The lesson, then, to be drawn from what I have urged in the preceding

chapter is, taken as a whole, no lesson of _laisser faire_. Though

neither Socialism nor Trade Unionism may have much, or perhaps any,

efficacy in raising the maximum of the labourer’s actual income,—though

this must depend on forces which are wholly different,—yet Trade

Unionism, and the principle which is called Socialism, may be of

incalculable service in bringing about conditions under which that

income may be earned with greater certainty, and under improved

circumstances, and, above all, be able to command more comforts,

conveniences, and enjoyments. Thus many of these measures which I have

called Socialistic under protest, may be regarded as an interception

of a portion of the labourer’s income, and an expenditure of it on his

account by the State in a way from which he derives far more benefit

than he would, or could have secured if he had had the spending of it

himself; whilst Trade Unionism, though it cannot permanently raise his

wages beyond a maximum determined by other causes, may, as has been

said before, raise them to this earlier than they would have risen

otherwise, and prevent what might otherwise occur—a fall in them before

it was imperative. ◆¹ Trade Unionism, however, has many other functions

besides the raising of wages. It aims—and aims successfully—at

diminishing the pain and friction caused amongst the labourers by the

vicissitudes alike of industry and of life. It has done much in this

direction already; and in the future it may do more.

The fact then that the normal forces of distribution must, if things

continue their present course, increase the income of the labourer,

even without any action on their own part, though it is calculated

to change the temper in which the labourers approach politics,

is, instead of being calculated to damp their political activity,

calculated to animate it with far more hope and interest than the

wild denunciations and theories of the contemporary agitator, which

those who applaud them do but half believe. It will to the labourer

be far more encouraging to feel that the problem before him is not

how to undermine a vast system which is hostile to him, and which,

though often attacked, has never yet been subverted, but merely to

accommodate more completely to his needs a system which has been, and

is, constantly working in his favour.

[Sidenote ◆1 Whilst as to mere wages, if the labourers will judge

of the possible near future from the actual near past,

the prospects before them must exceed their wildest

dreams hitherto.]

◆¹ Let him consider the situation well. Let him realise what that

system has already done for him. In spite of the sufferings which,

owing to various causes, were inflicted on the labouring classes

during the earlier years of the century,—many of them of a kind whose

recurrence improved policy may obviate,—the income of Labour has, on

the aggregate, continued to rise steadily. Let him consider how much.

I have stated this once, let me state it now again. During the first

sixty years of this century the income of the labouring classes rose

to such an extent that in the year 1860 it was equal (all deductions

for the increase of population being made) to the income of all classes

in the year 1800. But there is another fact, far more extraordinary,

to follow; and that is, that a result precisely similar has been

accomplished since in one-half of the time. In 1880 the income of the

labouring classes was (all deductions for the increase of population

being made) more than equal to the income of all classes in the year

1850. Thus the labouring classes in 1860 were in precisely the same

pecuniary position as the working classes in 1800 would have been had

the entire wealth of the kingdom been in their hands; and the working

classes of to-day are in a better pecuniary position than their fathers

would have been could they have plundered and divided between them the

wealth of every rich and middle-class man at the time of the building

of the first Great Exhibition. I repeat what I have said before—that

this represents a progress, which the wildest Socialist would never

have dreamed of promising.

And now comes what is practically the important deduction from these

facts. What has happened in the near past, will, other things being

equal, happen in the near future. If the same forces that have been

at work since the year 1850 continue to be at work, and if, although

regulated, they are not checked, the labourers of this country will in

another thirty years have nearly doubled the income which they enjoy

at present. Their income will have risen from something under _seven

hundred millions_ to something over _thirteen hundred millions_. The

labourers, in fact, will, so far as money goes, be in precisely the

same position as they would be to-day if, by some unheard-of miracle,

the entire present income of the country were suddenly made over to

them in the form of wages, and the whole of the richer classes were

left starving and penniless. This is no fanciful calculation. It is

simply a plain statement of what must happen, and will happen, if only

the forces of production continue to operate for another thirty years

as they have been operating steadily for the past hundred. Is not this

enough to stimulate the labourer’s hopes, and convince him that for him

the true industrial policy is one that will adjust his own relations

with the existing system better, and regulate better the flow of the

wealth which it promises to bring him, rather than a policy whose aim

is to subvert that system altogether, and in especial to paralyse the

force from which it derives its efficacy?

[Sidenote ◆1 But the one point to remember is that all their

prosperity depends on the continued action of Ability,

and the best conditions being secured for its operation,]

◆¹ And this brings me back to that main, that fundamental truth which

it is the special object of this volume to elucidate. The force which

has been at the bottom of all the labourers’ progress during the past,

and on the continued action of which depends all these hopes for their

future—that force is not Labour but Ability; it is a force possessed

and exercised not by the many but by the few. The income which Labour

receives already is largely in excess of what Labour itself produces.

Were Ability crippled, or discouraged from exerting itself, the entire

income of the nation would dwindle down to an amount which would not

yield Labour so much as it takes now; whilst any advance, no matter how

small, on what Labour takes now must come from an increasing product,

which Ability only can produce.

[Sidenote ◆1 Labour must remember that Ability is a living force

which cannot be appropriated as Capital might be; but

that it must be encouraged and propitiated.]

◆¹ Hitherto this truth, though more or less apparent to economic

writers and thoughtful persons generally, has been apparent to them

only by fits and starts, and has never been assigned any definite

or logical place in their theories of production, or has ever been

expressed clearly; and, owing to this cause, not only has it been

entirely absent from the theories of the public generally, but its

place has been usurped by a meaningless and absurd falsehood. In place

of the living force Ability, residing in living men, popular thought,

misled by a singular oversight of the economists, has substituted

Capital—a thing which, apart from Ability, assists production as

little as a dead or unborn donkey; and hence has arisen that dangerous

and ridiculous illusion—sometimes plainly expressed, often only

half-conscious—to the effect that if the labourers could only seize

upon Capital they would be masters of the entire productive power of

the country. The defenders of the existing system have been as guilty

of this error as its antagonists; and the attack and defence have

been conducted on equally false grounds. Thus in a recent strike,

the final threat of the employers—men who had created almost the

whole of their enormous business—was that, if the strikers insisted

upon certain demands, the Capital involved in the business would be

removed to another country; and a well-known journal, professing to be

devoted to the interest of Labour, conceived that it had disposed of

this threat triumphantly by saying that, of the Capital a large part

was not portable, and that the employers might go if they chose, and

leave this behind. A great musician, who conceived himself to have been

ill-treated in London, might just as well have threatened that he would

remove his concert-room to St. Petersburg, when the principal meaning

of his threat would be that he would remove _himself_; and the journal

referred to might just as well have said, had the business in question

been the production of a great picture, “The painter may go if he

likes—what matter? We can keep his brushes.”

The real parties, then, to the industrial disputes of the modern

world are not active labourers on one side, and idle, perhaps idiotic

owners of so much dead material on the other side: but they are, on

the one side, the vast majority of men, possessed of average powers

of production, and able to produce by them a comparatively small

amount; and, on the other, a minority whose powers of production are

exceptional, who, if we take the product of the average labourer as a

unit, are able to multiply this to an almost indefinite extent, and who

thus create an increasing store of Capital to be used by themselves, or

transmitted to their representatives, and an increasing income to be

divided between these and the labourers. In other words, the dispute is

between the many who desire to increase their incomes, and the few by

whose exceptional powers it is alone possible to increase them. Such

has been the situation hitherto; it is such at the present moment; and

the whole tendency of industrial progress is not to change, but to

accentuate it. As the productivity of Human Exertion increases, the

part played by Ability becomes more and more important. More and more

do the average men become dependent on the exceptional men. So long as

the nation at large remembers this, no reforms need be dreaded. If the

nation forgets this, it will be in danger every day of increasing, by

its reforms, the very evils it wishes to obviate, and postponing or

making impossible the advantages it wishes to secure.

[Sidenote ◆1 In this view there is nothing derogatory to Labour.]

[Sidenote ◆2 Ability does not _improve_ the products of Labour,

but multiplies them.]

