foresight to insist that the land should remain national property in
fact as well as in legal theory, and that all rents should be paid into
a common stock and used for public purposes. If that had been done
there need have been no slums, no ugly mean streets and buildings,
nor indeed any rates or taxes: everybody would benefit by the rent;
everybody would have to contribute to it by work; and no idler would
be able to live on the labor of others. The prosperity of our great
towns would be a real prosperity, shared by everyone, and not what it
is now, the enslavement and impoverishment of nine persons out of every
ten in order that the tenth should be idle and rich and extravagant
and useless. This evil is so glaring, so inexcusable by any sophistry
that the cleverest landlord can devise, that, long before Socialism was
heard of, a demand arose for the abolition of all taxation except the
taxation of landowners; and we still have among us people called Single
Taxers, who preach the same doctrine.
33
CAPITAL
Now the Single Taxers are not wrong in principle; but they are behind
the times. Out of landowning there has grown a lazier way of living on
other people’s labor without doing anything for them in return. Land
is not the only property that returns a rent to the owner. Spare money
will do the same if it is properly used. Spare money is called Capital;
its owner is called a capitalist; and our system of leaving all the
spare money in the country in private hands like the land is called
Capitalism. Until you understand Capitalism you do not understand human
society as it exists at present. You do not know the world, as the
saying is. You are living in a fool’s paradise; and Capitalism is doing
its best to keep you there. You may be happier in a fool’s paradise;
and as I must now proceed to explain Capitalism, you will read the rest
of this book at the risk of being made unhappy and rebellious, and
even of rushing into the streets with a red flag and making a greater
fool of yourself than Capitalism has ever made of you. On the other
hand, if you do not understand Capitalism you may easily be cheated out
of all your money, if you have any, or, if you have none, duped into
sacrificing yourself in all sorts of ways for the profit of mercenary
adventurers and philanthropic humbugs under the impression that you are
exercising the noblest virtues. Therefore I will risk letting you know
where you are and what is happening to you.
Nothing but a very narrow mind can save you from despair if you look at
all the poverty and misery around you and can see no way out of it all.
And if you had a narrow mind you would never have dreamt of buying this
book and reading it. Fortunately, you need not be afraid to face the
truth about our Capitalism. Once you understand it, you will see that
it is neither eternal nor even very old-established, neither incurable
nor even very hard to cure when you have diagnosed it scientifically. I
use the word cure because the civilization produced by Capitalism is a
disease due to shortsightedness and bad morals: and we should all have
died of it long ago if it were not that happily our society has been
built up on the ten commandments and the gospels and the reasonings
of jurists and philosophers, all of which are flatly opposed to the
principles of Capitalism. Capitalism, though it has destroyed many
ancient civilizations, and may destroy ours if we are not careful, is
with us quite a recent heresy, hardly two hundred years old at its
worst, though the sins it has let loose and glorified are the seven
deadly ones, which are as old as human nature.
And now I hear you say “My gracious goodness me, what on the face of
the earth has all this to do with the possession of spare money by
ordinary ladies and gentlemen, which you say is all that Capitalism
is?” And I reply, farfetched as it may seem, that it is out of that
innocent looking beginning that our huge burden of poverty and misery
and drink and crime and vice and premature death has grown. When we
have examined the possibilities of this apparently simple matter of
spare money, _alias_ Capital, you will find that spare money is the
root of all evil, though it ought to be, and can be made, the means of
all betterment.
What is spare money? It is the money you have left when you have bought
everything you need to keep you becomingly in your station in life. If
you can live on ten pounds a week in the way you are accustomed and
content to live, and your income is fifteen pounds a week, you have
five pounds spare money at the end of the week, and are a capitalist
to that amount. To be a capitalist, therefore, you must have more than
enough to live on.
