possessed, approaches felicity." Functionless property appears natural
to those who believe that society should be organized for the
acquisition of private wealth, and attacks upon it perverse or
malicious, because the question which they ask of any institution is,
"What does it yield?" And such property yields much {77} to those who
own it. Those, however, who hold that social unity and effective work
are possible only if society is organized and wealth distributed on the
basis of function, will ask of an institution, not, "What dividends
does it pay?" but "What service does it perform?" To them the fact
that much property yields income irrespective of any service which is
performed or obligation which is recognized by its owners will appear
not a quality but a vice. They will see in the social confusion which
it produces, payments disproportionate to service here, and payments
without any service at all there, and dissatisfaction everywhere, a
convincing confirmation of their argument that to build on a foundation
of rights and of rights alone is to build on a quicksand.
From the portentous exaggeration into an absolute of what once was, and
still might be, a sane and social institution most other social evils
follow the power of those who do not work over those who do, the
alternate subservience and rebelliousness of those who work towards
those who do not, the starving of science and thought and creative
effort for fear that expenditure upon them should impinge on the
comfort of the sluggard and the _faineant_, and the arrangement of
society in most of its subsidiary activities to suit the convenience
not of those who work usefully but of those who spend gaily, so that
the most hideous, desolate and parsimonious places in the country are
those in which the greatest wealth is produced, the Clyde valley, or
the cotton towns of Lancashire, or the mining villages of Scotland and
Wales, and the gayest and most luxurious {78} those in which it is
consumed. From the point of view of social health and economic
efficiency, society should obtain its material equipment at the
cheapest price possible, and after providing for depreciation and
expansion should distribute the whole product to its working members
and their dependents. What happens at present, however, is that its
workers are hired at the cheapest price which the market (as modified
by organization) allows, and that the surplus, somewhat diminished by
taxation, is distributed to the owners of property. Profits may vary
in a given year from a loss to 100 per cent. But wages are fixed at a
level which will enable the marginal firm to continue producing one
year with another; and the surplus, even when due partly to efficient
management, goes neither to managers nor manual workers, but to
shareholders. The meaning of the process becomes startlingly apparent
when, as in Lancashire to-day, large blocks of capital change hands at
a period of abnormal activity. The existing shareholders receive the
equivalent of the capitalized expectation of future profits. The
workers, as workers, do not participate in the immense increment in
value; and when, in the future, they demand an advance in wages, they
will be met by the answer that profits, which before the transaction
would have been reckoned large, yield shareholders after it only a low
rate of interest on their investment.
The truth is that whereas in earlier ages the protection of property
was normally the protection of work, the relationship between them has
come in the course of the economic development of the last two
centuries to {79} be very nearly reversed. The two elements which
compose civilization are active effort and passive property, the labor
of human things and the tools which human beings use. Of these two
elements those who supply the first maintain and improve it, those who
own the second normally dictate its character, its development and its
administration. Hence, though politically free, the mass of mankind
live in effect under rules imposed to protect the interests of the
small section among them whose primary concern is ownership. From this
subordination of creative activity to passive property, the worker who
depends upon his brains, the organizer, inventor, teacher or doctor
suffers almost as much embarrassment as the craftsman. The real
economic cleavage is not, as is often said, between employers and
employed, but between all who do constructive work, from scientist to
laborer, on the one hand, and all whose main interest is the
preservation of existing proprietary rights upon the other,
irrespective of whether they contribute to constructive work or not.
If, therefore, under the modern conditions which have concentrated any
substantial share of property in the hands of a small minority of the
population, the world is to be governed for the advantages of those who
own, it is only incidentally and by accident that the results will be
agreeable to those who work. In practice there is a constant collision
between them. Turned into another channel, half the wealth distributed
in dividends to functionless shareholders, could secure every child a
good education up to 18, could re-endow English Universities, and
(since more efficient production is {80} important) could equip English
industries for more efficient production. Half the ingenuity now
applied to the protection of property could have made most industrial
diseases as rare as smallpox, and most English cities into places of
health and even of beauty. What stands in the way is the doctrine that
the rights of property are absolute, irrespective of any social
function which its owners may perform. So the laws which are most
stringently enforced are still the laws which protect property, though
the protection of property is no longer likely to be equivalent to the
protection of work, and the interests which govern industry and
predominate in public affairs are proprietary interests. A mill-owner
may poison or mangle a generation of operatives; but his brother
magistrates will let him off with a caution or a nominal fine to poison
and mangle the next. For he is an owner of property. A landowner may
draw rents from slums in which young children die at the rate of 200
per 1000; but he will be none the less welcome in polite society. For
property has no obligations and therefore can do no wrong. Urban land
may be held from the market on the outskirts of cities in which human
beings are living three to a room, and rural land may be used for sport
when villagers are leaving it to overcrowd them still more. No public
authority intervenes, for both are property. To those who believe that
institutions which repudiate all moral significance must sooner or
later collapse, a society which confuses the protection of property
with the preservation of its functionless perversions will appear as
precarious as that which has left the memorials of its {81} tasteless
frivolity and more tasteless ostentation in the gardens of Versailles.
