, on behalf
of a body of Socialists, Mr. Shaw has made to the criticisms which,
in this Review and elsewhere, I have recently directed against the
entire Socialistic position—and particularly against that position as
expounded by himself and his colleagues.
Not only Mr. Shaw, but the other Fabian writers, are persons, at
all events, of sufficient intelligence, sufficient knowledge, and
sufficient literary skill, to render the way in which they put the
case for Socialism a valuable indication of what the strength of that
case is. It was for this reason that I thought _Fabian Essays_ worth
criticising; and for this reason I think Mr. Shaw’s answer worth
criticising also. It is an indication not only of how Mr. Shaw can
argue as an individual, but of what arguments are available in defence
of the position which he occupies; and Mr. Shaw has taken trouble
himself to make this view still more plausible, by the hints he gives
that in the composition of his answer he has sought the advice and
counsel of his faithful colleagues; so that his pages represent the
wisdom of many, though presumably the wit of one.
I propose, then, to show, in as few words as possible, that Mr. Shaw
has not only proved himself incapable of shaking a single one of the
various arguments advanced by me, but that whilst flattering himself
that, in his own phrase, he has been taking his opponent’s scalp, the
scalp which he holds, and has really taken, is his own. His criticism
divides itself into two main parts. One is an admission of the truth
of one of the fundamental propositions on which I insisted. The second
is a complete evasion of another, and the substitution for it of an
ineptitude which is entirely of Mr. Shaw’s invention, and which he
finds it so easy and so exciting to demolish, that he sets it up as
often as he knocks it down, for the pleasure of displaying his prowess
over again.
Here, then, are three propositions to be dealt with: First, the
primary proposition on which I insisted, and the truth of which Mr.
Shaw admits; secondly, a proposition on which Mr. Shaw declares that
I insisted, but which is really an invention of his own; and thirdly,
a proposition on which I did insist actually, but which Mr. Shaw
never even states, much less attempts to meet. This third proposition
I shall briefly state once again when I have dealt with the two
others, and show how Fabian philosophy—indeed the philosophy of all
Socialism—completely fails to meet it.
To begin, then, with the first. My primary object has been to exhibit
the absolute falsehood of the Socialistic doctrine that _all wealth
is due to labour_, and to replace this by a demonstration that under
modern conditions of production, labour is not only not the sole
producer of wealth, but does not even produce the principal part of
it. The principal producing agent, I have pointed out, is what I have
called Industrial Ability—or the faculty which, whilst exercised by
a few, directs the labour of the many; and if this truth is once
accepted, it completely cuts away from Socialism the whole of its
existing foundations, and renders absolutely meaningless the whole of
its popular rhetoric. For the most powerful argumentative appeal which
Socialism can make to the majority is merely some amplification of the
statement, which is no doubt plausible, and is advanced by Socialists
as an axiom, that the exertions of the majority—or, in other words,
Labour—has produced all wealth, and that therefore the majority not
only ought to possess it, but will be able to possess it by the simple
process of retaining it. But the moment the productive functions of
industrial ability are made clear, the doctrine which seemed an axiom
is reduced to an absurdity; and what might before have seemed a paradox
becomes a simple and intelligible truth—the doctrine, namely, that a
comparatively few persons, with certain exceptional gifts, are capable
of producing more wealth than all the rest of the community; and that
whoever may produce the wealth which the rich classes possess, it is
at all events not produced by the multitude, and might, under changed
conditions, be no longer produced at all.
Now this doctrine of Ability Mr. Shaw accepts, and completely
surrenders and throws overboard the Socialistic doctrine of Labour. He
does indeed endeavour to make the surrender seem less complete than it
is, partly by irrelevant comments on some minor points,[61] and partly
by insisting on certain qualifications which are perfectly true, and to
which I have myself often elsewhere alluded, but which, as I shall show
presently, are, on his own admission, of small practical importance,
and do not appreciably affect the main position. For instance Mr.
Shaw argues that it is not always the most able man who, in any given
business, is to be found directing it. This also is no doubt true.
It merely means, however, that of industrial ability the same thing
may be said, which has so truly been said of Government—that it is
always _in_, or _passing into_, the hands of the most powerful section
of the community. Businesses conducted by men of inferior Ability
are gradually superseded by businesses conducted by men of superior
Ability. Men’s actual positions may be a few years behind or before
their capacities, but for all practical purposes they coincide with
them and the utmost that Mr. Shaw’s contention could prove would be
that some members of a minority are in places which should be occupied
by other members of a minority; not that the majority could take the
places of either.
But I merely mention these points in passing, and waste no pains in
insisting on them or pressing them home, because their practical
insignificance is admitted by Mr. Shaw himself. The great body of
men—of men selected at random, even if they should enjoy the advantages
of superior position and education—“could not,” he says, “invent a
wheelbarrow, much less a locomotive.” He amplifies this admission
by quoting the case of an acquaintance of his, whose exceptional
Ability secured him _four thousand pounds_ a year, because without the
assistance of that Ability his employer would have lost more than this
sum. “Other men,” he proceeds, “have an eye for contracts, or what not,
or are born captains of industry, in which case they go into business
on their own account, and make ten, twenty, or two hundred per cent,
_where you or I should lose five_.... All these people are _rentiers_
of Ability.” Again he quotes with emphatic approval a passage from an
American writer, whom he praises as a skilled economist; and using this
passage as a text, endorses its meaning in these words of his own.
“The able man, the actual organiser and employer, alone is able to find
a use for mere manual deftness, or for that brute strength, and heavy
bank balance, which any fool may possess.” “The capitalist and the
labourer run helplessly to the able man.” “He is the only party in the
transaction capable of the slightest initiative in production.”
I need not add anything to these admissions. They constitute, as I
say, a complete surrender of the Socialistic doctrine of Labour, and
an emphatic admission of the primary proposition I advanced as to the
productive function of Ability. It is enough then to say, that so far
as the question of Labour is concerned, Mr. Shaw throws over completely
all the doctrines of the Gotha programme, the Erfurt programme, of Karl
Marx and his disciples, of Mr. Hyndman and his Social Democrats—in fact
the cardinal doctrine of Socialism as hitherto preached everywhere.
Having disposed then of the point as to which Mr. Shaw agrees with
me, I will pass on to the point on which he supposes me to disagree
with him; and this is the point to which he devotes the larger part
of his article. Everything else is thrown in as a sort of by-play.