◆¹ And now let me pause to point out to the reader that to insist thus

on the subordinate position of Labour as a productive agent is to

insist on nothing that need wound the self-love of the labourers. In

asserting that a man who can produce wealth only by Labour is inferior

to a man who can produce ten times the amount by Ability, we assert

his inferiority in the business of production only. In other respects

he may be the better, even the greater man of the two. Shakespeare or

Turner or Beethoven, if employed as producers of commodities, would

probably have been no better than the ordinary hands in a factory, and

far inferior to many a vulgar manufacturer. Again,—and it is still

more important to notice this,—if we confine our attention to single

commodities, many commodities produced by Labour[60] alone are better

and more beautiful than any similar ones produced by Labour under the

direction of Ability. ◆² Of some the reverse is true—notably those

whose utility depends on their mechanical precision; but of others, in

which beauty or even durability is of importance, such as fine stuffs

or carpets, fine paper and printing, carved furniture, and many kinds

of metal work, it is universally admitted that the handicraftsman,

working under his own direction, was long ago able to produce results

which Labour, directed by Ability, has never been able to improve

upon, and is rarely able to equal. What Ability does is not to improve

such commodities, but to multiply them, and thus convert them from

rare luxuries into generally accessible comforts. A paraffin lamp, for

instance, cast or stamped in metal, and manufactured by the thousand,

might not be able to compare for beauty with a lamp of wrought iron,

made by the skill and taste of some single unaided craftsman; but

whereas the latter would probably cost several guineas, and be in reach

only of the more opulent classes, the former would probably cost about

half a crown, and, giving precisely as much light as the other, would

find its way into every cottage home, and take the place of a tallow

dip or of darkness. Now since what the labouring classes demand in

order to improve their position is not _better_ commodities than can be

produced by hand, but _more_ commodities than can be produced by hand,

Ability is a more important factor in the case than Labour; but none

the less, from an artistic and moral point of view, the highest kind

of Labour may stand higher than many of the most productive kinds of

Ability.

[Sidenote ◆1 Ability, in yielding up part of its proceeds to

Labour, is discharging a moral debt.]

◆¹ Nor, again, do we ascribe to Labour any undignified position in

insisting that much of its present income, and any possible increase

of it, is and must be taken from the wealth produced by Ability. For

even were there nothing more to be said than this, Labour is in a

position, or we assume it will be, to command from Ability whatever

sum may be in question, and can be neither despised nor blamed for

making the best bargain for itself that is possible. But its position

can be justified on far higher grounds than these. In the first place,

Labour, by submitting itself to the guidance of Ability,—no matter

whether the submission was voluntary, which it was not, or gradual,

unconscious, and involuntary, which it was,—surrendered many conditions

of life which were in themselves desirable, and has a moral claim on

Ability to be compensated for having done so; whilst Ability, for its

part, owes a moral debt to Labour, not upon this ground only, but on

another also—one which thus far has never been recognised nor insisted

on, but out of which arises a yet deeper and stronger obligation. I

have shown that of the present annual wealth of the nation Ability

creates very nearly two-thirds. But it may truly be said to have

created far more than this. It may be said to have created not only

two-thirds of the income, but also to have created two-thirds of the

inhabitants. If the minority of this country, in pursuit of their own

advantage, had not exercised their Ability and increased production as

they have done, it is not too much to say that of our country’s present

inhabitants _twenty-four millions_ would never have been in existence.

Those, then, who either contributed to this result themselves, or

inherit the Capital produced by those who did so, are burdened by the

responsibility of having called these multitudes into life; and thus

when the wages of Labour are augmented out of the proceeds of Ability,

Ability is not robbed, nor does Labour accept a largess, but a duty is

discharged which, if recognised for what it is, and performed in the

spirit proper to it, will have the effect of really uniting classes,

instead of that which is now so often aimed at—of confusing them.

[Sidenote ◆1 But Labour must not forget that it owes a debt to

Ability;]

[Sidenote ◆2 And that this debt will grow heavier as the national

wealth increases.]

◆¹ The labourers, on the other hand, must remember this: that having

been called into existence, no matter by what means, and presumably

wishing to live rather than be starved to death, they do not labour

because the men of Ability make them, but—as I have before pointed

out—because imperious Nature makes them; ◆² and that the tendency of

Ability is in the long run to stand as a mediator between them and

Nature, and whilst increasing the products of their Labour, to diminish

its duration and severity.

There are two further points which yet remain to be noticed.

I have hitherto spoken of the increase of wealth and wages, as if that

were the main object on which the labourers should concentrate their

attention, and which bound up their interests so indissolubly with

those of Ability. But it must also be pointed out that were Ability

unduly hampered, and its efficacy enfeebled either by a diminution of

its rewards, or by interference with its action, the question would

soon arise, not of how to increase wages, but of how to prevent their

falling. This point I have indeed alluded to already; but I wish now

to exhibit it in a new light. As I mentioned in an earlier chapter, of

the inhabitants of this country, who are something like _thirty-eight

millions_ in number, _twenty-six millions_ live on imported corn,

and about _thirteen millions_ live on imported meat; or, to put it

in another way, we all of us—the whole population—live on imported

meat for nearly _five months_ of the year, and on imported corn for

_eight months_; and were these foreign food supplies interfered with,

there are possibilities in this country of suffering, of famine, and

of horror for all classes of society, to which the entire history of

mankind offers us no parallel. This country, more than any country in

the world, is an artificial fabric that has been built up by Ability,

half of its present wealth being,—let me repeat once more,—the

marvellous product of the past fifty years; and the constant action

of Ability is just as necessary to prevent this from dwindling as

it is to achieve its increase. But in order that Ability may exert

itself, something more is needed than mere freedom from industrial

interference, or security for its natural rewards; and that is the

maintenance of the national or international position which this

country has secured for itself amongst the other countries of the world.

[Sidenote ◆1 And this brings us round to what is commonly called

Politics; which have, as this book will show, a far

closer interest for the labourer than is commonly

thought.]

◆¹ And this brings us to that class of questions which, in ordinary

language, are called questions of policy, and amongst which foreign

policy holds a chief place. Successful foreign policy means the

maintenance or the achievement of those conditions that are most

favourable to the industries of our own nation; and this means the

conditions that are most favourable to the homes of our own people. It

is too commonly supposed that the greatness and the ascendancy of our

Empire minister to nothing but a certain natural pride; and natural

pride, in its turn, is supposed by some to be an immoral and inhuman

sentiment peculiar to the upper classes. No one will be quicker to

resent this last ludicrous supposition than the great masses of the

British people; but, all the same, they are apt to think the former

supposition correct,—to regard the mere glory of the country as the

principal result of our Empire; and such being the case, they are, on

occasion, apt to be persuaded that glory can be bought at too dear

a price, in money, struggle, or merely international friction. At

all events, they are constantly tempted to regard foreign politics

as something entirely unconnected with their own immediate, their

domestic, their personal, their daily interests.

I am going to enter here on no debatable matter, nor discuss the value

of this or that special possession, or this or that policy. It is

enough to point out that, to a very great extent, on the political

future of this country depends the magnitude of its income, and on the

magnitude of its income depends the income of the working classes—the

warmth of the hearth, the supply of food on the breakfast-table, of

every labourer’s home,—and that when popular support is asked for some

foreign war, the sole immediate aim of which seems the defence of some

remote frontier, or the maintenance of British prestige, it may well be

that our soldiers will be really fighting for the safety and welfare

of their children and wives at home—fighting to keep away from British

and Irish doors not the foreign plunderer and the ravisher, but enemies

still more pitiless—the want, the hunger, and the cold that spare

neither age nor sex, and against which all prayers are unavailing.

APPENDIX

_Early in this year [1894] I published in the_ Fortnightly Review _two

articles under the title of “Fabian Economics.” These articles were

not written or published until some months after the first publication

of the present volume. I wrote them then, because then, for the first

time, I happened to see a volume from which previously I had seen some

extracts only—a volume entitled_ Fabian Essays, _in which the doctrines

of contemporary English Socialism are set forth; and my aim was to

apply the general arguments embodied in_ Labour and the Popular Welfare

_to the position of the Socialists, as definitely stated by themselves.

One of the Fabian Essayists—Mr. Bernard Shaw—came forward in the_

Fortnightly Review _to attach my arguments, with what success will be

shown by the subjoined reply to him, which was originally published in

the same Review, under the title of “A Socialist in a Corner.” A few

paragraphs which would be here superfluous are omitted._

A SOCIALIST IN A CORNER

_Fortnightly Review, May 1894_

Magazine controversy on complicated and serious subjects, though it

can never be exhaustive, may yet be of great use, if it calls the

attention of the public to the main points at issue, if it helps men

to judge for themselves of the character and weight of the arguments

which are capable of being employed on one side and the other; and,

above all, if by elucidating the points on which opponents agree, the

area of actual dispute be narrowed down and defined. For this reason it

seems to me not useless to examine briefly the answer which, on behalf

of a body of Socialists, Mr. Shaw has made to the criticisms which,

in this Review and elsewhere, I have recently directed against the

entire Socialistic position—and particularly against that position as

expounded by himself and his colleagues.

