'LAISSEZ-FAIRE'
The school of Cobden is affiliated in general outlook both to the
doctrine of natural liberty and to the discipline of Bentham. It shared
with the Benthamites the thoroughly practical attitude dear to the
English mind. It has much less to say of natural rights than the French
theorists. On the other hand, it is saturated with the conviction that
the unfettered action of the individual is the mainspring of all
progress.[7] Its starting-point is economic. Trade is still in fetters.
The worst of the archaic internal restrictions have, indeed, been
thrown off. But even here Cobden is active in the work of finally
emancipating Manchester from manorial rights that have no place in the
nineteenth century. The main work, however, is the liberation of foreign
trade. The Corn Laws, as even the tariff reformers of our own day admit,
were conceived in the interest of the governing classes. They frankly
imposed a tax on the food of the masses for the benefit of the
landlords, and as the result of the agricultural and industrial
revolutions which had been in progress since 1760, the masses had been
brought to the lowest point of economic misery. Give to every man the
right to buy in the cheapest and sell in the dearest market, urged the
Cobdenite, and trade would automatically expand. The business career
would be open to the talents. The good workman would command the full
money's worth of his work, and his money would buy him food and clothing
at the lowest rate in the world's market. Only so would he get the full
value of his work, paying toll to none. Taxes there must be to carry on
government, but if we looked into the cost of government we found that
it depended mostly on armaments. Why did we need armaments? First,
because of the national antagonisms aroused and maintained by a
protective system. Free commercial intercourse between nations would
engender mutual knowledge, and knit the severed peoples by countless
ties of business interests. Free Trade meant peace, and once taught by
the example of Great Britain's prosperity, other nations would follow
suit, and Free Trade would be universal. The other root of national
danger was the principle of intervention. We took it on ourselves to set
other nations right. How could we judge for other nations? Force was no
remedy. Let every people be free to work out its own salvation. Things
were not so perfect with us that we need go about setting the houses of
other people in order. To complete personal freedom, there must be
national freedom. There must also be colonial freedom. The colonies
could no longer be governed in the interests of the mother country, nor
ought they to require standing garrisons maintained by the mother
country. They were distant lands, each, if we gave it freedom, with a
great future of its own, capable of protecting itself, and developing
with freedom into true nationhood. Personal freedom, colonial freedom,
international freedom, were parts of one whole. Non-intervention, peace,
restriction of armaments, retrenchment of expenditure, reduction of
taxation, were the connected series of practical consequences. The money
retrenched from wasteful military expenditure need not all be remitted
to the taxpayer. A fraction of it devoted to education--free, secular,
and universal--would do as much good as when spent on guns and ships it
did harm. For education was necessary to raise the standard of
intelligence, and provide the substantial equality of opportunity at the
start without which the mass of men could not make use of the freedom
given by the removal of legislative restrictions. There were here
elements of a more constructive view for which Cobden and his friends
have not always received sufficient credit.
In the main, however, the teaching of the Manchester school tended both
in external and in internal affairs to a restricted view of the function
of government. Government had to maintain order, to restrain men from
violence and fraud, to hold them secure in person and property against
foreign and domestic enemies, to give them redress against injury, that
so they may rely on reaping where they have sown, may enjoy the fruits
of their industry, may enter unimpeded into what arrangements they will
with one another for their mutual benefit. Let us see what criticism was
passed on this view by the contemporaries of Cobden and by the loud
voice of the facts themselves. The old economic régime had been in decay
throughout the eighteenth century. The divorce of the labourer from the
land was complete at the time when the Anti-Corn Law League was formed.
The mass of the English peasantry were landless labourers working for a
weekly wage of about ten or twelve shillings, and often for a good deal
less. The rise of machine industry since 1760 had destroyed the old
domestic system and reduced the operative in the towns to the position
of a factory hand under an employer, who found the road to wealth easy
in the monopoly of manufacture enjoyed by this country for two
generations after the Napoleonic war. The factory system early brought
matters to a head at one point by the systematic employment of women and
young children under conditions which outraged the public conscience
when they became known. In the case of children it was admitted from an
early date, it was urged by Cobden himself, that the principle of free
contract could not apply. Admitting, for the sake of argument, that the
adult could make a better bargain for himself or herself than any one
could do for him or her, no one could contend that the pauper child
apprenticed by Poor Law guardians to a manufacturer had any say or could
have any judgment as to the work which it was set to do. It had to be
protected, and experience showed that it had to be protected by law.
