It is true that Marx had drawn attention to the contradiction in the

first volume, but no explanation was forthcoming until the later volumes

appeared. Having stated that the greater quantity of surplus value is

the direct result of the greater proportion of circulating capital

employed, he proceeds: “This law clearly contradicts all experience based

on appearance. Everyone knows that a cotton-spinner who, reckoning the

percentage on the whole of his applied capital, employs much constant

and little variable capital, does not, on account of this, pocket less

profit or surplus value than a baker who relatively sets in motion much

variable and little constant capital. For the solution of this apparent

contradiction many intermediate terms are as yet wanted, as from the

standpoint of elementary algebra many intermediate terms are wanted to

demonstrate that 0/0 may represent an actual magnitude.… Vulgar economy,

which, indeed, has really learnt nothing, here, as everywhere, sticks to

appearance in opposition to the law which regulates and explains them.”

(_Kapital_, p. 274.)

It is probable that Marx was not very well satisfied with his

explanation, which may account for his reluctance to publish it during

his lifetime.

[977] In the example just given suppose A and B represent the total

industry of the country: the whole national industry will be made up of

£900 + £100 circulating capital and £100 + £900 fixed—£2000 altogether.

If the surplus value be at the rate of 100 per cent. of the circulating

capital, the total capital value will be £900 + £100 = £1000 on a capital

of £2000, or a percentage of 50.

[978] Taking the example given on p. 427, the mean of £900 + £100 = £500,

and industry A, instead of 90 per cent., will draw only 50 per cent.

profit, while industry B, instead of drawing only 10 per cent., will draw

50 per cent.

[979] We have indifferently employed the terms “profit” and “surplus

value” simply because the former is a much more familiar word. But we

must warn the reader against thinking that the two terms are synonymous.

The surplus value is all that part of the value of the produce which is

over and above the expenses of labour involved in its production—that

enormous slice which becomes the property of every class in society

except the workers, not merely the employers, but merchants, landlords,

etc.; while profit is that part of the surplus value which the employers

of labour keep for their own use. The rate of profit also is something

quite different from the percentage of surplus value, as we shall see

later.

We must call attention once more to the different interpretations which

have been given of the term “profit.” Marx and the English economists

take the word to comprise the whole revenue of capital under a _régime_

of free competition, no distinction being drawn between profit properly

so called and interest. To-day we understand by profit the income drawn

by the _entrepreneur_—as distinct from the capitalist—as the result of

certain favourable circumstances, notably imperfect competition.

It would be absurd to speak of a law of equality of profit, seeing that

profit, as we have defined it, is, like rent, a differential revenue.

[980] We are fully aware of the fact that our method of approach must

appear absurd from the Marxian standpoint, because it lays Marx open to

the charge of starting with a preconceived idea, much after the style of

economists like Bastiat, for example. Such a method, it is contended, is

utterly unscientific and unworthy of a great mind like Marx’s.

However great he may have been, we cannot help thinking that, in common

with most scientists, he discovered just what he was looking for, and it

would be difficult to prove that Marx was not a socialist long before he

began the writing of _Kapital_, even long before he had constructed a

system at all.

Our object in stating the conclusion first of all is to help the reader

to an understanding of the argument, but it is quite open to anyone who

thinks differently to say that Marx had not the least idea where the

analysis would lead him.

[981] The general use of the term “collectivism” is largely due to Marx.

While “collectivism” occurs almost on every page of the _Manifesto_, the

term “communism,” on the other hand, is never once employed.

James Guillaume, in the preface to the second volume of Bakunin’s

works, p. xxxvi, gives the following account of the origin of the word

“collectivism”: “At the fourth General Congress of the International,

held at Bâle in 1869, almost every delegate voted in favour of collective

property. But there were two distinct opinions cherished by the delegates

present. The German-Swiss, the English, and the German delegates were

really State communists. The Spanish, Belgian, French-Swiss, and most

of the French delegates were federal or anarchist communists who took

the name of collectivists. Bakunin belonged to the second group, and

to this group also belonged the Belgian Paepe and the French Varlin.”

Bakunin always spoke of himself as a collectivist and not a communist,

and in this respect he differs from Marx. The habit of thinking that all

anarchists are communists is largely due to Kropotkin.

[982] “We think we can perceive a change in the physiognomy of our

_dramatis personæ_. He who before was the money-owner now strides in

front as capitalist; the possessor of labour-power follows as his

labourer. The one with an air of importance, smirking, intent on

business; the other timid and holding back, like one who is bringing his

own hide to market and has nothing to expect but—a hiding.” (_Kapital_,

p. 155.)

[983] _Manifesto_, § 1.

[984] One of the chief objects of the trusts is the avoidance of

over-production, but that does not mean less unemployment; on the

contrary, a part of their policy consists in closing down certain

establishments which appear to be unnecessary.

[985] See the _Manifesto_ for an eloquent statement of this.

[986] Labriola.

[987] _Kapital_, p. 647.

[988] _Manifesto_, § 1.

[989] Engels in his preface to the _Manifesto_ admits that one of

its objects was “to announce the inevitable and imminent downfall of

_bourgeois_ property.”

Nowadays, however, it is more usual to characterise the aim of

collectivism as an attempt to abolish the wage-earning class—abolition

of property being simply a step towards that. This is how Labriola

writes in his _Essai sur la Conception matérialiste_ (2nd ed., p. 62):

“The proletariat must learn to concentrate upon one thing, namely, the

abolition of the wage-earner.”

It is well to remember that such is also the aim of the Associationists,

the co-operators, and the Radical Socialists. They proceed, however,

from the opposite point of view, and would multiply property rather than

abolish it, thinking that the latter process would merely universalise

the wage-earner.

[990] “Communism deprives no man of the power to appropriate the products

of society. All that it does is to deprive him of the power to subjugate

the labour of others by means of such appropriation.” (_Manifesto_, § 2.)

[991] To say that Karl Marx was the leader of a great socialist school

is hardly the way to describe him, for it is necessary that we should

remember that the vast majority of those who consider themselves

socialists are more or less his disciples. The other socialist schools,

the anarchists, the Fabians, the Collinsists, and the followers of Henry

George, cut a very poor figure beside his.

The bulk of his adherents is drawn either from Germany or Russia,

England being the country which has done least to swell the ranks of

his followers. In France the pure doctrine has been vigorously preached

since 1878 by MM. Jules Guesde and Lafargue—the latter of whom is Marx’s

son-in-law. But a great many French socialists, though collectivists in

name, refuse their adhesion to the Marxian doctrine in all its rigidity.

They have accepted three of his main principles—the socialisation of

the means of production, class war, and internationalism—but reject his

theory of value and his materialistic conception of history. Moreover,

they show no desire to break with the French socialist tradition, which

was pre-eminently idealistic. Benoît Malon, the founder of the _Revue

socialiste_ (1885), was one of the earliest representatives of French

collectivism, and among his successors may be reckoned M. George Renard

and Fournière.

[992] Labriola, _Essai sur la Conception matérialiste de l’Histoire_, p.

24. The Saint-Simonians had already made a similar claim. It is hardly

fair to class them among the Utopians, and some Marxians are quite ready

to admit their claim to priority in this matter.

[993] Georges Sorel, one of Marx’s disciples, writing in no derogatory

spirit, we may be certain, expresses himself as follows: “Our experience

of the Marxian theory of value convinces us of the importance which

obscurity of style may lend to a doctrine”—a remark that is applicable to

other writers besides Marx.

[994] See Sorel’s article, _Les Polémiques pour l’Interprétation du

Marxisme_, in the _Revue internationale de Sociologie_, 1900, p. 248.

There is no such thing as a theory of value—in the accepted sense of the

term in Marx. What we have is a theory of economic equilibrium which

would only be true of a very rudimentary kind of society. It is assumed,

for example, that all industries are equally easy or difficult, that

all the workers are of one type, that ten men working for one hour will

produce the same amount of wealth no matter what task they are engaged

upon. It is this equality that enables comparison to be made between one

commodity and another, and this constitutes their value. We are simply

treated to an abstraction which shows that with the exercise of a little

ingenuity it is at least possible to reconcile the theory of time-value

and the theory of market price.

[995] _Conception matérialiste_, p. 91. Sorel says: “Marxism is really

much more akin to the Manchester doctrine than to the Utopian. We must

never forget this.” (_La Décomposition du Marxisme_, p. 44.)

[996] “The _bourgeoisie_, historically, has played a most revolutionary

part.… The _bourgeoisie_ cannot exist without constantly revolutionising

the instruments of production, and thereby the relations of production,

and with them the whole relations of society.… All fixed, fast-frozen

relations, with their train of ancient and venerable prejudices and

opinions, are swept away, all new-formed ones become antiquated before

they can ossify, all that is solid melts into air, all that is holy is

profaned.” (_Manifesto_, § 1.)

Besides, the Marxians themselves have tried to prove that capital is

actively undermining its own existence, which is surely the _ne plus

ultra_ of the revolutionary temperament.

[997] “The result is that capital has managed to solve problems which

the Utopians tackled in vain. It has also given rise to conditions which

permit of an entrance into a new form of society. Thus socialism will not

need to invent new machinery or to get people accustomed to them,” etc.

(Sorel, _loc. cit._, p. 41.)

[998] “The economists regard the feudal institutions as artificial,

the _bourgeois_ as natural. The existing economic ties, in their

opinion, are elemental laws that must always bind society.… They have

had some history, that is all we can really say.” (Marx, _Misère de la

Philosophie_, pp. 167-168.)

[999] _Manifesto_, § 2.

[1000] Whenever they change their method of production men also change

their whole social outlook. “The hand-mill gave us the servile State; the

steam-mill is the parent of the industrial, capitalist State.” (_Misère

de la Philosophie_, 2nd ed., p. 156.) This oft-repeated phrase contains

a picturesque antithesis rather than a scientific formula of historical

materialism. In his preface to his _Kritik der politischen Oekonomie_

Marx expresses himself with much more moderation. The following is the

most important passage of that celebrated page (p. 5):

“In the course of their efforts at production men enter into certain

definite and necessary relations which may be wholly independent of

their own individual preferences—such industrial ties being, of course,

correlative to the state of their productive forces. Taken together, all

these links constitute the economic structure of society. In other words,

it supplies a basis upon which the legal and political superstructure is

raised, and corresponding to it are certain social forms which depend

upon the public conscience. The method of producing commodities, speaking

generally, fixes the social, political, and intellectual _processus_

of life. A man’s conscience has less to do with determining his manner

of life than has his manner of life with determining the state of his

conscience.”

The word “fixes,” even when qualified by “speaking generally,” seems a

little pronounced, and Marxism has substituted the term “explained,”

which is somewhat nearer the mark. Labriola says that “it merely

represents an attempt to explain historical facts in the light of the

economic substructure.” (_Conception matérialiste_, p. 120.)

This materialistic conception is developed in a very paradoxical fashion

in Loria’s _La Constitution sociale_. He shows how all history and

every war, whether of Guelph or of Ghibelline, the Reformation and the

French Revolution, and even the death of Christ upon Calvary, rest upon

an economic basis. In Loria’s opinion, however, this basal fact is not

industrialism, but the various types of land systems. See the chapter on

Rent.

It would not be correct to regard Marxism as a mere expression of

fatalism or out-and-out determinism. The Marxian pretends to be, and

as a matter of fact he really is, a great believer in will-power. Once

the workers see where their interests really lie he would have them

move towards that goal with irresistible strength. It is not always

even necessary to define the end quite clearly before beginning to

move. “Everything that has happened in history has, of course, been the

work of man, but only very rarely has it been the result of deliberate

choice and well-considered planning on his part.” (Labriola, _Conception

matérialiste_, p. 133.) Elsewhere: “The successive creation of different

social environments means the development of man himself.” (_Ibid._, pp.

131-132.)

It would be beyond the scope of this work to enter into a metaphysical

discussion of these theories, however much one would like to.

[1001] See the works of MM. Jaurès, _Études socialistes_; George Renard,

_Le Régime socialiste_; Fournière, _L’Individu, l’Association, et l’État_.

[1002] Labriola, _op. cit._ Vandervelde (_L’Idéalisme Marxiste_, in _La

Revue socialiste_, February 1904) says that “upon final analysis it will

be found that Marx’s whole argument rests upon a moral basis, which is

that justice requires that every man should get all that he produces.”

M. Landry, in a book of lectures delivered by different authors entitled

_Études sur la Philosophie morale au XIXe Siècle_ (p. 164), is of an

entirely different opinion. He thinks that Marx’s moral basis is simply

potentiality. In other words, everything that has been created in the

ordinary course of economic development is moral, everything that has

been destroyed is immoral.

[1003] Hence the alliance of the Marxians with what appears to be a

directly opposite philosophy—that of William James and Bergson (see Guy

Grand, _La Philosophie syndicaliste_).

[1004] _Manifesto._ It is impossible to do away with the intellectuals

altogether, but they may be reduced to the rank of mere wage-earners.

“The Marxians always regarded revolution as the special privilege of

the producers, by whom, of course, they understood the manual workers,

who, accustomed as they are to nothing but the factory _régime_, would

force the intellectuals also to supply some of the more ordinary wants of

life.” (Sorel, _Décomposition du Marxisme_, p. 51.)