Not only Mr. Shaw, but the other Fabian writers, are persons, at

all events, of sufficient intelligence, sufficient knowledge, and

sufficient literary skill, to render the way in which they put the

case for Socialism a valuable indication of what the strength of that

case is. It was for this reason that I thought _Fabian Essays_ worth

criticising; and for this reason I think Mr. Shaw’s answer worth

criticising also. It is an indication not only of how Mr. Shaw can

argue as an individual, but of what arguments are available in defence

of the position which he occupies; and Mr. Shaw has taken trouble

himself to make this view still more plausible, by the hints he gives

that in the composition of his answer he has sought the advice and

counsel of his faithful colleagues; so that his pages represent the

wisdom of many, though presumably the wit of one.

I propose, then, to show, in as few words as possible, that Mr. Shaw

has not only proved himself incapable of shaking a single one of the

various arguments advanced by me, but that whilst flattering himself

that, in his own phrase, he has been taking his opponent’s scalp, the

scalp which he holds, and has really taken, is his own. His criticism

divides itself into two main parts. One is an admission of the truth

of one of the fundamental propositions on which I insisted. The second

is a complete evasion of another, and the substitution for it of an

ineptitude which is entirely of Mr. Shaw’s invention, and which he

finds it so easy and so exciting to demolish, that he sets it up as

often as he knocks it down, for the pleasure of displaying his prowess

over again.

Here, then, are three propositions to be dealt with: First, the

primary proposition on which I insisted, and the truth of which Mr.

Shaw admits; secondly, a proposition on which Mr. Shaw declares that

I insisted, but which is really an invention of his own; and thirdly,

a proposition on which I did insist actually, but which Mr. Shaw

never even states, much less attempts to meet. This third proposition

I shall briefly state once again when I have dealt with the two

others, and show how Fabian philosophy—indeed the philosophy of all

Socialism—completely fails to meet it.

To begin, then, with the first. My primary object has been to exhibit

the absolute falsehood of the Socialistic doctrine that _all wealth

is due to labour_, and to replace this by a demonstration that under

modern conditions of production, labour is not only not the sole

producer of wealth, but does not even produce the principal part of

it. The principal producing agent, I have pointed out, is what I have

called Industrial Ability—or the faculty which, whilst exercised by

a few, directs the labour of the many; and if this truth is once

accepted, it completely cuts away from Socialism the whole of its

existing foundations, and renders absolutely meaningless the whole of

its popular rhetoric. For the most powerful argumentative appeal which

Socialism can make to the majority is merely some amplification of the

statement, which is no doubt plausible, and is advanced by Socialists

as an axiom, that the exertions of the majority—or, in other words,

Labour—has produced all wealth, and that therefore the majority not

only ought to possess it, but will be able to possess it by the simple

process of retaining it. But the moment the productive functions of

industrial ability are made clear, the doctrine which seemed an axiom

is reduced to an absurdity; and what might before have seemed a paradox

becomes a simple and intelligible truth—the doctrine, namely, that a

comparatively few persons, with certain exceptional gifts, are capable

of producing more wealth than all the rest of the community; and that

whoever may produce the wealth which the rich classes possess, it is

at all events not produced by the multitude, and might, under changed

conditions, be no longer produced at all.

Now this doctrine of Ability Mr. Shaw accepts, and completely

surrenders and throws overboard the Socialistic doctrine of Labour. He

does indeed endeavour to make the surrender seem less complete than it

is, partly by irrelevant comments on some minor points,[61] and partly

by insisting on certain qualifications which are perfectly true, and to

which I have myself often elsewhere alluded, but which, as I shall show

presently, are, on his own admission, of small practical importance,

and do not appreciably affect the main position. For instance Mr.

Shaw argues that it is not always the most able man who, in any given

business, is to be found directing it. This also is no doubt true.

It merely means, however, that of industrial ability the same thing

may be said, which has so truly been said of Government—that it is

always _in_, or _passing into_, the hands of the most powerful section

of the community. Businesses conducted by men of inferior Ability

are gradually superseded by businesses conducted by men of superior

Ability. Men’s actual positions may be a few years behind or before

their capacities, but for all practical purposes they coincide with

them and the utmost that Mr. Shaw’s contention could prove would be

that some members of a minority are in places which should be occupied

by other members of a minority; not that the majority could take the

places of either.

But I merely mention these points in passing, and waste no pains in

insisting on them or pressing them home, because their practical

insignificance is admitted by Mr. Shaw himself. The great body of

men—of men selected at random, even if they should enjoy the advantages

of superior position and education—“could not,” he says, “invent a

wheelbarrow, much less a locomotive.” He amplifies this admission

by quoting the case of an acquaintance of his, whose exceptional

Ability secured him _four thousand pounds_ a year, because without the

assistance of that Ability his employer would have lost more than this

sum. “Other men,” he proceeds, “have an eye for contracts, or what not,

or are born captains of industry, in which case they go into business

on their own account, and make ten, twenty, or two hundred per cent,

_where you or I should lose five_.... All these people are _rentiers_

of Ability.” Again he quotes with emphatic approval a passage from an

American writer, whom he praises as a skilled economist; and using this

passage as a text, endorses its meaning in these words of his own.

“The able man, the actual organiser and employer, alone is able to find

a use for mere manual deftness, or for that brute strength, and heavy

bank balance, which any fool may possess.” “The capitalist and the

labourer run helplessly to the able man.” “He is the only party in the

transaction capable of the slightest initiative in production.”

I need not add anything to these admissions. They constitute, as I

say, a complete surrender of the Socialistic doctrine of Labour, and

an emphatic admission of the primary proposition I advanced as to the

productive function of Ability. It is enough then to say, that so far

as the question of Labour is concerned, Mr. Shaw throws over completely

all the doctrines of the Gotha programme, the Erfurt programme, of Karl

Marx and his disciples, of Mr. Hyndman and his Social Democrats—in fact

the cardinal doctrine of Socialism as hitherto preached everywhere.

Having disposed then of the point as to which Mr. Shaw agrees with

me, I will pass on to the point on which he supposes me to disagree

with him; and this is the point to which he devotes the larger part

of his article. Everything else is thrown in as a sort of by-play.

This point is as follows. Speaking roughly, and adopting the following

figures, not because I consider them accurate, but merely because they

agree with Mr. Shaw’s, and are for the present purpose as good as any

others, above _seven hundred million pounds_ of the national income go

to the non-labouring classes. Mr. Shaw, as I gather, would set down

about _two hundred million pounds_ of this as the earnings or profits

of Ability; whilst he contends that the remainder is the product

neither of Ability nor Labour, but of capital or land. It represents

the assistance which land and capital give to the two other productive

agents; and it goes to those who possess this land and capital,

simply on account of the rights which they possess as passive owners.

This sum, which Mr. Shaw estimates at about _five hundred million

pounds_,[62] ought, he contends, still to go to the owners—in fact, it

must always go to its owners; but the owners should be changed. They

should be the whole nation instead of a small class.

Now Mr. Shaw says that my great mistake has relation to these _five

hundred million pounds_. He says that, having argued rightly enough

that _two hundred million pounds_ or so are the genuine product or

rent of actual and indispensable Ability, I have committed the absurd

mistake of confusing with this rent of ability, the rent of land, of

houses, and above all, the interest on capital. “Mr. Mallock,” he

says, “is an inconsiderate amateur, who does not know the difference

between profits and earnings on the one hand, and rent and interest on

the other.” And he summarises my views on the subject by saying, that

I “see in every railway shareholder the inventor of the locomotive or

the steam-engine,” and that I gravely maintain that the _three hundred

thousand pounds_ a year which may form the income of one or two great

urban landlords is produced by the exercise of some abnormal ability on

their parts. This supposed doctrine of mine forms the main subject of

Mr. Shaw’s attack. He is exuberantly witty on the subject. He turns

the doctrine this way and that, distorting its features into all sorts

of expressions, laughing afresh each time he does so. He calls me his

“brother” and his “son”; he quotes nursery rhymes at me. He alludes to

my own income and the income of the Duke of Westminster, and intimates

a desire to know whether the Duke being, so he says, many hundred

times as rich as myself, I am many hundred times as big a fool as the

Duke. In fact, he has recourse to every argumentative device which his

private sense of humour and his excellent taste suggest.

The immediate answer to all this is very simple—namely, that I never

gave utterance to any such absurdity as Mr. Shaw attributes to me,

but that, on the contrary, I have insisted with the utmost emphasis

on this very distinction between profits and earnings, and rent and

interest, which he assures his readers I do not even perceive. Mr.

Shaw, therefore, has devoted most of his time to trampling only on a

misconception of his own. This is the immediate answer to him; but

there is a further answer to come, relating to the conclusions I

drew from nature of rent and interest, after I had pointed out their

contrast to the direct receipts of Ability. Let me show the truth of

the immediate answer first.