This point is as follows. Speaking roughly, and adopting the following
figures, not because I consider them accurate, but merely because they
agree with Mr. Shaw’s, and are for the present purpose as good as any
others, above _seven hundred million pounds_ of the national income go
to the non-labouring classes. Mr. Shaw, as I gather, would set down
about _two hundred million pounds_ of this as the earnings or profits
of Ability; whilst he contends that the remainder is the product
neither of Ability nor Labour, but of capital or land. It represents
the assistance which land and capital give to the two other productive
agents; and it goes to those who possess this land and capital,
simply on account of the rights which they possess as passive owners.
This sum, which Mr. Shaw estimates at about _five hundred million
pounds_,[62] ought, he contends, still to go to the owners—in fact, it
must always go to its owners; but the owners should be changed. They
should be the whole nation instead of a small class.
Now Mr. Shaw says that my great mistake has relation to these _five
hundred million pounds_. He says that, having argued rightly enough
that _two hundred million pounds_ or so are the genuine product or
rent of actual and indispensable Ability, I have committed the absurd
mistake of confusing with this rent of ability, the rent of land, of
houses, and above all, the interest on capital. “Mr. Mallock,” he
says, “is an inconsiderate amateur, who does not know the difference
between profits and earnings on the one hand, and rent and interest on
the other.” And he summarises my views on the subject by saying, that
I “see in every railway shareholder the inventor of the locomotive or
the steam-engine,” and that I gravely maintain that the _three hundred
thousand pounds_ a year which may form the income of one or two great
urban landlords is produced by the exercise of some abnormal ability on
their parts. This supposed doctrine of mine forms the main subject of
Mr. Shaw’s attack. He is exuberantly witty on the subject. He turns
the doctrine this way and that, distorting its features into all sorts
of expressions, laughing afresh each time he does so. He calls me his
“brother” and his “son”; he quotes nursery rhymes at me. He alludes to
my own income and the income of the Duke of Westminster, and intimates
a desire to know whether the Duke being, so he says, many hundred
times as rich as myself, I am many hundred times as big a fool as the
Duke. In fact, he has recourse to every argumentative device which his
private sense of humour and his excellent taste suggest.
The immediate answer to all this is very simple—namely, that I never
gave utterance to any such absurdity as Mr. Shaw attributes to me,
but that, on the contrary, I have insisted with the utmost emphasis
on this very distinction between profits and earnings, and rent and
interest, which he assures his readers I do not even perceive. Mr.
Shaw, therefore, has devoted most of his time to trampling only on a
misconception of his own. This is the immediate answer to him; but
there is a further answer to come, relating to the conclusions I
drew from nature of rent and interest, after I had pointed out their
contrast to the direct receipts of Ability. Let me show the truth of
the immediate answer first.
I do not think that in my two recent articles in this Review there is
a single sentence that to any clear-headed man could form an excuse
for such a misconception as Mr. Shaw’s, whereas there are pages which
ought to have made it impossible. Indeed, a notice in the _Spectator_
disposes of Mr. Shaw by saying that he evades the real point raised
by me, not meeting what I did say, and combating what I did not say.
But, as I started with observing, magazine articles can rarely be
exhaustive, and I will assume that some incompleteness or carelessness
of expression on my part might have afforded, had these articles stood
alone, some excuse for their critic. Mr. Shaw, however, is at pains
to impress us that he has read other writings of mine on the same
subject. He even remembers, after an interval of more than ten years,
some letters I wrote to the _St. James’s Gazette_. It might, therefore,
have been not unreasonable to expect that he would have referred to
my recent volume, _Labour and the Popular Welfare_, which I expressly
referred to in my two articles, and in which I said I had stated my
position more fully. As an answer to Mr. Shaw I will quote from that
volume now.
The first Book deals with certain statistics as to production in this
country, and the growth of the national income as related to the
population. In the second Book I deal with the cause of this growth.
I point out that the causes of production are not three, as generally
stated—viz. Land, Labour, and Capital; but four—viz. Land, Labour,
Capital, and Ability; and that the fourth is the sole source of that
_increase_ in production which is the distinguishing feature of
modern industrial progress. In thus treating Capital as distinct from
Ability, I point out—taking a pumping-engine as an example—that capital
creates a product which necessarily goes to its owner, _quâ_ owner,
whether the owner is an individual or the State. I then proceed to
show that fixed capital—_e.g._ an engine—is the result of circulating
capital fossilised; and that circulating capital is productive only
in proportion as it is under the control of Ability. For this reason
I said that whilst it is _in process of being utilised_, Capital is
connected with Ability as the brain is connected with the mind, it
being the material means through which Ability controls Labour; and
that thus from _a certain point of view_ the two are inseparable. I
need not insist on this truth, because Mr. Shaw admits it. But Mr.
Shaw will find a subsequent chapter (Book IV. chap. ii.) bearing the
title, _Of the Ownership of Capital as distinct from its Employment by
Ability_. From that chapter I quote the following passage:—
“In dealing with Capital and Ability, I first treated them
separately, I then showed that, regarded as a productive agent,
Capital _is_ Ability, and must be treated as identical with it. But
it is necessary, now we are dealing with distribution, to dissociate
them for a moment and treat them separately once more. For even
though it be admitted that Ability, working by means of Capital,
produces, as it has been shown to do, nearly two-thirds of the
national income,[63] and though it may be admitted further that
a large portion of this product should go to the able men who are
actively engaged in producing it—the men whose Ability animates and
vivifies Capital—it may be argued that a portion of it, which is very
large indeed, goes as a fact to men who do not exert themselves at
all, or who, at any rate, do not exert themselves in the production
of wealth. These men, it will be said, live not on the products
of Ability, but on the interest of Capital, which they have come
accidentally to possess; and it will be asked on what ground Labour
is interested in forbearing to touch the possessions of those who
produce nothing?... Why should it not appropriate what goes to this
wholly non-productive class.”
If Mr. Shaw or his readers are still in doubt as to the extent to which
his criticism of myself is wide of the mark—if he still thinks that he
is fighting any mistake but his own, when he attacks me as though I
confused interest with the direct earnings of Ability, let me add one
passage more out of the same chapter:—
“Large profits must not be confounded with high interest. Large
profits are a mixture of three things, as was pointed out by Mill,
though he did not name two of them happily. He said that profits
consisted of wages of superintendence, compensation for risk, and
interest on Capital. If, instead of wages of superintendence we say
the product of Ability, and instead of compensation for risk we say
the reward of sagacity, which is itself a form of Ability, we shall
have an accurate statement of the case.”
Again, two pages earlier Mr. Shaw will find this:—
“Interest is capable, under certain circumstances, of being reduced
to a minimum without production being in any degree checked; and
every pound which the man who employs Capital is thus relieved from
paying to the man who owns it constitutes, _other things being
equal_, a fund which may be appropriated by Labour.”
