“The most striking distinction,” says Storch, “which presents itself
in the outset, is, that there are certain kinds of value which are
capable of appropriation, and other kinds which are not so.[49] ‹The
first alone are the subject of Political Economy›, for the analysis
of the others would furnish no result worthy of the attention of the
statesman.”
For my own part, I think that that portion of utility which, in the
progress of society, ceases to be onerous and to possess value,
but which does not on that account cease to be utility, and is
about to fall into the domain of the ‹common› and ‹gratuitous›, is
precisely that which should constantly attract the attention of the
statesman and of the Economist. If it do not, in place of penetrating
and comprehending the great results which affect and elevate the
human race, the science will be left to deal with what is quite
contingent and flexible—with what has a tendency to diminish, if not
to disappear—with a relation merely; in a word, with Value. Without
being aware of it, Economists are thus led to consider only labour,
obstacles, and the interest of the producer; and, what is worse, they
are led to confound the interest of the producer with the interest
of the public,—that is to say, to mistake evil for good, and, under
the guidance of the Sismondis and Saint-Chamans, to land at length in
the Utopia of the socialists, or the ‹Système des Contradictions› of
Proudhon.
And, then, is not this line of demarcation, which you attempt to
draw between the two descriptions of utility, chimerical, arbitrary,
and impossible? How can you thus disjoin the co-operation of nature
and that of man when they combine and get mixed up everywhere, much
more when the one tends constantly to replace the other, which is
precisely what constitutes progress? If economical science, so dry in
some respects, in other aspects elevates and fascinates the mind, it
is just because it describes the laws of this association between man
and nature,—it is because it shows gratuitous utility substituting
itself more and more for onerous utility, enjoyments bearing a
greater and greater proportion to labour and fatigue, obstacles
constantly lessening, and, along with them, value; the perpetual
mistakes and miscalculations of producers more than compensated by
the increasing prosperity of consumers; natural wealth, ‹gratuitous›
and ‹common›, coming more and more to take the place of wealth which
is ‹personal› and ‹appropriated›. What! are we to exclude from
Political Economy what constitutes its religious Harmony? [p192]
Air, light, water, are gratuitous, you say. True, and if we enjoyed
them under their primitive form, without making them co-operate in
any of our works, we might exclude them from Political Economy just
as we exclude from it the possible and probable utility of comets.
But observe the progress of man. At first he is able to make air,
light, water, and other natural agents co-operate very imperfectly.
His satisfactions were purchased by laborious personal efforts, they
exacted a large amount of labour, and they were transferred to others
as important ‹services›; in a word, they were possessed of great
‹value›. By degrees, this water, this air, this light, gravitation,
elasticity, calorie, electricity, vegetable life, have abandoned
this state of relative inactivity. They mingle more and more with
our industry. They are substituted for human labour. They do for us
gratuitously what labour does only for an onerous consideration.
They annihilate value without diminishing our enjoyments. To speak
in common language, what cost us a hundred francs, costs us only
ten—what required ten days’ labour now demands only one. The whole
value thus annihilated has passed from the domain of Property to that
of Community. A considerable proportion of human efforts has been
set free, and placed at our disposal for other enterprises; so that
with equal labour, equal services, equal value, mankind have enlarged
prodigiously the circle of their enjoyments; and yet you tell me that
I must eliminate and banish from the science this utility, which is
gratuitous and common, which alone explains progress, as well upward
as forward, if I may so speak, as well in wealth and prosperity as in
freedom and equality!
We may, then, legitimately attach to the word Wealth two meanings.
‹Effective Wealth›, real, and realizing satisfactions, or the
aggregate of utilities which human labour, aided by the co-operation
of natural agents, places within the reach of Society.
‹Relative Wealth›,—that is to say, the proportional share of each in
the general Riches, a share which is determined by Value.
This Economic Harmony, then, may be thus stated:
By labour the action of man is combined with the action of nature.
Utility results from that co-operation.
Each man receives a share of the general utility proportioned to
the value he has created,—that is to say, to the services he has
rendered; in other words, to the utility he has himself produced.[50]
[p193]
‹Morality of Wealth.›—We have just been engaged in studying wealth
in an economical point of view; it may not perhaps be useless to say
something here of its Moral effects.
In all ages, wealth, in a moral point of view, has been the subject
of controversy. Certain philosophers and certain religionists have
commanded us to despise it; others have greatly prided themselves on
the golden mean, ‹aurea mediocritas›. Few, if any, have admitted as
moral an ardent longing after the goods of fortune.
Which are right? Which are wrong? It does not belong to Political
Economy to treat of individual morality. I shall make only one
remark: I am always inclined to think that in matters which lie
within the domain of everyday practice, theorists, savants,
philosophers, are much less likely to be right than this universal
practice itself, when we include in the meaning of the word practice,
not only the actions of the generality of men, but their sentiments
and ideas.
Now, what does universal practice demonstrate in this case? It
shows us all men endeavouring to emerge from their original state
of poverty,—all preferring the sensation of satisfaction to the
sensation of want, riches to poverty; all, I should say, or almost
all, without excepting even those who declaim against wealth.
The desire for wealth is ardent, incessant, universal, irrepressible.
In almost every part of the globe it has triumphed over our natural
aversion to toil. Whatever may be said to the contrary, it displays
a character of avidity still baser among savage than among civilized
nations. All our navigators who left Europe in the eighteenth
century, imbued with the fashionable ideas of Rousseau, and expecting
to find the men of nature at the antipodes disinterested, generous,
hospitable, were struck with the devouring rapacity of these
primitive barbarians. Our military men can tell us, in our own day,
what we are to think of the boasted disinterestedness of the Arab
tribes.