Consequently a poor person cannot become a capitalist. A poor person
is one who has less than enough to live on. I can remember a bishop,
who ought to have known better, exhorting the poor in the east end
of London, at a time when poverty there was even more dreadful than
it is at present, to become capitalists by saving. He really should
have had his apron publicly and officially torn off him, and his
shovel hat publicly and officially jumped on, for such a monstrously
wicked precept. Imagine a woman, without enough money to feed her
children properly and clothe them decently and healthily, letting them
starve still more, and go still more ragged and naked, to buy Savings
Certificates, or to put her money in the Post Office Savings Bank and
keep it there until there is enough of it to buy stocks and shares! She
would be prosecuted for neglecting her children: and serve her right!
If she pleaded that the bishop incited her to commit this unnatural
crime, she would be told that the bishop could not possibly have meant
that she should save out of her children’s necessary food and clothing,
or even out of her own. And if she asked why the bishop did not say so,
she would be told to hold her tongue; and the gaoler would be ordered
to remove her to the cells.
Poor people cannot save, and ought not to try. Spending is not only
a first necessity but a first duty. Nine people out of ten have not
enough money to spend on themselves and their families; and to preach
saving to them is not only foolish but wicked. Schoolmistresses are
already complaining that the encouragement held out by Building
Societies to poor parents to buy their own houses has led to the
underfeeding of their children. Fortunately most of the poor neither
save nor try to. All the spare money invested in the Savings Banks and
Building Societies and Co-operative Societies and Savings Certificates,
though it sounds very imposing when it is totalled up into hundreds
of millions, and all credited to the working classes, is such a mere
fleabite compared to the total sums invested that its poor owners would
gain greatly by throwing it into the common stock if the capital owned
by the rich were thrown in at the same time. The great bulk of British
capital, the capital that matters, is the spare money of those who have
more than enough to live on. It saves itself without any privation to
the owner. The only question is, what is to be done with it? The answer
is, keep it for a rainy day: you may want it yet. This is simple; but
suppose it will not keep! Of course Treasury notes will keep; and Bank
notes will keep; and metal coins will keep: and cheque books will keep;
and entries of sums of money in the ledgers in the bank will keep
safely enough. But these things are only legal claims to the goods we
need, chiefly food. Food, we know, will not keep. And what good will
spare money be to us when the food it represents has gone rotten?
The Intelligent Woman, when she realizes that money really means the
things that money can buy, and that the most important of these things
are perishable, will see that spare money cannot be saved: it must be
spent at once. It is only the Very Simple Woman who puts her spare
money into an old stocking and hides it under a loose board in the
floor. She thinks that money is always money. But she is quite wrong
in this. It is true that gold coins will always be worth the metal
they are made of; but in Europe at present gold coins are not to be
had: there is nothing but paper money; and within the last few years
we have seen English paper money fall in value until a shilling would
buy no more than could be bought for sixpence before the war, whilst
on the Continent a thousand pounds would not buy a postage stamp, and
notes for fifty thousand pounds would hardly pay a tram fare. People
who thought themselves and their children provided for for life were
reduced to destitution all over Europe; and even in England women left
comfortably-off by insurances made by their fathers found themselves
barely able to get along by the hardest pinching. That was what came of
putting their trust in money.
Whilst people were being cheated in this fashion out of their savings
by Governments printing heaps of Treasury notes and Bank notes with no
goods at their back, several rich men of business became enormously
richer because, having obtained goods on credit, they were able to
pay for them in money that had become worthless. Naturally these rich
men of business used all their power and influence to make their
Governments go from bad to worse with their printing of bogus notes,
whilst other rich men of business who, instead of owing money were
owed it, used their influence in the opposite direction; so that the
Governments never knew where they were: one set of business men telling
them to print more notes, and another set to print less, and none of
them seeming to realize that they were playing with the food of the
people. The bad advice always won, because the Governments themselves
owed money, and were glad enough to pay it in cheap paper, following
the example of Henry VIII, who cheated his creditors by giving short
weight in his silver coins.