These quotations will be enough to show how the bulk of Mr. Shaw’s
criticisms, which he thinks are directed against myself, are criticisms
of an absurd error and confusion of thought, which I have myself done
my utmost to expose, in order that I might put the real facts of the
case more clearly.
Let me now briefly restate what I have actually said about these facts.
Let me restate the points which Mr. Shaw hardly ventures even to
glance at. I have said that Capital and Ability, as actually engaged
in production, are united like mind and brain. There is, however, as I
observed also, this difference. So far as this life is concerned, at
all events, brain and mind are inseparable. The organ and the function
cannot be divided. But in the case of Ability and Capital they can be.
The mind of one man has often to borrow from another man the matter
through which alone it is able to operate in production. Thus though
Ability and Capital, when viewed from the standpoint of Labour, are one
thing, when viewed from the standpoint of their different processes
they are two; and Capital is seen to produce a part of the product, as
distinguished from the Ability whose tool and organ it is. Mr. Shaw
says that the capital of the country at the present time produces _five
hundred million pounds_ annually, and, for argument’s sake, I accept
this figure. Thus far, then, Mr. Shaw and I agree. But what I have
urged Mr. Shaw to consider, and what he does not venture even to think
of, is the following question:—How did the capital of this country come
into existence?
Even the soil of this country, as we know it now, is an artificial
product. It did not exist in its present state two hundred years ago.
Still it was there. But of the capital of the country, as it exists
to-day, by far the larger part did not exist at all. Let us merely
go back two generations—to the times of our own grandfathers; and we
shall find that of the _ten thousand million pounds_ at which our
present capital is estimated, _eight thousand million pounds_ have been
produced during the last eighty years. That is to say, four-fifths of
our capital was non-existent at a time when the grandfathers of many
of us were already grown men. How, then, was this capital produced?
The ordinary Socialist will say that it was produced by Labour—that
it is, as (I think) Lassalle called it, “fossil Labour.” Mr. Shaw,
however, judging by what we have seen of his opinions, will agree with
me that though a small part of it may be fossil Labour, by far the
larger part is fossil Ability. It is, in fact, savings from the growing
annual wealth which has been produced during the period in question
by the activity of able men. But these able men did not produce
it by accident. They produced it under the stimulus of some very
strong motive. What was this motive? Mr. Shaw’s Socialistic friends
and predecessors have been spouting and shouting an answer to this
question for the past sixty years. They have been telling us that the
main motive of the employing class was “greed.” Unlike most of their
statements, this is entirely true. Nor, although the sound of it is
offensive, is there anything offensive in its meaning. It means that
in saving capital and in producing the surplus out of which they were
able to save it, the motive of the producers was the desire to live on
the interest of it when it was saved; and that if it had not been for
the desire, the hope, the expectation of getting this interest, the
capital most certainly would never have been produced at all, or, at
all events, only a very minute fraction of it.
I asked in one of my articles in this Review whether Mr. Shaw thought
that a man who received ten thousand a year as the product of his
exceptional ability would value this sum as much if he were forbidden
by the State to invest a penny of it—if the State, in fact, were an
organised conspiracy to prevent his investing it so as to make an
independent provision for his family, or for himself at any moment
when he might wish to stop working—as he values it now when the State
is organised so as to make his investments secure? And the sole
indication in the whole of Mr. Shaw’s paper that he has ever realised
the existence of the question here indicated is to be found in a casual
sentence, in which he says that to think that the complete confiscation
of all the capital created by the two past generations, and the avowed
intention on the part of the State to confiscate all the capital that
is now being created by the present—to think, in other words, that the
annihilation of the strongest and fiercest hope that has ever nerved
exceptional men to make exceptional industrial exertion, would in the
smallest degree damp the energies of any able man—“is an extremely
unhistoric apprehension,” and one as to which he “doubts whether the
public will take the alarm.” And having said this, he endeavours to
justify himself by an appeal to history. He asks if the men who built
the Pyramids did not work just as hard “though they knew that Pharaoh
was at the head of an organised conspiracy to take away the Pyramids
from them as soon as they were made?”
This remarkable historical reference is the sole answer Mr. Shaw
attempts to make to the real point raised by me. If it is necessary
seriously to answer it, let me refer Mr. Shaw to _Labour and
the Popular Welfare_, pp. 124, 125, where his childish piece of
reasoning—actually illustrated there by the example of Ancient Egypt—is
anticipated and disposed of. As I there pointed out, these great
buildings of the ancient world were the products not of Ability as it
exists in the modern world, but of Labour; the difference between the
two (so far as this point is concerned) being this:—that the labour an
average man can perform is a known quantity, and wherever a dominant
race enslaves an inferior one, the taskmasters of the former can
coerce the latter into performing a required amount of service. But
the existence of exceptional ability cannot be known or even suspected
by others till the able individual voluntarily shows and exerts it. He
cannot be driven; he must be induced and tempted. And not only is there
no means of making him exert his talents, except by allowing these
talents to secure for himself an exceptional reward; but in the absence
of any such reward to fire his imagination and his passion, he will
probably not be conscious of his own Ability himself. Pharaoh could
flog the stupidest Israelite into laying so many bricks, but he could
not have flogged Moses himself into a Brassey, a Bessemer, or an Edison.
This, however, is a point with which it is impossible to deal in a few
sentences or a few pages. The great question of human motive, closely
allied as it is with the question of family affection, the pleasures
of social intercourse, the excitements and prizes of social rivalry,
of love, of ambition, and all the philosophy of taste and manners—this
great question of motive can be only touched upon here. But a few more
words may be said to show the naïve ignorance of human nature and of
the world betrayed by the Fabian champion.
Mr. Shaw, in order to prove how fully he understands the question of
Ability, quotes the case of a friend of his, who, by his Ability,
makes _four thousand pounds_ a year. This, says Mr. Shaw, is just as
it should be: but if a man, like his friend, should save _one hundred
thousand pounds_, and desire to leave this to his son, invested for
him at 3½ per cent, so that the son may receive an income whether he
has any of his father’s ability or no—this, says Mr. Shaw, is what
Socialism will not permit. The son must earn all he gets; and if he
happens to have no exceptional ability, which may probably be the case,
he will have to put up with the mere wages of manual labour. He will
have to live on some _eighty pounds_ a year instead of _four thousand
pounds_. And Mr. Shaw says, that to introduce this arrangement into
our social system will have no appreciable effect on the men who are
now making, by their ability, their _four thousand pounds_ a year. Let
us suggest to him the following reflections. What good, in that case,
would the _four thousand pounds_ a year be to the father, unless he
were to eat and drink nearly the whole of it himself? For it would
be absurd and cruel in him to bring up his children in luxury if the
moment he died they would have to become scavengers. Wealth is mainly
valuable, and sought for, not for the sake of the pleasures of sense
which it secures for a man’s individual nervous system, but for the
sake of the _entourage_—of the world—which it creates around him, which
it peoples with companions for him brought up and refined in a certain
way, and in which alone his mere personal pleasures can be fully
enjoyed. Capitalism, as Mr. Shaw truly observes, produces many personal
inequalities, which without it could not exist. He fails to understand
that it is precisely the prospect of producing such inequalities that
constitutes the main motive that urges able men to create Capital.