I do not think that in my two recent articles in this Review there is

a single sentence that to any clear-headed man could form an excuse

for such a misconception as Mr. Shaw’s, whereas there are pages which

ought to have made it impossible. Indeed, a notice in the _Spectator_

disposes of Mr. Shaw by saying that he evades the real point raised

by me, not meeting what I did say, and combating what I did not say.

But, as I started with observing, magazine articles can rarely be

exhaustive, and I will assume that some incompleteness or carelessness

of expression on my part might have afforded, had these articles stood

alone, some excuse for their critic. Mr. Shaw, however, is at pains

to impress us that he has read other writings of mine on the same

subject. He even remembers, after an interval of more than ten years,

some letters I wrote to the _St. James’s Gazette_. It might, therefore,

have been not unreasonable to expect that he would have referred to

my recent volume, _Labour and the Popular Welfare_, which I expressly

referred to in my two articles, and in which I said I had stated my

position more fully. As an answer to Mr. Shaw I will quote from that

volume now.

The first Book deals with certain statistics as to production in this

country, and the growth of the national income as related to the

population. In the second Book I deal with the cause of this growth.

I point out that the causes of production are not three, as generally

stated—viz. Land, Labour, and Capital; but four—viz. Land, Labour,

Capital, and Ability; and that the fourth is the sole source of that

_increase_ in production which is the distinguishing feature of

modern industrial progress. In thus treating Capital as distinct from

Ability, I point out—taking a pumping-engine as an example—that capital

creates a product which necessarily goes to its owner, _quâ_ owner,

whether the owner is an individual or the State. I then proceed to

show that fixed capital—_e.g._ an engine—is the result of circulating

capital fossilised; and that circulating capital is productive only

in proportion as it is under the control of Ability. For this reason

I said that whilst it is _in process of being utilised_, Capital is

connected with Ability as the brain is connected with the mind, it

being the material means through which Ability controls Labour; and

that thus from _a certain point of view_ the two are inseparable. I

need not insist on this truth, because Mr. Shaw admits it. But Mr.

Shaw will find a subsequent chapter (Book IV. chap. ii.) bearing the

title, _Of the Ownership of Capital as distinct from its Employment by

Ability_. From that chapter I quote the following passage:—

“In dealing with Capital and Ability, I first treated them

separately, I then showed that, regarded as a productive agent,

Capital _is_ Ability, and must be treated as identical with it. But

it is necessary, now we are dealing with distribution, to dissociate

them for a moment and treat them separately once more. For even

though it be admitted that Ability, working by means of Capital,

produces, as it has been shown to do, nearly two-thirds of the

national income,[63] and though it may be admitted further that

a large portion of this product should go to the able men who are

actively engaged in producing it—the men whose Ability animates and

vivifies Capital—it may be argued that a portion of it, which is very

large indeed, goes as a fact to men who do not exert themselves at

all, or who, at any rate, do not exert themselves in the production

of wealth. These men, it will be said, live not on the products

of Ability, but on the interest of Capital, which they have come

accidentally to possess; and it will be asked on what ground Labour

is interested in forbearing to touch the possessions of those who

produce nothing?... Why should it not appropriate what goes to this

wholly non-productive class.”

If Mr. Shaw or his readers are still in doubt as to the extent to which

his criticism of myself is wide of the mark—if he still thinks that he

is fighting any mistake but his own, when he attacks me as though I

confused interest with the direct earnings of Ability, let me add one

passage more out of the same chapter:—

“Large profits must not be confounded with high interest. Large

profits are a mixture of three things, as was pointed out by Mill,

though he did not name two of them happily. He said that profits

consisted of wages of superintendence, compensation for risk, and

interest on Capital. If, instead of wages of superintendence we say

the product of Ability, and instead of compensation for risk we say

the reward of sagacity, which is itself a form of Ability, we shall

have an accurate statement of the case.”

Again, two pages earlier Mr. Shaw will find this:—

“Interest is capable, under certain circumstances, of being reduced

to a minimum without production being in any degree checked; and

every pound which the man who employs Capital is thus relieved from

paying to the man who owns it constitutes, _other things being

equal_, a fund which may be appropriated by Labour.”

These quotations will be enough to show how the bulk of Mr. Shaw’s

criticisms, which he thinks are directed against myself, are criticisms

of an absurd error and confusion of thought, which I have myself done

my utmost to expose, in order that I might put the real facts of the

case more clearly.

Let me now briefly restate what I have actually said about these facts.

Let me restate the points which Mr. Shaw hardly ventures even to

glance at. I have said that Capital and Ability, as actually engaged

in production, are united like mind and brain. There is, however, as I

observed also, this difference. So far as this life is concerned, at

all events, brain and mind are inseparable. The organ and the function

cannot be divided. But in the case of Ability and Capital they can be.

The mind of one man has often to borrow from another man the matter

through which alone it is able to operate in production. Thus though

Ability and Capital, when viewed from the standpoint of Labour, are one

thing, when viewed from the standpoint of their different processes

they are two; and Capital is seen to produce a part of the product, as

distinguished from the Ability whose tool and organ it is. Mr. Shaw

says that the capital of the country at the present time produces _five

hundred million pounds_ annually, and, for argument’s sake, I accept

this figure. Thus far, then, Mr. Shaw and I agree. But what I have

urged Mr. Shaw to consider, and what he does not venture even to think

of, is the following question:—How did the capital of this country come

into existence?

Even the soil of this country, as we know it now, is an artificial

product. It did not exist in its present state two hundred years ago.

Still it was there. But of the capital of the country, as it exists

to-day, by far the larger part did not exist at all. Let us merely

go back two generations—to the times of our own grandfathers; and we

shall find that of the _ten thousand million pounds_ at which our

present capital is estimated, _eight thousand million pounds_ have been

produced during the last eighty years. That is to say, four-fifths of

our capital was non-existent at a time when the grandfathers of many

of us were already grown men. How, then, was this capital produced?

The ordinary Socialist will say that it was produced by Labour—that

it is, as (I think) Lassalle called it, “fossil Labour.” Mr. Shaw,

however, judging by what we have seen of his opinions, will agree with

me that though a small part of it may be fossil Labour, by far the

larger part is fossil Ability. It is, in fact, savings from the growing

annual wealth which has been produced during the period in question

by the activity of able men. But these able men did not produce

it by accident. They produced it under the stimulus of some very

strong motive. What was this motive? Mr. Shaw’s Socialistic friends

and predecessors have been spouting and shouting an answer to this

question for the past sixty years. They have been telling us that the

main motive of the employing class was “greed.” Unlike most of their

statements, this is entirely true. Nor, although the sound of it is

offensive, is there anything offensive in its meaning. It means that

in saving capital and in producing the surplus out of which they were

able to save it, the motive of the producers was the desire to live on

the interest of it when it was saved; and that if it had not been for

the desire, the hope, the expectation of getting this interest, the

capital most certainly would never have been produced at all, or, at

all events, only a very minute fraction of it.

I asked in one of my articles in this Review whether Mr. Shaw thought

that a man who received ten thousand a year as the product of his

exceptional ability would value this sum as much if he were forbidden

by the State to invest a penny of it—if the State, in fact, were an

organised conspiracy to prevent his investing it so as to make an

independent provision for his family, or for himself at any moment

when he might wish to stop working—as he values it now when the State

is organised so as to make his investments secure? And the sole

indication in the whole of Mr. Shaw’s paper that he has ever realised

the existence of the question here indicated is to be found in a casual

sentence, in which he says that to think that the complete confiscation

of all the capital created by the two past generations, and the avowed

intention on the part of the State to confiscate all the capital that

is now being created by the present—to think, in other words, that the

annihilation of the strongest and fiercest hope that has ever nerved

exceptional men to make exceptional industrial exertion, would in the

smallest degree damp the energies of any able man—“is an extremely

unhistoric apprehension,” and one as to which he “doubts whether the

public will take the alarm.” And having said this, he endeavours to

justify himself by an appeal to history. He asks if the men who built

the Pyramids did not work just as hard “though they knew that Pharaoh

was at the head of an organised conspiracy to take away the Pyramids

from them as soon as they were made?”