The Intelligent Woman will conclude, and conclude rightly, that
hoarding money is not a safe way of saving. If her money is not spent
at once she can never be sure what it will be worth ten years hence, or
ten weeks or even ten days or minutes in war time.
But you, prudent lady, will remind me that you do not want to spend
your spare money: you want to keep it. If you wanted anything that it
could buy it would not be spare money. If a woman has just finished
a good dinner it is no use advising her to order another and eat it
immediately so as to make sure of getting something for her money: she
had better throw it out of the window. What she wants to know is how
she can spend it and save it too. That is impossible; but she can spend
it and increase her income by spending it. If you would like to know
how, read the next chapter.
34
INVESTMENT AND ENTERPRISE
If, having finished your dinner, you can find a hungry person who can
be depended on to give you a dinner, say after a year’s time, for
nothing, you can spend your spare money in giving him a dinner for
nothing; and in this way you will in a sense both spend your money on
the spot and save it for next year, or, to put it the other way, you
will have your spare food eaten while it is fresh and yet have fresh
food to eat a year hence.
You will at once reply that you can find a million hungry persons
only too easily, but that none of them can be depended on to provide
a dinner for themselves, much less for you, next year: if they could,
they would not be hungry. You are quite right; but there is a way
round the difficulty. You will not be able to find dependable men who
are hungry; but your banker or stockbroker or solicitor will find you
plenty of more or less dependable persons, some of them enormously
rich, who, though overfed, are nevertheless always in want of huge
quantities of spare food.
What do they want it for? Why, to feed the hungry men who cannot be
depended on, not on the chance of their returning the compliment next
year, but for doing some work immediately that will bring in money
later on. There is nothing to prevent any Intelligent Woman with spare
money enough from doing this herself if she has enough invention and
business ability.
Suppose, for instance, she has a big country house in a big park.
Suppose her park blocks up the shortest way from one important town to
another, and that the public roads that go round her park are hilly and
twisty and dangerous for motor cars. She can then use her spare food to
feed the hungry men while they make a road for motors through her park.
When this is done she can send the hungry men away to find another job
as best they can, leaving herself with a new road for the use of which
she can charge a shilling to every motorist who uses it, as they all
will to save time and risk and difficulty. She can keep one of the
hungry men to collect the shillings for her. In this way she will have
changed her spare food into a steady income. In city language, she will
have gone into business as a roadmaker with her own capital.
Now if the traffic on the road be so great that the shillings, and
the spare food they represent, pile themselves up on her hands faster
than she can spend them (or eat them), she will have to find some new
means of spending them to prevent the new spare food going bad. She
will have to call the hungry men back and find something new for them
to do. She might set them to build houses all along the road. Then she
could present the road to the local authorities to be maintained by the
ratepayers as a public street, and yet greatly increase her income by
letting the houses. Having in this way obtained more spare money than
ever, she could establish a service of motor buses to the nearest town
to enable her tenants to work there and her workmen to live there. She
could set up an electric lighting plant and gasworks to supply their
houses. She could turn her big house into a hotel, or knock it down and
cover its site and the park with new houses and streets. The hungry
would do all the executive work for her: what she would have to do
would be to give them the necessary orders and allow them to live on
her spare food meanwhile.
But, you will say, only an exceptionally able and hardworking woman of
business could plan all this and superintend its carrying-out. Suppose
she were too stupid or too lazy to think of these things, or a genius
occupied with art or science or religion or politics! Well, if only she
had the spare money, hungry women and men with the requisite ability
would come to her and offer to develop her estate and to pay her so
much a year for the use of her land and of her spare money, arranging
it all with her solicitor so that she would not have to lift her little
finger in the matter except to sign her name sometimes. In business
language, she could invest her capital in the development of her estate.