Free contract did not solve the question of the helpless child. It left
it to be "exploited" by the employer in his own interest, and whatever
regard might be shown for its health and well-being by individuals was a
matter of individual benevolence, not a right secured by the necessary
operation of the system of liberty.
But these arguments admitted of great extension. If the child was
helpless, was the grown-up person, man or woman, in a much better
position? Here was the owner of a mill employing five hundred hands.
Here was an operative possessed of no alternative means of subsistence
seeking employment. Suppose them to bargain as to terms. If the bargain
failed, the employer lost one man and had four hundred and ninety-nine
to keep his mill going. At worst he might for a day or two, until
another operative appeared, have a little difficulty in working a single
machine. During the same days the operative might have nothing to eat,
and might see his children going hungry. Where was the effective liberty
in such an arrangement? The operatives themselves speedily found that
there was none, and had from an early period in the rise of the machine
industry sought to redress the balance by combination. Now, combination
was naturally disliked by employers, and it was strongly suspect to
believers in liberty because it put constraint upon individuals. Yet
trade unions gained the first step in emancipation through the action of
Place and the Radicals in 1824, more perhaps because these men conceived
trade unions as the response of labour to oppressive laws which true
freedom of competition would render superfluous than because they
founded any serious hopes of permanent social progress upon Trade
Unionism itself. In point of fact, the critical attitude was not without
its justification. Trade Unionism can be protective in spirit and
oppressive in action. Nevertheless, it was essential to the maintenance
of their industrial standard by the artisan classes, because it alone,
in the absence of drastic legislative protection, could do something to
redress the inequality between employer and employed. It gave, upon the
whole, far more freedom to the workman than it took away, and in this we
learn an important lesson which has far wider application. In the matter
of contract true freedom postulates substantial equality between the
parties. In proportion as one party is in a position of vantage, he is
able to dictate his terms. In proportion as the other party is in a weak
position, he must accept unfavourable terms. Hence the truth of Walker's
dictum that economic injuries tend to perpetuate themselves. The more a
class is brought low, the greater its difficulty in rising again without
assistance. For purposes of legislation the State has been exceedingly
slow to accept this view. It began, as we saw, with the child, where
the case was overwhelming. It went on to include the "young person" and
the woman--not without criticism from those who held by woman's rights,
and saw in this extension of tutelage an enlargement of male domination.
Be that as it may, public opinion was brought to this point by the
belief that it was intervening in an exceptional manner to protect a
definite class not strong enough to bargain for itself. It drew the line
at the adult male; and it is only within our own time, and as the result
of a controversy waged for many years within the trade union world
itself, that legislation has avowedly undertaken the task of controlling
the conditions of industry, the hours, and at length, through the
institution of Wages Boards in "sweated industries," the actual
remuneration of working people without limitation of age or sex. To this
it has been driven by the manifest teaching of experience that liberty
without equality is a name of noble sound and squalid result.
In place of the system of unfettered agreements between individual and
individual which the school of Cobden contemplated, the industrial
system which has actually grown up and is in process of further
development rests on conditions prescribed by the State, and within the
limits of those conditions is very largely governed by collective
arrangements between associations of employers and employed. The law
provides for the safety of the worker and the sanitary conditions of
employment. It prescribes the length of the working day for women and
children in factories and workshops, and for men in mines and on
railways.[8] In the future it will probably deal freely with the hours
of men. It enables wages boards to establish a legal minimum wage in
scheduled industries which will undoubtedly grow in number. It makes
employers liable for all injuries suffered by operatives in the course
of their employment, and forbids any one to "contract out" of this
obligation. Within these limits, it allows freedom of contract. But at
this point, in the more highly developed trades, the work is taken up by
voluntary associations. Combinations of men have been met by
combinations of employers, and wages, hours, and all the details of the
industrial bargain are settled by collective agreement through the
agency of a joint board with an impartial chairman or referee in case of
necessity for an entire locality and even an entire trade. So far have
we gone from the free competition of isolated individuals.
