"In every case in which labour is exchanged for commodities,
production really precedes enjoyment . . . wages are the
earnings--that is to say, the makings--of labour--not the advances
of capital."
And the proposition which the author endeavours to disprove is the
hitherto generally accepted doctrine
..."that labour is maintained and paid out of existing capital,
before the product which constitutes the ultimate object is
secured" (p. 16).
The doctrine respecting the relation of capital and wages, which is
thus opposed in "Progress and Poverty," is that illustrated in the
foregoing pages; the truth of which, I conceive, must be plain to any
one who has apprehended the very simple arguments by which I have
endeavoured to [170] demonstrate it. One conclusion or the other must
be hopelessly wrong; and, even at the cost of going once more over
some of the ground traversed in this essay and that on "Natural and
Political Rights,"* I propose to show that the error lies with
"Progress and Poverty"; in which work, so far as political science is
concerned, the poverty is, to my eye, much more apparent than the
progress.
* Collected Essays, vol. i. pp. 359-382.
To begin at the beginning. The author propounds a definition of
wealth: "Nothing which nature supplies to man without his labour is
wealth" (p. 28). Wealth consists of "natural substances or products
which have been adapted by human labour to human use or gratification,
their value depending upon the amount of labour which, upon the
average, would be required to produce things of like kind" (p. 27).
The following examples of wealth are given:--
. . . "Buildings, cattle, tools, machinery, agricultural and
mineral products, manufactured goods, ships, waggons,
furniture, and the like" (p. 27).
I take it that native metals, coal and brick clay, are "mineral
products"; and I quite believe that they are properly termed "wealth."
But when a seam of coal crops out at the surface, and lumps of coal
are to be had for the picking up; or when native copper lies about in
nuggets, or [171] when brick clay forms a superficial stratum, it
appears to me that these things are supplied to, nay almost thrust
upon, man without his labour. According to the definition, therefore,
they are not "wealth." According to the enumeration, however, they are
"wealth": a tolerably fair specimen of a contradiction in terms. Or
does "Progress and Poverty" really suggest that a coal seam which
crops out at the surface is not wealth; but that if somebody breaks
off a piece and carries it away, the bestowal of this amount of labour
upon that particular lump makes it wealth; while the rest remains "not
wealth"? The notion that the value of a thing bears any necessary
relation to the amount of labour (average or otherwise) bestowed upon
it, is a fallacy which needs no further refutation than it has already
received. The average amount of labour bestowed upon warming-pans
confers no value upon them in the eyes of a Gold-Coast negro; nor
would an Esquimaux give a slice of blubber for the most elaborate of
ice-machines.
So much for the doctrine of "Progress and Poverty" touching the nature
of wealth. Let us now consider its teachings respecting capital as
wealth or a part of wealth. Adam Smith's definition "that part of a
man's stock which he expects to yield him a revenue is called his
capital" is quoted with approval (p. 32); elsewhere capital is said to
be that part of wealth "which [172] is devoted to the aid of
production" (p. 28); and yet again it is said to be
. . . "wealth in course of exchange,* understanding exchange to
include, not merely the passing from hand to hand, but
also such transmutations as occur when the reproductive
or transforming forces of nature are utilised for the
increase of wealth" (p. 32).
* The italics are the author's.
But if too much pondering over the possible senses and scope of these
definitions should weary the reader, he will be relieved by the
following acknowledgment:--
. . . "Nor is the definition of capital I have suggested of
any importance" (p. 33).
The author informs us, in fact, that he is "not writing a text-book,"
thereby intimating his opinion that it is less important to be clear
and accurate when you are trying to bring about a political revolution
than when a merely academic interest attaches to the subject treated.
But he is not busy about anything so serious as a textbook: no, he "is
only attempting to discover the laws which control a great social
problem"--a mode of expression which indicates perhaps the high-water
mark of intellectual muddlement. I have heard, in my time, of "laws"
which control other "laws"; but this is the first occasion on which
"laws" which "control a problem" have come under my notice. Even the
disquisitions "of [173] those flabby writers who have burdened the
press and darkened counsel by numerous volumes which are dubbed
political economy" (p. 28) could hardly furnish their critics with a
finer specimen of that which a hero of the "Dunciad," by the one flash
of genius recorded of him, called "clotted nonsense."
Doubtless it is a sign of grace that the author of these definitions
should attach no importance to any of them; but since, unfortunately,
his whole argument turns upon the tacit assumption that they are
important, I may not pass them over so lightly. The third I give up.
Why anything should be capital when it is "in course of exchange," and
not be capital under other circumstances, passes my understanding. We
are told that "that part of a farmer's crop held for sale or for seed,
or to feed his help, in part payment of wages, would be accounted
capital; that held for the care of his family would not be" (p. 31).