This remarkable historical reference is the sole answer Mr. Shaw

attempts to make to the real point raised by me. If it is necessary

seriously to answer it, let me refer Mr. Shaw to _Labour and

the Popular Welfare_, pp. 124, 125, where his childish piece of

reasoning—actually illustrated there by the example of Ancient Egypt—is

anticipated and disposed of. As I there pointed out, these great

buildings of the ancient world were the products not of Ability as it

exists in the modern world, but of Labour; the difference between the

two (so far as this point is concerned) being this:—that the labour an

average man can perform is a known quantity, and wherever a dominant

race enslaves an inferior one, the taskmasters of the former can

coerce the latter into performing a required amount of service. But

the existence of exceptional ability cannot be known or even suspected

by others till the able individual voluntarily shows and exerts it. He

cannot be driven; he must be induced and tempted. And not only is there

no means of making him exert his talents, except by allowing these

talents to secure for himself an exceptional reward; but in the absence

of any such reward to fire his imagination and his passion, he will

probably not be conscious of his own Ability himself. Pharaoh could

flog the stupidest Israelite into laying so many bricks, but he could

not have flogged Moses himself into a Brassey, a Bessemer, or an Edison.

This, however, is a point with which it is impossible to deal in a few

sentences or a few pages. The great question of human motive, closely

allied as it is with the question of family affection, the pleasures

of social intercourse, the excitements and prizes of social rivalry,

of love, of ambition, and all the philosophy of taste and manners—this

great question of motive can be only touched upon here. But a few more

words may be said to show the naïve ignorance of human nature and of

the world betrayed by the Fabian champion.

Mr. Shaw, in order to prove how fully he understands the question of

Ability, quotes the case of a friend of his, who, by his Ability,

makes _four thousand pounds_ a year. This, says Mr. Shaw, is just as

it should be: but if a man, like his friend, should save _one hundred

thousand pounds_, and desire to leave this to his son, invested for

him at 3½ per cent, so that the son may receive an income whether he

has any of his father’s ability or no—this, says Mr. Shaw, is what

Socialism will not permit. The son must earn all he gets; and if he

happens to have no exceptional ability, which may probably be the case,

he will have to put up with the mere wages of manual labour. He will

have to live on some _eighty pounds_ a year instead of _four thousand

pounds_. And Mr. Shaw says, that to introduce this arrangement into

our social system will have no appreciable effect on the men who are

now making, by their ability, their _four thousand pounds_ a year. Let

us suggest to him the following reflections. What good, in that case,

would the _four thousand pounds_ a year be to the father, unless he

were to eat and drink nearly the whole of it himself? For it would

be absurd and cruel in him to bring up his children in luxury if the

moment he died they would have to become scavengers. Wealth is mainly

valuable, and sought for, not for the sake of the pleasures of sense

which it secures for a man’s individual nervous system, but for the

sake of the _entourage_—of the world—which it creates around him, which

it peoples with companions for him brought up and refined in a certain

way, and in which alone his mere personal pleasures can be fully

enjoyed. Capitalism, as Mr. Shaw truly observes, produces many personal

inequalities, which without it could not exist. He fails to understand

that it is precisely the prospect of producing such inequalities that

constitutes the main motive that urges able men to create Capital.

More than ten years ago I published a book called _Social Equality_,

devoted to the exposition of these truths. I cannot dwell upon them

now. In that book history is appealed to, and biography is appealed to;

and the special case of literary and artistic production, of which Mr.

Shaw makes so much, is considered in a chapter devoted to the subject,

and Mr. Shaw’s precise arguments are disposed of in anticipation. But

to a great extent the true doctrine of motive is one which cannot be

established by mere formal argument. It must to a great extent be left

to the verdict of the jury of general common sense, the judgment of men

of experience and knowledge of the world—that knowledge which, of all

others, Mr. Shaw and his friends appear to be most lacking in.

It will be enough, then, to turn from Mr. Shaw himself to ordinary

sensible men, especially to the men of exceptional energy, capacity,

shrewdness, strong will, and productive genius—the men who are making

fortunes, or who have just made them, and without whose efforts all

modern industry would be paralysed, and to tell such men that the

sole answer of Fabianism to my attack on the Socialistic position is

summed up in the following astounding statement:—That the complete

confiscation of all the invested money in this country, and all the

incomes derived from it—from the many thousands a year going to the

great organiser of industry to the hundred a year belonging to the

small retired tradesman—would have no effect whatever on the hopes and

efforts of those who are now devoting their Ability to making money to

invest (see Mr. Shaw’s article). Well—_Bos locutus est_: there is the

quintessence of Mr. Shaw’s knowledge of human nature and of the world,

and though it would be interesting and instructive to analyse the error

of his view, no analysis could make its absurdity seem more complete

than it will seem without analysis, to every practical man.

FOOTNOTES

[1] Writers also from whom better things might have been expected make

use of the same foolish language. “The proletarian, in accepting the

highest bid, sells himself openly into bondage” (_Fabian Essays_, p.

12).

[2] According to Professor Leone Levi, the actual sum would be _one

hundred and thirteen million pounds_: but in dealing with estimates

such as these, in which absolute accuracy is impossible, it is better,

as well as more convenient, to use round numbers. More than nine-tenths

of this sum belongs to the income of the classes that pay income-tax.

Of the working-class income, not more than two per cent is counted

twice over, according to Professor Leone Levi.

[3] There is a general agreement amongst statisticians with regard to

these figures. _Cf._ Messrs Giffen, Mulhall, and Leone Levi _passim_.

[4] Out of any _thousand_ inhabitants, _two hundred and fifty-eight_

are under ten years of age; and _three hundred and sixty-six_ out of

every _thousand_ are under fifteen.

[5] Statistics in support of the above result might be indefinitely

multiplied, both from European countries and America. So far as food is

concerned, scientific authorities tell us that if _twenty_ represents

the amount required by a man, a woman will require _fifteen_, and a

child _eleven_; but the total expenditures necessary are somewhat

different in proportion.

[6] The total imperial taxation in the United Kingdom is about _two

pounds eight shillings_ per head; and the total local taxation is about

_one pound four shillings_. Thus the two together come to _three pounds

twelve shillings_ per head, which for every family of four and a half

persons gives a total of _sixteen pounds four shillings_.

[7] The number of females over fifteen years of age is about _twelve

millions_. Those who work for wages number less than _five millions_.

[8] Mr. Giffen’s latest estimates show that not more than twenty-three

per cent of the wage-earners in this country earn less than _twenty

shillings_ a week; whilst seventy-seven per cent earn this sum

and upwards. Thirty-five per cent earn from _twenty shillings_ to

_twenty-five shillings_; and forty-one per cent earn more than

_twenty-five shillings_. See evidence given by Mr. Giffen before the

Labour Commission, 7th December 1892.

[9] The reader must observe that I speak of the _rent_ of the land,

not of the land itself, as the subject of the above calculation. I

forbear to touch the question of any mere change in the occupancy or

administration of the land, or even of any scheme of nationalising the

land by purchasing it at its market price from the owners; for by none

of these would the present owners be robbed pecuniarily, nor would the

nation pecuniarily gain, except in so far as new conditions of tenure

made agriculture more productive. All such schemes are subjects of

legitimate controversy, or, in other words, are party questions; and

I therefore abstain from touching them. I deal in the text with facts

about which there can be no controversy.

[10] It is also every year becoming more unimportant, in diametrical

contradiction of the theories of Mr. H. George. This was pointed out

some twelve years ago by Professor Leone Levi, who showed that whereas

in 1814 the incomes of the landlord and farmer were fifty-six per cent

of the total assessed to income-tax, in 1851 they were thirty-seven per

cent, and in 1880 only twenty-four per cent. They are now only sixteen

per cent.

[11] See Local Government Board valuation of 1878.

[12] Recent falls in rent make it impossible to give the figures with

actual precision; but the returns in the New Doomsday Book, taken

together with subsequent official information, enable us to arrive at

the substantial facts of the case. In 1878 the rental of the owners

of more than _a thousand_ acres was _twenty-nine million pounds_.

The rental of the rural owners of smaller estates was _thirty-two

million pounds_; and the rental of small urban and suburban owners was

_thirty-six million pounds_. The suburban properties averaged _three

and a half_ acres, the average rent being _thirteen pounds_ per acre.

[13] According to the Local Government Report of 1878, the rental of

all the properties over _five hundred_ acres averaged _thirty-six

shillings_ an acre; that of properties between _fifty_ and _a hundred_

acres, _forty-eight shillings_ an acre; and that of properties between

_ten_ and _fifty_ acres, _a hundred and sixteen shillings_ an acre. In

Scotland, the rental of properties over _five hundred_ acres averaged

_nine shillings_ an acre: that of properties between _ten_ and _fifty_

acres, _four hundred and thirteen shillings_. With regard to the value

of properties under _ten_ acres, the following Scotch statistics are

interesting. Four-fifths of the ground rental of Edinburgh is taken

by owners of less than one acre, the rental of such owners being on

an average _ninety-nine pounds_. Three-fourths of the ground rental

of Glasgow is taken by owners of similar plots of ground; only there

the rental of such owners is _a hundred and seventy-one pounds_. In

the municipal borough of Kilmarnock, land owned in plots of less than

an acre lets per acre at _thirty-two pounds_. The land of the few men

who own larger plots lets for not more than _twenty pounds_. Each

one of the _eleven thousand_ men who own collectively four-fifths of

Edinburgh, has in point of money as much stake in the soil as though he

were the owner in Sutherland of _two thousand_ acres: and each one of

the _ten thousand_ men who own collectively three-fourths of Glasgow,

has as much stake in the soil as though he were the owner in Sutherland

of _three thousand four hundred_ acres.