This development is sometimes held to have involved the decay and death
of the older Liberalism. It is true that in the beginning factory
legislation enjoyed a large measure of Conservative support. It was at
that stage in accordance with the best traditions of paternal rule, and
it commended itself to the religious convictions of men of whom Lord
Shaftesbury was the typical example. It is true, also, that it was
bitterly opposed by Cobden and Bright. On the other hand, Radicals like
J. Cam Hobhouse took a leading part in the earlier legislation, and Whig
Governments passed the very important Acts of 1833 and 1847. The
cleavage of opinion, in fact, cut across the ordinary divisions of
party. What is more to the purpose is that, as experience ripened, the
implications of the new legislation became clearer, and men came to see
that by industrial control they were not destroying liberty but
confirming it. A new and more concrete conception of liberty arose and
many old presuppositions were challenged.
Let us look for a moment at these presuppositions. We have seen that the
theory of _laissez-faire_ assumed that the State would hold the ring.
That is to say, it would suppress force and fraud, keep property safe,
and aid men in enforcing contracts. On these conditions, it was
maintained, men should be absolutely free to compete with one another,
so that their best energies should be called forth, so that each should
feel himself responsible for the guidance of his own life, and exert his
manhood to the utmost. But why, it might be asked, on these conditions,
just these and no others? Why should the State ensure protection of
person and property? The time was when the strong man armed kept his
goods, and incidentally his neighbour's goods too if he could get hold
of them. Why should the State intervene to do for a man that which his
ancestor did for himself? Why should a man who has been soundly beaten
in physical fight go to a public authority for redress? How much more
manly to fight his own battle! Was it not a kind of pauperization to
make men secure in person and property through no efforts of their own,
by the agency of a state machinery operating over their heads? Would not
a really consistent individualism abolish this machinery? "But," the
advocate of _laissez-faire_ may reply, "the use of force is criminal,
and the State must suppress crime." So men held in the nineteenth
century. But there was an earlier time when they did not take this view,
but left it to individuals and their kinsfolk to revenge their own
injuries by their own might. Was not this a time of more unrestricted
individual liberty? Yet the nineteenth century regarded it, and justly,
as an age of barbarism. What, we may ask in our turn, is the essence of
crime? May we not say that any intentional injury to another may be
legitimately punished by a public authority, and may we not say that to
impose twelve hours' daily labour on a child was to inflict a greater
injury than the theft of a purse for which a century ago a man might be
hanged? On what principle, then, is the line drawn, so as to specify
certain injuries which the State may prohibit and to mark off others
which it must leave untouched? Well, it may be said, _volenti non fit
injuria_. No wrong is done to a man by a bargain to which he is a
willing party. That may be, though there are doubtful cases. But in the
field that has been in question the contention is that one party is not
willing. The bargain is a forced bargain. The weaker man consents as one
slipping over a precipice might consent to give all his fortune to one
who will throw him a rope on no other terms. This is not true consent.
True consent is free consent, and full freedom of consent implies
equality on the part of both parties to the bargain. Just as government
first secured the elements of freedom for all when it prevented the
physically stronger man from slaying, beating, despoiling his
neighbours, so it secures a larger measure of freedom for all by every
restriction which it imposes with a view to preventing one man from
making use of any of his advantages to the disadvantage of others.
There emerges a distinction between unsocial and social freedom.
Unsocial freedom is the right of a man to use his powers without regard
to the wishes or interests of any one but himself. Such freedom is
theoretically possible for an individual. It is antithetic to all public
control. It is theoretically impossible for a plurality of individuals
living in mutual contact. Socially it is a contradiction, unless the
desires of all men were automatically attuned to social ends. Social
freedom, then, for any epoch short of the millennium rests on restraint.
It is a freedom that can be enjoyed by all the members of a community,
and it is the freedom to choose among those lines of activity which do
not involve injury to others. As experience of the social effects of
action ripens, and as the social conscience is awakened, the conception
of injury is widened and insight into its causes is deepened. The area
of restraint is therefore increased. But, inasmuch as injury inflicted
is itself crippling to the sufferer, as it lowers his health, confines
his life, cramps his powers, so the prevention of such injury sets him
free. The restraint of the aggressor is the freedom of the sufferer, and
only by restraint on the actions by which men injure one another do they
as a whole community gain freedom in all courses of conduct that can be
pursued without ultimate social disharmony.