More than ten years ago I published a book called _Social Equality_,
devoted to the exposition of these truths. I cannot dwell upon them
now. In that book history is appealed to, and biography is appealed to;
and the special case of literary and artistic production, of which Mr.
Shaw makes so much, is considered in a chapter devoted to the subject,
and Mr. Shaw’s precise arguments are disposed of in anticipation. But
to a great extent the true doctrine of motive is one which cannot be
established by mere formal argument. It must to a great extent be left
to the verdict of the jury of general common sense, the judgment of men
of experience and knowledge of the world—that knowledge which, of all
others, Mr. Shaw and his friends appear to be most lacking in.
It will be enough, then, to turn from Mr. Shaw himself to ordinary
sensible men, especially to the men of exceptional energy, capacity,
shrewdness, strong will, and productive genius—the men who are making
fortunes, or who have just made them, and without whose efforts all
modern industry would be paralysed, and to tell such men that the
sole answer of Fabianism to my attack on the Socialistic position is
summed up in the following astounding statement:—That the complete
confiscation of all the invested money in this country, and all the
incomes derived from it—from the many thousands a year going to the
great organiser of industry to the hundred a year belonging to the
small retired tradesman—would have no effect whatever on the hopes and
efforts of those who are now devoting their Ability to making money to
invest (see Mr. Shaw’s article). Well—_Bos locutus est_: there is the
quintessence of Mr. Shaw’s knowledge of human nature and of the world,
and though it would be interesting and instructive to analyse the error
of his view, no analysis could make its absurdity seem more complete
than it will seem without analysis, to every practical man.
FOOTNOTES
[1] Writers also from whom better things might have been expected make
use of the same foolish language. “The proletarian, in accepting the
highest bid, sells himself openly into bondage” (_Fabian Essays_, p.
12).
[2] According to Professor Leone Levi, the actual sum would be _one
hundred and thirteen million pounds_: but in dealing with estimates
such as these, in which absolute accuracy is impossible, it is better,
as well as more convenient, to use round numbers. More than nine-tenths
of this sum belongs to the income of the classes that pay income-tax.
Of the working-class income, not more than two per cent is counted
twice over, according to Professor Leone Levi.
[3] There is a general agreement amongst statisticians with regard to
these figures. _Cf._ Messrs Giffen, Mulhall, and Leone Levi _passim_.
[4] Out of any _thousand_ inhabitants, _two hundred and fifty-eight_
are under ten years of age; and _three hundred and sixty-six_ out of
every _thousand_ are under fifteen.
[5] Statistics in support of the above result might be indefinitely
multiplied, both from European countries and America. So far as food is
concerned, scientific authorities tell us that if _twenty_ represents
the amount required by a man, a woman will require _fifteen_, and a
child _eleven_; but the total expenditures necessary are somewhat
different in proportion.
[6] The total imperial taxation in the United Kingdom is about _two
pounds eight shillings_ per head; and the total local taxation is about
_one pound four shillings_. Thus the two together come to _three pounds
twelve shillings_ per head, which for every family of four and a half
persons gives a total of _sixteen pounds four shillings_.
[7] The number of females over fifteen years of age is about _twelve
millions_. Those who work for wages number less than _five millions_.
[8] Mr. Giffen’s latest estimates show that not more than twenty-three
per cent of the wage-earners in this country earn less than _twenty
shillings_ a week; whilst seventy-seven per cent earn this sum
and upwards. Thirty-five per cent earn from _twenty shillings_ to
_twenty-five shillings_; and forty-one per cent earn more than
_twenty-five shillings_. See evidence given by Mr. Giffen before the
Labour Commission, 7th December 1892.
[9] The reader must observe that I speak of the _rent_ of the land,
not of the land itself, as the subject of the above calculation. I
forbear to touch the question of any mere change in the occupancy or
administration of the land, or even of any scheme of nationalising the
land by purchasing it at its market price from the owners; for by none
of these would the present owners be robbed pecuniarily, nor would the
nation pecuniarily gain, except in so far as new conditions of tenure
made agriculture more productive. All such schemes are subjects of
legitimate controversy, or, in other words, are party questions; and
I therefore abstain from touching them. I deal in the text with facts
about which there can be no controversy.
[10] It is also every year becoming more unimportant, in diametrical
contradiction of the theories of Mr. H. George. This was pointed out
some twelve years ago by Professor Leone Levi, who showed that whereas
in 1814 the incomes of the landlord and farmer were fifty-six per cent
of the total assessed to income-tax, in 1851 they were thirty-seven per
cent, and in 1880 only twenty-four per cent. They are now only sixteen
per cent.
[11] See Local Government Board valuation of 1878.
[12] Recent falls in rent make it impossible to give the figures with
actual precision; but the returns in the New Doomsday Book, taken
together with subsequent official information, enable us to arrive at
the substantial facts of the case. In 1878 the rental of the owners
of more than _a thousand_ acres was _twenty-nine million pounds_.
The rental of the rural owners of smaller estates was _thirty-two
million pounds_; and the rental of small urban and suburban owners was
_thirty-six million pounds_. The suburban properties averaged _three
and a half_ acres, the average rent being _thirteen pounds_ per acre.
[13] According to the Local Government Report of 1878, the rental of
all the properties over _five hundred_ acres averaged _thirty-six
shillings_ an acre; that of properties between _fifty_ and _a hundred_
acres, _forty-eight shillings_ an acre; and that of properties between
_ten_ and _fifty_ acres, _a hundred and sixteen shillings_ an acre. In
Scotland, the rental of properties over _five hundred_ acres averaged
_nine shillings_ an acre: that of properties between _ten_ and _fifty_
acres, _four hundred and thirteen shillings_. With regard to the value
of properties under _ten_ acres, the following Scotch statistics are
interesting. Four-fifths of the ground rental of Edinburgh is taken
by owners of less than one acre, the rental of such owners being on
an average _ninety-nine pounds_. Three-fourths of the ground rental
of Glasgow is taken by owners of similar plots of ground; only there
the rental of such owners is _a hundred and seventy-one pounds_. In
the municipal borough of Kilmarnock, land owned in plots of less than
an acre lets per acre at _thirty-two pounds_. The land of the few men
who own larger plots lets for not more than _twenty pounds_. Each
one of the _eleven thousand_ men who own collectively four-fifths of
Edinburgh, has in point of money as much stake in the soil as though he
were the owner in Sutherland of _two thousand_ acres: and each one of
the _ten thousand_ men who own collectively three-fourths of Glasgow,
has as much stake in the soil as though he were the owner in Sutherland
of _three thousand four hundred_ acres.