Now consider how much further these operations can be carried than
the mere investment of one lady’s savings, and the development of one
lady’s estate in the country. Big companies, by collecting millions
of spare subsistence in small or large sums from people all over the
country who are willing to take shares according to their means, can
set the hungry to dig those mines that run out under the sea and need
twenty years work before the coal is reached. They can make railways
and monster steamships; they can build factories employing thousands
of men, and equip them with machinery; they can lay cables across the
ocean: there is no end or limit to what they can do as long as they can
borrow spare food enough for the hungry men until the preparations are
finished and the businesses begin to pay their own way.
Sometimes the schemes fail, and the owners of the spare food lose it;
but they have to risk this because, as the food will not keep, they
would lose it all the same if they did not invest it. So there is
always spare money being offered to the big men of business and their
companies; and thus our queer civilization, with its many poor and its
few rich, grows as we see it with all its shops, factories, railways,
mines, ocean liners, aeroplanes, telephones, palaces, mansions, flats,
and cottages, on top of the fundamental sowing and reaping of the food
that it all depends on.
Such is the magic of spare subsistence, called capital. That is how
idle people who have land and spare subsistence become enormously rich
without knowing how, and make their babies enormously rich in their
cradles, whilst the landless penniless persons who do it all by slaving
from dawn to dusk are left as poor at the end of the job as they were
at the beginning.
35
LIMITATIONS OF CAPITALISM
Many people are so impressed with the achievements of Capitalism that
they believe that if you overthrow it you overthrow civilization. It
seems to them indispensable. We must therefore consider, first, what
are the disadvantages of this way of doing it? and, second, is there
any other way?
Now in one sense there is no other way. All the businesses that need
to have many weeks or months or years of work done on them by large
bodies of men before they can pay their way, require great quantities
of spare subsistence. If it takes ten years to make a harbor or twenty
years to make a coal mine, the men who are making it will be eating
their heads off all that time. Other people must be providing them with
food, clothes, lodging, and so forth without immediate return, just as
parents have to provide for growing children. In this respect it makes
no difference whether we vote for Capitalism or Socialism. The process
is one of natural necessity which cannot be changed by any political
revolution nor evaded by any possible method of social organization.
But it does not follow that the collection and employment of spare
subsistence for these purposes must be done by private companies
touting for the money that very rich people are too gorged with
luxuries to be able to spend, and that people of more moderate means
are prudent enough to put by for a rainy day.
To begin with, there are many most necessary things that the private
companies and employers will not do because they cannot make people pay
for them when they are done. Take for instance a lighthouse. Without
lighthouses we should hardly dare to go to sea; and the trading ships
would have to go so slowly and cautiously, and so many of them would
be wrecked, that the cost of the goods they carry would be much higher
than it is. Therefore we all benefit greatly by lighthouses, even
those of us who have never seen the sea and never expect to. But the
capitalists will not build lighthouses. If the lighthouse keeper could
collect a payment from every ship that passed, they would build them
fast enough until the cost was lighted all round like the sea front in
Brighton; but as this is impossible, and the lighthouses must shine on
every ship impartially without making the captain put his hand in his
pocket for it, the capitalists leave the coast in the dark. Therefore
the Government steps in and collects spare subsistence in the shape
of taxes from everybody (which is quite fair, as everybody shares the
benefit), and builds the lighthouses. Here we see Capitalism failing
completely to supply what to a seafaring nation like ours is one of the
first necessaries of life (for we should starve without our shipping)
and thereby forcing us to resort to Communism.
But Capitalism often refuses necessary work even when some money can be
made out of it directly.