On the other hand, the opinions of all men, even of those who do not
act up to their opinions, concur in honouring disinterestedness,
generosity, self-control, and in branding that ill-regulated,
inordinate love of wealth which causes men not to shrink from any
means of obtaining it. The same public opinion surrounds with
esteem the man who, in whatever rank of life, devotes his honest
and persevering labour to ameliorating the lot and elevating the
condition of his family. It is from this combination of facts, ideas,
and sentiments, it would seem to me, that we must form our judgment
on wealth in connexion with individual morality. [p194]
First of all, we must acknowledge that the motive which urges us
to the acquisition of riches is of providential creation,—natural,
and consequently ‹moral›. It has its source in that original and
general destitution which would be our lot in everything, if it
did not create in us the desire to free ourselves from it. We must
acknowledge, in the second place, that the efforts which men make to
emerge from their primitive destitution, provided they keep within
the limits of justice, are estimable and respectable, seeing that
they are universally esteemed and respected. No one, moreover, will
deny that labour is in itself of a moral nature. This is expressed
in the common proverb which we find in all countries,—Idleness is
the parent of vice. And we should fall into a glaring contradiction
were we to say, on the one hand, that labour is indispensable to the
morality of men, and, on the other, that men are immoral when they
seek to realize wealth by their labour.
We must acknowledge, in the third place, that the desire of wealth
becomes immoral when it goes the length of inducing us to depart
from the rules of justice, and that avarice becomes more unpopular
in proportion to the wealth of those who addict themselves to that
passion.
Such is the judgment pronounced, not by certain philosophers or
sects, but by the generality of men; and I adopt it.
I must guard myself, however, by adding that this judgment may be
different at the present day from what it was in ancient times,
without involving a contradiction.
The Essenians and Stoics lived in a state of society where wealth
was always the reward of oppression, of pillage, and of violence.
Not only was it deemed immoral in itself, but, in consequence of
the immoral means employed in its acquisition, it revealed the
immorality of those who possessed it. A reaction, even an exaggerated
reaction, against riches and rich men was to be expected. Modern
philosophers who declaim against wealth, without taking into account
this difference in the means of acquiring wealth, believe themselves
Senecas, while they are only parrots, repeating what they do not
understand.
But the question which Political Economy proposes is this: Is wealth
for mankind a moral good or a moral evil? Does the progressive
development of wealth imply, in a moral point of view, improvement or
decadence?
The reader anticipates my answer, and will understand that I must
say a few words on the subject of individual morality, in order
to get quit of the contradiction, or rather of the impossibility,
[p195] which would be implied in asserting that what is individual
immorality is general morality.
Without having recourse to statistics, or the records of our prisons,
we must handle a problem which may be enunciated in these terms:—
Is man degraded by exercising more power over nature—by constraining
nature to serve him—by obtaining additional leisure—by freeing
himself from the more imperious and pressing wants of his
organization—by being enabled to rouse from sleep and inactivity his
intellectual and moral faculties,—faculties which assuredly have not
been given him to remain in eternal lethargy?
Is man degraded by being removed from a state the most inorganic, so
to speak, and raised to a state of the highest spiritualism which it
is possible for him to reach?
To enunciate the problem in this form is to resolve it.
I willingly grant, that when wealth is acquired by means which are
immoral, it has an immoral influence, as among the Romans.
I also allow that when it is developed in a very unequal manner,
creating a great gulf between classes, it has an immoral influence,
and gives rise to revolutionary passions.
But does the same thing hold when wealth is the fruit of honest
industry and free transactions, and is uniformly distributed over all
classes? That would be a doctrine which it is impossible to maintain.
Socialist works, nevertheless, are crammed with declamations against
the rich.
I really cannot comprehend how these schools, so opposite in
other respects, but so unanimous in this, should not perceive the
contradiction into which they fall.
On the one hand, wealth, according to the leaders of these schools,
has a deleterious and demoralizing action, which debases the soul,
hardens the heart, and leaves behind only a taste for depraved
enjoyments. The rich have all manner of vices. The poor have
all manner of virtues—they are just, sensible, disinterested,
generous,—such is the favourite theme of these authors.
On the other hand, all the efforts of the Socialists’ imagination,
all the systems they invent, all the laws they wish to impose
upon us, tend, if we are to believe them, to convert poverty into
riches. . . . . . .
Morality of wealth proved by this maxim; the profit of one is
the profit of another. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . [p196]
VII.
CAPITAL.
The economic laws will be found to act on the same principle,
whether we take the case of a numerous agglomeration of men or of
only two individuals, or even of a single individual condemned by
circumstances to live in a state of isolation.
Such an individual, if he could exist for some time in an isolated
state, would be at once capitalist, employer, workman, producer,
and consumer. The whole economic evolution would be accomplished
in him. Observing each of the elements of which that evolution is
made up—want, effort, satisfaction—gratuitous utility, and onerous
utility—he would be enabled to form an idea of the entire mechanism,
even when thus reduced to its greatest simplicity.
One thing is obvious enough, that he could never confound what
was gratuitous with what exacted efforts; for that would imply a
contradiction in terms. He would know at once when a material or a
force was furnished to him by nature without the co-operation of his
labour, even when his own labour was assisted by natural agents, and
thus rendered more productive.
An isolated individual would never think of applying his own labour
to the production of a commodity as long as he could procure it
directly from nature. He would not travel a league to fetch water
if he had a well at his door. For the same reason, whenever his own
labour was called into requisition, he would endeavour to substitute
for it, as much as he possibly could, the co-operation of natural
agents.