It is, therefore, a very shallow wit that taunts contemporary Liberalism
with inconsistency in opposing economic protection while it supports
protective legislation for the manual labourer. The two things have
nothing in common but that they are restraints intended to operate in
the interests of somebody. The one is a restraint which, in the Liberal
view, would operate in favour of certain industries and interests to the
prejudice of others, and, on the whole, in favour of those who are
already more fortunately placed and against the poorer classes. The
other is a restraint conceived in the interest primarily of the poorer
classes with the object of securing to them a more effective freedom and
a nearer approach to equality of conditions in industrial relations.
There is point in the argument only for those who conceive liberty as
opposed to restraint as such. For those who understand that all social
liberty rests upon restraint, that restraint of one man in one respect
is the condition of the freedom of other men in that respect, the taunt
has no meaning whatever. The liberty which is good is not the liberty of
one gained at the expense of others, but the liberty which can be
enjoyed by all who dwell together, and this liberty depends on and is
measured by the completeness with which by law, custom, or their own
feelings they are restrained from mutual injury.
Individualism, as ordinarily understood, not only takes the policeman
and the law court for granted. It also takes the rights of property for
granted. But what is meant by the rights of property? In ordinary use
the phrase means just that system to which long usage has accustomed us.
This is a system under which a man is free to acquire by any method of
production or exchange within the limits of the law whatever he can of
land, consumable goods, or capital; to dispose of it at his own will and
pleasure for his own purposes, to destroy it if he likes, to give it
away or sell it as it suits him, and at death to bequeath it to
whomsoever he will. The State, it is admitted, can take a part of a
man's property by taxation. For the State is a necessity, and men must
pay a price for security; but in all taxation the State on this view is
taking something from a man which is "his," and in so doing is justified
only by necessity. It has no "right" to deprive the individual of
anything that is his in order to promote objects of its own which are
not necessary to the common order. To do so is to infringe individual
rights and make a man contribute by force to objects which he may view
with indifference or even with dislike. "Socialistic" taxation is an
infringement of individual freedom, the freedom to hold one's own and do
as one will with one's own. Such seems to be the ordinary view.
But a consistent theory of liberty could not rest wholly satisfied with
the actual system under which property is held. The first point of
attack, already pressed by the disciples of Cobden, was the barrier to
free exchange in the matter of land. It was not and still is not easy
for the landless to acquire land, and in the name of free contract
Cobden and his disciples pressed for cheap and unimpeded transfer. But a
more searching criticism was possible. Land is limited in amount,
certain kinds of land very narrowly limited. Where there is limitation
of supply monopoly is always possible, and against monopoly the
principles of free competition declared war. To Cobden himself, free
trade in land was the pendant to free trade in goods. But the attack on
the land monopoly could be carried much further, and might lead the
individualist who was in earnest about his principles to march a
certain distance on parallel lines with the Socialist enemy. This has,
in fact, occurred in the school of Henry George. This school holds by
competition, but by competition only on the basis of a genuine freedom
and equality for all individuals. To secure this basis, it would purge
the social system of all elements of monopoly, of which the private
ownership of land is in its view the most important. This object, it
maintains, can be secured only through the absorption by the State of
all elements of monopoly value. Now, monopoly value accrues whenever
anything of worth to men of which the supply is limited falls into
private hands. In this case competition fails. There is no check upon
the owner except the limitations of demand. He can exact a price which
bears no necessary relation to the cost of any effort of his own. In
addition to normal wages and profits, he can extract from the
necessities of others a surplus, to which the name of economic rent is
given. He can also hold up his property and refuse to allow others to
make use of it until the time when its full value has accrued, thereby
increasing the rent which he will ultimately receive at the cost of
much loss in the interim to society.