For example, a lighthouse reminds us of a harbor, which is equally
necessary. Every ship coming into a harbor has to pay harbor dues;
therefore anyone making a harbor can make money by it. But great
harbors, with their breakwaters and piers built up in the sea, take
so many years to construct, and the work is so liable to damage and
even destruction in storms, and the impossibility of raising harbor
dues beyond a certain point without sending the ships round to cheaper
harbors so certain, that private capital turns away from it to
enterprises in which there is more certainty as to what the cost will
be, less delay, and more money to be made. For instance, distilleries
make large profits. There is no uncertainty about the cost of building
them and fitting them up; and a ready sale for whiskey can always be
depended on. You can tell to within a few hundred pounds what a big
distillery will cost, whereas you cannot tell to within a million what
a big harbor will cost. All this would not influence the Government,
which has to consider only whether another distillery or another harbor
is more wanted for the good of the nation. But the private capitalists
have not the good of the nation in their charge: all they have to
consider is their duty to themselves and their families, which is to
choose the safest and most profitable way of investing their spare
money. Accordingly they choose the distillery; and if we depended on
private capitalists alone the country would have as many distilleries
as the whiskey market could support, and no harbors. And when they have
established their distillery they will spend enormous sums of money
in advertisements to persuade the public that their whiskey is better
and healthier and older and more famous than the whiskey made in other
distilleries, and that everybody ought to drink whiskey every day as
a matter of course. As none of these statements is true, the printing
of them is, from the point of view of the nation, a waste of wealth, a
perversion of labor, and a propaganda of pernicious humbug.
The private capitalists not only choose what will make most money for
them, but what will make it with least trouble: that is, they will do
as little for it as possible. If they sell an article or a service,
they will make it as dear as possible instead of as cheap as possible.
This would not matter if, as thoughtless people imagine, the lower the
price the bigger the sale, and the bigger the sale the greater the
profit. It is true in many cases that the lower the price the bigger
the sale; but it is not true that the bigger the sale the greater the
profit. There may be half a dozen prices (and consequently sales) at
which the profit will be exactly the same.
Take the case of a cable laid across the ocean to send messages to
foreign countries. How much a word is the company to charge for the
messages? If the charge is a pound a word very few people can afford to
send them. If the charge is a penny a word the cable will be crowded
with messages all day and all night. Yet the profit may be the same;
and, if it is, it will be far less trouble to send one word at a pound
than two hundred and forty words at a penny.
The same is true of the ordinary telegraph service. When it was in the
hands of private companies, the service was restricted and expensive.
When the Government took it over, it not only extended lines of all
sorts to out-of-the-way places; cheapened the service; and did without
a profit: it actually ran it at what the private capitalist calls a
loss. It did this because the cheap service was such a benefit to
the whole community, including the people who never send telegrams
as well as those who send a dozen every day, that it paid the nation
and was much fairer as well to reduce the price charged to the actual
senders below the cost of the service, the difference being made up by
everybody in taxes.
This very desirable arrangement is quite beyond the power of private
Capitalism, which not only keeps the price as high as possible above
the cost of production and service for the sake of making the utmost
profit, but has no power to distribute that cost over all the people
who benefit, and must levy it entirely on those who actually buy the
goods or pay for the service. It is true that business people can
pass the cost of their telegrams and telephone messages on to their
customers in the price of the things they sell; but a great deal of
our telegraphing and telephoning is not business telegraphing and
telephoning; and its cost cannot be passed on by the senders to anyone.
The only objection to throwing the cost entirely on public taxation is
that if we could all send telegrams of unlimited length without having
to pay across the counter enough ready money to prevent us using the
telegraph service when the post would do as well, or sticking in “kind
regards from all to dear Aunt Jane and a kiss from Baby” at the end of
every message, the lines would be so choked that we should not be able
to send telegrams at all. As to the telephone, some women would hang
on to it all day if it made no difference to their pockets. Even as it
is, a good deal of unnecessary work is put upon the telegraph service
by people spinning out their messages to twelve words because they are
not allowed to pay for less, and they think they are not getting full
value for their money if they say what they have to say in six. It
does not occur to them that they are wasting their own time and that
of the officials, besides increasing their taxes. It seems a trifle;
but public affairs consist of trifles multiplied by as many millions
as there are people in the country; and trifles cease to be trifles
when they are multiplied on that scale. Snowball letters, which seem a
kindly joke to the idiots who start them, would wreck our postal system
if sensible people did not conscientiously throw them into the waste
paper basket.