If he constructed a canoe, he would make it of the lightest
materials, in order to take advantage of the specific gravity of
water. He would furnish it with a sail, that the wind might save him
the trouble of rowing, etc. [p197]
In order to obtain in this way the co-operation of natural agent,
tools and instruments would be wanted.
And here the isolated individual would begin to calculate. He would
ask himself this question: At present I obtain a satisfaction at the
expense of a given effort: when I am in possession of the proper tool
or instrument, shall I obtain the same satisfaction with less effort,
taking into account the labour required for the construction of the
instrument itself?
No one will throw away his labour for the mere pleasure of throwing
it away. Our supposed Robinson Crusoe, then, will be induced to set
about constructing the instrument only if he sees clearly that, when
completed, he will obtain an equal satisfaction at a smaller expense
of effort, or a greater amount of satisfaction with the same effort.
One circumstance will form a great element in his calculation—the
number of commodities in the production of which this instrument will
assist while it lasts. He has a primary standard of comparison—the
present labours to which he is subjected every time he wishes
to procure the satisfaction directly and without assistance. He
estimates how much labour the tool or instrument will save him on
each occasion; but labour is required to make the tool, and this
labour he will in his own mind spread over all the occasions on which
such an instrument can be made available. The greater the number
of these occasions, the stronger will be his motive for seeking
the co-operation of natural agents. It is here—in this spreading
of an ‹advance› over an aggregate of products—that we discover the
principle and foundation of Interest.
When Robin Crusoe has once made up his mind to construct the
instrument, he perceives that his willingness to make it, and the
advantage it is to bring him, are not enough. Tools are necessary to
the manufacture of tools—iron must be hammered with iron—and so you
go on, mounting from difficulty to difficulty, till you reach the
first difficulty of all, which appears to be insuperable. This shows
us the extreme slowness with which Capital must have been formed
at the beginning, and what an enormous amount of human labour each
satisfaction must originally have cost.
Again, in order to construct the instruments of labour, not only
tools, but ‹materials› are wanted. If these materials, as for
instance stones, are furnished gratuitously by nature, we must
still combine them, which costs labour. But the possession of these
materials supposes, in almost every case, anterior labour both long
and complicated, as in the manufacture of wool, flax, iron, lead, etc.
Nor is this all. Whilst a man is thus working for the exclusive
[p198] purpose of facilitating his ulterior labour, he can do
nothing to supply his present wants. Now, here we encounter an order
of phenomena in which there can be no interruption. Each day the
labourer must be fed, clothed, and sheltered. Robinson will perceive,
then, that he can undertake nothing for the purpose of procuring the
co-operation of natural forces until he has previously accumulated
a stock of ‹provisions›. He must every day redouble his activity in
the chase, and store up a portion of the game he kills, and subject
himself to present privations, in order that he may have at his
disposal the time requisite for the construction of the instrument he
has projected. In such circumstances, it is most probable that all he
will accomplish will be the construction of an instrument which is
rude and imperfect, and not very well fitted for the purpose he has
in view.
Afterwards, he will obtain greater facilities. Reflection and
experience will teach him to work better; and the first tool he
makes will furnish him with the means of fabricating others, and of
accumulating provisions with greater promptitude.
Tools, materials, provisions—these, doubtless, Robinson will
denominate his ‹Capital›; and he will readily discover that the more
considerable his capital becomes, the greater command will he obtain
over natural agents—that the more he makes such agents co-operate in
his labour, the more will he augment his satisfactions in proportion
to his efforts.
Let us now vary the hypothesis, and place ourselves in the midst
of the social order. Capital is still composed of instruments of
labour, materials, and provisions, without which no enterprise of any
magnitude can be undertaken, either in a state of isolation, or in
a social state. Those who are possessed of capital have been put in
possession of it only by their labour, or by their privations; and
they would not have undergone that labour (which has no connexion
with present wants), they would not have imposed on themselves those
privations, but with the view of obtaining ulterior advantages—with
the view, for example, of procuring in larger measure the future
co-operation of natural agents. On their part, to give away this
capital would be to deprive themselves of the special advantage they
have in view; it would be to transfer this advantage to others; it
would be to render others a ‹service›. We cannot, then, without
abandoning the most simple principles of reason and justice, fail
to see that the owners of capital have a perfect right to refuse
to make this transfer unless in exchange for another ‹service›,
freely bargained for and voluntarily agreed to. No man in the world,
I believe, will dispute [p199] the equity of the ‹mutuality of
services›, for mutuality of services is, in other words, equity.
Will it be said that the transaction cannot be free and voluntary,
because the man who is in possession of capital is in a position to
lay down the law to the man who has none? But how is a bargain to be
made? In what way are we to discover the ‹equivalence of services›
if it be not in the case of an exchange voluntarily effected on
both sides? Do you not perceive, moreover, that the man who borrows
capital, being free either to borrow it or not, will refuse to do so
unless he sees it to be for his advantage, and that the loan cannot
make his situation worse? The question he asks himself is evidently
this: Will the employment of this capital afford me advantages which
are more than sufficient to make up for the conditions which are
demanded of me? Or this: Is the effort which I am now obliged to
make, in order to obtain a given satisfaction, greater or less than
the sum of the efforts which the loan will entail upon me—first of
all, in rendering the ‹services› which are demanded of me by the
lender, and afterwards in procuring the special satisfaction I have
in view with the aid of the capital borrowed? If, taking all things
into account, there be no advantage to be got, he will not borrow,
he will remain as he is, and what injury is done him? He may be
mistaken, you will say. Undoubtedly he may. One may be mistaken in
all imaginable transactions. Are we then to abandon our liberty? If
you go that length, tell us what we are to substitute for free will
and free consent. Constraint? for if we give up liberty, what remains
but constraint? No, you say—the judgment of a third party. Granted,
on these conditions: First, that the decision of this third party,
whatever name you give him, shall not be put in force by constraint.