[1005] _Manifesto_, § 2. It is necessary that we should be reminded of

the fact that the Saint-Simonians had already emphasised the antagonism

by speaking, not of rich and poor, but of idlers and workers. The

differentiation, that is to say, was economic. The Marxian distinction

is quite different, for the Saint-Simonians included within the category

workers, bankers, and employers, for example, who are excluded by the

Marxians. In some cases the Saint-Simonians thought they had even better

claims to inclusion than the ordinary worker.

[1006] The first of these means, namely, the acquiring of public works

by the State, is spoken of as unified socialism in France, whereas the

second, which relies upon direct action without the assistance of any

political organisation, is known as syndicalism and is represented by the

Confédération générale du Travail (see p. 480).

[1007] Marx, _Misère de la Philosophie_. “What does the word ‘revolt’

imply? Simply disobedience to law. But what are these laws that govern

our lives? They are just the products of _bourgeois_ society and of the

institutions which they are supposed to defend. Revolution will simply

mean replacing these laws by others which will have an entirely different

kind of justification.”

[1008] “It is the worst side of things that begets movement and makes

history by begetting strife.” (_Ibid._, 2nd ed., p. 173.)

[1009] Preface to _Kapital_, p. xix.

[1010] For the evolution of Marxism see Sombart’s lively volume

_Sozialismus und soziale Bewegung im 19 Jahrhundert_ (6th ed., 1908), and

also Georges Sorel, _La Décomposition du Marxisme_ (1908).

[1011] Labriola, _Socialisme et Philosophie_, p. 29. Others declare more

unmistakably still that “these obscure formulæ [the writer is thinking

of surplus labour] lead to equivocation and must be banished from the

science altogether.” (Sorel, _Revue internationale de Sociologie_, 1900,

p. 270.)

[1012] M. Sorel says of the revolutionary movement that everything

connected with it is very improbable. (_Décomposition du Marxisme_.)

[1013] The Italian syndicalist Arthur Labriola (_Revue socialiste_, 1899,

vol. i, p. 674) writes as follows: “While we Marxians are trying to

repatch the master’s cloak political economy is making some headway every

day. If we compare Marx’s _Kapital_ with Marshall’s _Principles_—chapter

by chapter, that is to say—we shall find that problems which required

a few hundred pages in the _Kapital_ are solved in a few lines by

Marshall.” B. Croce (_Materialismo storico ed Economia marxistica_, 1900,

p. 105) writes thus: “I am strongly in favour of economic construction

along Hedonistic lines. But that does not satisfy the natural desire for

a sociological treatment of profits, and such treatment is impossible

unless we make use of the comparative considerations suggested by Marx.”

Lastly, Sorel, in _Saggi di Critica del Marxismo_ (1903, p. 13) says:

“It is necessary to give up the attempt to transform socialism into a

science.”

[1014] Especially in that passage to which Bernstein calls attention:

“According to the law of value not merely must one devote the socially

necessary amount of time to the production of each commodity, but each

group of commodities must have such extra effort spent upon it as the

nature of the commodity or the character of the demand requires. The

first condition of value is utility or the satisfaction of some social

need—that is, value in use raised to such a degree of potentiality as

shall determine the proportion of total social labour to each of the

various kinds of production.” (_Kapital_, vol. iii.)

Bernstein adds: “This admission makes it impossible to treat the themes

of Gossen, of Jevons, and of Böhm-Bawerk as so many insignificant

irrelevancies.” (_Die Voraussetzungen des Sozialismus._)

[1015] “The surplus-value theory may be true or it may be false, but

that will make no difference to the existence of surplus labour. Surplus

labour is a fact of experience, demonstrable by observation, and requires

no deductive proof.” (Bernstein, _loc. cit._, p. 42.) That Marx did not

treat it with quite the same indifference is evident from the fact that

the whole theory is developed, not incidentally in the course of the

work, but at the very opening of the book.

[1016] In the book already quoted, which was published in 1899.

[1017] Sorel, _Les Polémiques pour l’Interprétation du Marxisme_, in the

_Revue internationale de Sociologie_, 1900.

[1018] Sorel, _Décomposition du Marxisme_, p. 33.

[1019] _Socialisme et Social-démocratie_, p. 234. We have recently

been told that syndicalism is just a literal application of Bergson’s

philosophy.

[1020] This point of view is very neatly expressed in an article of

M. Berth’s (_Mouvement socialiste_, May 1908, p. 393): “From a purely

negative or critical point of view we agree with Bernstein rather than

the orthodox Kautsky. But what does Bernstein propose to substitute for

the revolutionary ideal—impracticable as it was—of the German Social

Democratic party? The alternative offered is a simple democratic,

reformist evolution, a political or economic development which would

just be a pale imitation of the _bourgeois_ Liberal _régime_, which it

is hoped would result in the emancipation of the workers by getting

rid of _bourgeois_ Liberalism altogether. The complete democratisation

of politics and economics would, it is hoped, effect the necessary

improvement. On this point we syndicalists must definitely part company

with Bernstein and his _confrères_, for what we want is not a mere

evolution, but a revolutionary creation of new social forms.”

[1021] “An organisation of producers who will be able to manage their

own affairs without having recourse to the superior knowledge which the

typical _bourgeois_ in supposed to possess.” (Sorel, _Décomposition du

Marxisme_, pp. 60-61.)

[1022] “Revolutionary syndicalism is the great educative force which

contemporary society has at its disposal to prepare it for the tasks

which await it.” (Sorel, _Réflexions sur la Violence_, p. 244; 1909.)

“In the general ruin of institutions something new and powerful will

remain intact. This will be what is generally known as the proletarian

soul, which it is hoped will survive the general reassessment of moral

values, but that will depend on the energy displayed by the workers

in resisting the corruption of the _bourgeoisie_ and in meeting their

advances with the most unmistakable hostility.” (_Ibid._, p. 253.)

It is altogether a different point of view from that of the consumer,

the shareholder, or the “literary idler,” who are only interested in the

success of buyers’ social leagues, or in consumers’ societies. Cf. p. 342.

[1023] This incessant struggle is what Sorel has named violence, which he

thinks is peculiarly healthy. “I have shown,” says he, “that proletarian

violence has an entirely different significance from that usually

attributed to it by politicians and amateur students of society.” It is

incorrect, however, to say that he is in favour of sabotage. “Sabotage,”

says Sorel, “belongs to the old _régime_, but does nothing to set the

worker in the way of emancipation.” (_Mouvement socialiste_, 1905,

November 1 and 15.)

One cannot fail to see the antagonism which exists in France between the

Socialistes Unifiés (which is largely recruited from the old Marxian

party) and the syndicalists, who condemn both universal suffrage and

parliamentary action.

[1024] “One no longer thinks of drawing up a scheme which shall determine

the way in which people in the future are to seek their own well-being.

The problem now is how to complete the revolutionary education of the

proletarian.” (Sorel, _Décomposition du Marxisme_, introduction, p. 37.)

[1025] This group is represented by the review called _Le Mouvement

socialiste_, which is controlled by M. Lagardelle. Sorel has withdrawn

from the group and is now leading a campaign in favour of Catholic

nationalism.

The recent literature of syndicalism is very extensive. We have already

mentioned M. Guy Grand’s _La Philosophie Syndicaliste_.

[1026] _Réflexions sur la Violence_, p. xxxv. We must note, however, that

M. Sorel protests against any confusion being made between the myth as

he understands it and Utopian socialism. The myth is obviously superior

in the fact that it cannot be refuted, seeing that it is merely the

expression of a conviction. See pp. xxv and 218 of the same work.

[1027] We need only recall the doctrine of usury and the legislation on

the question—all of it the outcome of Canonist teaching.

[1028] A Catholic professor—long since forgotten—of the name of de

Coux wrote as follows in a book entitled _Essai d’Economie politique_,

published in 1832: “The practical application of Catholicism would result

in the finest system of social economy that the world has ever seen.”

[1029] “Catholicism alone has the necessary cohesion and power to

withstand socialism, which has been erected upon the ruins of the Liberal

system.” (Comte de Mun, _La Question sociale au XIXe Siècle_, 1900.)

“There is no need to think of the Church as a kind of gendarme in cassock

flinging itself against the people in the interest of capital. Rather it

should be understood that it is working in the interests and solely for

the defence of the weak.” (Comte de Mun, _Discours_, April 1893.)

[1030] The Social Christians somewhere make the remark that even if

the orthodox account of creation is destined to disappear before the

onslaughts of the evolutionary theory and Adam makes way for the gorilla,

the problem would merely be intensified, for it would still be necessary

to get rid of the “old man.” “We live,” says Brunetière, “in the strength

of the victories won over the more primitive instincts of our nature”

(_Revue des Deux Mondes_, May 1, 1895).

Kidd in his _Social Evolution_, a work which attracted great attention

when it was first published in 1894, attempts to apply the Darwinian

theory to Christianity. He accepts the Darwinian hypothesis that the

struggle for existence and natural selection constitute the mainsprings

of progress. But the struggle may demand, or the selection involve, the

sacrifice of individual to collective interest, and the only force which

can inspire such sacrifice is religion.

[1031] It was no Christian Socialist, but Auguste Comte, the founder of

Positivism, who wrote: “The original equality of men is not a doctrine

founded simply upon the observation of social facts. It was only clearly

affirmed for the first time by Christianity.” (_Traité de Politique_,

vol. i, p. 407.)

[1032] Frédéric Le Play (1806-82) was a mining engineer, and was educated

at the École Polytechnique. He subsequently became a professor at

the École des Mines and a Counseiller d’État. In 1855 he published a

collection of monographs dealing with working-class families under the

title of _Les Ouvriers européens_, in one volume (the second edition,

which appeared in 1877, consisted of six volumes). In 1864 he published

an exposition of his social creed in _La Réforme sociale_, a book that

Montalembert declared to be “the most original, the most courageous, the

most useful, and altogether the most powerful book of the century.” It

hardly deserves such extravagant praise, perhaps, but it is true that

many of its more pessimistic prophecies concerning the future of France

have been very curiously verified.

In 1856 Le Play founded La Société d’Économie sociale, which since 1881

has been responsible for the publication of _La Réforme sociale_. He

organised the Universal Exhibition in 1867, and was one of the first to

arrange exhibitions of social work. For a _résumé_ of his life and work

see _Frédéric Le Play d’après lui-même_, by Auburtin (Paris, 1906).

[1033] _Programme des Unions de la Paix sociale_, chap. 1.

[1034] “The gravest and most dangerous error of all, and one that has

been the parent of all our revolutions, is the false principle which the

innovators of 1789 would put into practice and which affirms the original

perfection of mankind. It also encourages the belief that a society

composed of ‘natural’ men would enjoy peace and happiness without any

effort at all, and that these desiderata are just the spontaneous outcome

of every free society.”

[1035] “It is the great misfortune of France that the family should be

immersed in the commune, the commune in the department, the department in

the State.” (_La Réforme sociale_, vol. iii, Book VII.)

[1036] “It [the patriarchal _régime_] in all matters relating to economic

action or to social life shows greater attachment to the past than

concern for the future. Obedience is the keynote rather than initiation.

The family group tends to arrest the enterprise which would characterise

the action of the more independent members of the family in a somewhat

freer atmosphere.” (_La Réforme sociale_, Book III.)

[1037] “In short, I have never met with a social organisation which to

the same extent vitiates the laws both of nature and morality.”

[1038] Le Play, who had some influence over Napoleon III, tried to

get him to consent to some such modification of the Civil Code. But

the Emperor, though favourably inclined, and despot as he was, dared

not alienate public sympathy in the matter. And really fathers seldom

exercise the full authority which the law gives them even now. The evil,

then, if it is an evil, is deeper than Le Play imagined, and seems to be

moral rather than legal.

[1039] “Human societies should aim not so much at the creation of wealth

as such, but rather at increasing the well-being of mankind. Well-being

includes daily bread, but it does not exclude social peace.” (Claudio

Jannet in a lecture on _Les Quatre Écoles d’Économie sociale_.)

[1040] We must remember that these were the orthodox views then.

Villermé, writing in 1840 in his celebrated _Tableau de l’État moral et

physique des Ouvriers_, thought it was the employers really who could

best improve the circumstances and character of the workers.

[1041] We get some idea of the importance which he attributed to the

permanence of engagements when we realise that he contemplated the

abolition of slavery with a measure of regret. (_La Réforme sociale._)

[1042] _Principles_, Book IV, chap. 7.

[1043] “Among the panaceas advocated in our time none has been more

criticised than ‘association.’ From a practical point of view these

societies seem to present none of the advantages ordinarily associated

either with complete independence or with a well-managed business

concern.”

[1044] “I have frequently posted as much as 1000 kilometres in order to

consult some eminent landowner living on the confines of Europe.” (Letter

to M. de Ribbes, October 3, 1867.)

[1045] “This method is based upon a careful observation of each fact and

its past history. Nothing is left to the imagination, the presupposition,

or the prejudices of the observer. It is essentially scientific and

exact.” (_La Réforme en Europe._)

[1046] These monographs appeared first of all, as we have seen, in his

great work on the European workmen in 1855. The work has been carried on

by his disciples and the results incorporated in the _Ouvriers des Deux

Mondes_, which already numbers above a hundred volumes. They have also

employed the method in writing monographs on industries and communes, etc.

The method requires supplementing by reference to statistics of

population and wages, which can only be supplied, of course, by

Governments.

[1047] “The comparison of receipts and expenditure should help to

discover any oversight, just as the weight of a chemical substance both

before and after an experiment helps to determine the nature of the

chemical reaction.” (Bureau, _L’Œuvre d’Henri de Tourville_.)

