indeed many of them are done at present partly by private enterprise
and partly by public: for instance, in London private electric lighting
companies supply light in one district whilst the Borough Councils
provide a municipal supply in others. But the municipal supply is
cheaper, and with honest and capable management always must be cheaper
than the private company’s supply.
You will ask, why must it? Well, shortly, because it pays less for its
capital, less for its management, and nothing at all for profits, this
triple advantage going to the consumer in cheapness. But to take in
the whole scope of public enterprise as compared with private, let us
begin with the nationalized services. Why is it that the nationalized
Post Office is so much cheaper and more extensive than a private
letter-carrying company could make it, that private letter-carrying is
actually forbidden by law?
The reason is that the cost of carrying letters differs greatly as
between one letter and another. The cost of carrying a letter from
house to house in the same terrace is so small that it cannot be
expressed in money: it is as near nothing as does not matter: to get
a figure at all you would have to take the cost per thousand letters
instead of per letter. But the cost of carrying the same letter from
the Isle of Wight to San Francisco is considerable. It has to be
taken from the train to the ship to cross the Solent; changed into
another ship at Southampton or perhaps at Liverpool after another
train journey; carried across the Atlantic Ocean; then across the
continent of North America; and finally delivered at the opposite
side of the world to the Isle of Wight. You would naturally expect
the Postmaster-General to deliver a dozen letters for you in the
same terrace for a penny, and charge you a pound or so for sending
one letter to San Francisco. What he actually does for you is to
deliver the thirteen letters for three-halfpence apiece. By the time
these lines are in print he may be charging you only a penny apiece,
as he used to before the war. He charges you less than the cost of
sending the long-distance letter, and more than the cost of sending
the short-distance letters; but as he has thousands of short-distance
letters to send and only dozens of long-distance ones he can make up
for the undercharge on the long by an overcharge on the short. This
charging the same for all letters is called by economists averaging.
Others call it gaining on the swings what we lose on the roundabouts.
Our reason for forbidding private persons or companies to carry letters
is that if they were allowed to meddle, there would soon be companies
selling stamps at threepence a dozen to deliver letters within a few
miles. The Postmaster-General would get nothing but long-distance
letters: that is, the ones with a high cost of carriage. He would have
to put up the price of his stamps; and when we found that the advantage
of sending a letter a mile or two for a farthing was accompanied by
the disadvantage of paying sixpence or a shilling when we wanted to
write to someone ten miles off, we should feel that we had made a very
bad bargain. The only gainers would be the private companies who had
upset our system. And when they had upset it they would raise their
short-distance prices to the traditional penny, if not higher.
Now let us turn from this well-established nationalized service to one
that might be nationalized, and that concerns every housekeeper in the
country very intimately. I mean the coal supply. Coals have become a
necessary of life in our climate; and they are dreadfully dear. As
I write these lines it is midsummer, when coals are cheapest; and a
circular dated the 16th June offers me drawingroom coal for thirty-six
and threepence a ton, and anthracite for seventy shillings. That is
much more than the average cost. Why must I pay it? Why must you pay
it? Simply because the coal industry is not yet nationalized. It is
private property.
The cost price of coal varies from nothing to a pound a ton or more,
without counting what it costs to carry and distribute the coal
throughout the country. Perhaps you do not believe that coals can be
had for nothing; but I assure you that on the Sunderland coast when the
tide is out coals can be picked up on the shore by all comers as freely
as shells or seaweed. I have seen them with my own eyes doing it. A
sack and a back to carry it on is all that anybody needs there to set
up as a hawker of coals in a small way, or to fill the cellar at home.
Elsewhere on our coasts coal is so hard to reach that shafts have been
sunk and mines dug for miles under the sea, the coal not having been
reached until after twenty years work and a heavy expenditure of money.
Between these two extremes there are all sorts of mines, some yielding
so little coal at such high cost that they are worked only when the
price of coal rises to exceptional heights, and others in which coal
is so plentiful and easily got at that it is always profitable to work
them even when coal is unusually cheap. The money they cost to open up
varies from £350 to over a million. But the price you have to pay never
falls below the cost from the very dearest mines.
The reason is this. What makes prices high is scarcity: what
brings them down is plenty. Coals rise and fall in price just like
strawberries. They are dear when scarce, cheap when plenty.
Now an article can become scarce in several ways. One is by reducing
the quantity in the market by slackening or ceasing to manufacture.