[14] This is Mr. Giffen’s estimate. Mr. Mulhall, who has made
independent calculations, does not differ from Mr. Giffen by more than
five per cent.
[15] General merchandise is estimated by Mr. Mulhall at _three hundred
and forty-three million pounds_. For every _hundred_ inhabitants in the
year 1877 there were _five_ horses, _twenty-eight_ cows, _seventy-six_
sheep, and _ten_ pigs. In 1881 there were in Great Britain _five
million four hundred and seventy-five thousand_ houses. The rent of
eighty-seven per cent of these was under _thirty pounds_ a year,
and the rental of more than a half averaged only _ten pounds_. The
total house-rental of Great Britain in that year was _one hundred
and fourteen million pounds_; and the aggregate total of houses over
_thirty pounds_ annual value was _sixty million pounds_; though in
point of number these houses were only thirteen per cent of the whole.
[16] This classification of houses may perhaps be objected to; but
from the above point of view it is correct. Houses represent an annual
income of _one hundred and thirty-five million pounds_. Not more
than _thirty-five million pounds_ are spent annually in building new
houses; whilst the whole are counted as representing a new _one hundred
million pounds_ every year. It is plain, therefore, that if we estimate
the entire annual value as above, the sum in question stands not for
the houses, but for the use of them. Even more clearly does the same
reasoning apply to railways and shipping. Whether we send goods by
these or are conveyed by them ourselves, all that we get from them is
the mere service of transport. On transport and travelling by railway
about _seventy million pounds_ are spent annually: by ship about
_thirty million pounds_; by trams about _two million pounds_.
[17] The total annual imports are about _four hundred and twenty
million pounds_. The amount retained for home consumption is about
_three hundred and sixty-five million pounds_.
[18] The approximate value of the food consumed annually in the United
Kingdom (exclusive of alcoholic drinks) is _two hundred and ninety
million pounds_. The total value of food imported is over _one hundred
and fifty million pounds_.
[19] The number of persons fed on home-grown meat was _twenty-three
millions one hundred thousand_. The number fed on imported meat was
_fourteen millions seven hundred thousand_. In other words, the number
of persons who subsist on imported meat now is about equal to the
entire population of the United Kingdom in 1801.
[20] From the year 1843 to 1851, the annual income of the nation
averaged _five hundred and fifteen million pounds_, according to the
calculations of Messrs. Leone Levi, Dudley Baxter, Mulhall, and Giffen.
[21] The actual figures are as follows:—In 1887 the estimates of the
value of agricultural products per each individual actually engaged
in agriculture were: United Kingdom, _ninety-eight pounds_; France,
_seventy-one pounds_; Belgium, _fifty-six pounds_; Germany, _fifty-two
pounds_; Austria, _thirty-one pounds_; Italy, _thirty-seven pounds_.
[22] It is understating the case to say that the British operative
to-day works one hundred and eighty-nine hours less annually than
his predecessor of forty or fifty years ago, and one hundred and
eighty-nine hours = three weeks of nine hours a day. To this must be
added at least a week of additional holidays.
[23] The hours of labour in Switzerland are, on an average, sixty-six a
week.
[24] The agricultural population in France is about _eighteen
millions_; in this country, about _six millions_. The produce of France
is worth about _four hundred and fourteen million pounds_; of this
country, _two hundred and twenty-six million pounds_.
[25] According to Eden it was about _seventeen hundred million pounds_
at the beginning of the present century. Twenty-five years previously
it was, according to Young’s estimate, _eleven hundred million pounds_.
[26] I have not mentioned Profits. They consist, says Mill, of Interest
on Capital and Wages of Superintendence; to which he adds compensation
for risk—a most important item, but not requiring to be included here.
[27] From 1716 to 1770 the cotton manufactured in this country annually
averaged under _two and a half million pounds_ weight. From 1771 to
1775 it was _four million seven hundred thousand pounds_. From 1781
to 1785 it was _eleven million pounds_. From 1791 to 1795 it was
_twenty-six million pounds_; and from 1795 to 1800 it was _thirty-seven
million pounds_.
[28] Pitt estimated that the hands employed in spinning increased from
forty thousand to eighty thousand between the years 1760 and 1790.
[29] Were any confirmation of this conclusion needed, it is afforded
us by the fact that in 1786 a spinner received _ten shillings_ a pound
for spinning cotton of a certain quality: in 1795 he had received only
_eightpence_, or a fifteenth part of ten shillings; and yet in the
course of a similar day’s labour, he made more money than he had been
able to do under the former scale of payment. The price of spinning
No. 100 was _ten shillings_ per pound in 1786; in 1793, _two shillings
and sixpence_. The subsequent drop to _eightpence_ coincided with the
application of machinery to the working of the mule.
[30] Were this work a treatise on political economy, rather than a work
on practical politics, in which only the simplest and most fundamental
economic principles are insisted on, I should have here introduced a
chapter on the special and peculiar part which fixed capital, other
than machinery, plays in agriculture. I have not done so, however, for
fear of interrupting the thread of the main argument; but it will be
useful to call the reader’s attention to the subject in a note.
It was explained in the last chapter that rent (to speak with strict
accuracy) is not to be described as the product of superior soils,
but rather as the product of the qualities which make such soils
superior—qualities which are present in them and which in poorer
soils are absent. Now in speaking of rent, we assumed these superior
qualities to be natural. As a matter of fact, however, in highly
cultivated countries, many of them are artificial. They have been added
to the soil by human exertion—for instance by the process of draining;
or they have been actually placed in the soil, as by the process of
manuring. In this way land and capital merge and melt into one another,
and illustrate each other’s functions as productive agents. It is
impossible to imagine a more complete and beautiful example of the
relation between the two. At this point the rent of Capital and the
rent of Land become indistinguishable.
[31] In a state where the employing class were physically the masters
of the employed, Wage Capital would be unnecessary for the employer. A
system of forced labour might take its place.