[1048] With a good deal of candour he admits offering a reward to anyone

who could show him a single happy family except under conditions of this

kind. “But,” he adds, “all my efforts proved fruitless.” (_Les Ouvriers

européens_, vol. iv, introduction.)

[1049] When Le Play teaches us that the essential condition of society

implies

A double foundation—the Decalogue and paternal authority,

A twofold link—religion and sovereignty, and

Three kinds of material—the community, private property, and employers,

we cannot help thinking that the so-called method of observation has a

very pronounced trait of dogmatism in its constitution.

[1050] “The principal object to aim at here is the limitation of the

ecclesiastical _personnel_ with a view to keeping them all fully

employed,” as he adds later on. He had the same antipathy to religious

congregations as he had to other forms of association.

[1051] “No social phenomenon can ever be explained if it is taken out of

its own setting. All social science is based upon this law.” (Demolins,

_La Classification sociale_.)

[1052] The similarity noted here has given rise to emphatic protests on

the part of certain members of this school. There is no need to take

offence at the epithet, however, provided we are careful to distinguish

it from philosophic materialism and recognise that it does not

necessarily exclude idealism.

[1053] This branch of the school, of which Tourville and Demolins were

the earliest leaders, has given us several excellent books. Demolins’ own

work on the superiority of the Anglo-Saxons caused quite a stir. Then

there is M. de Rousiers’ book on producers’ industrial unions, and P. du

Maroussem’s. We would also specially mention Paul Bureau’s _Le Contrat de

Travail_ (1902), _La Participation aux Bénéfices_, and _La Crise morale

des Temps nouveaux_. Bureau’s work is characterised by precise impartial

analysis of facts combined with great moral fervour.

[1054] Huet was a professor at Ghent, which accounts for his being

considered a Belgian, just as Walras is generally considered a Swiss.

[1055] He was the first to emphasise the importance of borrowers

combining. Only in this way can the poor hope to offer some real

security. “How is it that the worker cannot borrow? Simply because he

has no security to offer except just his work in the future. That future

guarantee can only become real and certain by means of combination. Union

eliminates the uncertainty which hitherto made the security worthless and

the loan impossible.” (_La Question du Travail_, p. 25.)

“The problem is to outline a state of society where working men will work

only for themselves and not for others; where none will reap but has

already sown, and where each will enjoy the fruits of his own labour.”

(_Ibid._)

[1056] “Christianity and revolution as far as humanity is concerned

have identical aims, and the one is the natural outcome of the other.”

(Buchez, _Traité de la Politique_, vol. ii, p. 504.)

[1057] Moufang’s principal writings were published in 1864 under the

title of _Le Question ouvrière et le Christianisme_. He could never

make up his mind as between the corporative and the co-operative ideal,

however. The latter was very much to the front just then, not only in

France, but also with the English Christian Socialists and with the

German socialist Lassalle. This was before the co-operative movement was

eclipsed by trade unionism.

Hitze, however, shows none of his master’s hesitation, but emphatically

declares that “the solution of the social question is essentially and

exclusively bound up with a reorganisation of trades and professions. We

must have the mediæval _régime_ of corporations re-established—a _régime_

which offers a better solution of the social problem than any which

existed either before or after. Of course times have changed, and certain

features of the mediæval _régime_ would need modification. But some such

corporative _régime_ conceived in a more democratic spirit must form the

economic basis.” (_Capital and Labour._)

[1058] “We must direct all our private initiative and concentrate

public attention upon this one reform—the corporative reorganisation of

society.” (_Programme de l’Œuvre des Cercles ouvriers_, April 1894.)

Co-operative association is dismissed altogether. The Social Catholics

have especially little sympathy with the small retail co-operative

stores, because they threaten the existence of the small merchant and

the small artisan—types of individuals that are dear to the heart of the

Catholics. On the other hand, it shows itself very favourably inclined

towards co-operative credit, because of the possibility of assisting the

classes already referred to—the shopkeeper and the small merchant.

[1059] In 1894 the Congress of Catholic Circles which met at Rheims

declared that, “without minimising the difficulties which stand in the

way of extending the mixed _syndicats_, the formation of such _syndicats_

must be our chief aim.” In 1904 Father Rutten, one of the leaders of

the Belgian Catholic Syndical movement, in a report on the syndicalist

movement writes as follows: “We do not despair of the mixed _syndicat_,

which in theory we certainly think is nearest perfection. But we must

not blind ourselves to facts, and whether we will or no we have to admit

that at the present moment the mixed _syndicat_ in ninety industries out

of every hundred seems quite Utopian.” (Quoted by Dechesne, _Syndicats

Ouvriers belges_, p. 76; 1906.)

[1060] Such is the programme as outlined especially in Austria, which is

one of the countries where Social Catholicism seems fairly powerful. As

a matter of fact, the corporative _régime_ has never quite disappeared

there, and for some years now attempts have been made to revive it in the

smaller crafts. The new corporation would take the form of a centralised

organisation, whose regulations would be obligatory upon all the members

of the craft.

[1061] “The commune has always been organised. Is there any reason why

the trade should not be? In both cases special relations are established,

special needs arise, there are frequent conflicts and occasional harmony

between the different interests. But all of them are nevertheless

intimately bound together, and the links connecting them must be

co-ordinated on some regular plan if every one is to be safe, and free

to follow his own bent.” (Henri Lorin, _Principes de l’Organisation

professionnelle_, in _L’Association catholique_, July 15, 1892.)

To this it might be replied that the majority generally makes the law for

the commune, but that in the case of a free corporation it is often the

minority that rules. To which it might be retorted that the so-called

majority is often not better than a minority of the electors, and a very

small minority indeed of the whole inhabitants—who of course include

women, who generally have no votes. Moreover, as soon as the rules of the

_syndicat_ became really obligatory the majority if not the whole of the

workers in the trade would be found within the union.

[1062] Father Antoine writes as follows in his _Cours d’Économie

sociale_, p. 154; “The social question can never be completely solved

until we have a complete revival of Christian morals.” Still more

categorical is the declaration of M. Léon Harmel in _L’Association

catholique_ for December 1889: “We can see only one remedy, and that is

that the authority of the Pope should be recognised all the world over,

and his ruling accepted by all people.”

The annual study reunions which go by the name of _les Semaines

sociales_, and which afford one of the best manifestations of the kind

of activities which Social Christianity gives rise to everywhere, are

not so exclusive. Economic questions of all kinds are discussed, but the

programme is not strictly Catholic at all, and the basis is wide enough

to include everyone who is a professed Christian.

[1063] “The corporations which would be set up under the ægis of

religion would aim at making all their members contented with their lot,

patient in toil and disposed to lead a tranquil, happy life” (_sua sorte

contentos, operumque patientes et ad quietam ac tranquillam vitam agendam

inducant_). (Encyclical of Leo XII, December 28, 1878, called the _Quod

Apostolici_. See _History of Corporations_, by M. Martin Saint-Leon.)

[1064] “The corporation is simply the model of the Church. Just as for

the Church all the faithful are equal in the sight of God, so here. But

equality ends there. For the rest it is a hierarchy.” (Ségur-Lamoignon,

_L’Association catholique_, July 13, 1894.)

[1065] The Ligue sociale d’Acheteurs, founded in Paris in 1900, is of

Social Catholic inspiration.

[1066] “More important even than free will, whether of masters or of men,

is that higher and more ancient law of natural justice which demands that

wages should always be sufficient to enable the worker to lead a sober

and honest life. But lest the public authority in this case, as in some

other analogous cases, such as the question of the length of the working

day, should unwisely intervene, and in view of the great variety of

circumstances, it is better that the solution should be left in the hands

of the corporations or the unions.” (Encyclical, _Rerum Novarum_, 1891.)

[1067] The Social Catholics wherever found are usually Protectionists,

the reason being that they think their “corporative _régime_ could never

be kept going without some protection against foreign competition,” and

also because most of their adherents are drawn from the ranks of the

agricultural unions. (_Programme de l’Œuvre des Cercles ouvriers_, Art.

7.)

[1068] “The so-called productivity of capital, which constitutes

the greatest iniquity of profit-making society, and which is from

an economical point of view the final cause of social suffering, is

nothing better than a word invented to hide the real fact, namely,

the appropriation of the fruits of labour by those who possess the

instruments of labour.” (Loesewitz, _Législation du Travail_, in

_L’Association catholique_, 1886.)

[1069] Extract from a report of a meeting of the Sillon, November 1907:

“MARC SANGNIER. The social transformation which we desire to see,

comrades, will aim, not at absorbing the individual, but rather at

developing him. We want the factories, the mines, and the industries in

the possession, not of the State, but of groups of workers.

“AN INTERRUPTER. That is socialism.

“MARC SANGNIER. You can call it socialism if you like. It makes no

difference to me. But it is not the socialism of the socialists, of the

centralising socialists. We don’t want to set the proletarians free from

the control of the masters to put them under the immediate control of

one great master, the State; we want the proletarians themselves, acting

collectively, to become their own masters.”

[1070] Milcent, in _L’Association catholique_, 1897, vol. ii, p. 58.

There is a Catholic Social school which is Liberal and individualist in

its tendencies, and which is represented by such writers as the late

Charles Périn, professor at Louvain, author of _La Richesse_ and _La

Socialisme chrétien_, and by M. Rambaud, author of _Cours d’Histoire des

Doctrines_. Nor ought we to forget their connection with the development

of agricultural credit banks of the Raiffeisen type which have been

established in Germany, France, and Italy—although their inception in

Italy is largely the work of a Jew named Wollemborg.

[1071] Such, for example, is the opinion of Nitti in his book on Catholic

Socialism, and because of that rather unsatisfactory reason he only

devotes a few pages to it.

[1072] There are several historical considerations that may with

advantage be kept in mind in dealing with this subject, such as, for

example, the notable fact that while the Catholic Church has always

been opposed to usury, it was Calvin and Calvinists like Saumaise and

the ancient jurist Dumoulin who first justified the practice of taking

interest.

[1073] _The Christian Socialist_ was preceded by another paper called

_Politics for the People_, founded in 1848, which may be taken as the

birthday of the movement. In any case the date is significant in view of

the contemporary revolution in France.

It is only just to note that Channing, the American pastor, who died in

1842, was one of the pioneers. His writings on social questions are still

read.

Those who wish for more information either on the history or on the other

aspects of Social Christianity should consult the _New Encyclopædia of

Social Reform_, published in America.

[1074] The following year Charles Kingsley preached a sermon in London

which caused such a sensation that the vicar of the parish felt bound to

protest against its tone even during the service. In the course of the

sermon Kingsley remarked that any social system which enabled capital to

become the possession of a few, which robbed the masses of the land which

they and their ancestors had cultivated from time immemorial, and reduced

them to the condition of serfs working for daily wage or for charity, was

contrary to the spirit of the Kingdom of God, as revealed in Christ. The

sermon was afterwards published under the title of _The Church’s Message

to the Workers_.

[1075] Maurice declared that everyone who is a Christian must also be

a socialist. But the significance of the word “socialist” has changed

somewhat since then. According to Maurice, “The motto of the socialist is

co-operation; of the anti-socialist, competition.”

[1076] “There is no doubt about association being the form which

industrial government will take in future, and I have no doubt as to its

success, but a preliminary training extending possibly over a couple of

generations is necessary before the worker has the requisite ability or

moral strength to make use of it.” (Kingsley in 1856.)

And this is how State intervention appealed to him: “The devil is always

ready to urge us to change law and government, heaven and earth even, but

takes good care never to suggest that we might change ourselves.”

[1077] The official organ of the Christian Social Union, which is

definitely connected with the Church of England, is the _Economic

Review_, published at Oxford—not to be confused with the _Economic

Journal_, which is published in London by the Royal Economic Society.

[1078] E. Gounelle, _Le Mouvement des Fraternités_.

[1079] Mr. Josiah Strong, director of the Institute of Social Service

at New York, is the publisher of a review called _The Gospel of the

Kingdom_, which has for its programme “the study of economic facts in the

light of the Gospel,” and in which he maintains that “if the world is

ever to be Christianised industry must be Christianised first of all.”

On the question of unemployment, for example, he refers us to Matthew

xx, 6, and on the still more vexed question of the closed or open shop

we are referred to 1 Corinthians xii, 16, 26. We must also mention

Rauschenbusch’s eloquent book, _Christianity and the Social Crisis_.

The well-known economist Professor Richard T. Ely is another of

the leaders of this movement. Nor must we omit Herron, who caused

some sensation by declaring that it is necessary to go well beyond

collectivism, which he thinks altogether too conservative and

reactionary. He adds that Karl Marx is a crusted Tory compared with

Jesus, “for any one who accepts private property in any form whatsoever,

even in matters of consumption, must reject Christ.”

[1080] At a conference held at Geneva in 1891. At this conference M.

Stöcker defined his programme as follows: “We do not believe that we

can do anything without the State, but we also believe in the spirit of

association. We have told the masters that their duty is to make some

sacrifice for the sake of solving the question in a way that will be

agreeable to their men. We have also told the workers that they must work

hard, economically, and conscientiously, even if they never obtain a

better situation.”

[1081] He was formally repudiated by the Emperor in 1896 in a telegram

addressed to a powerful employer, Baron Stumm.

[1082] Goehre is the author of a work entitled _Three Months in a

Workshop_. The book has been a great success and has produced a crop of

imitations.

[1083] Kutter’s book _Sie Mussen_ caused quite a flutter. The author

attempts to show that the socialists are to-day the real disciples of

Christ, but have been disowned by the Church.