But I fail to discover any ground of reason or authority for the
doctrine that it is only when a crop is about to be sold or sown, or
given as wages, that it may be called capital. On the contrary,
whether we consider custom or reason, so much of it as is stored away
in ricks and barns during harvest, and remains there to be used in any
of these ways months or years afterwards, is customarily and rightly
termed capital. Surely, the meaning of the clumsy phrase that capital
is "wealth in the [174] course of exchange" must be that it is "wealth
capable of being exchanged" against labour or anything else. That, in
fact, is the equivalent of the second definition, that capital is
"that part of wealth which is devoted to the aid of production."
Obviously, if you possess that for which men will give labour, you can
aid production by means of that labour. And, again, it agrees with the
first definition (borrowed from Adam Smith) that capital is "that part
of a man's stock which he expects to yield him a revenue." For a
revenue is both etymologically and in sense a "return." A man gives
his labour in sowing grain, or in tending cattle, because he expects a
"return"--a "revenue"--in the shape of the increase of the grain or of
the herd; and also, in the latter case, in the shape of their labour
and manure which "aid the production" of such increase. The grain and
cattle of which he is possessed immediately after harvest is his
capital; and his revenue for the twelvemonth, until the next harvest,
is the surplus of grain and cattle over and above the amount with
which he started. This is disposable for any purpose for which he may
desire to use it, leaving him just as well off as he was at the
beginning of the year. Whether the man keeps the surplus grain for
sowing more land, and the surplus cattle for occupying more pasture;
whether he exchanges them for other commodities, such as the use of
the land (as rent); or labour (as [175] wages); or whether he feeds
himself and his family, in no way alters their nature as revenue, or
affects the fact that this revenue is merely disposable capital.
That (even apart from etymology) cattle are typical examples of
capital cannot be denied ("Progress and Poverty," p. 25); and if we
seek for that particular quality of cattle which makes them "capital,"
neither has the author of "Progress and Poverty" supplied, nor is any
one else very likely to supply, a better account of the matter than
Adam Smith has done. Cattle are "capital" because they are "stock
which yields revenue." That is to say, they afford to their owner a
supply of that which he desires to possess. And, in this particular
case, the "revenue" is not only desirable, but of supreme importance,
inasmuch as it is capable of maintaining human life. The herd yields a
revenue of food-stuffs as milk and meat; a revenue of skins; a revenue
of manure; a revenue of labour; a revenue of exchangeable commodities
in the shape of these things, as well as in that of live cattle. In
each and all of these capacities cattle are capital; and, conversely,
things which possess any or all of these capacities are capital.
Therefore what we find at page 25 of "Progress and Poverty" must be
regarded as a welcome lapse into clearness of apprehension:--
"A fertile field, a rich vein of ore, a falling stream which supplies
power, may give the possessor advantages [176] equivalent to the
possession of capital; but to class such things as capital would be to
put an end to the distinction between land and capital."
Just so. But the fatal truth is that these things are capital; and
that there really is no fundamental distinction between land and
capital. Is it denied that a fertile field, a rich vein of ore, or a
falling stream, may form part of a man's stock, and that, if they do,
they are capable of yielding revenue? Will not somebody pay a share of
the produce in kind, or in money, for the privilege of cultivating the
first royalties for that of working the second; and a like equivalent
for that of erecting a mill on the third? In what sense, then, are
these things less "capital" than the buildings and tools which on page
27 of "Progress and Poverty" are admitted to be capital? Is it not
plain that if these things confer "advantages equivalent to the
possession of capital," and if the "advantage" of capital is nothing
but the yielding of revenue, then the denial that they are capital is
merely a roundabout way of self-contradiction?
All this confused talk about capital, however, is lucidity itself
compared with the exposition of the remarkable thesis, "Wages not
drawn from capital, but produced by labour," which occupies the third
chapter of "Progress and Poverty."
"If, for instance, I devote my labour to gathering birds' eggs or
picking wild berries, the eggs or berries I thus [177] get are my
wages. Surely no one will contend that, in such a case, wages are
drawn from capital. There is no capital in the case" (p. 34).
Nevertheless, those who have followed what has been said in the first
part of this essay surely neither will, nor can, have any hesitation
about substantially adopting the challenged contention, though they
may possibly have qualms as to the propriety of the use of the term
"wages."* They will have no difficulty in apprehending the fact that
birds' eggs and berries are stores of foodstuffs, or vital capital;
that the man who devotes his labour to getting them does so at the
expense of his personal vital capital; and that, if the eggs and the
berries are "wages" for his work, they are so because they enable him
to restore to his organism the vital capital which he has consumed in
doing the work of collection. So that there is really a great deal of
"capital in the case."
* Not merely on the grounds stated below, but on the strength
of Mr. George's own definition. Does the gatherer of eggs, or
berries, produce them by his labour? If so, what do the hens
and the bushes do?