Secondly, that he be infallible, for to substitute one fallible man
for another would be to no purpose; and the parties whose judgment
I should least distrust in such a matter are the parties who are
interested in the result. The third and last condition is, that
this arbitrator shall not be paid for his services; for it would
be a singular way of manifesting his sympathy for the borrower,
first of all to take away from him his liberty, and then to lay
on his shoulders an additional burden as the recompense of this
philanthropical service. But let us leave the question of right, and
return to Political Economy.
A Capital which is composed of materials, provisions, and
instruments, presents two aspects—Utility and Value. I must have
failed in my exposition of the theory of value, if the reader does
not understand that the man who transfers capital is paid only for
its ‹value›, that is to say, for the service rendered in [p200]
creating that capital; in other words, for the pains taken by the
‹cédant› combined with the pains saved to the recipient. Capital
consists of commodities or products. It assumes the name of capital
only by reason of its ulterior destination. It is a great mistake
to suppose that capital, as such, is a thing having an independent
existence. A sack of corn is still a sack of corn, although one man
sells it for revenue, and another buys it for capital. Exchange
takes place on the invariable principle of value for value, service
for service; and the portion of gratuitous utility which enters
into the commodity is so much into the bargain. At the same time,
the portion which is gratuitous has no value, and value is the only
thing regarded in bargains. In this respect, transactions which have
reference to capital are in no respect different from others.
This consideration opens up some admirable views with reference to
the social order, but which I cannot do more than indicate here.
Man, in a state of isolation, is possessed of capital only when he
has brought together materials, provisions, and tools. The same
thing does not hold true of man in the social state. It is enough
for the latter to have rendered ‹services›, and to have thus the
power of drawing upon society, by means of the mechanism of exchange,
for equivalent services. I mean by the mechanism of exchange,
money, bills, bank-notes, and even bankers themselves. Whoever has
rendered a ‹service›, and has not yet received the corresponding
‹satisfaction›, is the bearer of a warrant, either possessed of
value, as money, or fiduciary, like bank-notes, which warrant gives
him the power of receiving back from society, when he will, where he
will, and in what form he will, an equivalent ‹service›. This impairs
neither in principle, nor in effect, nor in an equitable point of
view, the great law which I seek to elucidate, that ‹services are
exchanged for services›. It is still the embryo barter, which has
been developed, enlarged, and rendered more complex, but without
losing its identity.
The bearer of such a warrant as I have just described may then demand
back from society, at pleasure, either an immediate satisfaction,
or an object which, in another aspect, may be regarded as capital.
The person who lends or transfers has nothing to do with that. He
satisfies himself as to the ‹equivalence of the services›—that is all.
Again, he may transfer this warrant to another, to use it as he
pleases, under the double condition of ‹restitution›, and of a
‹service›, at a fixed date. If we go to the bottom of the matter,
we shall find that in this case the person who lends or transfers
capital [p201] ‹deprives himself›, in favour of the cessionary or
recipient, either of an immediate satisfaction, which he defers for
some years, or of an instrument of labour which would have increased
his power of production, procured him the co-operation of natural
agents, and augmented, to his profit, the proportion of satisfactions
to efforts. He strips himself of these advantages, in order to invest
another with them. This is undoubtedly to render a ‹service›, and
in equity this service is entitled to a return. Mere restitution
at the year’s end cannot be considered as the remuneration of this
special service. Observe that the transaction here is not a sale,
where the delivery of the thing sold is immediate, and the return
or remuneration is immediate also. What we have to do with here is
delay. And this delay is ‹in itself› a special service, seeing that
it imposes a sacrifice on the person who accords it, and confers
an advantage on the person who asks for it. There must, then, be
remuneration, or we must give up that supreme law of society,
‹service for service›. This remuneration is variously denominated,
according to circumstances—‹hire›, ‹rent›, yearly ‹income›—but its
generic name is ‹Interest›.[51]
Every ‹service› then is, or may become, a Capital, an admirable
phenomenon due to the mechanism of exchange. If workmen are to
commence the construction of a railway ten years hence, we could
not at the present moment store up in kind the corn which is to
feed them, the stuff which is to clothe them, and the barrows and
implements of which they will have need during that protracted
operation. But we can save up and transmit to them the ‹value› of
these things. For this purpose it is enough that we render present
services to society, and obtain for these services the warrants,
in money or credits of which I have spoken, which can be converted
into corn or cloth ten years hence. It is not even necessary that we
should leave these warrants dormant and unproductive in the interval.
There are merchants, bankers, and others in society who, for the use
of our services or their results, render us the service of imposing
upon themselves these privations in our place.
And it is still more remarkable that we can effect an inverse
operation, however impossible at first sight this may appear. We can
convert into instruments of labour, into railways, into houses, a
capital which as yet has no existence—thus making available at once
‹services› which will not be actually rendered till the twentieth
century. There are bankers who are ready to make present advances on
the faith that workmen and railway travellers of the [p202] third
and fourth generation will provide for their payment, and these
drafts upon the future are transmitted from hand to hand, without
remaining for a moment unproductive. I confess I do not believe that
the numerous inventors of artificial societies ever imagined anything
at once so simple and so complex, so ingenious and so equitable, as
this. They would at once abandon their insipid and stupid utopias if
they but knew the fine harmonies of the social mechanism which has
been instituted by God. It was a king of Aragon who bethought him
what advice he should have given to Providence on the construction
of the celestial mechanism, had he been called to the counsels of
Omniscience. Newton never conceived so impious a thought.