Do men love peace? They will see the greatest enemy of social unity in
rights which involve no obligation to co-operate for the service of
society. Do they value equality? Property rights which dispense their
owners from the common human necessity of labor make inequality an
institution permeating every corner of society, from the distribution
of material wealth to the training of intellect itself. Do they desire
greater industrial efficiency? There is no more fatal obstacle to
efficiency than the revelation that idleness has the same privileges as
industry, and that for every additional blow with the pick or hammer an
additional profit will be distributed among shareholders who wield
neither.
Indeed, functionless property is the greatest enemy of legitimate
property itself. It is the parasite which kills the organism that
produced it. Bad money drives out good, and, as the history of the
last two hundred years shows, when property for acquisition or power
and property for service or for use jostle each other freely in the
market, without restrictions such as some legal systems have imposed on
alienation and inheritance, the latter tends normally to be absorbed by
the former, because it has less resisting power. Thus functionless
property grows, and as it grows it undermines the creative energy which
produced property and which in earlier ages it protected. It cannot
unite men, for what unites them is the bond of service to a common
purpose, and that bond it repudiates, since its very {82} essence is
the maintenance of rights irrespective of service. It cannot create;
it can only spend, so that the number of scientists, inventors, artists
or men of letters who have sprung in the course of the last century
from hereditary riches can be numbered on one hand. It values neither
culture nor beauty, but only the power which belongs to wealth and the
ostentation which is the symbol of it.
So those who dread these qualities, energy and thought and the creative
spirit--and they are many--will not discriminate, as we have tried to
discriminate, between different types and kinds of property, in order
that they may preserve those which are legitimate and abolish those
which are not. They will endeavor to preserve all private property,
even in its most degenerate forms. And those who value those things
will try to promote them by relieving property of its perversions, and
thus enabling it to return to its true nature. They will not desire to
establish any visionary communism, for they will realize that the free
disposal of a sufficiency of personal possessions is the condition of a
healthy and self-respecting life, and will seek to distribute more
widely the property rights which make them to-day the privilege of a
minority. But they will refuse to submit to the naive philosophy which
would treat all proprietary rights as equal in sanctity merely because
they are identical in name. They will distinguish sharply between
property which is used by its owner for the conduct of his profession
or the upkeep of his household, and property which is merely a claim on
wealth produced by another's labor. They will insist that {83}
property is moral and healthy only when it is used as a condition not
of idleness but of activity, and when it involves the discharge of
definite personal obligations. They will endeavor, in short, to base
it upon the principle of function.
{84}
VI
THE FUNCTIONAL SOCIETY
The application to property and industry of the principle of function
is compatible with several different types of social organization, and
is as unlikely as more important revelations to be the secret of those
who cry "Lo here!" and "Lo there!" The essential thing is that men
should fix their minds upon the idea of purpose, and give that idea
pre-eminence over all subsidiary issues. If, as is patent, the purpose
of industry is to provide the material foundation of a good social
life, then any measure which makes that provision more effective, so
long as it does not conflict with some still more important purpose, is
wise, and any institution which thwarts or encumbers it is foolish. It
is foolish, for example, to cripple education, as it is crippled in
England for the sake of industry; for one of the uses of industry is to
provide the wealth which may make possible better education. It is
foolish to maintain property rights for which no service is performed,
for payment without service is waste; and if it is true, as
statisticians affirm, that, even were income equally divided, income
per head would be small, then it is all the more foolish, for sailors
in a boat have no room for first-class passengers, and it is all the
more important that none of the small national income should be
misapplied. It is foolish to leave the direction of industry {85} in
the hands of servants of private property-owners who themselves know
nothing about it but its balance sheets, because this is to divert it
from the performance of service to the acquisition of gain, and to
subordinate those who do creative work to those who do not.