Another is to increase the number of people who want to buy the
article and have money enough to pay for it. Yet another is to find
out new uses for it. A scarcity of coal can be produced not only by
the increase of the population, but by the people who formerly wanted
only a scuttle of coals for the kitchen fire wanting thousands of tons
for blast furnaces and ocean steamers. It is the scarcity produced
in these ways that has raised the price of coal to such a point that
it is now worth while to tunnel out mines under the sea. The cost of
such mines is heavy; but it is not incurred until the price of coal
has gone up sufficiently to cover it with a profit. If the price falls
enough to cut off that profit the mine stops working and is abandoned.
And what is the consequence of that? The stopping of the mine cuts off
the supply of coals it used to send to the market; and the scarcity
produced by the stoppage sends the price up again until it is high
enough to restart the mine without losing money by it.
In this way the Intelligent Woman (and also the unintelligent one)
finds herself condemned always to pay for her coals the full cost of
getting them from the very dearest mines in use, though she may know
that only the fag end of the supply comes from these mines, the rest
coming from mines where the cost is much lower. She will be assured,
if she remonstrates, that the price is barely sufficient to enable
some of the collieries to continue working; and this will be quite
true. What she will not be told, though it also is quite true, is that
the better mines are making excessive profits at her expense, to say
nothing of landlord’s royalties.
And here comes in another complication. The miners who hew out the coal
for wages in the better mines are paid no more than those in the worse
ones which can barely afford to keep going, because the men, unlike the
coal, can go from one mine to another, and what the poorest miner must
accept all must accept. Thus the wages of all the miners are kept down
to the poverty of the worst mines, just as the coal bills of all the
housekeepers are kept up to their high cost. The dissatisfied miners
strike, making coals scarcer and dearer than ever. The housekeepers
grumble, but cannot bring down prices, and blame “the middleman”.
Nobody is satisfied except the owners of the better mines.
The remedy here is, of course, the Postmaster-General’s plan of
averaging. If all the coal mines belonged to a Coalmaster-General he
could set off the good mines against the bad, and sell coal for the
average cost of getting the whole supply instead of having to sell
it for the cost of getting it in the very worst mines. To take fancy
figures, if half the supply cost a pound a ton to raise and the other
half cost half a crown a ton, he could sell at eleven and threepence
a ton instead of at a pound. A Commercial Coal Trust, though it might
come to own all the mines, would not do this, because its object would
be to make as much profit as possible for its shareholders instead of
to make coal as cheap for you as possible. There is only one owner who
would work in your interest, and not want to make any profit at all.
That owner would be a Government Coalmaster-General, acting for the
nation: that is, acting for you and all the other housekeepers and
users of coal.
Now you understand why you have the miners and the intelligent users
and buyers of coal demanding the nationalization of the coal mines,
and all the owners of the mines and the sellers of coal shrieking
that nationalization would mean waste, corruption, ruinously high
prices, the destruction of our commerce and industry, the end of our
empire, and anything else they can think of in their dismay at the
prospect of losing the profits they make by compelling us to pay a
great deal more for our coal than it costs. But however recklessly
they shriek, they are careful never to mention the real point of the
whole business: that is, the procuring of coal for everybody at cost
price. To keep the attention of the public off that, they will declare
that nationalization is a wicked invention of the Bolshevists, and
that the British Government is so corrupt and incompetent that it
could not manage a baked potato stand honestly and capably, much less
a coal mine. You may read ten debates in the House of Commons on coal
nationalization, and a hundred newspaper articles on those debates,
without ever learning what I have just told you about the difference
between the mines, and how by averaging the cost of working them the
price of your coals could be greatly reduced. Once these facts are
known and understood there is no room for further argument: every
purchaser of coal becomes a nationalizer at once; though every coal
proprietor is ready to spend the last penny he can spare to discredit
and prevent nationalization.
You see then how separate private property in coal mines hits a woman
every time she buys coals. Well, it hits her in precisely the same way
every time she buys a pair of scissors or a set of knives and forks
or a flat-iron, because iron mines and silver mines differ like coal
mines. It hits her every time she buys a loaf of bread, because wheat
farms differ in fertility just like mines: a bushel of wheat will cost
much more to raise on one farm than on another. It hits her every time
she buys anything that is made in a factory, because factories differ
according to their distance from railways or canals or seaports or big
market towns or places where their raw materials are plentiful, or
where there is natural water power to drive their works. In every case
the shop price represents the cost of the article in the few mines and
factories where the cost of production is greatest. It never represents
the average cost taking one factory and one mine with another, which
is the real national cost. Thus she is kept poor in a rich country
because all the difference between the worst and the best in it is
skimmed off for the private owners of the mines and factories by simply
charging her more for everything she uses than the things cost. And
it is to save her from this monstrous imposition that the Socialists,
and many people who never dream of calling themselves Socialists,
propose that the mines and factories shall be made national property
instead of private property. The difference between the Socialist and
non-Socialist nationalizers is that the non-Socialists aim only at
cheap coal, whereas the Socialists have the ulterior object of bringing
the mines into national ownership and control so as to prevent their
remaining an instrument of inequality of income. On the immediate
practical question of nationalization they are agreed. That is how
Socialism can advance without a majority of professed Socialists in
Parliament, or even without any.