We thus see that all transmissions of services from one point of
time or of space to another repose upon this datum, that ‹to accord
delay is to render service›; in other words, they repose on the
legitimacy of Interest. The man who, in our days, has wished to
suppress interest, does not see that he would bring back exchange to
its embryo form,—barter, present barter,—without reference either to
the future or the past. He does not see that, imagining himself the
most advanced, he is in reality the most retrograde of men, since he
would reconstruct society on its most primitive model. He desires,
he says, ‹mutuality of services›. But he begins by taking away the
character of ‹services› exactly from that kind of ‹services› which
unite, tie together, and ‹solidarize› all places and all times. In
spite of the practical audacity of his socialist aphorisms, he has
paid an involuntary homage to the present order of things. He has but
one reform, which is negative. It consists in suppressing in society
the most powerful and marvellous part of its machinery.
I have explained in another place the ‹legitimacy› and ‹perpetuity›
of Interest. I shall content myself at present with reminding the
reader—
‹1st›, That the legitimacy of interest rests upon the fact that he
who ‹accords delay renders service›. Interest, then, is legitimate in
virtue of the principle of ‹service for service›.
‹2d›, That the perpetuity of interest reposes on this other fact,
that ‹he who borrows must pay back all that he has borrowed at a
fixed date›. When the thing lent, or its value, is restored to its
owner, he can lend it anew. When returned to him a second time, he
can lend it a third time, and so on to ‹perpetuity›. Which of the
successive and voluntary borrowers can find fault with this?
But since the legitimacy of interest has been contested so [p203]
seriously in our day as to put capital to flight, or force it to
conceal itself, I may be permitted to show how utterly foolish and
insensate this controversy is.
And, first of all, let me ask, would it not be absurd and unjust
either that no remuneration should be given for the use of capital,
or that that remuneration should be the same, whether the loan were
granted and obtained at one year’s, or two years’, or ten years’
date. If, unhappily, under this doctrine of pretended ‹equality›,
such a law should find a place in our code, an entire category of
human transactions would be suppressed on the instant. We should
still have ‹barter›, and ‹sales for ready money›, but we could no
longer have sales on credit, nor ‹loans›. The advocates of equality
would relieve borrowers from the burden of paying interest; but they
would, at the same time, balk them of their loans. At the same rate,
we might relieve men from the inconvenient necessity of paying for
what they buy. We should only have to prohibit them from purchasing;
or, what would come to the same thing, declare ‹prices› illegal.
There is levelling enough, in all conscience, in this pretended
principle of equality. First of all, it would put a stop to the
creation of capital; for who would desire to save when he could reap
no advantage from saving? Then it would reduce wages to zero, for
where there is no capital (instruments, materials, and provisions),
there can be neither future work nor wages. We should very soon
arrive at the most perfect of all equalities, the equality of
nothingness.
But is there any man so blind as not to see that delay is ‹in itself›
a circumstance which is ‹onerous›, and, consequently, entitled to
remuneration? Apart, even, from the consideration of loans, would
not every one endeavour to abridge delays? It is the object of our
perpetual solicitude. Every employer of workmen lays great stress
on the time which must elapse before his returns come in. He sells
dearer or cheaper according as his returns are more or less distant.
Were he indifferent on that subject, he must forget that capital is
power; for if he is alive to that consideration, he must naturally
desire that it should perform its work in the shortest possible time,
so as to enable him the oftener to engage it in a new operation.
They are but short-sighted Economists who think that we pay interest
for capital only when we borrow it. The general rule is, that he who
reaps the satisfaction should bear all the charges of production,
‹delay included›, whether he renders the service to himself, or
has it rendered to him by another. A man in a state of [p204]
isolation, who has no bargains or transactions with any one, would
consider it an ‹onerous› circumstance to be deprived of the use of
his weapons for a year. Why, then, should an analogous circumstance
not be considered as onerous in society? But if a man submits to
it voluntarily for the sake of another who agrees voluntarily to
remunerate it, what should render that remuneration illegitimate?
Nothing would be transacted in the world; no enterprise requiring
advances would be undertaken; we should neither plant, nor sow,
nor labour, were not delay considered as ‹in itself› an ‹onerous›
circumstance, and treated and paid for as such. Universal consent
is so unanimous on this point, that no exchange takes place but on
this principle. Delays, hindrances, enter into the appreciation of
‹services›, and, consequently, into the constitution of ‹value›.
Thus, in their crusade against interest, the advocates of equality
not only trample under foot the most obvious notions of equity—they
ignore not only their own principle of ‹service for service›, but
also the authority of mankind and universal practice. How can they,
in the face of day, exhibit the overweening pride which such a
pretension supposes? Is it not, indeed, a very strange and a very sad
thing, that these sectaries should adopt not only tacitly, but often
in so many words, the motto, that, since the beginning of the world,
all men have been mistaken except themselves? ‹Omnes, ego non.›
Pardon me for thus insisting on the legitimacy of interest, which is
founded on this principle, that, ‹since delay is costly, it must be
paid for›—to ‹cost› and to ‹pay› being correlative terms. The fault
lies in the spirit of our age. It is quite necessary to defend vital
truths, admitted generally by mankind, but attacked and brought into
question by a few fanatical innovators. For a writer who aspires
to demonstrate the harmony of phenomena in the aggregate, it is a
painful thing, you may believe, to be constantly stopped by the
necessity of elucidating the most elementary notions. Would Laplace
have been able to explain the planetary system in all its simplicity,
if, among his readers, there had not existed certain common and
received ideas,—if it had been necessary for him, in order to prove
that the earth turns upon its axis, to begin by teaching numeration?