[14] This is Mr. Giffen’s estimate. Mr. Mulhall, who has made

independent calculations, does not differ from Mr. Giffen by more than

five per cent.

[15] General merchandise is estimated by Mr. Mulhall at _three hundred

and forty-three million pounds_. For every _hundred_ inhabitants in the

year 1877 there were _five_ horses, _twenty-eight_ cows, _seventy-six_

sheep, and _ten_ pigs. In 1881 there were in Great Britain _five

million four hundred and seventy-five thousand_ houses. The rent of

eighty-seven per cent of these was under _thirty pounds_ a year,

and the rental of more than a half averaged only _ten pounds_. The

total house-rental of Great Britain in that year was _one hundred

and fourteen million pounds_; and the aggregate total of houses over

_thirty pounds_ annual value was _sixty million pounds_; though in

point of number these houses were only thirteen per cent of the whole.

[16] This classification of houses may perhaps be objected to; but

from the above point of view it is correct. Houses represent an annual

income of _one hundred and thirty-five million pounds_. Not more

than _thirty-five million pounds_ are spent annually in building new

houses; whilst the whole are counted as representing a new _one hundred

million pounds_ every year. It is plain, therefore, that if we estimate

the entire annual value as above, the sum in question stands not for

the houses, but for the use of them. Even more clearly does the same

reasoning apply to railways and shipping. Whether we send goods by

these or are conveyed by them ourselves, all that we get from them is

the mere service of transport. On transport and travelling by railway

about _seventy million pounds_ are spent annually: by ship about

_thirty million pounds_; by trams about _two million pounds_.

[17] The total annual imports are about _four hundred and twenty

million pounds_. The amount retained for home consumption is about

_three hundred and sixty-five million pounds_.

[18] The approximate value of the food consumed annually in the United

Kingdom (exclusive of alcoholic drinks) is _two hundred and ninety

million pounds_. The total value of food imported is over _one hundred

and fifty million pounds_.

[19] The number of persons fed on home-grown meat was _twenty-three

millions one hundred thousand_. The number fed on imported meat was

_fourteen millions seven hundred thousand_. In other words, the number

of persons who subsist on imported meat now is about equal to the

entire population of the United Kingdom in 1801.

[20] From the year 1843 to 1851, the annual income of the nation

averaged _five hundred and fifteen million pounds_, according to the

calculations of Messrs. Leone Levi, Dudley Baxter, Mulhall, and Giffen.

[21] The actual figures are as follows:—In 1887 the estimates of the

value of agricultural products per each individual actually engaged

in agriculture were: United Kingdom, _ninety-eight pounds_; France,

_seventy-one pounds_; Belgium, _fifty-six pounds_; Germany, _fifty-two

pounds_; Austria, _thirty-one pounds_; Italy, _thirty-seven pounds_.

[22] It is understating the case to say that the British operative

to-day works one hundred and eighty-nine hours less annually than

his predecessor of forty or fifty years ago, and one hundred and

eighty-nine hours = three weeks of nine hours a day. To this must be

added at least a week of additional holidays.

[23] The hours of labour in Switzerland are, on an average, sixty-six a

week.

[24] The agricultural population in France is about _eighteen

millions_; in this country, about _six millions_. The produce of France

is worth about _four hundred and fourteen million pounds_; of this

country, _two hundred and twenty-six million pounds_.

[25] According to Eden it was about _seventeen hundred million pounds_

at the beginning of the present century. Twenty-five years previously

it was, according to Young’s estimate, _eleven hundred million pounds_.

[26] I have not mentioned Profits. They consist, says Mill, of Interest

on Capital and Wages of Superintendence; to which he adds compensation

for risk—a most important item, but not requiring to be included here.

[27] From 1716 to 1770 the cotton manufactured in this country annually

averaged under _two and a half million pounds_ weight. From 1771 to

1775 it was _four million seven hundred thousand pounds_. From 1781

to 1785 it was _eleven million pounds_. From 1791 to 1795 it was

_twenty-six million pounds_; and from 1795 to 1800 it was _thirty-seven

million pounds_.

[28] Pitt estimated that the hands employed in spinning increased from

forty thousand to eighty thousand between the years 1760 and 1790.

[29] Were any confirmation of this conclusion needed, it is afforded

us by the fact that in 1786 a spinner received _ten shillings_ a pound

for spinning cotton of a certain quality: in 1795 he had received only

_eightpence_, or a fifteenth part of ten shillings; and yet in the

course of a similar day’s labour, he made more money than he had been

able to do under the former scale of payment. The price of spinning

No. 100 was _ten shillings_ per pound in 1786; in 1793, _two shillings

and sixpence_. The subsequent drop to _eightpence_ coincided with the

application of machinery to the working of the mule.

[30] Were this work a treatise on political economy, rather than a work

on practical politics, in which only the simplest and most fundamental

economic principles are insisted on, I should have here introduced a

chapter on the special and peculiar part which fixed capital, other

than machinery, plays in agriculture. I have not done so, however, for

fear of interrupting the thread of the main argument; but it will be

useful to call the reader’s attention to the subject in a note.

It was explained in the last chapter that rent (to speak with strict

accuracy) is not to be described as the product of superior soils,

but rather as the product of the qualities which make such soils

superior—qualities which are present in them and which in poorer

soils are absent. Now in speaking of rent, we assumed these superior

qualities to be natural. As a matter of fact, however, in highly

cultivated countries, many of them are artificial. They have been added

to the soil by human exertion—for instance by the process of draining;

or they have been actually placed in the soil, as by the process of

manuring. In this way land and capital merge and melt into one another,

and illustrate each other’s functions as productive agents. It is

impossible to imagine a more complete and beautiful example of the

relation between the two. At this point the rent of Capital and the

rent of Land become indistinguishable.

[31] In a state where the employing class were physically the masters

of the employed, Wage Capital would be unnecessary for the employer. A

system of forced labour might take its place.

[32] This was Pitt’s computation. _See_ Lecky, _History of England

during the Eighteenth Century_, vol. vi. chap. xxiii.

[33] The amount of land, formerly waste, that was added to the

cultivable area during the last century, was in England and Wales not

more than sixteen per cent of the total.

[34] The rental of Great Britain in 1750 was about _thirteen million

five hundred thousand pounds_, and in 1800 about _twenty-nine million

six hundred thousand pounds_. According to the estimates of Arthur

Young, the farmer’s income somewhat more. The wages of Agricultural

Labour had not risen proportionately.

[35] See _Encyclopædia Britannica_, first and earlier editions.

[36] See _Encyclopædia Britannica_, first and earlier editions. The

product of each smelting furnace in use in 1780 was _two hundred

and ninety-four tons_ annually. In 1788, these same furnaces were

producing, by the aid of new inventions, _five hundred and ninety-four

tons_.

[37] According to Arthur Young’s estimates, the earnings of an

agricultural family, consisting of seven persons all capable of work,

would be about _fifty-one pounds_ annually. This gives a little over

_seven pounds_ a head; but when the children and others not capable

of work are taken into account the average is considerably lower. The

wages, however, of the artisan class being higher, the average amount

per head taken by the whole working population would be about _seven

pounds_.

[38] About £1 12s. per head would have to be set down to land, were

the land question being dealt with. But for the purpose of the above

discussion, land may be ignored, as it does not affect the problem.

[39] This fact has been commented on with much force by Mr. Gourlay in

a paper contributed by him to the _National Review_.

[40] The matter may also be put in this way. There are _ninety-nine

labourers_ engaged on a certain work at which there is room for _a

hundred_. The _ninety-nine men_ produce every week value to the amount

of _ninety-nine pounds_. There are two candidates for the hundredth

place: one a labourer, John; and one, a man of ability, James. If

John takes the vacant place, we have _a hundred men_ producing _a

hundred pounds_. If James takes the vacant place, the productivity

of labour by his action is (we will say) doubled, and we have _a

hundred men_ producing _a hundred and ninety-eight pounds_. No amount

of theory based on the fact that James could do nothing without the

_ninety-nine labourers_ can obscure or do away with the practical truth

and importance of the fact that the exertion of James will produce

_ninety-eight pounds_ more than the exertion of John; and any person

with whom the decision rested, which of these two men should take the

hundredth place, would base their decision on this fact.