Note that the difference between the highest cost of production under
the worst circumstances and the lower costs under more favorable
circumstances is called by economists rent. Mining rents and rents of
copyrights and patent rights are called royalties; and most people call
nothing rent except what they pay for house and land. But rent is part
of the price of everything that has a price at all, except things that
are communized, and things that are produced under the most unfavorable
conditions.
30
YOUR TAXES
Besides buying things in the shops you have to pay rates, taxes,
telephone rent (if you have a telephone), and rent of house and land.
Let us examine this part of your expenditure, and see whether you get
hit here again and again.
People grumble a great deal about the rates, because they get nothing
across the counter for them; and what they do get they share with
everyone else, so that they have no sense of individual property in
it, as they have in their clothes and houses and furniture. But they
would not possess their clothes or their furniture or their houses very
long in peace but for the paved and lighted and policed streets, the
water supply and drainage, and all the other services the rates pay
for. The Intelligent Woman, when she begins to study these matters,
soon realizes that she gets better value for her rates than for any
other part of her expenditure, and that the municipal candidates who
ask for her vote on the ground that they are going to abolish or reduce
the rates (which they fortunately cannot do) are mostly either fools
or humbugs, if not both. And she has the satisfaction of knowing that
she gets these services as nearly as possible at their cost to the
local authority, which not only does not profiteer at her expense, but
does for nothing a great deal of directorial work that in any private
business would have to be paid for, and under present circumstances
ought to be paid for, in public business as well.
The same advantage can be claimed for taxes. Of all the public services
which you pay for in taxes to the Government it can be said that there
is no direct profiteering in them: you get them for what they cost the
Government: that is, for much less than you would have to pay if they
were private business concerns.
So far it would seem that when you pay your rates and taxes you escape
the exactions which pursue you whenever you spend money in any other
way. You are perhaps beginning to feel that the next time the collector
calls you will hear his knock with joy, and welcome him with the
beaming face of the willing giver.
I am sorry to spoil it all; but the truth is that Capitalism plunders
you through the Government and the municipalities and County Councils
as effectually as it does through the shopkeeper. It is not only
that the Government and the local authorities, in order to carry on
their public services, have to buy vast quantities of goods from
private profiteers who charge them more than cost price, and that this
overcharge is passed on to you as a ratepayer and taxpayer. Nor is
it that the Government of the country, acting for the people of the
country, cannot use the land of the country without paying some private
person heavily for leave to do so. There are ways of getting round
these overcharges, as, for instance, when the Government buys a piece
of land for its operations, but raises the money to pay for it by a tax
on rent which only the landlords pay, or when it raises capital by a
tax on unearned incomes. By this expedient it can, and sometimes does,
give you a complete and genuine cost price service. It can even give it
to you for nothing and make richer people pay for it.
But you are rated and taxed not only to pay for public services which
are equally useful to all, but for other things as well; and when you
come to these you may, if you are a rich woman, complain that you are
being plundered by Socialists for the benefit of the poor, or, if you
are a poor woman, that you are being plundered by Capitalists who
throw on the rents and taxes certain expenses which they should pay out
of their own pockets.
Let us see what foundation there is for such complaints. Let us begin
with the rich. By taxation rich people have a quarter or a third
of their incomes, and very rich people more than half, taken from
them by the Government, not for any specified public service, but as
pure nationalization (communization) of their income to that extent
without any compensation, and by simple coercion. This is now taken so
completely as a matter of course that the rich never dream of asking
for compensation, or refusing to pay until their goods are forcibly
seized, or even of calling it Bolshevik confiscation; and so we are apt
to talk as if such things never happened except in the imaginations
of wicked Communists; but they happen in Great Britain regularly
every January; and the Act authorizing them is brought in every April
by the Chancellor of the Exchequer. Though reassuringly called the
Appropriation Act it is really an Expropriation Act.
There is nothing in the law or the Constitution, or in any custom or
tradition or parliamentary usage or any other part of our established
morality, to prevent this confiscated third or half being raised to
three-quarters, nine-tenths, or the whole. Besides this, when a very
rich person dies, the Government confiscates the entire income of the
property for the next eight years. The smallest taxable properties have
to give up their incomes to the Government for ten months, and the rest
for different periods between these extremes, in proportion to their
amount.