[1084] For the past twenty years M. de Boyve, the leader of the

co-operative movement in France, has been the president, which confirms

us in the suspicion that the two schools had a common parentage, both

really springing from the École de Nîmes. Periodical congresses are held

in connection with it, and it also has a review called _Le Christianisme

Social_.

[1085] Pastor Tomy Fallot, the initiator of this movement, indicates

the path that should be followed thus: “The essential thing is to get a

rough outline of that perfect type which is known as co-operation. Just

now it seems the only thing that contains a prophecy of better times.”

(_L’Action Bonne._) Compare this with Maurice’s formula.

“We are Social Christians because we are solidarists. In our search for

solidarity we have found the Messiah and His Kingdom. Solidarity is the

layman’s term, the Kingdom of God the theologian’s, but the two are the

same.” (Gounelle, _L’Avant-Garde_,1907.)

[1086] This group found its earliest recruits among the young pastors

who ministered in the great industrial towns (M. Wilfred Monod at Rouen

and M. Gounelle at Roubaix, for example), and thus found itself in close

touch with poverty, suffering, and discontent. But several laymen have

also joined it, among them being a son of the economist who was regarded

as the _doyen_ of the Liberal school—Frédéric Passy.

The Christian Socialist group publishes a journal of its own, entitled

_L’Espoir du Monde_.

[1087] “‘For I could wish that myself were accursed from Christ for my

brethren,’ writes St. Paul; in other words, ‘I do not want to be saved

alone, and I shall be completely saved only when humanity as a whole has

been saved.’ And so the evangelical doctrine would subordinate the full

realisation of my personal salvation to the salvation of others.” (W.

Monod, _La Notion apostolique du Salut_.)

[1088] Or, as he epitomises it elsewhere, “It is useless to speak of

giving ourselves until we are certain that we own ourselves.”

[1089] Ruskin himself did not think that his doctrines were only of

slight importance. The introduction to _Munera Pulveris_ (1862) contains

the following words: “The following pages contain, I believe, the first

accurate analysis of the laws of Political Economy which has been

published in England.”

See also the preface to _Unto This Last_, which has for its sub-title

“Four Essays on the First Principles of Political Economy.”

[1090] There are a great number of novels dealing with social questions.

For the English novels bearing on this topic see M. Cazamian, _Le Roman

social_.

[1091] So much was this the case with Ruskin that Mme. Brunhes has

published a book called _Ruskin et la Bible_, and Tolstoy on his side has

an edition of the Gospels to his credit which is said to be much nearer

the original than the ordinary version of the canon.

[1092] See _Fors Clavigera_, _passim_. Tolstoy writes in a similar

strain. Money is just a conventional sign giving the right or the

possibility of claiming the service of others. But although money is

all-powerful in the matter of exploiting the worker it is quite useless

when it comes to a question of furthering his well-being. There is a

curious development of this thesis in Tolstoy’s _What is to be Done?_

[1093] “All this has come of the spreading of that thrice accursed,

thrice impious doctrine of the modern economist, that ‘To do the best

for yourself, is finally to do the best for others.’ Friends, our great

Master said not so.” (Ruskin, _Crown of Wild Olive_, Lecture II).

[1094] Especially in that celebrated passage: “It [Political Economy]

sounds with Philosophico-Politice-Economic plummet the deep dark sea of

troubles, and having taught us rightly what an infinite sea of troubles

it is sums up with the practical inference and use of consolation that

nothing whatever can be done in it by man, who has simply to sit still

and look wistfully to ‘time and general laws,’ and thereupon without so

much as recommending suicide coldly takes its leave of us.” (_Chartism._)

[1095] “If thou ask again … What is to be done? allow me to reply: By

thee, for the present, almost nothing.… Thou shalt descend into thy inner

man, and see if there be any traces of a _soul_ there; till then there

can be nothing done!… Then shall we discern, not one thing, but, in

clearer or dimmer sequence, a whole endless host of things that can be

done. _Do_ the first of these.” (_Past and Present._ Book I. chap. 4.)

[1096] See particularly _Fors Clavigera_.

[1097] “Why, the four-footed worker has already got all that this

two-handed one is clamouring for, and you say it is impossible.”

(Carlyle, _Past and Present_, chap. 3; and see also _Chartism_, chap. 4.)

[1098] This was the ideal which he had in mind in founding the Guild

of St. George. See an article by Professor Marshall, _The Social

Possibilities of Economic Chivalry_, in the _Economic Journal_, March

1907. There is no reference to Ruskin in it, however.

[1099] When the Christian Socialists in 1854 organised a course of

lectures for working men in London Ruskin volunteered to give a few

addresses, not on social economics or on history, but on drawing.

[1100] One naturally thinks first of such industrial villages as

Bournville and Port Sunlight. But in 1903 an entirely new city of this

kind was begun at Letchworth, Herts. The idea has recently undergone a

considerable development by a society that owes its inspiration to Ruskin.

[1101] _Story of a Horse_, in his _First Stories_ (1861).

[1102] See a book entitled _Labour_, which consists of the meditations of

a _muzhik_ called Bondareff upon those words of Genesis, “In the sweat of

thy face shalt thou eat bread,” followed by a long commentary by Tolstoy.

[1103] “Pleasure and pain are undoubtedly the ultimate objects of the

calculus of economics. To satisfy our wants to the utmost with the least

effort, to procure the greatest amount of what is desirable at the

expense of the least that is undesirable, in other words, _to maximise

pleasure_, is the problem of economics.” (Stanley Jevons, _Theory of

Political Economy_, p. 40.)

[1104] “The errors of the Classical school are, so to speak, the ordinary

diseases of the childhood of every science.” (Böhm-Bawerk, _The Austrian

Economists_, in _Annals of the American Academy of Political and Social

Science_, January 1891.)

[1105] _Recherches sur les Principes mathématiques de la Théorie des

Richesses._

[1106] Let P = value of product and _x_, _y_, _z_ represent wages,

interest, and rent respectively, then _x_ + _y_ + _z_ = P, which is

insoluble.

Nor does it seem much more hopeful when written out thus:

_x_ = P - (_y_ + _z_)

_y_ = P - (_x_ + _z_)

_z_ = P - (_x_ + _y_)

[1107] “The theory of economic equilibrium is quite distinct from the

theory of final utility, although the public are apt to confuse them and

to think that they are both the same.” (Vilfredo Pareto, _L’Economie

pure_, 1902.)

[1108] The name varies a little with different authors and in different

countries. “The final degree of utility” is the term used by Jevons,

“marginal utility” by the Americans, “the intensity of the last satisfied

want” by Walras. Walras also speaks of it as “scarcity,” using the term

in a purely subjective fashion to denote insufficiency for present need.

This very plethora of terms suggests a certain haziness of conception.

The term “marginal” seems clearer than the term “final,” although in some

cases it may be impossible to oust the latter.

It appears that the first suggestion of final utility in the sense in

which it is employed by the Psychological school is due to a French

engineer of the name of Dupuit. He threw out the suggestion in two

memoirs entitled _La Mesure de l’Utilité des Travaux publics_ (1844)

and _L’Utilité des Voies de Communication_ (1849), both of which were

published in the _Annales des Ponts et Chaussées_, although their real

importance was not realised until a long time afterwards. Gossen also,

whose book is referred to on p. 529, was one of the earliest to discover

it.

In its present form it was first expounded by Stanley Jevons in his

_Theory of Political Economy_, and by Karl Menger in his _Grundsätze der

Volkswirtschaftlehre_ (1871). Walras’s conception of scarcity, which

is just a parallel idea, was made public about the same time (1874).

Finally Clark, the American economist, in his _Philosophy of Value_,

which is of a somewhat later date (1881), seems to have arrived at a

similar conclusion by an entirely different method—a remarkable example

of simultaneous discoveries, which are by no means rare in the history of

thought.

Despite its cosmopolitan origin, the school is generally spoken of as

the Austrian school, because its most eminent representatives have for

the most part been Austrians. Among these we may mention Karl Menger,

already referred to, Professor Sax (_Das Wesen und die Aufgabe der

Nationalökonomie_, 1884), Wieser (_Der natürliche Werth_, 1889), and of

course Böhm-Bawerk (author of _Grundzüge der Theorie des wirtschaftlichen

Güterwerths_, in _Jahrbücher für Nationalökonomie_, 1886, and the

well-known book on capital and interest).

Lately, however, the doctrine seems to have changed its nationality and

become wholly American. The American professors J. B. Clark, Patten,

Irving Fisher, Carver, Fetter, etc., are assiduous students of marginal

utility, applying the conception not only to problems of capital and

interest, but also to the question of distribution.

[1109] To escape the confusion which would result from employing the same

term in two such very different senses—a confusion that is inevitable

however one may try to avoid it—Pareto has substituted the word

“ophelimity,” and Gide in his _Principles_ (1883) “desirability.”

[1110] “The idea of final utility is the ‘open sesame,’ the key to the

most complicated phenomena of economic life, affording a solution of its

most difficult problems.” (Böhm-Bawerk, _The Austrian Economists_, in

_Annals of the American Academy of Political and Social Science_, 1891.)

[1111] Condillac had already drawn attention to this fact (see p. 48),

and Buffon had noted it even before that. “The poor man’s coin which goes

to pay for the necessaries of life and the last coin that goes to fill

the financier’s purse are in the opinion of the mathematician two units

of the same order, but to the moralist the one is worth a louis, the

other not a cent.” (_Essai d’Arithmétique morale._)

The connection between quantity and demand is best expressed by means of

a curve either of utility or of demand (see p. 532). Along the horizontal

line let the figures 1, 2, 3, 4 denote the quantities consumed, and from

each of these points draw a vertical line to denote the intensity of

demand for each of these quantities. The height of the ordinate decreases

more or less rapidly as the quantity increases, until at last it falls to

zero.

[1112] It is in cases of this kind that figures become handy. If we take

two curves, an ascending one to represent the utility of each handful

of salt parted with, and a descending one to represent the utility

of each handful of rice acquired, the two curves must necessarily

intersect, seeing that one is just the inverse of the other. The point

of intersection marks the place where the utilities of the two exchanged

handfuls are exactly equal.

We must be careful not to confuse matters, however. It is not suggested

that the final utilities in the case of the two co-exchangers are equal.

There is no common measure by which the desires of different persons can

be compared, and no bridge from one to the other. What is implied is

that the final utility of both commodities for the _same person_ are the

same. The balance lies between two preferences of the same individual.

The actual market exchange is just the resultant of all these virtual

exchanges.

The Austrian school in its explanation makes use of a hypothesis

known as the double limit, which does not seem to be absolutely

indispensable, seeing that other economists of the same school—Walras,

for example—appear to get on well enough without it. They seem to think

of buyers and sellers drawn up in two rows facing one another. Every one

of the sellers attributes to the object which he possesses and which he

wants to sell a certain utility different from his neighbour’s. Each

buyer in the same way attributes to that object which he desires to buy

a degree of utility which is different from that which his neighbour

puts upon it. The first exchange, which will probably have the effect of

fixing the price for all the other buyers and sellers, will take place

between the buyer who attributes the greatest utility to the commodity

he has to sell, and who is therefore least compelled to sell, and the

buyer who attributes the least utility to the commodity he wishes to

buy and who is therefore least tempted to buy. At first sight it seems

impossible that the party as a whole should be bound by the action of

the two individuals who show the least inclination to come to terms. It

would be more natural to expect the first move to take place between the

seller who is forced to sell and because of his urgency is content with

a price of 10_s._ per bushel, say, and the buyer who feels the strongest

desire to buy and who rather than go without would be willing to give

30_s._ for it. But upon consideration it will be found that the price is

indeterminate just because these two are ready to treat at any price.

The most impatient individual will surely wait to see what terms the

least pressed will be able to make, and it is only natural that those who

are nearest one another should be the first to come together. These two

co-exchangists who control the market are known as the “limiting couple.”

[1113] It was Stanley Jevons who gave it this expressive name. It is

meant to imply that if two objects which fulfil very different needs,

perhaps, can be interchanged, they cannot have very different values.

[1114] The law of substitution applies not merely to different objects

which satisfy the same need, but also to objects which supply different

needs, provided those needs are to any extent interchangeable—to tea as a

substitute for wines, to coffee as a substitute for both, to travel as a

substitute for the life of a country gentleman.

[1115] “The enjoyment derived from the least enjoyable unit is what we

understand by final utility.” (Böhm-Bawerk, _The Austrian Economists_,

in the _Annals of the American Academy of Political and Social Science_,

1891.)

[1116] The new school deduces a very curious conclusion from this law

of indifference. Although there is only one price for all corn buyers,

say, the final utility of the corn for each individual is by no means

the same. Let us assume that the price is 20_s._, but one of the buyers,

rather than go without, would possibly have given 25_s._ for it, and

others might have been willing to give 24_s._, 23_s._, 22_s._, etc.

Every one of those who _ex hypothesi_ only pay 20_s._ gains a surplus

which Professor Marshall has called consumer’s rent (_Principles_,

Book III, chap. 6). He has given it that name in order to facilitate

comparison with producer’s rent, which had gained notoriety long before

the Hedonistic school arose. Both are due to similar causes, namely, the

existence of differential advantages which give rise to a substantial

margin between the selling price and the cost of production.