Such is the hard fate of the Economist of our day. If he neglects
the rudiments, he is not understood—if he explains them, the beauty
and simplicity of his system is lost sight of in the multiplicity of
details.
It is a happy thing for mankind that ‹Interest› can be shown to be
legitimate. We should otherwise be placed in a miserable [p205]
dilemma—we must either perish by remaining just, or make progress by
means of injustice.
Every branch of industry is an aggregate of Efforts. But, as regards
efforts, there is an important distinction to be made. Some efforts
are connected with services which we are presently engaged in
rendering; others with an indefinite series of analogous services.
Let me explain myself.
The day’s work of the water-carrier must be paid for by those who
profit by his labour. But his anterior labour in making his barrow
and his water-cask must, as regards remuneration, be spread over an
indeterminate number of consumers.
In the same way, ploughing, sowing, harrowing, weeding, cutting
down, thrashing, apply only to the present harvest; but clearing,
enclosing, draining, building, improving, apply to and facilitate an
indefinite number of future harvests.
According to the general law of ‹service for service›, those who
receive the ultimate satisfaction must recompense the efforts which
have been made for them. As regards the first class of efforts, there
is no difficulty. They are bargained for and ‹estimated› by the man
who makes them, and the man who profits by them. But how are those of
the second class to be ‹estimated›? How is a just proportion of the
permanent advances, the general costs, and what the Economists term
fixed capital, to be spread over the whole series of satisfactions
which they are destined to realize? By what process can we distribute
the burden among those to whom the water is furnished down to the
time when the barrow shall be worn out, and among all the consumers
of corn until the period when the field will produce no more?
I know not how they would resolve this problem in Icarie, or at
the Phalanstère.[52] But I am inclined to think that the gentlemen
who manufacture artificial societies, and who are so fertile in
arrangements and expedients, and so prompt to compel their adoption
by Law (or constraint), could imagine no solution more ingenious than
the very natural process which men have adopted since the beginning
of the world, and which it is now sought to prohibit them from
following. Here is the process—it flows from the law of ‹Interest›.
Suppose a thousand francs to be laid out on agricultural
improvements, the rate of interest to be five per cent., and the
average return fifty hectolitres of corn. In these circumstances,
each hectolitre would be burdened with one franc. [p206]
This franc is obviously the legitimate recompense of an actual
‹service›, rendered by the proprietor (whom we might term a
labourer), as well to the person who shall acquire a hectolitre of
corn ten years hence as to the man who buys it to-day. The law of
strict justice, then, is observed here.
But if the agricultural improvement, or the barrow and the
water-barrel, have only a limited duration, which we can appreciate
approximately, a sinking fund must be added to the interest, in order
that, when these portions of capital are worn out, the proprietor
may be enabled to renew them. Still it is the law of justice which
governs the transaction.
We must not suppose, however, that the franc with which each
hectolitre is burdened as interest is an invariable quantity. It
represents a value, and is subject to the law of values. It rises
or falls with the variation of supply and demand,—that is to say,
according to the exigencies of the times and the interests of society.
It is generally thought that this species of remuneration has a
tendency to rise, if not in the case of manufacturing, at least in
the case of agricultural improvements. Supposing this rent to have
been equitable at the beginning, it has a tendency, it is said, to
degenerate into abuse; because the proprietor, sitting with his hands
across, sees it increase year after year, solely in consequence of
the increase of population and the enlarged demand for corn.
I allow that this tendency exists, but it is not peculiar to the
rent of land,—it is common to all departments of industry. In all,
value increases with the density of population, and even the common
day-labourer earns more in Paris than he could in Brittany.
And then, as regards the rent of land, the tendency to which we have
referred is powerfully counterbalanced by another tendency—that of
progress. An amelioration, realized at the present day by improved
processes, effected with less manual labour, and at a time when
the rate of interest has fallen, saves our paying too dearly for
improvements effected in former times. The fixed capital of the
landed proprietor, like that of the manufacturer, is deteriorated
in the long-run by the invention of instruments of equal value and
greater efficiency. This is a magnificent Law, which overturns the
melancholy theory of Ricardo; and it will be explained more in detail
when we come to the subject of landed property.
Observe, that the problem of the distribution of the services which
form the remuneration of permanent improvements can be resolved
only by a reference to the law of ‹interest›. The capital [p207]
itself cannot be spread over a succession of purchasers, for this is
rendered impossible by their indeterminate number. The first would
pay for the last, which would be unjust. Besides, a time would arrive
when the proprietor would become possessed both of the capital laid
out in the improvement, and of the improvement itself, which would be
equally unfair. Let us acknowledge, then, that the natural mechanism
of society is too ingenious to require the substitution of artificial
contrivances.
I have presented the phenomenon in its simplest form, in order to
render it intelligible; but, in practice, things do not take place
quite as I have described them.
The proprietor does not regulate the distribution himself, or
determine that each hectolitre shall be charged with one franc, more
or less, as in the hypothetical case which I have put. He finds an
established order of things, as well with reference to the average
price of corn as to the rate of interest. Upon these data he decides
how he shall invest his capital. He will devote it to agricultural
improvements, if he finds that the average price of corn will return
him the ordinary rate of interest. If not, he will devote his capital
to a more lucrative branch of industry—a branch of industry which,
just because it is more lucrative, presents, happily for society,
greater attractions for capital. This movement of capital from one
department to another, which is what actually takes place, tends to
the same result, and presents us with another Harmony.