[32] This was Pitt’s computation. _See_ Lecky, _History of England
during the Eighteenth Century_, vol. vi. chap. xxiii.
[33] The amount of land, formerly waste, that was added to the
cultivable area during the last century, was in England and Wales not
more than sixteen per cent of the total.
[34] The rental of Great Britain in 1750 was about _thirteen million
five hundred thousand pounds_, and in 1800 about _twenty-nine million
six hundred thousand pounds_. According to the estimates of Arthur
Young, the farmer’s income somewhat more. The wages of Agricultural
Labour had not risen proportionately.
[35] See _Encyclopædia Britannica_, first and earlier editions.
[36] See _Encyclopædia Britannica_, first and earlier editions. The
product of each smelting furnace in use in 1780 was _two hundred
and ninety-four tons_ annually. In 1788, these same furnaces were
producing, by the aid of new inventions, _five hundred and ninety-four
tons_.
[37] According to Arthur Young’s estimates, the earnings of an
agricultural family, consisting of seven persons all capable of work,
would be about _fifty-one pounds_ annually. This gives a little over
_seven pounds_ a head; but when the children and others not capable
of work are taken into account the average is considerably lower. The
wages, however, of the artisan class being higher, the average amount
per head taken by the whole working population would be about _seven
pounds_.
[38] About £1 12s. per head would have to be set down to land, were
the land question being dealt with. But for the purpose of the above
discussion, land may be ignored, as it does not affect the problem.
[39] This fact has been commented on with much force by Mr. Gourlay in
a paper contributed by him to the _National Review_.
[40] The matter may also be put in this way. There are _ninety-nine
labourers_ engaged on a certain work at which there is room for _a
hundred_. The _ninety-nine men_ produce every week value to the amount
of _ninety-nine pounds_. There are two candidates for the hundredth
place: one a labourer, John; and one, a man of ability, James. If
John takes the vacant place, we have _a hundred men_ producing _a
hundred pounds_. If James takes the vacant place, the productivity
of labour by his action is (we will say) doubled, and we have _a
hundred men_ producing _a hundred and ninety-eight pounds_. No amount
of theory based on the fact that James could do nothing without the
_ninety-nine labourers_ can obscure or do away with the practical truth
and importance of the fact that the exertion of James will produce
_ninety-eight pounds_ more than the exertion of John; and any person
with whom the decision rested, which of these two men should take the
hundredth place, would base their decision on this fact.
[41] I say _practically_ as absurd, meaning absurd and practically
meaningless in an economic argument. There are many points of view from
which it would be philosophically true.
[42] The examples given above might be multiplied indefinitely.
Maudslay was brought up as a “powder-boy” at Woolwich. The inventors of
the planing machine, Clements and Fox, were brought up, the one as a
slater, the other as a domestic servant. Neilson, the inventor of the
hot-blast, was a millwright. Roberts, the inventor of the self-acting
mule and the slotting-machine, was a quarryman. The illustrious Bramah
began life as a common farm-boy.
[43] By labouring classes is meant all those families having incomes of
less than a _hundred and fifty pounds_ a year. The substantial accuracy
of this rough classification has already been pointed out. No doubt
they include many persons who are not manual labourers; but against
this must be set the fact that, according to the latest evidence, there
are at least a _hundred and eighty thousand_ skilled manual labourers
who earn more than a _hundred and fifty pounds_. And, at all events,
whether the classes in question are manual labourers or not, they
are, with very manifest exceptions, wage-earners—that is to say, for
whatever money they receive they give work which is estimated at at
least the same money value. A schoolmaster, for instance, who receives
a _hundred and forty pounds_ a year gives in return teaching which
is valued at the same sum. School teaching is wealth just as much as
a schoolhouse; it figures in all estimates as part of the national
income; and therefore the schoolmaster is a producer just as much as
the school builder.
[44] This corresponds with Arthur Young’s estimate of wages for about
the same period.
[45] Statisticians estimate that in 1860 the working classes of the
United Kingdom received in wages _four hundred million pounds_; the
population then being about twice what it was at the close of the
last century. In order to arrive at the receipts of British Labour,
the receipts of Irish Labour must be deducted from this total. The
latter are proportionately much lower than the former, and could not
have reached the sum of _eighty million pounds_. But assuming them to
have reached that, and deducting _eighty million pounds_ from _four
hundred million pounds_, there is left for British Labour _three
hundred and twenty million pounds_, to be divided, roughly speaking,
amongst _twenty million_ people; which for each _ten millions_ yields a
_hundred and sixty million pounds_.
[46] According to the latest estimates, it exceeds _seven hundred
million pounds_.
[47] The entire population has risen from about _twenty-seven million
five hundred thousand_ to _thirty-eight millions_. But a large part of
this increase has taken place amongst the classes who pay income-tax,
and are expressly excluded from the above calculations. These classes
have risen from _one million five hundred thousand_ to _five millions_.
[48] These considerations are so obvious, and have been so constantly
dwelt upon by all economic writers, other than avowed Socialists,
that it is quite unnecessary here to insist on these further. Even
the Socialists themselves have recognised how much force there is in
them, and have consequently been at pains to meet them by the following
curious doctrine. They maintain that a man who makes or inherits a
certain sum has a perfect right to possess it, to hoard it, or squander
it on himself; but no right to any payment for the use made of it by
others. They argue that if he puts it into a business he is simply
having it preserved for him; for the larger part of the Capital at any
time existing would dwindle and disappear if it were not renewed by
being used. Let him put it into a business, say the Socialists, and
draw it out as he wants it. Few things can show more clearly than this
suggested arrangement the visionary character of the Socialistic mind;
for it needs but little thought to show that such an arrangement would
defeat its own objects and be altogether impracticable. The sole ground
on which the Socialists recommend it, in preference to the arrangement
which prevails at present, is that the interest which the owners of
the Capital are forbidden to receive themselves would by some means
or other be taken by the State instead and distributed amongst the
labourers as an addition to their wages, and would thus be the means
of supplying them with extra comforts. Now the interest if so applied
would, it is needless to say, be not saved but consumed. But the owners
of the Capital, who are thus deprived of their interest, are to have
the privilege, according to the arrangement we are considering, of
consuming their Capital in lieu of the interest that has been taken
from them. Accordingly, whereas the interest is all that is consumed
now, under this arrangement the Capital would be consumed as well. The
tendency, in fact, of the arrangement would be neither more nor less
than this: to increase the consumption of the nation at the expense of
its savings, until at last all the savings had disappeared. It would be
impracticable also for many other reasons, to discuss which here would
simply be waste of time. It is enough to observe that the fact of its
having been suggested is only a tribute to the insuperable nature of
the difficulty it was designed to meet.