Really, however, the similarity is simply a matter of words, because

consumer’s rent is purely subjective, whereas producer’s rent is a

marketable commodity. It would be better to say simply that in many cases

of exchange it is not correct to argue that because the prices are equal

the satisfaction given to different persons is necessarily equal.

[1117] It is scarcely necessary to point out that if workers are not

really interchangeable on account of their different capacities the law

can no longer be said to hold good, since it always presupposes free

competition, whereas in this case we have a personal monopoly.

[1118] It is not quite the same when the capital is fixed, for the law of

substitution is no longer applicable in that case, and the incomes are

very different.

[1119] It must not be supposed that in applying the term “school” to

these writers we wish to suggest that they have a common programme. All

we mean is that they make use of the same method.

It is generally recognised to-day that the school dates from the

appearance of Cournot’s _Recherches sur les Principes mathématiques de

la Théorie des Richesses_ (1838). Cournot, who was a school inspector,

died in 1877, leaving behind him several philosophical works which are

now considered to be of some importance. The story of his economic work

affords an illustration of the kind of misfortune which awaits a person

who is in advance of his age. For several years not a single copy of the

book was sold. In 1863 the author tried to overcome the indifference of

the public by recasting the work and omitting the algebraical formulæ.

This time the book was called _Principes de la Théorie des Richesses_. In

1876 he published it again in a still more elementary form, and under the

title of _Revue sommaire des Doctrines économiques_, but with the same

result. It was only shortly before his death that attention was drawn

to the merits of the work in a glowing tribute which was paid to him by

Stanley Jevons.

Gossen’s book, _Entwickelung der Gesetze des menschlichen Verkehrs_,

which appeared much later (1853), was equally unfortunate. The author

remained an obscure civil servant all his life. His book, of which

there is still a copy in the British Museum—the only one in existence

possibly—was accidentally discovered by Professor Adamson, and Stanley

Jevons was again the first to recognise its merits. A brief _résumé_ of

the work will be found in our chapter on Rent.

Stanley Jevons (died 1882) belongs both to the Mathematical and to

the Final Utility school. His charming book, _The Theory of Political

Economy_, dates from 1871.

Léon Walras, who is persistently spoken of as a Swiss economist just

because he happened to spend the greater part of his life at the

University of Lausanne, also known as the School of Lausanne, was in

reality a Frenchman. His _Éléments d’Économie politique pure_, of

which the first part appeared in 1874, contains a full exposition of

Mathematical economics.

To-day the Mathematical method can claim representatives in every

country: Marshall and Edgeworth in England, Launhardt, Auspitz, and

Lieben in Germany, Vilfredo Pareto and Barone in Italy, Irving Fisher

in the United States, and Bortkevitch in Russia. France, however, the

country of Cournot and Walras, has no Mathematical economists, unless we

mention Aupetit whose work, _Théorie de la Monnaie_, although dealing

with a special subject, contains a general introduction.

[1120] _Des Différences d’Opinion entre Économistes_ (Geneva, 1897),

inserted in _Scritti varii di Economia_, pp. 1-48 (1904).

[1121] Value itself, the pivot of Classical economics, is simply a link

in exchange with the new school, and thus it loses all its subjectivity;

and since it is not a thing at all, but merely an expression, it would

be ridiculous to struggle to find its cause, foundation, or nature,

as the older writers did. This is why Jevons proposed to banish the

word altogether and to employ the term “ratio of exchange” instead.

And Aupetit insists that “the expression ‘value’ is to-day devoid of

content … and seems doomed to disappear from the scientific vocabulary

altogether. There is no great harm in omitting this parasitical element

as we have done, and in treating economic equilibrium as an entity

without ever employing the term ‘value.’” (_Théorie de la Monnaie_, p.

85.)

[1122] If demand be represented by _d_ and price by _p_, then _d_ =

_f_(_p_); _i.e._ demand is a function of price.

[1123] Dupuit, the engineer, was the first to make use of a demand

curve. Cournot, who refers to it as the law of sale, gives an admirable

illustration of its operation in the case of bottles of medicinal

waters of wonderful curative power. At a very low price the demand and

consequently the sale would be very great, though not infinite because

of the limit which exists for each want. At a very high price it would

be _nil_. Between the two extremes would be several intermediate curves.

We cannot deal with all the ingenious deductions which Cournot makes

concerning monopoly and the greater or lesser discord between monopoly

and the general interest.

[1124] The demand curve is generally concave, and this characteristic

form is just the geometrical expression of the well-known fact that when

prices are low enough to be accessible to everybody the sales increase

rapidly, because lean purses being much more numerous than fat ones a

slight lowering of the level of prices will bring the commodity within

the reach of a fresh stratum of people. It may take different forms,

however. For some products, such as common salt, a considerable fall

in the price will not result in a large increase in the sales. In the

case of diamonds a great fall in price may cause a falling off in demand

because they have become too cheap. The supply curve, on the other hand,

is generally convex, because the supply, which only enters upon the scene

at a certain point, is very sensible to price movements, going up rapidly

with a slight increase in price. Its upward trend is soon arrested,

however, because production cannot keep up the pace. It is even possible

that the supply may fall off at the next point, for the simple reason

that there is no more of the commodity available.

[1125] Below on the same diagram is traced a demand and a supply curve.

[Illustration]

The figures along the horizontal line denote price, along the vertical

the quantity demanded. In the given figure when price is 1, quantity

demanded is VI, and with the price at 7 the quantity demanded falls to

zero.

The dotted curve represents the supply. When price is 1, supply is _nil_.

When price is 10, supply mounts up to IV. Exchange obviously must take

place just where demand and supply are equal, _i.e._ at _b_, which marks

the point of intersection of the two lines, when the amount demanded is

equal to the quantity offered and the price is 5.

The vertical lines are called ordinates, and 0 X the axis of the

ordinates. Distances along 0 X are called abscissæ. Each point on the

curve simply marks the intersection of these, of the ordinates and

the abscissæ. This is true of the point _a_, for example, where the

perpendicular denotes the price (1) and the other line the number of

units sold, in this case VI.

Though in the diagram we have considered the ordinates to represent price

and the abscissæ quantities, the reverse notation would work equally well.

[1126] Mathematical economics also studies other forms of equilibrium

which are much more complicated and not quite so important perhaps,

relating as they do to conditions of unstable equilibrium.

[1127] Note Pareto’s terms of appreciation (_Économie pure_, 1902, p.

11): “Walras was the first to show the importance of these equations,

especially in the case of free competition. This capital discovery

entitles him to all the praise that we can give him. The science has

developed a good deal since then, and will undoubtedly develop still

more in the future, but that will not take away from the importance of

Walras’s discovery. Astronomy has progressed very considerably since

Newton published his _Principia_, but far from detracting from the merits

of the earlier work it has rather enhanced its reputation.”

[1128] If this is to be taken as literally true, we have this curious

result: the _entrepreneur_, receiving for the products which he sells

just exactly what he paid for producing them, makes no profit at all.

Both Walras and Pareto fully admit the paradoxical nature of the

statement. Of course it is understood that it can only happen under

a _régime_ of perfectly free competition, care being also taken to

distinguish between profits and interest, a thing that is never done,

apparently, by English economists, who treat both interest and profit as

constituent elements of cost of production.

But this is not so wonderful as it seems at first sight. It simply

means a return to the well-known formula that under a _régime_ of

free competition selling price must necessarily coincide with cost of

production.

This does not prevent our recognising the existence of actual profits.

Profits are to be regarded as the result of incessant oscillations of a

system round some fixed point with which it never has the good fortune

actually to coincide. According to this conception they are but the

waves of the sea. But the existence of waves is no reason for denying a

mean level of the ocean or for not taking that mean level as a basis for

measuring other heights. Some day, perhaps, equilibrium will become a

fact, and profits will vanish. But if that day ever does dawn either upon

the physical or the economic world, all activity will suddenly cease, and

the world itself will come to a standstill.

[1129] A full exposition of Walras’s system involves the supposition

not only of two but of three markets interwoven together. On the actual

market where goods are exchanged the quantity of these commodities

depends upon the quantity of productive services, land, capital, and

labour, and the quantity of these productive services, at least the

quantity of capital, depends to a certain extent upon the creation of

new capital, which in turn depends upon the amount of saving. The third

market, then, is that of capitalisation. Since the new capital can only

be paid for out of savings, _i.e._ out of that part of the revenue which

has been employed in other ways than in buying consumable commodities,

the price of capital must be such as to equal the quantity saved and the

quantity of new capital demanded. If saving exceeds the demand the price

will fall, etc.

To say that the price of capital has gone up is to say that the rate of

interest or the reward of saving has fallen. But a fall in the rate of

interest will check saving. The result will be a change of equilibrium,

the price of new capital will fall, the rate of interest will go up, etc.

Briefly, then, the total maximum utilities on the one hand and the price

on the other, these are the two conditions determining equilibrium in the

economic world, no matter whether it be products or services or capital.

“The same thing is true of gravity in the physical world, which varies

directly with the mass and inversely with the square of the distance.

Such is the twofold condition which determines the movement of the

celestial bodies.… In both cases the whole science may be represented by

a formula consisting of only two lines. Such a formula will include a

great number of facts.” (Walras, _Économie politique pure_, p. 306.)

[1130] Professor Edgeworth employs a similar comparison, speaking of

the economic man as a charioteer and of social science as consisting of

a chariot and some such charioteer (_Mathematical Psychics_, p. 15).

“‘Mécanique Sociale’ may one day take her place along with ‘Mécanique

Céleste,’ throned each upon the double-sided height of one maximum

principle, the supreme pinnacle of moral as of physical science.”

(_Ibid._, p. 12.)

Pareto regards political economy as a study of the balance between

desires and the obstacles which stand in the way of their satisfaction.

[1131] During the last few years we have had, of course, M. Colson’s

great book on political economy, which contains a mathematical treatment

of demand and supply, M. Landry’s exposition of the Austrian theory in

his _Manuel d’Économique_, and M. Antonelli giving a special course on

Walras’s system at the Collège libre des Sciences sociales. We have

already referred to Aupetit’s book on money. We must also mention the

translations of the _Manual of Political Economy_ of Vilfredo Pareto and

of Jevons’s _Theory of Political Economy_.

[1132] M. Paul Leroy-Beaulieu is particularly severe upon the

Mathematical method. “It is a pure delusion and a hollow mockery. It

has no scientific foundation and is of no practical use. It is as much

a gamble as the scramble for prizes at the table at Monte Carlo.… The

so-called curve of utility or demand is of no earthly use, for if the

price of wine goes up the consumption of beer or cider will increase,

that is all.” (_Traité d’Économie politique_, vol. i, p. 85; vol. iii, p.

62.)

This last criticism is somewhat unexpected, for we have already seen that

the Hedonists are very far indeed from ignoring the law of substitution.

If they did not actually discover it they immensely amplified it. And it

is very probable that if there had been a contradiction between their

doctrines and this law it would not have escaped them. Moreover, we note

that beer and cider have their demand curves: cannot wine have one as

well? Having to pass from one to the other does undoubtedly complicate

matters, and the Mathematical economist frequently finds himself obliged

to juggle not with one but with two or three balls. But this is just the

kind of difficulty which is amenable to mathematical treatment—nay, even,

perhaps, demands it. The connection between the values of complementary

or supplementary goods is one of the problems that has been most

thoroughly investigated by the Hedonists. See Pantaleoni, _Economia pura_.

A criticism of Mathematical economics may be found in an article by M.

Simiand entitled _La Méthode positive en Science économique_ (_Revue

de Métaphysique et de Morale_, November 1908), and a good reply in _La

Méthode mathématique en Économie politique_, by M. Bouvier.

[1133] Walras put it well when he wrote as follows: “We have never tried

to analyse the motives of free human beings. We have simply tried to give

a mathematical expression of the result.” (_Éléments d’Économie politique

pure_, p. 232.)

[1134] “We do not know exactly what it is that binds the function and the

variable together, or the intensity of the satisfied need to the quantity

already consumed. But for every item on the one side we feel certain that

there must be a corresponding item on the other.” (Aupetit, _Théorie de

la Monnaie_, p. 42.)

[1135] For a vigorous refutation of this criticism see two articles by

Rist entitled _Économie optimiste_ and _Économie scientifique_ in the

_Revue de Métaphysique et de Morale_ for July 1904 and September 1907.

[1136] Or he will argue, perhaps, that the market would have been much

more favourable to Esau if Jacob had had more pottage than he could

easily have disposed of—a case where even monopoly might offer some

advantage to the buyer.

[1137] “For purposes of demonstration,” says Pareto, “we have assumed

the existence of private property. But to assume on the strength of the

conclusion which we have established that a _régime_ of private property

gives the maximum of well-being would clearly be to beg the question.”

[1138] This doctrine is not accepted even by all the Hedonists. Walras

especially is very critical in the fourth edition of his _Économie pure_.

M. A. Landez in his _Intérêt du Capital_ (1904) and Irving Fisher in _The

Rate of Interest_ (1907) have tried if not to demolish it at least to

correct it by giving a more subtle analysis of the motives determining

a preference for a future income as compared with a present one. This

time-preference, of course, varies according to the fortune of each and

other circumstances.

[1139] We have already remarked on this in the case of M. Böhm-Bawerk.

This is another respect in which the Hedonists have shown themselves

faithful to the Classical tradition. The necessity for separating the art

from the science of political economy, pure economics from applied, was

especially emphasised by Courcelle-Seneuil and Cherbuliez. Pareto put it

well when he said that the maximum of ophelimity can be put in the shape

of an equation, but the maximum of justice can not.