The reader will understand that I confine myself to a special
instance only for the sake of elucidating a general law, which
applies to all trades and professions.
A lawyer, for example, cannot expect, from the first suit of which
he happens to have charge, to be reimbursed the expense of his
education, of his course of probation, of his establishment in
business, which we may suppose to amount to 20,000 francs. Not only
would this be unjust—it would be impracticable; for were he to make
such a stipulation, his first brief would never make its appearance,
and our Cujacius would be obliged to imitate the gentleman who, on
taking up house, could get nobody to come to his first ball, and
declared that next year he would begin with his second.
The same thing holds with the merchant, the physician, the shipowner,
the artist. In every career we encounter these two classes of
efforts—the second imperatively requires to be spread over an
indeterminate number of consumers, employers, or customers, and it is
impossible to imagine such a distribution without reference to the
mechanism of ‹interest›. [p208]
Great efforts have been made of late to remove the hatred which
exists in the popular mind against capital,—infamous, infernal
capital, as it is called. It has been exhibited to the masses as a
voracious and insatiable monster, more destructive than cholera, more
frightful than revolution, exercising on the body politic the action
of a vampire, whose power of suction goes on increasing indefinitely.
‹Vires acquirit eundo.› The tongue of this blood-sucker is called
usury, revenue, hire, rent, interest. A writer, who might have
acquired reputation by his great powers, and who has preferred to
gain notoriety by his paradoxes, has been pleased to scatter these
paradoxes among a people already in the delirium of a revolutionary
fever. I, too, have an apparent paradox to submit to the reader; and
I beg him to examine it, and see whether it be not in reality a great
and consoling truth.
But, first, I must say a word as to the manner in which M. Proudhon
and his school explain what they term the illegitimacy of ‹interest›.
Capital is an instrument of labour. The use of instruments of labour
is to procure us the co-operation of the ‹gratuitous› forces of
nature. By the steam-engine we avail ourselves of the elasticity of
air; by the watch-spring, of the elasticity of steel; by weights or
waterfalls, of gravitation; by the voltaic pile, of the rapidity of
the electric spark; by the sun’s rays, of the chemical and physical
combinations which we call vegetation, etc., etc. Now, by confounding
Utility with Value, we suppose that these natural agents possess a
value ‹which is inherent in them›; and that, consequently, those who
appropriate them are paid for their use, inasmuch as value implies
payment. We imagine that products are burdened with one item for the
services of man, which we admit to be just; and with another item for
the services of nature, which we reject as iniquitous. Why, it is
asked, should we pay for gravitation, electricity, vegetable life,
elasticity, and so forth?
The answer to this question is to be found in the theory of ‹value›.
Those Socialists who take the name of ‹Égalitaires› confound the
legitimate ‹value› of the instrument, which is the offspring of
human labour, with its useful result, which, under deduction of that
legitimate value, or of the interest which represents it, is always
gratuitous. When I remunerate an agricultural labourer, a miller,
a railway company, I give nothing, absolutely nothing, for the
phenomena of vegetation, gravitation, or the elasticity of steam.
I pay for the human labour required for making the instruments by
means of which these forces are constrained to act; or, what suits
my purpose better, I pay interest for that labour. I render [p209]
service for service, by means of which the useful action of these
forces is turned gratuitously to my profit. It is the same thing as
in the case of Exchange, or simple barter. The presence of capital
does not at all modify this law, for capital is nothing else than
an accumulation of values, of ‹services›, to which is committed the
special duty of procuring the co-operation of nature.
And now for my paradox.
Of all the elements of which the total value of any product is made
up, the part which we should pay for most cheerfully is that element
which we term the interest of the advances, or capital.
And why? Because that element enables us, by paying for ‹one›, to
save ‹two›. Because, by its very presence, it shows clearly that
natural forces have concurred in the final result, without our having
had to pay for their co-operation; and the consequence is, that the
same general utility is placed at our disposal, while at the same
time a certain portion of gratuitous utility has, happily for us,
been substituted for onerous utility; and, in short, the price of the
product has been reduced. We acquire it with a less proportion of our
own labour, and, what happens to society at large, is just what would
happen to an isolated individual who should succeed in realizing an
ingenious invention.
Suppose the case of a common artisan, who earns four francs a-day.
With two francs,—that is to say, with half-a-day’s labour, he
purchases a pair of cotton stockings. Were he to try to procure these
stockings by his own direct labour, I sincerely believe that his
whole life would not suffice for the work. How, then, does it happen
that his half-day’s work pays for all the ‹human services› which
have been rendered to him on this occasion? According to the law of
‹service for service›, why is he not forced to give several years’
labour?
For this reason, that the stockings are the result of ‹human
services›, of which natural agents, by the intervention of Capital,
have enormously diminished the proportion. Our artisan, however,
pays not only for the actual labour of all those who have concurred
in the work, but also the interest of the capital by means of
which the co-operation of nature was procured; and it is worthy of
remark, that, without this last remuneration, or were it held to
be illegitimate, capital would not have been employed to secure
the assistance of the natural agents. There would have been in the
product only onerous utility; for in that case the commodity would
have been the exclusive result of human labour, and our artisan
would have been brought back to the point whence he started,—that is
to say, he would have been placed in the [p210] dilemma of either
dispensing with the stockings, or of paying for them the price of
several years’ labour.