[41] I say _practically_ as absurd, meaning absurd and practically

meaningless in an economic argument. There are many points of view from

which it would be philosophically true.

[42] The examples given above might be multiplied indefinitely.

Maudslay was brought up as a “powder-boy” at Woolwich. The inventors of

the planing machine, Clements and Fox, were brought up, the one as a

slater, the other as a domestic servant. Neilson, the inventor of the

hot-blast, was a millwright. Roberts, the inventor of the self-acting

mule and the slotting-machine, was a quarryman. The illustrious Bramah

began life as a common farm-boy.

[43] By labouring classes is meant all those families having incomes of

less than a _hundred and fifty pounds_ a year. The substantial accuracy

of this rough classification has already been pointed out. No doubt

they include many persons who are not manual labourers; but against

this must be set the fact that, according to the latest evidence, there

are at least a _hundred and eighty thousand_ skilled manual labourers

who earn more than a _hundred and fifty pounds_. And, at all events,

whether the classes in question are manual labourers or not, they

are, with very manifest exceptions, wage-earners—that is to say, for

whatever money they receive they give work which is estimated at at

least the same money value. A schoolmaster, for instance, who receives

a _hundred and forty pounds_ a year gives in return teaching which

is valued at the same sum. School teaching is wealth just as much as

a schoolhouse; it figures in all estimates as part of the national

income; and therefore the schoolmaster is a producer just as much as

the school builder.

[44] This corresponds with Arthur Young’s estimate of wages for about

the same period.

[45] Statisticians estimate that in 1860 the working classes of the

United Kingdom received in wages _four hundred million pounds_; the

population then being about twice what it was at the close of the

last century. In order to arrive at the receipts of British Labour,

the receipts of Irish Labour must be deducted from this total. The

latter are proportionately much lower than the former, and could not

have reached the sum of _eighty million pounds_. But assuming them to

have reached that, and deducting _eighty million pounds_ from _four

hundred million pounds_, there is left for British Labour _three

hundred and twenty million pounds_, to be divided, roughly speaking,

amongst _twenty million_ people; which for each _ten millions_ yields a

_hundred and sixty million pounds_.

[46] According to the latest estimates, it exceeds _seven hundred

million pounds_.

[47] The entire population has risen from about _twenty-seven million

five hundred thousand_ to _thirty-eight millions_. But a large part of

this increase has taken place amongst the classes who pay income-tax,

and are expressly excluded from the above calculations. These classes

have risen from _one million five hundred thousand_ to _five millions_.

[48] These considerations are so obvious, and have been so constantly

dwelt upon by all economic writers, other than avowed Socialists,

that it is quite unnecessary here to insist on these further. Even

the Socialists themselves have recognised how much force there is in

them, and have consequently been at pains to meet them by the following

curious doctrine. They maintain that a man who makes or inherits a

certain sum has a perfect right to possess it, to hoard it, or squander

it on himself; but no right to any payment for the use made of it by

others. They argue that if he puts it into a business he is simply

having it preserved for him; for the larger part of the Capital at any

time existing would dwindle and disappear if it were not renewed by

being used. Let him put it into a business, say the Socialists, and

draw it out as he wants it. Few things can show more clearly than this

suggested arrangement the visionary character of the Socialistic mind;

for it needs but little thought to show that such an arrangement would

defeat its own objects and be altogether impracticable. The sole ground

on which the Socialists recommend it, in preference to the arrangement

which prevails at present, is that the interest which the owners of

the Capital are forbidden to receive themselves would by some means

or other be taken by the State instead and distributed amongst the

labourers as an addition to their wages, and would thus be the means

of supplying them with extra comforts. Now the interest if so applied

would, it is needless to say, be not saved but consumed. But the owners

of the Capital, who are thus deprived of their interest, are to have

the privilege, according to the arrangement we are considering, of

consuming their Capital in lieu of the interest that has been taken

from them. Accordingly, whereas the interest is all that is consumed

now, under this arrangement the Capital would be consumed as well. The

tendency, in fact, of the arrangement would be neither more nor less

than this: to increase the consumption of the nation at the expense of

its savings, until at last all the savings had disappeared. It would be

impracticable also for many other reasons, to discuss which here would

simply be waste of time. It is enough to observe that the fact of its

having been suggested is only a tribute to the insuperable nature of

the difficulty it was designed to meet.

[49] The part played in national progress by the mere business

sagacity of investors, amounts practically to a constant criticism of

inventions, discoveries, schemes, and enterprises of all kinds, and the

selection of those that are valuable from amongst a mass of what is

valueless and chimerical.

[50] See Mr. Giffen’s Inaugural Address of the Fiftieth Session of the

Statistical Society.

[51] The gross amount assessed to income-tax in 1891 was nearly _seven

hundred million pounds_; now more than _a hundred million pounds_ was

exempt, as belonging to persons with incomes of less than _a hundred

and fifty pounds_ a year. Mr. Giffen maintains (see his evidence given

before the Royal Commission on Labour, 7th December 1892) that there

is an immense middle-class income not included amongst the wages of

the labouring class. This, according to the classification adopted

above, which divides the population into those with incomes above, and

those with incomes below _a hundred and fifty pounds_, would raise the

collective incomes of the latter to over _seven hundred million pounds_.

[52] See Mr. Giffen’s Address, as above.

[53] If the number of employers does not increase, it is true that

they, unlike the employed, will be richer in proportion to their

numbers; but they will be poorer in proportion to the number of men

employed by them.

[54] Thus the old theory of the wage-fund, which has so often been

attacked of late, has after all this great residuary truth, namely,

that the amount of wealth that is spent and taken in wages is limited

by the total amount of wealth produced _in proportion to the number_

of labourers who assist in its production. That theory, however, as

commonly understood, is no doubt erroneous, though not for the reasons

commonly advanced by its critics. The theory of a wage-fund as commonly

understood means this—that if there were eight labourers and a capital

of _four hundred pounds_, which would be spent in wages and replaced

within a year, and if this were distributed in equal shares of _fifty

pounds_, it would be impossible to increase the share of one labourer

without diminishing that of the others; or to employ more labourers

without doing the same thing. But the truth is that if means were

discovered by which the productivity of any one labourer could be

doubled during the first six months, the whole _fifty pounds_ destined

for his whole year’s subsistence might be paid to him during the first

six months, and the fund would meanwhile have been created with which

to pay him a similar sum for the next six months—the employer gaining

in the same proportion as the labourer. So, too, with regard to an

additional number of labourers—if ability could employ their labour to

sufficient advantage, part of the sum destined to support the original

labourer for the second six months of the year might be advanced to

them, and before the second six months’ wages became due there might be

enough to pay an increased wage to all.

[55] This is true even of productive or distributive industries carried

out by the State. The real Socialistic principle of production has

never been applied by the State, or by any municipal authority; nor

has any practical party so much as suggested that it should be. The

manager of a State factory has just the same motive to save that an

ordinary employer has: he can invest his money, and get interest

on it. A State or a municipal business differs only from a private

Capitalist’s business either in making no profits, as is the case in

the building of ships of war; or of securing the services of Ability

at a somewhat cheaper rate, and, in consequence, generally diminishing

its efficacy. Of State business carried on at a profit, the Post Office

offers the best example; and it is the example universally fixed on

by contemporary English Socialists. It is an example, however, which

disproves everything that they think it proves; and shows the necessary

limitations of the principle involved, instead of the possibility of

its extension. For, in the first place, the object aimed at—_i.e._ the

delivery of letters—is one of exceptional simplicity. In the second

place, all practical men agree that, could the postal service be

carried out by private and competing firms, it would (at all events

in towns) be carried out much better; only the advantages gained in

this special and exceptional case from the entire service being under

a single management, outweigh the disadvantages. And lastly, the

business, as it stands, is a State business in the most superficial

sense only. The railways and the steamers that carry the letters are

all the creations of private enterprise, in which the principle of

competition, and the motive force of the natural rewards of Ability,

have had free play. Indeed the Post Office, as we now know it, if we

can call it Socialistic at all, represents only a superficial layer of

State Socialism resting on individualism, and only made possible by its

developments. Real State Socialism would be merely the Capitalistic

system minus the rewards of that Ability by which alone Capital is made

productive.

[56] _Principles of Economics_, by Alfred Marshall, book iv. chap. vii.