[1140] This system, according to Walras, would possess another advantage

in that it would facilitate the establishment of free trade, which is

an ideal of the science. The chief difficulties would thus be avoided,

such as unequal import duties and unequal degree of fertility. “Free

trade has always involved the absence of duties, and the nationalisation

of land would further result in the free movement of capital and labour

to whatever place might prove most advantageous to them.” (_La Paix par

la Justice sociale et par le Libre-Échange_, in _Questions pratiques de

Législation ouvrière_, September-October 1907.)

[1141] The same is true of American economists, where the use of the

Hedonistic method is by no means confined to one school. Professor Clark

employs it, and he is rather inclined to set up an apology for the

present economic order and to trust to the efficacy of free competition.

But Professor Patten also makes use of it, and he is an interventionist

of the extreme type.

[1142] Economics will become a science when it can say that “what was

just now nothing better than an intuition can now be fully proved.”

(Walras, _Économie politique pure_, p. 427.)

[1143] “It is necessary to apply the law of the variation of intensity of

need to each separate individual in relation to each one of his needs.”

(Aupetit, _La Monnaie_, p. 93.)

[1144] It is only those Hedonists who claim to be able to establish an

exact science that make use of the mathematical and abstract method to

the total exclusion of the historical and biological method. Professor

Marshall expressly declares himself in favour of the biological method,

and would advocate employing diagrams and curves as little as possible

(_Economic Journal_, March 1898, p. 50).

[1145] Pareto, _Giornali degli Economisti_, September 1901.

[1146] Böhm-Bawerk, _the Austrian Economists_, _loc. cit._ On the other

hand, one of the disciples of this school, M. Landry, writes: “To-day

the Austrian school is somewhat played out” (_L’École économique_, in

_Rivista di Scienza_, 1907). At the end of thirty years!—not a very long

life.

[1147] Marshall, _Distribution and Exchange_, in _Economic Journal_,

March 1898.

[1148] Our figures are taken from the well-informed pamphlet of M.

Einaudi, _La Municipalisation du Sol dans les Grandes Villes_ (Girard et

Brière, 1898), reprinted from _Devenir social_.

[1149] P. Leroy-Beaulieu, _L’Art de placer et gérer sa Fortune_, p. 34.

[1150] Marshall, _Principles_, preface to the first edition.

[1151] There is a good account of the evolution of which we have given

a brief _résumé_ in a work published as far back as 1868, entitled

_Versuch einer Kritischen Dogmengeschichte der Grundrente_, by Edward

Berens (Leipzig), but especially in _La Théorie de la Rente et son

Extension récente_, by Paul Frézouls (Montpellier, 1908), and in the

very interesting articles of Herr Schumpeter, _Das Rentenprinzip in der

Verteilungslehre_, which appeared in Schmoller’s _Jahrbuch_ in 1907, pp.

31 and 591.

[1152] Ricardo’s _Principles_, chap. 3, “On the Rent of Mines.” Cf.

Stuart Mill, _Principles_, Book III, chap. 5, § 3.

[1153] Stuart Mill, _loc. cit._

[1154] This fact was noted by Hermann even as far back as 1832 in his

very remarkable _Staatswirtschaftliche Untersuchungen_ (Munich, 1832),

p. 166: “A phenomenon that is exactly analogous to rent becomes manifest

whenever a country employs imported machinery the multiplication of

which is difficult, possibly because the producing country discourages

such exportation. [Such was the case with English machinery at the

time Hermann wrote.] … Suppose now that the price of the commodity

manufactured with the aid of such machinery goes up. If the country

under consideration can only manufacture with machinery that is more

expensive but less efficient because of its defective character, the cost

of production will still be higher than if the best [foreign] machinery

were employed. The result is that the proprietors of the latter retain

such advantages as the rise in price had secured them.” Mangoldt (in

_Die Lehre vom Unternehmergewinn_, Leipzig, 1855) expresses his view

in a somewhat similar fashion: “Rent shows itself clearest and on the

largest scale in the case of agricultural land, but it is equally evident

wherever the difficulty of multiplying capital prevails or where it can

only be replaced by other capital of a more expensive character or a less

productive yield.” Ricardo himself possibly had the rent of capital in

mind when he said: “The exchangeable value of all commodities, whether

they be manufactured or the produce of the mines or the produce of

land, is always regulated, not by the less quantity of labour that ill

suffice for their production under circumstances highly favourable, and

exclusively enjoyed by those who have peculiar facilities of production,

but by the greater quantity of labour necessarily bestowed on their

production by those who have no such facilities, by those who contrive

to produce them under the most unfavourable circumstances—meaning by

the most unfavourable circumstances the most unfavourable under which

the quantity of produce required renders it necessary to carry on the

production.” (_Principles_, p. 37.) English writers, however, seldom

speak of the rent of capital. Rent with them always signifies income

due, not to the intervention of man, but to the natural resources of

production.

[1155] _Principles_, Book III, chap. 5, § 4.

[1156] “But as it is clearly a surplus, the labour having been previously

paid for by average wages, and that surplus the spontaneous gift of

nature, we have thought it most convenient to term it rent.” (Quoted by

Cannan, _Production and Distribution_, p. 198.)

[1157] In an article entitled _The Source of Business Profit_.

[1158] Walker is one of the first of the English-speaking economists

to make this distinction and to employ the term “profit” in a narrow

sense, distinguishing it from interest on the one hand and wages on the

other. He even went so far as to subtract the wages of superintendence

and direction because this work of supervision could be delegated to

others (_Wages Question_, 2nd ed., 1891, pp. 230, etc.), while the

special function performed by the _entrepreneur_, namely, the adaptation

of supply to demand, requires special remuneration, which he proposes

to call profit. It is a little odd that a writer who seemed completely

isolated should be shown, after all, to share the views of other

economists. Walker declares that save his own father, Amasa Walker,

he knew of no economist who had distinguished between capitalist and

_entrepreneur_. But J. B. Say had already made the same distinction,

which had been adopted by all Continental economists even as far back as

the beginning of the nineteenth century.

[1159] This is how Walker summarises his duties: “To furnish also

technical skill, commercial knowledge, and powers of administration; to

assume responsibilities and provide against contingencies; to shape and

direct production, and to organise and control the industrial machinery.”

(_The Wages Question_, p. 245.)

[1160] Walker, _Quarterly Journal of Economics_, April 1887, p. 278.

[1161] Hermann, _Untersuchungen_, p. 206; for J. B. Say cf. _supra_, p.

113.

[1162] Pantaleoni (_Economia pura_, Part III, chap. 4) seems to be the

only economist who accepts Walker’s theory without any reservation.

[1163] For his criticism of Walker see the _Quarterly Journal of

Economics_, 1887, p. 479, and the _Principles_, 4th edition, p. 705,

note. In conformity with English tradition, Marshall includes within

profits any interest upon such capital as the _entrepreneur_ possesses.

[1164] Pantaleoni makes the same distinction: “Profits,” says he, “may

be the result of superior ability acquired either by assiduous study or

prolonged preparation. In that case we are dealing, not with a kind of

rent, but with a species of profit which may be very remunerative but

which is nevertheless amenable to a very different law from that which

generally regulates the investment of capital.” (_Economia pura_, Part

III, chap. 4.) On the other hand, Pantaleoni refuses to recognise the

existence of an element of insurance against risk as an item in profits,

because, as he points out, if the premium has been carefully reckoned up

and compared with the risk, “it ought on an average to be equal to it at

the end of a certain number of years, so that the net rent would become

equal to zero.” (_Ibid._)

[1165] _Cf. Distribution of Wealth_ (1899) and _Essentials of Economic

Theory_ (1908).

[1166] Moreover, the _entrepreneur_ may find himself forced to yield a

part of this composite rent either to the landlord or to the capitalist

from whom he has borrowed his capital or to the workers by whose superior

ability he has benefited. The difficult question of determining what

proportion ought to be given in this way is discussed by Marshall in his

_Principles_, Book V, chap. 10, § 4; Book VI, chap. 8, § 9.

[1167] Walker might answer by saying that the dividend is simply the

interest upon the capital. But we can hardly bring ourselves to believe

this.

[1168] This word “acquired” is not quite in conformity with the pure

theory of rent, for if these advantages are acquired the remuneration

thus received should be considered merely as interest upon capital spent.

[1169] Stuart Mill, _Principles_, Book III, chap. 5, § 4.

[1170] “Wages and profits represent the universal elements in production,

while rent may be taken to represent the differential and peculiar: any

difference in favour of certain producers, or in favour of production

in certain circumstances, being the source of a gain, which, though

not called rent unless paid periodically by one person to another, is

governed by laws entirely the same with it.” (_Ibid._, Book III, chap. 5,

§ 4.)

[1171] “Rent, it should be remembered, is the difference between the

produce obtained by equal portions of labour and capital employed on land

of the same or different qualities.” (Ricardo, _Principles_, chap. 9.)

[1172] _Principles_, Book II, chap. 16, § 2.

[1173] Ricardo had already made use of the following argument: “Suppose

that the demand is for a million of quarters of corn, and that they

are the produce of the land actually in cultivation. Now, suppose the

fertility of all the land to be so diminished that the very same lands

will yield only 900,000 quarters. The demand being for a million of

quarters, the price of corn would rise, and recourse must necessarily

be had to land of an inferior quality sooner than if the superior land

had continued to produce a million of quarters.” (_Principles_, chap.

32, p. 246.) Towards the end of his life Ricardo seems to have been more

favourably inclined to a conception of rent somewhat closer akin to J. B.

Say’s. Compare the curious quotations given in Frézouls, _op. cit._, p.

21.

[1174] “A commodity may no doubt, in some contingencies, yield a rent

even under the most disadvantageous circumstances of its production; but

only when it is, for the time, in the condition of those commodities

which are absolutely limited in supply, and is therefore selling at a

scarcity value—which never is, nor has been, nor can be a permanent

condition of any of the great rent-yielding commodities.” (_Principles_,

Book III, chap. 5, § 4.) For the position with regard to mines see the

same chapter, § 3.

[1175] In this case Stuart Mill seems to compare rent to a monopoly

revenue: “A thing which is limited in quantity, even though its

possessors do not act in concert, is still a monopolised article.”

(_Ibid._, Book II, chap. 16, § 2.) The expression, though adopted by

several other writers, is not quite accurate. In the case of a monopoly

the owners fix the quantity which they will produce beforehand with a

view to getting a maximum of profit. But this cannot apply to landowners.

At any rate, if there is any monopoly it must be an incomplete one.

[1176] Stuart Mill, _Principles_, Book III, chap. 5, § 1.

[1177] Such was the argument employed by J. B. Say in the course of a

controversy with Ricardo. “It is perfectly obvious that if the needs

of society raise the price of corn to such a level as to permit of the

cultivation of inferior lands which yield nothing beyond wages for

the workmen and profits on the capital, then that demand on the part

of society, coupled with the price which it can afford to pay for the

corn, allows of a profit on the most fertile or best situated lands.”

(_Traité_, 6th edition, p. 410.) Continuing, he remarks: “David Ricardo

in the same chapter clearly shows that the profit from land is not the

cause but the effect of the demand for corn, and the reasons which he

adduces in support of this view may be turned against him to prove that

other items in cost of production, notably the wages of labour, are not

the cause but the effect of the current price of goods.” Ricardo himself

seemed on the point of being converted to this view. See p. 554, note 2.

[1178] The theory of economic equilibrium enables us to give a still

better demonstration of the general nature of this theory of rent. On

this point we may refer to Pareto’s _Cours_ and Sensi’s _La Teoria della

Rendita_ (Rome, 1912).

[1179] Cf. _supra_, p. 555, note 2.

[1180] Hermann, _Staatswirtschaftliche Untersuchungen_, Part V: _Vom

Gewinn_. Even in the preface he declares that the doctrine of the rent of

land must be regarded as a particular instance in the exposition of the

law governing the returns from fixed capital in general.

[1181] Mangoldt, _Die Lehre vom Unternehmergewinn_ (Leipzig, 1855), pp.

109 _et seq._

[1182] _Die nationalökonomische Theorie der ausschliessenden

Absatzverhältnisse_ (Tübingen)—a work in which he attempts a

justification of rents in general and of the rent of land in particular.

Rent he regards as the reward offered to anyone who knows how to utilise

either his personal capacity or his capital or land in a way that is

particularly advantageous to society. It supplies an allurement that acts

as the source of all progress and of all economic activity, a sort of

natural right of ownership which society spontaneously confers upon those

individuals who know how to serve society, and which competition causes

to disappear at the opportune moment. The rent of land can be justified

on this ground wherever legislation has not made an abuse of it. This new

claim on behalf of rent is very interesting, and those who regard rent as

exclusively unearned increment may ponder over this new characteristic of

unearned incomes.

[1183] P. 148.

[1184] “The sum paid for the use of land differs in no material respect

from the sum paid for the use of other kinds of capital—a machine, for

example. Although the land or the machine has to be returned to its

rightful owner in the same condition as it was received, one ought to

pay something just because such capitals are economically scarce; in

other words, the amount existing at any one time or place is not greater

than the demand. What differentiates land from machinery is that savings

might easily be employed in turning out new machinery, but cannot very

well increase the quantity of land in existence, or at any rate cannot

transform existing soils in a manner that is profitable.” (Pareto, _Cours

d’Économie politique_, vol. ii, § 759.) Marshall makes use of analogous

terms: “If the supply of any factor of production is limited, and

incapable of much increase by man’s effort in any given period of time,

then the income to be derived from it is to be regarded as of the nature

of rent rather than profits in inquiries as to the action of economic

causes during that period; although for longer periods it may rightly

be regarded as profits which are required to cover part of the expenses

of production and which therefore directly enter into those expenses.”