If our artisan had learnt to analyze phenomena, he would soon get
reconciled to Capital, on seeing how much he is indebted to it. He
would be convinced, above all, that the gratuitous nature of the
gifts of God has been completely preserved, and that these gifts
have been lavished on him with a liberality which he owes not to his
own merit, but to the beautiful mechanism of the ‹natural› social
order. Capital does not consist in the vegetative force which has
made cotton germinate and flower, but in the ‹pains taken› by the
planter. Capital is not the wind which fills the sails of the ship,
or the magnetism which acts upon the needle, but the ‹pains taken›
by the sailmaker and the optician. Capital is not the elasticity of
steam which turns the spindles of the mill, but the ‹pains taken› by
the machine-maker. Vegetation, the power of the winds, magnetism,
elasticity,—all these are purely gratuitous; and hence the stockings
have so little value. As regards the pains taken by the planter,
the sailmaker, the optician, the shipbuilder, the sailor, the
manufacturer, the merchant, they are spread—or, rather, so far as
capital is concerned, the interest of that capital is spread—over
innumerable purchasers of stockings; and this is the reason why the
portion of labour given by each of these purchasers is so small.
Modern reformers! when I see you desiring to replace this admirable
natural order by an arrangement of your own invention, there are two
things (although they are in reality one and the same) which confound
me,—namely, your want of faith in Providence, and your faith in
yourselves—your ignorance, and your presumption.
* * * * *
It follows from what I have said that the progress of mankind
coincides with the rapid creation of Capital; for to say that new
capital is formed, is just to say, in other words, that obstacles,
formerly onerously combated by labour, are now gratuitously combated
by nature; and that, be it observed, not for the profit of the
capitalist, but for the profit of the community.
This being so, the paramount interest of all (in an economical point
of view, and rightly understood) is to favour the rapid creation of
capital. But capital, if I may say so, increases of its own accord
under the triple influence of activity, frugality, and security.
We can scarcely exercise any direct influence on the activity and
frugality of our neighbours, except through the medium of public
opinion, by an intelligent communication of our antipathies and our
sympathies. But as regards security we can do much, for, [p211]
without security, capital, far from being formed and accumulated,
conceals itself, takes flight, and perishes; and this shows us how
suicidal that popular ardour is which displays itself in disturbing
the public tranquillity. Let the working-classes be well assured that
the mission of Capital from the beginning has been to set men free
from the yoke of ignorance, of want, and of despotism; and that to
frighten away Capital is to rivet a triple chain on the energies of
the human race.
The ‹vires acquirit eundo› may be applied with rigorous exactitude
to capital, and its beneficent influence. Capital, when formed,
necessarily leaves disposable both labour and the remuneration of
that labour. It carries in itself, then, a power of progression.
There is in it something which resembles the law of velocities. This
progression economical science has omitted hitherto to oppose to the
other progression which Malthus has remarked. It is a Harmony which
we cannot explain in this place, but must reserve for the chapter on
Population.
But I must here put the reader on his guard against a specious
objection. If the mission of capital, it may be said, is to cause
nature to execute work which has been hitherto executed by human
labour, whatever good it may confer upon mankind, it must do injury
to the working-classes, especially to those classes who live by
wages; for everything which throws hands out of employment, and
renders them disposable, renders competition more intense; and
this, undoubtedly, is the secret reason of the antipathy of the
working-classes to men of capital. If this objection were well
founded, we should have a discordant note in the social harmony.
The illusion arises from losing sight of this, that ‹capital,
in proportion as its action is extended, sets free and renders
disposable a certain amount of human efforts, only by setting free
and rendering disposable a corresponding fund of remuneration›, so
that these two elements meet and compensate one another. The labour
is not paralyzed. Replaced in a special department of industry by
gratuitous forces, it sets to work upon other obstacles in the
general march of progress, and with more certainty, inasmuch as it
finds its recompense prepared beforehand.
Recurring to our former illustration, it is easy to see that the
price of stockings (like that of books, and all things else) is
lowered by the action of capital, only by leaving in the hands of
the purchaser a part of the former price. This is too clear for
illustration. The workman who now pays two francs for what he paid
six francs for formerly, has four francs left at his disposal. Now,
it is exactly [p212] in that proportion that human labour has been
replaced by natural forces. These forces, then, are a pure and simple
acquisition, which alters in no respect the relation of labour to
available remuneration. It will be remembered that the answer to this
objection was given formerly,[53] when, observing upon man in a state
of isolation, or reduced once more to the primitive law of barter,
I put the reader on his guard against the illusion which it is my
object here to dispel.
We may leave capital, then, to take care of itself, to be created
and accumulated according to its own proper tendencies, and the
wants and desires of men. Do not imagine that, when the common
labourer economizes for his old days, when the father of a family
sets his son up in business, or provides a dower for his daughter,
they are exercising to the detriment of the public that noble
attribute of man, Foresight; but it would be so, and private virtues
would be in direct antagonism with the general good, were there an
incompatibility between Capital and Labour.
Far from mankind being subjected to this contradiction, or, I might
rather say, this impossibility (for how can we conceive progressive
evil in the aggregate to result from progressive good in individual
cases?) we must acknowledge that Providence, in justice and mercy,
has assigned a nobler part to Labour than to Capital in the work of
progress, and has afforded a stimulant more efficacious, a recompense
more liberal, to the man who lives by the sweat of his brow, than to
the man who subsists upon the exertions of his forefathers.
In fact, having established that every increase of capital is
followed by a necessary increase of general prosperity, I venture to
lay down the following principle with reference to the distribution
of wealth,—a principle which I believe will be found unassailable:—
“‹In proportion to the increase of Capital, the› absolute ‹share of
the total product falling to the capitalist is augmented, and his›
relative ‹share is diminished; while, on the contrary, the labourer’s
share is increased both absolutely and relatively.›”