[57] Though I have aimed at excluding from this volume all

controversial matter, I may here hazard the opinion that the

Socialistic principle is most properly applied to providing the

labourers, not with things that they would buy if they were able to do

so, but things that naturally they would not buy. Things procurable

by money may be divided into three classes—things that are necessary,

things that are superfluous, and things that are beneficial. Clothing

is an example of the first class, finery of the second, and education

of the third. If a man receives food from the State, otherwise than as

a reward for a given amount of labour, his motive to labour will be

lessened. If a factory girl, irrespective of her industry, was supplied

by the State with fashionable hats and jackets, her motive to labour

would be lessened also; for clothing and finery are amongst the special

objects to procure which labour is undertaken. But desire to be able to

pay for education does not constitute, for most men and women, a strong

motive to labour; and therefore education may be supplied by the State,

without the efficacy of their labour being interfered with.

[58] In our imaginary community we have at first eight labourers, who

produce _fifty pounds_ a year a-piece = _four hundred pounds_. Then

we have eight labourers + one able man, who produce _four hundred

pounds_ a year for each labourer = _three thousand two hundred pounds_.

Of this the able man takes _two thousand eight hundred pounds_. Now,

suppose the labourers strike for double wages, and succeed in getting

them, their total wages are _eight hundred pounds_ a year instead of

_four hundred pounds_; and the employer’s income is _two thousand four

hundred pounds_ instead of _two thousand eight hundred pounds_. The

labourers gain a hundred per cent; the employer loses little more than

fourteen per cent. The labourers therefore have a stronger motive in

demanding than the employer has in resisting. But let us suppose that,

the total income of the community remaining unchanged, the labourers

have succeeded in obtaining _one thousand eight hundred pounds_, thus

leaving the employer _one thousand four hundred pounds_. The situation

will now be changed. The labourers could not possibly now gain an

increase of a hundred per cent, for the entire income available would

not supply this; but let us suppose they strike for an increase of

_two hundred pounds_. If they gained that, their income would be _two

thousand pounds_, and that of the employer _one thousand two hundred

pounds_; but the former situation would be reversed. The employer now

would lose more than the labourer would gain. The labourers would gain,

in round numbers, only eleven per cent; and the employer would lose

fourteen per cent. Therefore the employer would have a stronger motive

in resisting than the labourers in demanding.

[59] The possibility of such a result would depend upon two

assumptions, which are not in accordance with reality, and for which

allowance must be made. The first is the assumption that the labouring

population is stationary; the second is that Ability can increase the

productivity of Labour equally in all industries. In reality, however,

as was noticed in the last chapter, the number of labourers increases

constantly, and the improvements in different industries are very

unequal; and, owing to these two causes, it often happens that the

total value produced in some industries by Labour and Ability together

is not so great as is the share that is taken by Labour in others.

Thus the labourers employed in the inferior industries could by no

possibility raise their wages to the amount received by the labourers

employed in the superior ones. Their effort accordingly would be to

obtain employment in the latter, and to do so by accepting wages

higher indeed than what they receive at present, but lower than those

received by the men whose positions they wish to take. Thus, under such

circumstances, a union of industrial interests ceases to be any longer

possible. By an irresistible and automatic process, there is produced

an antagonism between them; and the labourers who enjoy the higher

wages will do what is actually done by our Trade Unions: they will form

a separate combination to protect their own interests, not only against

the employers, but even more directly against other labourers. At a

certain stage of their demands, the labourers may be able to combine

more readily and more closely than the employers; but when a certain

stage has been passed, the case will be the reverse. The employers will

be forced more and more into unanimous action, whilst the labourers,

by their diverging interests, are divided into groups whose action is

mutually hostile.

[60] The reader must always bear in mind the definition given of

Labour, as that kind of industrial exertion which is applied to one

task at a time only, and while so applied begins and ends with that

task; as distinguished from Ability, which influences simultaneously an

indefinite number of tasks.

[61] Mr. Shaw, for instance, is at much pains to point out that Ability

is not one definite thing, as the power of jumping is, and makes

himself merry by asking if Wellington’s Ability could be compared

with Cobden’s, or Napoleon’s with Beethoven’s. This is all beside the

mark. I have been careful to define the sense in which I used the

word Ability—to define it with the utmost exactness. I have said that

I use it as meaning productive Ability—industrial Ability. That is

to say, those faculties by which men, not labouring themselves, are

capable of directing to the best advantage the labour of others, with

a view to the production of economic commodities. In the Middle Ages I

said that another kind of Ability was more important—_i.e._ Military

Ability, instead of Economic; and the historical importance of this

fact, which Mr. Shaw says I discovered only after I had written my

first article on Fabian Economics, I insisted on, at much greater

length, years ago, when criticising Karl Marx’s “Theory of Value,” in

this [the Fortnightly] Review. Again, let Mr. Shaw turn to _Labour and

the Popular Welfare_, p. 328, and he will find what he says put more

clearly by myself than by him.

[62] It is interesting to see the analysis which Mr. Shaw gives of the

elements which make up the _five hundred million pounds_ (see page 482

of his article). It shows a curious want of sense of proportion, and

reads much like a statement that a young man’s bankruptcy was due to

the _one hundred thousand pounds_ he has spent on the turf, the _fifty

thousand pounds_ he had spent on building a house, the _fifty pounds_

he has spent on a fur coat, and the sixpence he gave last Saturday to

the porter at Paddington Station. But there is in it a more serious

error than this. Mr. Shaw says, and rightly, that a large part of the

millions to which he alludes consists of payments to artists and other

professional men (_e.g._ doctors), by very rich commonplace people

competing for their services. But he entirely mistakes the meaning of

this fact. I have pointed it out carefully in _Labour and the Popular

Welfare_ (Book I. chap. iii.) and have illustrated it by one of the

exact cases Mr. Shaw has in view, viz. that of a doctor who gets a fee

of _one thousand two hundred pounds_ from “a very rich commonplace

person.” I pointed out that in the estimates, from which Mr. Shaw gets

his figures of _five hundred million pounds_, all such payments are

counted twice over. The “very rich commonplace person” and the doctor

both pay income-tax on and are regarded as possessing the same _one

thousand two hundred pounds_. As matters stand this is right enough,

for the patient receives either in good or fancied good an equivalent

for his fee in the doctor’s services; but if the sum in question were

to be divided up and distributed, there would for distribution be one

_one thousand two hundred pounds_ only. By reference to calculations

of Professor Leone Levi, with whom I corresponded on these matters, I

drew the conclusion that the sum thus counted twice over was about _one

hundred million pounds_ annually ten years ago. This would knock off

twenty per cent at once from Mr. Shaw’s _five hundred million pounds_;

and I may again mention Mr. Giffen’s emphatic warning that, if we are

thinking of any general redistribution, another _two hundred million

pounds_ would have to be deducted from the sums which persons like Mr.

Shaw imagine await their seizure.

[63] The case may also be put in another way. Interest is the product

of capital _quâ_ capital, as opposed to the product of ability as

distinct from capital. But the bulk of modern capital is historically

the creation of ability, which has miraculously multiplied the few

loaves and fishes existing at the close of the last century. Interest

may therefore be called the secondary or indirect product of ability,

whilst earnings and profits may be called the direct product of

ability. Any one who is living on interest at the present moment is

almost sure to be living, not on his own ability, but on the products

of the ability of some member of his own family who has added to the

national wealth within the past two generations. Suppose a man who

died in 1830 left a fortune of _two hundred thousand pounds_, which he

made, as Salt did, by the invention and production of some new textile

fabric; and suppose that this fortune is now in the hands of a foolish

and feeble grandson, who enjoys _eight thousand pounds_ a year. This

is evidently not the product of the grandson’s ability; but it is the

product of the ability of the grandfather. The truth of this may be

easily seen by altering the supposition thus—by supposing that the

original maker of the fortune, instead of dying in 1830, is alive now,

but as imbecile as we supposed his grandson to be. He has, we will say,

long retired from business, and lives on the interest of the capital

he made when his faculties were in their vigour. Would any one say

that he is not living on his own ability? The only difference is—and

it is a difference which, from many points of view, is of the greatest

importance—that formerly he was living on the direct product of his

ability, and he is now living on its indirect product.

THE END

_Printed by_ R. & R. CLARK, _Edinburgh_.

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Transcriber’s Note (continued)

Minor typographical errors have been corrected in this transcription.

Other errors and unusual or variable spelling and hyphenation have been

left unchanged except as noted below.

The four references to (Henry) Maudsley have the surname corrected

to Maudslay.

Page 79 — “labour-party” changed to “Labour Party” (leaders of the

Labour Party to-day)

Page 118 — “Hargraves” changed to “Hargreaves” (Hargreaves and

Arkwright)

Page 200 — “monoply” changed to “monopoly” (the monopoly of Ability)

Page 337 — “originially” changed to “originally” (which was originally

published)

Page 243 — “transction” changed to “transaction” (party in the

transaction)

Page 344 — “Leoni” changed to “Leone” in footnote (Professor Leone

Levi)

Footnotes have been re-indexed using numbers and placed after the

Appendix.