(_Principles_, 1st ed., Book VI, chap. 3, § 1.)

[1185] _Ibid._, Book VI, chap. 3, § 7.

[1186] Did space permit, this would be the place to refer to the latest

glorification of the doctrine of rent, which is to be found in Clark’s

_Distribution of Wealth_, published in 1899. In that work, upon the

strength of which the author enjoys a well-deserved reputation, revenues

of various kinds are successively treated as rents. Imagine a fixed

amount of capital applied along with successive doses of labour: each

new dose of labour will produce less than the preceding one, while the

production of the last dose regulates the remuneration of all the rest.

But the product of the preceding doses is greater than that of the last,

and a surplus value will be produced which will represent the product

of capital and which will be exactly analogous to rent. Or suppose, on

the other hand, that the quantity of labour is fixed and applied along

with successive doses of capital; the productivity of the latter will

in this case go on decreasing, and since the revenue of each dose will

be proportionate to its productivity, any surplus left over will be of

the nature of rent due to labour. There are other ingenious discussions

which cannot be referred to in a note of this kind. But in our opinion

the theory of economic equilibrium affords a simpler explanation of

distribution, and the kind of optimism to which Clark’s theory gives

rise seems hardly justified. His attempt to combine the idea of marginal

productivity with the law of diminishing returns is a further proof of

the persistent influence exerted by Ricardian ideas upon English-speaking

economists.

[1187] Proudhon, _Qu’est-ce que la Propriété_, p. 74.

[1188] Pollock, _The Land Laws_, p. 12.

[1189] _Agrarian Justice opposed to Agrarian Law and Agrarian Monopoly._

[1190] _The Theory of Human Progression and Natural Probability of a

Reign of Justice._ For further information concerning Spence, Ogilvie,

Dove, Paine, etc., see Escarra’s _Nationalisation du Sol et Socialisme_

(Paris, 1904). We have drawn upon his book for the views here put

forward, the works of these writers not being easily accessible.

[1191] _Justice_, p. 92.

[1192] “The land is the original heritage of the whole human race,” says

Mill in his _Dissertations and Discussions_. In the _Principles_, Book

II, chap. 2, § 5, he expresses his views thus: “The essential principle

of property being to assure to all persons what they have produced

by their labour and accumulated by their abstinence, this principle

cannot apply to what is not the produce of labour, the raw material of

the earth.” Walras, in his _Théorie de la Propriété_, in the _Études

d’Économie sociale_, p. 218, says that the land by a kind of natural

right is the property of the State. Henry George, in _Progress and

Poverty_, Book VII, chap. 1, maintains that “the equal right of all men

to the use of the land is as clear as their equal right to breathe the

air—it is a right proclaimed by the fact of their existence.”

[1193] _Principles_, Book V, chap. 2, § 5.

[1194] “This continual increase arising from the circumstances of the

community and from nothing in which the landholders themselves have

any peculiar share, does seem a fund no less peculiarly fitted for

appropriation to the purposes of the State than the whole of the rent

in a country where land has never been appropriated.” (_Elements of

Political Economy_, chap. 4, § 5.)

[1195] _Cf. supra_, chapter on Saint-Simon.

[1196] _Principles_, Book V, chap. 2, § 5. Cf. also chap. 3, §§ 2 and 6.

For the programme of the League see _Dissertations and Discussions_, vol.

iv.

[1197] Mill thought it impossible to distinguish in individual cases

between the surplus value which is due to general circumstances and the

surplus that results from the expenditure undertaken by the proprietor.

Hence his conclusion that a general tax was the most equitable method of

procedure with a view to effecting confiscation.

[1198] _Dissertations and Discussions_, vol. iv, p. 256.

[1199] _Progress and Poverty_ was not his first effort, however. In 1871

_Our Land and Land Policy_ had appeared, and in 1874 _The Land Question_.

Later still he published _Protection or Free Trade_ (1886), in which he

puts forward a strong case for Free Trade, and in 1891 _An Open Letter to

Pope Leo XIII_ on the condition of the workers.

[1200] Clark in his _Distribution of Wealth_ states that the method by

which he tries to determine the exact productivity of each factor of

production is one that he borrowed from Henry George.

[1201] “Twenty men working together will, where nature is niggardly,

produce more than twenty times the wealth that one man can produce where

nature is most bountiful.” _Cf._ also the whole of Book II, which is a

disproof of the Malthusian theory.

[1202] “Labour and capital are but different forms of the same

thing—human exertion. Capital is produced by labour; it is, in fact,

but labour impressed upon matter.… The use of capital in production

is, therefore, but a mode of labour.… Hence the principle that, under

circumstances which permit free competition, operates to bring wages to a

common standard and profits to a substantial equality—the principle that

men will seek to gratify their desires with the least exertion—operates

to establish and maintain this equilibrium between wages and interest.…

And this relation fixed, it is evident that interest and wages must

rise and fall together, and that interest cannot be increased without

increasing wages, nor wages be lowered without depressing interest.”

(_Progress and Poverty_, Book III, chap. 5.) It is hardly necessary to

point out how very much simplified this doctrine concerning the relation

between wages and interest really is.

[1203] A _résumé_ of this theory of distribution, whose very simplicity

must make it suspect, may be found in Book V, chap. 2: “In every

direction, the direct tendency of advancing civilisation is to increase

the power of human labour to satisfy human desires—to extirpate poverty

and to banish want and the fear of want.… But labour cannot reap the

benefits which advancing civilisation thus brings, because they are

intercepted. Land being necessary to labour, and being reduced to private

ownership, every increase in the productive power of labour but increases

rent—the price that labour must pay for the opportunity to utilise its

power; and thus all the advantages gained by the march of progress go to

the owners of land, and wages do not increase.” George, however, does not

claim that real wages have fallen because technical improvements enable

production to be carried on where it was formerly impossible. At most

this will only enable capital and labour to preserve their old scale of

remuneration; it will not give them any share in the progress that has

been made, so that, relatively speaking, it is true to say that wages and

interest have both fallen in comparison with rent. “When I say that wages

fall as rent rises, I do not mean that the quantity of wealth obtained

by labourers as wages is necessarily less, but that the proportion

which it bears to the whole produce is necessarily less. The proportion

may diminish while the quantity remains the same, or even increases.”

(Book VI, chap. 6. Cf. also Book IV, chap. 3.) George, like Ricardo and

a good many socialists, confuses two different problems, namely, the

price of productive services and the proportional distribution of the

product between the different agents of production (Book V). He adds,

however, that scientific discovery, by pushing the margin of cultivation

back to that point where the law of diminishing returns is more than

counterbalanced by increased productive efficiency, may even sometimes

reduce the worker’s real wages, and so impair his position not only

relatively, but also absolutely. (Book IV, chap. 4.)

[1204] _Ibid._, Book V, chap. 2.

[1205] That portion of their revenue which represented the capital sunk

in the land would still be the property of the landowners.

[1206] Mill points out that the answer to this objection is that the

right of selling the land at a price which depends upon two contrary

conditions (gain or loss) establishes a kind of equilibrium. The State

would not lose anything by this, for a fall in value in one place,

unless it be accompanied by a general want of prosperity, implies a

corresponding increase somewhere else, of which the State will get the

benefit. (_Dissertations and Discussions_, vol. iv.)

[1207] M. Einaudi, however, in his excellent _Studi sugli effetti

delle imposte_, p. 125 (Turin, 1902), remarks that this principle of

indemnifying losses leads directly to a State guarantee of values—the

expediency of which is at least problematic. He makes the further

observation that the compensation would often be paid to a person other

than the one who paid the tax when it was levied—the property in the

meantime having changed hands.

[1208] For the distinction between the legality of movable and immovable

property see Mill, _Principles_, Book II, chap. 2, § 1, and Henry George,

_Progress and Poverty_, Book VII, chap. 1. “The institution of private

property,” says Mill in the above passage, “when limited to its essential

elements, consists in the recognition, in each person, of a right to the

exclusive disposal of what he or she have produced by their own efforts,

or received either by gift or by fair agreement without force or fraud

from those who produced it.” Such a definition at least implies that

landed property is illegal. A house is distinguished from the land upon

which it is built; whereas the former is legally held the latter is not.

[1209] Mill, _Dissertations and Discussions_, vol. iv, p. 298.

[1210] Especially in England, where various schemes have been propounded

and investigated by Royal Commissions in the course of the last ten

years. Such schemes are discussed in a very thorough fashion in Einaudi’s

book already mentioned, and in an article entitled _Recent Schemes for

Rating Urban Land Values_ contributed by Edgeworth to the _Economic

Journal_ in 1906.

[1211] Article 30 of the Act of September 16, 1807, runs as follows: “If

as the result of the improvements already mentioned in this Act—through

the making of new roads or the laying out of new squares, through the

construction of quays or other public works—any private property acquires

a notable increase in value, such property shall be made to pay an

indemnity which may be equal to half the value of the advantage which

has thus accrued to it.” The principle was rarely applied, however.

M. Berthélemy (_Traité élémentaire de Droit administratif_, 1908, p.

624) states that he can only find twenty occasions on which the law was

brought into operation in the whole course of the nineteenth century.

[1212] Professor Seligman (_Essays in Taxation_, 5th ed., p. 341) quotes

an English law of 1672 relating to the widening of certain streets in

Westminster in which the principle is neatly stated. But when it was

proposed to apply it to certain public works undertaken in London in 1890

it was energetically opposed. It was admitted afresh in the Tower Bridge

Act of 1895. A similar system is frequently adopted in America under the

name of “special assessment” or “betterment.”

[1213] No notice whatever was taken of it then, and even in the second

edition of the great _Handwörterbuch der Staatswissenschaften_, published

in 1900, no mention is made of Gossen’s name, although the third edition

of that work has made ample reparation. The book was reprinted in 1889.

On the relation between the ideas of Gossen and those of Jevons and

Walras see Walras’s interesting article, _Un Économiste inconnu, Hermann

Henri Gossen_, published in the _Journal des Économistes_ in 1885 and

reproduced in his _Études d’Économie sociale_, pp. 351 _et seq._

[1214] _Entwickelung der Gesetze_, p. 250.

[1215] Gossen sees other advantages that would follow such reform. He

enumerates them thus: (1) The confiscation of rent would reduce the

possibility of living without working, and this would increase the

industrial activity of the class under consideration. (2) The legal

transference of property would be greatly simplified. (3) Producers would

be exempted from buying land and from keeping capital for this purpose.

(4) Rent would take the place of taxation to a very considerable extent,

and would free the collection of it from every trace of vexation or

injustice. (_Ibid._, p. 273.)

[1216] Cf. the fragment entitled _Méthode de Conciliation ou de

Synthèse_, in the _Études d’Économie sociale_. Henry George in his

preface to _Progress and Poverty_ writes thus: “What I have done in this

book … is to unite the truth perceived by the school of Smith and Ricardo

to the truth perceived by the school of Proudhon and Lassalle; to show

that _laissez-faire_ (in its full, true meaning) opens the way to a

realisation of the noble dream of socialism.”

[1217] _Études d’Économie sociale_, p. 239.

[1218] See the charming sixth lesson of the _Théorie générale de la

Société_ in the _Études d’Économie sociale_.

[1219] “In order to justify a measure involving a slight diminution

in the rent of landed proprietors, it is hardly necessary to invoke

the fact that rents have a faculty of growing continuously without the

co-operation of the proprietor. We need scarcely point out that this

increase in rent over a certain period cannot enter into the price of

land simply because it cannot be calculated. Consequently, when a buyer

buys under the system of guarantee afforded by the State he has at the

same time undoubtedly bought a claim to all the variations of rent which

may ensue.… Even if the landed proprietor is indemnified by being paid a

perpetual rent equal to the rent of his land at the time of confiscation,

as is done to-day in the case of compulsory purchase, the injustice will

not be as great as it otherwise would be, but it will not be removed

altogether.” (Gossen, _Entwickelung der Gesetze_, pp. 257-258.)

[1220] Gossen gives reasons for thinking that the State, owing to its

superior position as compared with individuals, might offer better terms

to the proprietors than ordinary buyers could—among others, that the

State can borrow cheaply and could consequently offer a better price.

[1221] A similar idea underlies Gide’s proposal in an article contributed

to the _Journal des Économistes_ for July 1883. “The State would offer to

buy the land and pay for it on the basis of ninety-nine years’ purchase.

There is reason to think that hardly a buyer would be found who would

refuse such an offer coupled with a slight compensation, for ninety-nine

years is the equivalent of perpetuity as far as the individual is

concerned. There would be nothing mean about such a price; really it

would be more of a gift to the proprietor.”

[1222] Walras, _Études d’Économie sociale_, p. 368. A mathematical

discussion of the theory is contained in the _Théorie mathématique du

Prix des Terres_. The same argument expressed in ordinary language may be

found in the article entitled _Un Économiste inconnu_ (_Études d’Économie

sociale_, pp. 365 _et seq._), and it is still more simply summed up in

the _Problème fiscal_, pp. 446-449.