In addition, there are certain taxes paid by rich and poor alike,
called indirect taxes. Some of them are taxes on certain articles of
food, and on tobacco and spirits, which you pay in the shop when you
buy them, as part of the price. Others are stamp duties: twopence
if you give a receipt for £2 or more, sixpence if you make a simple
written agreement, hundreds of pounds on certain other documents which
propertyless people never use. None of these taxes are levied for a
named service like the police rate or the water rate: they are simple
transfers of income from private pockets to the national pocket, and,
as such, acts of pure Communism. It may surprise you to learn that even
without counting the taxes on food, which fall on all classes, the
private property thus communized already amounts to nearly a million a
day.
The rich may well gasp at the figure, and ask what does the Government
do with it all? What value do they get for this contribution which
appears so prodigious to most of us who have to count our incomes
in hundreds a year and not in millions a day? Well, the Government
provides an army and navy, a civil service, courts of law and so forth;
and, as we have seen, it provides them either at cost price or more
nearly at cost price than any commercial concern would. But over a
hundred million solid pounds of it are handed over every year in hard
cash in pensions and doles to the unfortunate people who have small
incomes or none.
This is pure redistribution of income: that is, pure Socialism. The
officers of the Government take the money from the rich and give it to
the poor because the poor have not enough and the rich have too much,
without regard to their personal merits. And here again there is no
constitutional limit to the process. I can remember a time when there
was no supertax, and the income tax was twopence in the pound instead
of four-and-sixpence or five shillings, and when Gladstone hoped to
abolish it altogether. Nobody dreamt then of using taxation as an
instrument for effecting a more equal distribution of income. Nowadays
it is one of the chief uses of taxation; and it could be carried to
complete equality without any change in our annual exchequer routine.
So far the poor have the better of the bargain. But some of the rich
do very well out of the taxes. By far the heaviest single item of
Government expenditure is the annual payment for the hire of the money
we borrowed for the war. It is all spent and gone; but we must go on
paying for the hire until we replace and repay it. Most of it was
borrowed from the rich, because they alone had any spare money to lend.
Consequently the Government takes a vast sum of money every year from
the whole body of rich, and immediately hands it back to those who
lent it money for the war. The effect of this transaction is simply to
redistribute income between the rich themselves. Those who lose by it
make a fuss about what they call the burden of the National Debt; but
the nation is not a penny the poorer for taking money from one bold
Briton and giving it to another. Whether the transfer is for better
or worse depends on whether it increases or diminishes the existing
inequality. Unfortunately, it is bound, on the whole, to increase it,
because the Government, instead of taking money from some capitalists
and dividing it among them all, is taking money from all capitalists
and dividing it among some of them. This is the real mischief of the
National Debt, which, in so far as it is owed to our own people, is
not a debt at all. To illustrate, one may say that an elephant does
not complain of being burdened because its legs have to carry its own
weight; but if all the weight were on one side instead of being equally
distributed between the legs, the elephant would hardly be able to
carry it, and would roll over on its back when it met the slightest
obstacle, which is very much what our trade does under our unequal
system.
It is sometimes said that the capitalists who lent the Government the
money for the war deserve the hire of it because they made sacrifices.
As I was one of them myself I can tell you without malice that this
is sentimental nonsense. They were the only people who were not
called on to make any sacrifice: on the contrary, they were offered
a gilt-edged investment at five per cent when they would have taken
four. The people who were blinded, maimed, or killed by the war were
those really sacrificed; and those who worked and fought were the real
saviors of the country; whilst the people who did nothing but seize
the national loaf that others had made, and take a big bite out of it
(they and their servants) before passing on what they left of it to
the soldiers, did no personal service at all: they only made the food
shortage still shorter. The reason for pampering them in this absurd
fashion was not for any service or merit on their part: it was the
special consideration we have to shew to spare money as such because
we are afraid there would not be any available if we did not pamper a
class by giving it more than it can spend. We shall have to go further
into this when we examine the nature of capital later on. Meanwhile, if
you had the misfortune to lose an eye during one of the air raids, or
if you lost your husband or son, or if you “did your bit” strenuously
throughout the war, and are now a taxpayer, it must seem to you, to say
the least, funny to have money taken from you by the Government and
handed over to some lady who did nothing but live as indulgently as
she could all the time. You will not easily be convinced that it would
have been a more dreadful thing for the Government to commandeer her
money than your husband’s limbs, or your son’s life. The utmost that
can be said is that it may have been more expedient.