Monopolies in our country fall into three classes. There is, first, the
monopoly of land. Urban rents, for example, represent not merely the
cost of building, nor the cost of building plus the site, as it would be
if sites of the kind required were unlimited in amount. They represent
the cost of a site where the supply falls short of the demand, that is
to say, where there is an element of monopoly. And site value--the
element in the actual cost of a house or factory that depends on its
position--varies directly with the degree of this monopoly. This value
the land nationalizer contends is not created by the owner. It is
created by society. In part it is due to the general growth of the
country to which the increase of population and the rise of town life is
to be attributed. In part it depends on the growth of the particular
locality, and in part on the direct expenditure of the ratepayers' money
in sanitation and other improvements which make the place one where
people can live and industry can thrive. Directly and indirectly, the
community creates the site value. The landlord receives it, and,
receiving it, can charge any one who wants to live or carry on industry
upon the site with rent to the full amount. The land-nationalizer,
looking at rights of property purely from the point of view of the
individual, denies the justice of this arrangement, and he sees no
solution except this--that the monopoly value should pass back to the
community which creates it. Accordingly, he favours the taxation of site
value to its full amount. Another element of monopoly arises from
industries in which competition is inapplicable--the supply of gas and
water, for example, a tramway service, and in some conditions a railway
service. Here competition may be wasteful if not altogether impossible;
and here again, on the lines of a strictly consistent individualism, if
the industry is allowed to fall into private hands the owners will be
able to secure something more than the normal profits of competitive
industry. They will profit by monopoly at the expense of the general
consumer, and the remedy is public control or public ownership. The
latter is the more complete and efficacious remedy, and it is also the
remedy of municipal socialism. Lastly, there may be forms of monopoly
created by the State, such as the sale of liquor as restricted by the
licensing system. In accordance with competitive ideas the value so
created ought not to pass into private hands, and if on social grounds
the monopoly is maintained, the taxation of licensed premises ought to
be so arranged that the monopoly value returns to the community.
Up to this point a thoroughly consistent individualism can work in
harmony with socialism, and it is this partial alliance which has, in
fact, laid down the lines of later Liberal finance. The great Budget of
1909 had behind it the united forces of Socialist and individualist
opinion. It may be added that there is a fourth form of monopoly which
would be open to the same double attack, but it is one of which less has
been heard in Great Britain than in the United States. It is possible
under a competitive system for rivals to come to an agreement. The more
powerful may coerce the weaker, or a number of equals may agree to work
together. Thus competition may defeat itself, and industry may be
marshalled into trusts or other combinations for the private advantage
against the public interest. Such combinations, predicted by Karl Marx
as the appointed means of dissolving the competitive system, have been
kept at bay in this country by Free Trade. Under Protection they
constitute the most urgent problem of the day. Even here the railways,
to take one example, are rapidly moving to a system of combination, the
economies of which are obvious, while its immediate result is monopoly,
and its assured end is nationalization.
Thus individualism, when it grapples with the facts, is driven no small
distance along Socialist lines. Once again we have found that to
maintain individual freedom and equality we have to extend the sphere of
social control. But to carry through the real principles of Liberalism,
to achieve social liberty and living equality of rights, we shall have
to probe still deeper. We must not assume any of the rights of property
as axiomatic. We must look at their actual working and consider how they
affect the life of society. We shall have to ask whether, if we could
abolish all monopoly on articles of limited supply, we should yet have
dealt with all the causes that contribute to social injustice and
industrial disorder, whether we should have rescued the sweated worker,
afforded to every man adequate security for a fair return for an honest
day's toil, and prevented the use of economic advantage to procure gain
for one man at the expense of another. We should have to ask whether we
had the basis of a just delimitation between the rights of the community
and those of the individual, and therewith a due appreciation of the
appropriate ends of the State and the equitable basis of taxation. These
inquiries take us to first principles, and to approach that part of our
discussion it is desirable to carry further our sketch of the historic
development of Liberalism in thought and action.
FOOTNOTES:
[7] "If I were asked to sum up in a sentence the difference and the
connection (between the two schools) I would say that the Manchester men
were the disciples of Adam Smith and Bentham, while the Philosophical
Radicals followed Bentham and Adam Smith" (F. W. Hirst, _The Manchester
School_, Introd., p. xi). Lord Morley, in the concluding chapter of his
_Life of Cobden_, points out that it was the view of "policy as a whole"
in connection with the economic movement of society which distinguished
the school of Cobden from that of the Benthamites.
[8] Indirectly it has for long limited the hours of men in factories
owing to the interdependence of the adult male with the female and child
operative.