The course of wisdom in the affairs of industry is, after all, what it
is in any other department of organized life. It is to consider the
end for which economic activity is carried on and then to adapt
economic organization to it. It is to pay for service and for service
only, and when capital is hired to make sure that it is hired at the
cheapest possible price. It is to place the responsibility for
organizing industry on the shoulders of those who work and use, not of
those who own, because production is the business of the producer and
the proper person to see that he discharges his business is the
consumer for whom, and not for the owner of property, it ought to be
carried on. Above all it is to insist that all industries shall be
conducted in complete publicity as to costs and profits, because
publicity ought to be the antiseptic both of economic and political
abuses, and no man can have confidence in his neighbor unless both work
in the light.
As far as property is concerned, such a policy would possess two edges.
On the one hand, it would aim at abolishing those forms of property in
which ownership is divorced from obligations. On the other hand, it
would seek to encourage those forms of economic organization under
which the worker, whether owner or not, is free to carry on his work
without sharing its control or its profits with the mere _rentier_.
Thus, if in certain {86} spheres it involved an extension of public
ownership, it would in others foster an extension of private property.
For it is not private ownership, but private ownership divorced from
work, which is corrupting to the principle of industry; and the idea of
some socialists that private property in land or capital is necessarily
mischievous is a piece of scholastic pedantry as absurd as that of
those conservatives who would invest all property with some kind of
mysterious sanctity. It all depends what sort of property it is and
for what purpose it is used. Provided that the State retains its
eminent domain, and controls alienation, as it does under the Homestead
laws of the Dominions, with sufficient stringency to prevent the
creation of a class of functionless property-owners, there is no
inconsistency between encouraging simultaneously a multiplication of
peasant farmers and small masters who own their own farms or shops, and
the abolition of private ownership in those industries, unfortunately
to-day the most conspicuous, in which the private owner is an absentee
shareholder.
Indeed, the second reform would help the first. In so far as the
community tolerates functionless property it makes difficult, if not
impossible, the restoration of the small master in agriculture or in
industry, who cannot easily hold his own in a world dominated by great
estates or capitalist finance. In so far as it abolishes those kinds
of property which are merely parasitic, it facilitates the restoration
of the small property-owner in those kinds of industry for which small
ownership is adapted. A socialistic policy towards the former is not
{87} antagonistic to the "distributive state," but, in modern economic
conditions, a necessary preliminary to it, and if by "Property" is
meant the personal possessions which the word suggests to nine-tenths
of the population, the object of socialists is not to undermine
property but to protect and increase it. The boundary between large
scale and small scale production will always be uncertain and
fluctuating, depending, as it does, on technical conditions which
cannot be foreseen: a cheapening of electrical power, for example,
might result in the decentralization of manufactures, as steam resulted
in their concentration. The fundamental issue, however, is not between
different scales of ownership, but between ownership of different
kinds, not between the large farmer or master and the small, but
between property which is used for work and property which yields
income without it. The Irish landlord was abolished, not because he
owned a large scale, but because he was an owner and nothing more; if,
and when English land-ownership has been equally attenuated, as in
towns it already has been, it will deserve to meet the same fate. Once
the issue of the character of ownership has been settled, the question
of the size of the economic unit can be left to settle itself.
The first step, then, towards the organization of economic life for the
performance of function is to abolish those types of private property
in return for which no function is performed. The man who lives by
owning without working is necessarily supported by the industry of some
one else, and is, therefore, too expensive a luxury to be encouraged.
Though he deserves to be {88} treated with the leniency which ought to
be, and usually is not, shown to those who have been brought up from
infancy to any other disreputable trade, indulgence to individuals must
not condone the institution of which both they and their neighbors are
the victims. Judged by this standard, certain kinds of property are
obviously anti-social. The rights in virtue of which the owner of the
surface is entitled to levy a tax, called a royalty, on every ton of
coal which the miner brings to the surface, to levy another tax, called
a way-leave, on every ton of coal transported under the surface of his
land though its amenity and value may be quite unaffected, to distort,
if he pleases, the development of a whole district by refusing access
to the minerals except upon his own terms, and to cause some 3,500 to
4,000 million tons to be wasted in barriers between different
properties, while he in the meantime contributes to a chorus of
lamentation over the wickedness of the miners in not producing more
tons of coal for the public and incidentally more private taxes for
himself--all this adds an agreeable touch of humor to the drab quality
of our industrial civilization for which mineral owners deserve perhaps
some recognition, though not the $400,000 odd a year which is paid to
each of the four leading players, or the $24,000,000 a year which is
distributed among the crowd.