[49] The part played in national progress by the mere business
sagacity of investors, amounts practically to a constant criticism of
inventions, discoveries, schemes, and enterprises of all kinds, and the
selection of those that are valuable from amongst a mass of what is
valueless and chimerical.
[50] See Mr. Giffen’s Inaugural Address of the Fiftieth Session of the
Statistical Society.
[51] The gross amount assessed to income-tax in 1891 was nearly _seven
hundred million pounds_; now more than _a hundred million pounds_ was
exempt, as belonging to persons with incomes of less than _a hundred
and fifty pounds_ a year. Mr. Giffen maintains (see his evidence given
before the Royal Commission on Labour, 7th December 1892) that there
is an immense middle-class income not included amongst the wages of
the labouring class. This, according to the classification adopted
above, which divides the population into those with incomes above, and
those with incomes below _a hundred and fifty pounds_, would raise the
collective incomes of the latter to over _seven hundred million pounds_.
[52] See Mr. Giffen’s Address, as above.
[53] If the number of employers does not increase, it is true that
they, unlike the employed, will be richer in proportion to their
numbers; but they will be poorer in proportion to the number of men
employed by them.
[54] Thus the old theory of the wage-fund, which has so often been
attacked of late, has after all this great residuary truth, namely,
that the amount of wealth that is spent and taken in wages is limited
by the total amount of wealth produced _in proportion to the number_
of labourers who assist in its production. That theory, however, as
commonly understood, is no doubt erroneous, though not for the reasons
commonly advanced by its critics. The theory of a wage-fund as commonly
understood means this—that if there were eight labourers and a capital
of _four hundred pounds_, which would be spent in wages and replaced
within a year, and if this were distributed in equal shares of _fifty
pounds_, it would be impossible to increase the share of one labourer
without diminishing that of the others; or to employ more labourers
without doing the same thing. But the truth is that if means were
discovered by which the productivity of any one labourer could be
doubled during the first six months, the whole _fifty pounds_ destined
for his whole year’s subsistence might be paid to him during the first
six months, and the fund would meanwhile have been created with which
to pay him a similar sum for the next six months—the employer gaining
in the same proportion as the labourer. So, too, with regard to an
additional number of labourers—if ability could employ their labour to
sufficient advantage, part of the sum destined to support the original
labourer for the second six months of the year might be advanced to
them, and before the second six months’ wages became due there might be
enough to pay an increased wage to all.
[55] This is true even of productive or distributive industries carried
out by the State. The real Socialistic principle of production has
never been applied by the State, or by any municipal authority; nor
has any practical party so much as suggested that it should be. The
manager of a State factory has just the same motive to save that an
ordinary employer has: he can invest his money, and get interest
on it. A State or a municipal business differs only from a private
Capitalist’s business either in making no profits, as is the case in
the building of ships of war; or of securing the services of Ability
at a somewhat cheaper rate, and, in consequence, generally diminishing
its efficacy. Of State business carried on at a profit, the Post Office
offers the best example; and it is the example universally fixed on
by contemporary English Socialists. It is an example, however, which
disproves everything that they think it proves; and shows the necessary
limitations of the principle involved, instead of the possibility of
its extension. For, in the first place, the object aimed at—_i.e._ the
delivery of letters—is one of exceptional simplicity. In the second
place, all practical men agree that, could the postal service be
carried out by private and competing firms, it would (at all events
in towns) be carried out much better; only the advantages gained in
this special and exceptional case from the entire service being under
a single management, outweigh the disadvantages. And lastly, the
business, as it stands, is a State business in the most superficial
sense only. The railways and the steamers that carry the letters are
all the creations of private enterprise, in which the principle of
competition, and the motive force of the natural rewards of Ability,
have had free play. Indeed the Post Office, as we now know it, if we
can call it Socialistic at all, represents only a superficial layer of
State Socialism resting on individualism, and only made possible by its
developments. Real State Socialism would be merely the Capitalistic
system minus the rewards of that Ability by which alone Capital is made
productive.
[56] _Principles of Economics_, by Alfred Marshall, book iv. chap. vii.
[57] Though I have aimed at excluding from this volume all
controversial matter, I may here hazard the opinion that the
Socialistic principle is most properly applied to providing the
labourers, not with things that they would buy if they were able to do
so, but things that naturally they would not buy. Things procurable
by money may be divided into three classes—things that are necessary,
things that are superfluous, and things that are beneficial. Clothing
is an example of the first class, finery of the second, and education
of the third. If a man receives food from the State, otherwise than as
a reward for a given amount of labour, his motive to labour will be
lessened. If a factory girl, irrespective of her industry, was supplied
by the State with fashionable hats and jackets, her motive to labour
would be lessened also; for clothing and finery are amongst the special
objects to procure which labour is undertaken. But desire to be able to
pay for education does not constitute, for most men and women, a strong
motive to labour; and therefore education may be supplied by the State,
without the efficacy of their labour being interfered with.
[58] In our imaginary community we have at first eight labourers, who
produce _fifty pounds_ a year a-piece = _four hundred pounds_. Then
we have eight labourers + one able man, who produce _four hundred
pounds_ a year for each labourer = _three thousand two hundred pounds_.
Of this the able man takes _two thousand eight hundred pounds_. Now,
suppose the labourers strike for double wages, and succeed in getting
them, their total wages are _eight hundred pounds_ a year instead of
_four hundred pounds_; and the employer’s income is _two thousand four
hundred pounds_ instead of _two thousand eight hundred pounds_. The
labourers gain a hundred per cent; the employer loses little more than
fourteen per cent. The labourers therefore have a stronger motive in
demanding than the employer has in resisting. But let us suppose that,
the total income of the community remaining unchanged, the labourers
have succeeded in obtaining _one thousand eight hundred pounds_, thus
leaving the employer _one thousand four hundred pounds_. The situation
will now be changed. The labourers could not possibly now gain an
increase of a hundred per cent, for the entire income available would
not supply this; but let us suppose they strike for an increase of
_two hundred pounds_. If they gained that, their income would be _two
thousand pounds_, and that of the employer _one thousand two hundred
pounds_; but the former situation would be reversed. The employer now
would lose more than the labourer would gain. The labourers would gain,
in round numbers, only eleven per cent; and the employer would lose
fourteen per cent. Therefore the employer would have a stronger motive
in resisting than the labourers in demanding.