[1223] “The same considerations would apply in the case of mines,

railways, monopolies of every kind, natural and otherwise, where the

principle of free competition is in operation or where any surplus value

exists.” (_Études d’Économie sociale_, p. 347, note. Cf. also pp. 237 _et

seq._)

[1224] Cf. Escarra, _loc. cit._, p. 224. See also Laveleye, _Le

Socialisme contemporain_, 8th ed., Appendix I.

[1225] Métin, _Le Socialisme en Angleterre_, p. 179 (1897).

[1226] “The possession of a piece of land frees the workman from

dependence upon the masters, which is one cause of poverty. The worker

who possesses land is free. He has always something he can turn his hand

to when out of work.” Elsewhere: “If a certain quantity of land is given

to the workers their wages will surely rise, for no one will work for

another unless he can get more than he gets when working for himself.”

(Quoted by Escarra, p. 224, note.) The same idea occurs in Henry George,

but not as a part of the general argument.

[1227] If we had not decided against the inclusion of the Italian

economists, this would have been the place to devote a few words to the

writings of Achille Loria. No one excels him as a writer on political

economy. An elaborate superstructure of great economic, political,

social, and even religious significance has been built upon the

foundation of free land, which at least denotes a powerful imagination. A

_résumé_ of this thesis is contained in _La Terra ed il Sistema sociale_,

translated for the _Revue d’Économie politique_ in 1892. We cannot

examine Loria’s system here. Suffice it to say that in his _Costituzione

economica odierna_ (1900) he demands that the law should recognise each

man’s right to the land: either to a unit of land (_i.e._ a quantity of

land such as would enable a man to live and set up as an independent

producer) or, failing that, to a fraction of such a unit.

Such is the theoretical solution, but the practical suggestion is

somewhat milder, a kind of territorial wage being suggested. Every master

would be obliged to give to his workmen, in addition to a minimum wage, a

certain amount of land at the end of a given number of years. If during

that period the workman has been employed by several masters, each master

should contribute in proportion to the length of time he has been in his

service.

At the end of a certain period every worker would thus become a

proprietor. These would thus be in the same position as their primitive

ancestors were as far as natural economy is concerned, and would be able

to join with the older proprietors in a kind of association of capital

and labour on a footing of absolute equality, which Signor Loria thought

would be a most fruitful type of organisation. During the intervening

years a certain amount of pressure would have to be put upon the

proprietors.

[1228] The Social Democratic Federation was founded by Hyndman in 1881.

See Métin, _Le Socialisme en Angleterre_, chap. 6 (1897).

[1229] Bernard Shaw, _The Fabian Society, what it has done and how it has

done it_ (1892; Fabian Tract, No. 41).

[1230] _Report on Fabian Policy_ (Fabian Tract, No. 70).

[1231] “For it was at this period that we contracted the invaluable habit

of freely laughing at ourselves which has always distinguished us, and

which has saved us from becoming hampered by the gushing enthusiasts who

mistake their own emotions for public movements.” (Bernard Shaw, _loc.

cit._)

[1232] _Report on Fabian Policy._

[1233] Socialism, as understood by the Fabian Society, means the

organisation and conduct of the necessary industries of the country,

and the appropriation of all forms of economic rent of land and capital

by the nation as a whole, through the most suitable public authorities,

municipal, provincial, or central. The socialism advocated by the Fabian

Society is State socialism exclusively (the term is used to distinguish

it from anarchist socialism). On the other hand, it “steadfastly

discountenances all schemes for securing to any person, or any group of

persons, the entire product of their labour. It recognises that wealth

is social in its origin and must be social in its distribution, since

the evolution of industry has made it impossible to distinguish the

particular contribution that each person makes to the common product, or

to ascertain its value.” (_Report on Fabian Policy._)

[1234] _Ibid._

[1235] In addition to the _Fabian Essays_, the principal publications

containing an exposition of Fabian ideas are the Fabian Tracts, a

collection containing a great number of pamphlets on various subjects;

_The History of Trade Unionism_, by Mr. and Mrs. Webb; _Industrial

Democracy_, particularly chaps. 1 and 2 of the third part, by the same

authors; and, finally, _Problems of Modern Industry_ (1898), a collection

of lectures and articles, also by Mr. and Mrs. Webb.

[1236] Mr. and Mrs. Webb in their _History of Trade Unionism_ reject

“that confident sciolism and prejudice which has led generations of

socialists to borrow from Adam Smith and the ‘classic’ economists the

erroneous theory that labour is by itself the creator of value without

going on to master that impregnable and more difficult law of economic

rent which is the very corner-stone of collectivist economy.”

[1237] “The interest with which we are concerned must clearly be

a definable quantity of produce.” (_The National Dividend and its

Distribution_, in _Problems of Modern Industry_, p. 227. We are indebted

to this article for the exposition which we have given of the Fabian

doctrine.)

[1238] An exposition of the same theory is given in Tract No. 15,

_English Progress towards Social Democracy_: “The individuals or classes

who possess social power have at all times, consciously or unconsciously,

made use of that power in such a way as to leave to the great majority

of their fellows practically nothing beyond the means of subsistence

according to the current local standard. The additional product,

determined by the relative differences in productive efficiency of the

different sites, soils, capitals, and forms of skill above the margin of

cultivation, has gone to those exercising control over these valuable

but scarce productive factors. This struggle to secure the surplus or

‘economic rent’ is the key to the confused history of European progress,

and an underlying, unconscious motive of all revolutions.” Cf. also _The

Difficulties of Individualism_, in _Problems of Modern Industry_, pp.

237-239.

[1239] Bernard Shaw in his _Economic Basis of Socialism_, published in

the _Fabian Essays_, makes a very neat distinction between interest

properly so called and economic rent.

[1240] _Fabian Essays_, p. 35.

[1241] _Socialism True and False_ (Tract No. 51).

[1242] _What Socialism is_ (Tract No. 13).

[1243] In his preface to Kurella’s German book, _Sozialismus in England_

(1898), he mentions the fact that the English working class is divided

into a number of corporations who are either jealous of or misunderstand

one another, but have not what we may properly call a class consciousness

(p. 10).

[1244] _Report on Fabian Policy_, p. 7.

[1245] _Fabian Essays_, pp. 47-49.

[1246] _Ibid._, p. 31.

[1247] Sidney Webb, _The Difficulties of Individualism_, in _Problems

of Modern Industry_, p. 231. Also in the _Fabian Essays_, p. 35, he

declares: “Socialists as well as individualists realise that important

organic changes can only be (1) democratic …; (2) gradual …; (3) not

regarded as immoral by the mass of the people; and (4) in this country,

at any rate, constitutional and peaceful.”

[1248] B. Potter (Mrs. Sidney Webb), _The Co-operative Movement_, p. 16.

[1249] Etymologically “solidarity” is a corruption of _solidum_, which

was employed by the Roman jurists to signify the obligation incurred by

debtors who were each held responsible for the whole amount of a debt.

One would naturally expect the French derivative to be _solidité_, which

was the term used by the jurists under the old _régime_, especially by

Pothier. _Solidarité_ was substituted for it by the editors of the Civil

Code.

[1250] We should never come to an end if we began to quote passages in

which the merits of solidarity are set forth. We must content ourselves

with the following, chosen at random:

M. Millerand, at the time Minister of Commerce, in a speech delivered at

the opening of the Exposition Universelle in 1900, said: “Science teaches

men the true secret of material greatness and of social morality; and all

its teaching, in a word, points to solidarity.”

M. Deherme, the founder of the People’s University movement, says: “The

folly of solidarity should be the source of our inspiration, just as the

martyrs of old were inspired by the folly of the Cross. The thing that

wants doing is to organise democracy.” (_La Co-operation des Idées_, June

16, 1900.)

[1251] “For as we have many members in one body, and all members have not

the same office; so we, being many, are one body in Christ, and every one

members one of another.” (Romans xii, 4 and 5.)

“As in physical organisms the unity is made up of separate limbs, so

among reasoning things the reason is distributed among individuals

constituted for unity of co-operation.” (Marcus Aurelius, vii, 13;

Rendall’s translation.)

[1252] _Discours sur l’Esprit positif._ In the _Cours de Philosophie_ he

frankly pays it this well-deserved compliment: “It is a truly capital

idea, and thoroughly modern too.”

[1253] Social biology dates from the publication of Professor Schäffle’s

great work _Bau und Leben des sozialen Körpers_ (1875-78); possibly

from the publication of Rodbertus’s work—at any rate, Rodbertus accuses

Schäffle of plagiarism. See also Spencer’s _Principles of Sociology_.

Aristotle had already ventured to say that “an animal is just like a

well-ordered city,” a proposition that might well be inverted.

[1254] There are still a few adherents left. See M. Worms’s book,

_Organisme et Société_, and Lilienfeld’s _Pathologie sociale_.

Herbert Spencer, who was the pioneer of the analogy, had abandoned it;

and Auguste Comte, the godfather of sociology, took good care to put

sociologists on their guard against the method, which he considered

irrational.

[1255] “The enormous development of steam communication and the spread of

the telegraph over the whole globe have caused modern industry to develop

from a gigantic starfish, any of whose members might be destroyed without

affecting the rest, into a μέγα ζῶον which is convulsed in agony by a

slight injury in one part.” (Nicholson, _Effects of Machinery on Wages_,

p. 117.)

[1256] It was in 1889, if we mistake not, that the term “solidarity” was

proposed as the title of a new economic school in a lecture entitled

_L’École nouvelle_. This lecture was published, along with others, in a

small volume entitled _Quatre Écoles d’Économie sociale_ (1890, Geneva)

(_L’École libérale_, by Frédéric Passy; _L’École catholique_, by Claudio

Jannet; _L’École socialiste_ by M. Stiegler; and _L’École nouvelle_, by

M. Gide). The characteristics of the various schools are summed up as

follows: The one is the school of liberty, the other of authority, while

the third is the school of equality. Gide then proceeds: “Were I asked

to define what I understand by the New School in a single word, I should

call it the Solidarity School. Unlike liberty, equality, and fraternity,

solidarity is not a very high-sounding word, nor is it a mere ideal.

It is just a fact, one of the best-established facts of history and

experience, and the most important discovery of our time, and this fact

of solidarity is becoming better established every day.”

It would have been better, perhaps, to have spoken of a new movement

rather than of a new school, seeing the variety of schools, some of

them actually opposed to one another, such as the school of Biological

Naturalism and the Christian school, the Anarchist school and the State

Socialist school, that have adopted solidarity as a part of their creed.

[1257] M. Léon Bourgeois’s _La Solidarité_ appeared originally as a

series of articles contributed to the _Nouvelle Revue_ in 1896. These

were published in book form in the following year. The different aspects

of the question have been dealt with in a series of lectures delivered

by various authors at the École des Hautes Études sociales under the

presidency of M. Bourgeois himself, and published in a volume entitled

_Essai d’une Philosophie de la Solidarité_ (1902). An association for

the propagation of the new ideas was founded in 1895 under the name of

La Société d’Éducation sociale. An International Congress was called

together on the occasion of the 1900 Exposition, but since then the signs

of activity have been few.

French books and articles dealing with the subject are plentiful enough.

We can only mention _La Solidarité sociale et ses Nouvelles Formules_,

by M. d’Eichthal (1903); the annual report of L’Académie des Sciences

morales et politiques for 1903; M. Bouglé’s book _Le Solidarisme_ (1907);

and Fleurant’s _La Solidarité_ (1907). There is hardly a manual for

teachers published which does not contain a chapter devoted to this

question.

[1258] “The fact that such a thing as natural solidarity exists should

not be taken to imply that it must necessarily be just. Justice can never

be realised unless the laws of solidarity are first observed; but once

these have been established, their effects must be modified to make them

conform to the requirements of justice. The actual and the ideal should

never be confused; they are the direct contraries of one another. But it

is absolutely necessary that the first should be established before we

can realise the moral necessity for the other.” (Bourgeois, _Philosophie

de la Solidarité_, pp. 13, 17.)

[1259] “There are some debts which are hardly noticed at all, but

which ought to be paid all the same.” (Bourgeois, _Philosophie de la

Solidarité_, p. 60.) “There is a real claim where we thought there was

only a moral obligation, and a debt where we thought there was only a

sacrifice.” As the Gospel says: “Unto whomsoever much is given, of him

shall be much required.” (Luke xii, 48.) “So that ye come behind in no

gift.” (1 Corinthians i, 7.)

[1260] “No man is free as long as he is in debt. He becomes free the

moment he pays off that debt. The doctrine of solidarity is just the

corrective of the theories of private property and individual liberty.”

(Bourgeois, _op. cit._, p. 45.)

[1261] M. Bourgeois also points out that just as our ancestors were

indebted to us, so are we indebted to those that shall come after us. But

that is a different thing, and the theory does not seem very sound on

this point. It is strange to think that creditors long since dead should

transfer the debt which was owing to them to the credit of generations

yet unborn!

[1262] Bourgeois, _op. cit._, p. 94.

[1263] Even the texts of the Civil Code seem to point to some such

theory. Article 1370, in addition to the cases of quasi-contract and

quasi-misdemeanour of which it speaks, also mentions “law” as a general

cause of obligation.

[1264] “Wherever it is impossible to fix definitely the value of the

personal effort put forth by a single individual, as in the case of a

quasi-contract—that is, whenever it is impossible to determine the value

of the debt on the one hand or the credit on the other—_the best plan

is to pool those risks and advantages_. This would mean that none would

know who is really bearing the risk or who is reaping the advantages, the

risks being shared by everybody and the advantages being thrown open to

everyone.” (_Ibid._, p. 81.)