The alchemy by which a gentleman who has never seen a coal mine
distills the contents of that place of gloom into elegant chambers in
London and a place in the country is not the monopoly of royalty
owners. A similar feat of prestidigitation is performed by the {89}
owner of urban ground-rents. In rural districts some landlords,
perhaps many landlords, are partners in the hazardous and difficult
business of agriculture, and, though they may often exercise a power
which is socially excessive, the position which they hold and the
income which they receive are, in part at last, a return for the
functions which they perform. The ownership of urban land has been
refined till of that crude ore only the pure gold is left. It is the
perfect sinecure, for the only function it involves is that of
collecting its profits, and in an age when the struggle of Liberalism
against sinecures was still sufficiently recent to stir some chords of
memory, the last and greatest of liberal thinkers drew the obvious
deduction. "The reasons which form the justification ... of property
in land," wrote Mill in 1848, "are valid only in so far as the
proprietor of land is its improver.... In no sound theory of private
property was it ever contemplated that the proprietor of land should be
merely a sinecurist quartered on it." Urban ground-rents and royalties
are, in fact, as the Prime Minister in his unregenerate days suggested,
a tax which some persons are permitted by the law to levy upon the
industry of others. They differ from public taxation only in that
their amount increases in proportion not to the nation's need of
revenue but to its need of the coal and space on which they are levied,
that their growth inures to private gain not to public benefit, and
that if the proceeds are wasted on frivolous expenditure no one has any
right to complain, because the arrangement by which Lord Smith spends
wealth produced by Mr. Brown on objects which do no good to either is
part {90} of the system which, under the name of private property, Mr.
Brown as well as Lord Smith have learned to regard as essential to the
higher welfare of mankind.
But if we accept the principle of function we shall ask what is the
_purpose_ of this arrangement, and for what end the inhabitants of, for
example, London pay $64,000,000 a year to their ground landlords. And
if we find that it is for no purpose and no end, but that these things
are like the horseshoes and nails which the City of London presents to
the Crown on account of land in the Parish of St. Clement Danes, then
we shall not deal harshly with a quaint historical survival, but
neither shall we allow it to distract us from the business of the
present, as though there had been history but there were not history
any longer. We shall close these channels through which wealth leaks
away by resuming the ownership of minerals and of urban land, as some
communities in the British Dominions and on the Continent of Europe
have resumed it already. We shall secure that such large accumulations
as remain change hands at least once in every generation, by increasing
our taxes on inheritance till what passes to the heir is little more
than personal possessions, not the right to a tribute from industry
which, though qualified by death-duties, is what the son of a rich man
inherits to-day. We shall treat mineral owners and land-owners, in
short, as Plato would have treated the poets, whom in their ability to
make something out of nothing and to bewitch mankind with words they a
little resemble, and crown them with flowers and usher them politely
out of the State.
{91}
VII
INDUSTRY AS A PROFESSION
Rights without functions are like the shades in Homer which drank blood
but scattered trembling at the voice of a man. To extinguish royalties
and urban ground-rents is merely to explode a superstition. It needs
as little--and as much--resolution as to put one's hand through any
other ghost. In all industries except the diminishing number in which
the capitalist is himself the manager, property in capital is almost
equally passive. Almost, but not quite. For, though the majority of
its owners do not themselves exercise any positive function, they
appoint those who do. It is true, of course, that the question of how
capital is to be owned is distinct from the question of how it is to be
administered, and that the former can be settled without prejudice to
the latter. To infer, because shareholders own capital which is
indispensable to industry, that therefore industry is dependent upon
the maintenance of capital in the hands of shareholders, to write, with
some economists, as though, if private property in capital were further
attenuated or abolished altogether, the constructive energy of the
managers who may own capital or may not, but rarely, in the more
important industries, own more than a small fraction of it, must
necessarily be impaired, is to be guilty of a robust _non-sequitur_ and
to ignore the most obvious facts of {92} contemporary industry. The
less the mere capitalist talks about the necessity for the consumer of
an efficient organization of industry, the better; for, whatever the
future of industry may be, an efficient organization is likely to have
no room for _him_. But though shareholders do not govern, they reign,
at least to the extent of saying once a year "_le roy le veult_." If
their rights are pared down or extinguished, the necessity for some
organ to exercise them will still remain. And the question of the
ownership of capital has this much in common with the question of
industrial organization, that the problem of the constitution under
which industry is to be conducted is common to both.