[59] The possibility of such a result would depend upon two
assumptions, which are not in accordance with reality, and for which
allowance must be made. The first is the assumption that the labouring
population is stationary; the second is that Ability can increase the
productivity of Labour equally in all industries. In reality, however,
as was noticed in the last chapter, the number of labourers increases
constantly, and the improvements in different industries are very
unequal; and, owing to these two causes, it often happens that the
total value produced in some industries by Labour and Ability together
is not so great as is the share that is taken by Labour in others.
Thus the labourers employed in the inferior industries could by no
possibility raise their wages to the amount received by the labourers
employed in the superior ones. Their effort accordingly would be to
obtain employment in the latter, and to do so by accepting wages
higher indeed than what they receive at present, but lower than those
received by the men whose positions they wish to take. Thus, under such
circumstances, a union of industrial interests ceases to be any longer
possible. By an irresistible and automatic process, there is produced
an antagonism between them; and the labourers who enjoy the higher
wages will do what is actually done by our Trade Unions: they will form
a separate combination to protect their own interests, not only against
the employers, but even more directly against other labourers. At a
certain stage of their demands, the labourers may be able to combine
more readily and more closely than the employers; but when a certain
stage has been passed, the case will be the reverse. The employers will
be forced more and more into unanimous action, whilst the labourers,
by their diverging interests, are divided into groups whose action is
mutually hostile.
[60] The reader must always bear in mind the definition given of
Labour, as that kind of industrial exertion which is applied to one
task at a time only, and while so applied begins and ends with that
task; as distinguished from Ability, which influences simultaneously an
indefinite number of tasks.
[61] Mr. Shaw, for instance, is at much pains to point out that Ability
is not one definite thing, as the power of jumping is, and makes
himself merry by asking if Wellington’s Ability could be compared
with Cobden’s, or Napoleon’s with Beethoven’s. This is all beside the
mark. I have been careful to define the sense in which I used the
word Ability—to define it with the utmost exactness. I have said that
I use it as meaning productive Ability—industrial Ability. That is
to say, those faculties by which men, not labouring themselves, are
capable of directing to the best advantage the labour of others, with
a view to the production of economic commodities. In the Middle Ages I
said that another kind of Ability was more important—_i.e._ Military
Ability, instead of Economic; and the historical importance of this
fact, which Mr. Shaw says I discovered only after I had written my
first article on Fabian Economics, I insisted on, at much greater
length, years ago, when criticising Karl Marx’s “Theory of Value,” in
this [the Fortnightly] Review. Again, let Mr. Shaw turn to _Labour and
the Popular Welfare_, p. 328, and he will find what he says put more
clearly by myself than by him.
[62] It is interesting to see the analysis which Mr. Shaw gives of the
elements which make up the _five hundred million pounds_ (see page 482
of his article). It shows a curious want of sense of proportion, and
reads much like a statement that a young man’s bankruptcy was due to
the _one hundred thousand pounds_ he has spent on the turf, the _fifty
thousand pounds_ he had spent on building a house, the _fifty pounds_
he has spent on a fur coat, and the sixpence he gave last Saturday to
the porter at Paddington Station. But there is in it a more serious
error than this. Mr. Shaw says, and rightly, that a large part of the
millions to which he alludes consists of payments to artists and other
professional men (_e.g._ doctors), by very rich commonplace people
competing for their services. But he entirely mistakes the meaning of
this fact. I have pointed it out carefully in _Labour and the Popular
Welfare_ (Book I. chap. iii.) and have illustrated it by one of the
exact cases Mr. Shaw has in view, viz. that of a doctor who gets a fee
of _one thousand two hundred pounds_ from “a very rich commonplace
person.” I pointed out that in the estimates, from which Mr. Shaw gets
his figures of _five hundred million pounds_, all such payments are
counted twice over. The “very rich commonplace person” and the doctor
both pay income-tax on and are regarded as possessing the same _one
thousand two hundred pounds_. As matters stand this is right enough,
for the patient receives either in good or fancied good an equivalent
for his fee in the doctor’s services; but if the sum in question were
to be divided up and distributed, there would for distribution be one
_one thousand two hundred pounds_ only. By reference to calculations
of Professor Leone Levi, with whom I corresponded on these matters, I
drew the conclusion that the sum thus counted twice over was about _one
hundred million pounds_ annually ten years ago. This would knock off
twenty per cent at once from Mr. Shaw’s _five hundred million pounds_;
and I may again mention Mr. Giffen’s emphatic warning that, if we are
thinking of any general redistribution, another _two hundred million
pounds_ would have to be deducted from the sums which persons like Mr.
Shaw imagine await their seizure.
[63] The case may also be put in another way. Interest is the product
of capital _quâ_ capital, as opposed to the product of ability as
distinct from capital. But the bulk of modern capital is historically
the creation of ability, which has miraculously multiplied the few
loaves and fishes existing at the close of the last century. Interest
may therefore be called the secondary or indirect product of ability,
whilst earnings and profits may be called the direct product of
ability. Any one who is living on interest at the present moment is
almost sure to be living, not on his own ability, but on the products
of the ability of some member of his own family who has added to the
national wealth within the past two generations. Suppose a man who
died in 1830 left a fortune of _two hundred thousand pounds_, which he
made, as Salt did, by the invention and production of some new textile
fabric; and suppose that this fortune is now in the hands of a foolish
and feeble grandson, who enjoys _eight thousand pounds_ a year. This
is evidently not the product of the grandson’s ability; but it is the
product of the ability of the grandfather. The truth of this may be
easily seen by altering the supposition thus—by supposing that the
original maker of the fortune, instead of dying in 1830, is alive now,
but as imbecile as we supposed his grandson to be. He has, we will say,
long retired from business, and lives on the interest of the capital
he made when his faculties were in their vigour. Would any one say
that he is not living on his own ability? The only difference is—and
it is a difference which, from many points of view, is of the greatest
importance—that formerly he was living on the direct product of his
ability, and he is now living on its indirect product.
THE END
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Transcriber’s Note (continued)
Minor typographical errors have been corrected in this transcription.
Other errors and unusual or variable spelling and hyphenation have been
left unchanged except as noted below.
The four references to (Henry) Maudsley have the surname corrected
to Maudslay.
Page 79 — “labour-party” changed to “Labour Party” (leaders of the
Labour Party to-day)
Page 118 — “Hargraves” changed to “Hargreaves” (Hargreaves and
Arkwright)
Page 200 — “monoply” changed to “monopoly” (the monopoly of Ability)
Page 337 — “originially” changed to “originally” (which was originally
published)
Page 243 — “transction” changed to “transaction” (party in the
transaction)
Page 344 — “Leoni” changed to “Leone” in footnote (Professor Leone
Levi)
Footnotes have been re-indexed using numbers and placed after the
Appendix.
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