This Memorial Edition of the Writings of
Henry George is limited to one thousand
numbered copies, of which this is
No. 4
MEMORIAL EDITION
OF THE WRITINGS
OF HENRY GEORGE
VOL. I.
Make for thyself a definition or description of the thing which is
presented to thee, so as to see distinctly what kind of a thing it is,
in its substance, in its nudity, in its complete entirety, and tell
thyself its proper name, and the names of the things of which it has
been compounded, and into which it will be resolved. For nothing is so
productive of elevation of mind as to be able to examine methodically
and truly every object which is presented to thee in life, and always
to look at things so as to see at the same time what kind of universe
this is, and what kind of use everything performs in it, and what value
everything has with reference to the whole, and what with reference to
man, who is a citizen of the highest city, of which all other cities
are like families; what each thing is, and of what it is composed, and
how long it is the nature of this thing to endure.—_Marcus Aurelius
Antoninus._
[Illustration: _Henry George when writing “Progress and Poverty” San
Francisco, 1879_]
THE WRITINGS OF
HENRY GEORGE
PROGRESS AND
POVERTY
AN INQUIRY INTO THE CAUSE OF INDUSTRIAL
DEPRESSIONS AND OF INCREASE
OF WANT WITH INCREASE OF WEALTH
THE REMEDY
I
[Illustration: Colophon]
NEW YORK: DOUBLEDAY
AND MCCLURE COMPANY
1898
Copyright, 1891, by
HENRY GEORGE
THE DE VINNE PRESS.
TO THOSE WHO,
SEEING THE VICE AND MISERY THAT SPRING FROM
THE UNEQUAL DISTRIBUTION
OF WEALTH AND PRIVILEGE,
FEEL THE POSSIBILITY OF A HIGHER SOCIAL STATE
AND WOULD STRIVE FOR ITS ATTAINMENT
SAN FRANCISCO, March, 1879.
There must be refuge! Men
Perished in winter winds till one smote fire
From flint stones coldly hiding what they held,
The red spark treasured from the kindling sun;
They gorged on flesh like wolves, till one sowed corn,
Which grew a weed, yet makes the life of man;
They mowed and babbled till some tongue struck speech,
And patient fingers framed the lettered sound.
What good gift have my brothers, but it came
From search and strife and loving sacrifice?
_Edwin Arnold._
Never yet
Share of Truth was vainly set
In the world’s wide fallow;
After hands shall sow the seed,
After hands, from hill and mead,
Reap the harvests yellow.
_Whittier._
PREFACE TO FOURTH EDITION.
The views herein set forth were in the main briefly stated in a
pamphlet entitled “Our Land and Land Policy,” published in San
Francisco in 1871. I then intended, as soon as I could, to present them
more fully, but the opportunity did not for a long time occur. In the
meanwhile I became even more firmly convinced of their truth, and saw
more completely and clearly their relations; and I also saw how many
false ideas and erroneous habits of thought stood in the way of their
recognition, and how necessary it was to go over the whole ground.
This I have here tried to do, as thoroughly as space would permit. It
has been necessary for me to clear away before I could build up, and
to write at once for those who have made no previous study of such
subjects, and for those who are familiar with economic reasonings;
and, so great is the scope of the argument that it has been impossible
to treat with the fullness they deserve many of the questions raised.
What I have most endeavored to do is to establish general principles,
trusting to my readers to carry further their applications where this
is needed.
In certain respects this book will be best appreciated by those who
have some knowledge of economic literature; but no previous reading
is necessary to the understanding of the argument or the passing of
judgment upon its conclusions. The facts upon which I have relied are
not facts which can be verified only by a search through libraries.
They are facts of common observation and common knowledge, which every
reader can verify for himself, just as he can decide whether the
reasoning from them is or is not valid.
Beginning with a brief statement of facts which suggest this inquiry,
I proceed to examine the explanation currently given in the name of
political economy of the reason why, in spite of the increase of
productive power, wages tend to the minimum of a bare living. This
examination shows that the current doctrine of wages is founded upon
a misconception; that, in truth, wages are produced by the labor for
which they are paid, and should, other things being equal, increase
with the number of laborers. Here the inquiry meets a doctrine which
is the foundation and center of most important economic theories,
and which has powerfully influenced thought in all directions—the
Malthusian doctrine, that population tends to increase faster than
subsistence. Examination, however, shows that this doctrine has no
real support either in fact or in analogy, and that when brought to a
decisive test it is utterly disproved.
Thus far the results of the inquiry, though extremely important, are
mainly negative. They show that current theories do not satisfactorily
explain the connection of poverty with material progress, but throw
no light upon the problem itself, beyond showing that its solution
must be sought in the laws which govern the distribution of wealth.
It therefore becomes necessary to carry the inquiry into this field.
A preliminary review shows that the three laws of distribution must
necessarily correlate with each other, which as laid down by the
current political economy they fail to do, and an examination of the
terminology in use reveals the confusion of thought by which this
discrepancy has been slurred over. Proceeding then to work out the laws
of distribution, I first take up the law of rent. This, it is readily
seen, is correctly apprehended by the current political economy. But it
is also seen that the full scope of this law has not been appreciated,
and that it involves as corollaries the laws of wages and interest—the
cause which determines what part of the produce shall go to the land
owner necessarily determining what part shall be left for labor and
capital. Without resting here, I proceed to an independent deduction
of the laws of interest and wages. I have stopped to determine the
real cause and justification of interest, and to point out a source of
much misconception—the confounding of what are really the profits of
monopoly with the legitimate earnings of capital. Then returning to the
main inquiry, investigation shows that interest must rise and fall with
wages, and depends ultimately upon the same thing as rent—the margin
of cultivation or point in production where rent begins. A similar but
independent investigation of the law of wages yields similar harmonious
results. Thus the three laws of distribution are brought into mutual
support and harmony, and the fact that with material progress rent
everywhere advances is seen to explain the fact that wages and interest
do not advance.
What causes this advance of rent is the next question that arises,
and it necessitates an examination of the effect of material progress
upon the distribution of wealth. Separating the factors of material
progress into increase of population and improvements in the arts,
it is first seen that increase in population tends constantly, not
merely by reducing the margin of cultivation, but by localizing the
economies and powers which come with increased population, to increase
the proportion of the aggregate produce which is taken in rent, and to
reduce that which goes as wages and interest. Then eliminating increase
of population, it is seen that improvement in the methods and powers of
production tends in the same direction, and, land being held as private
property, would produce in a stationary population all the effects
attributed by the Malthusian doctrine to pressure of population.
And then a consideration of the effects of the continuous increase
in land values which thus spring from material progress reveals in
the speculative advance inevitably begotten when land is private
property a derivative but most powerful cause of the increase of rent
and the crowding down of wages. Deduction shows that this cause must
necessarily produce periodical industrial depressions, and induction
proves the conclusion; while from the analysis which has thus been made
it is seen that the necessary result of material progress, land being
private property, is, no matter what the increase in population, to
force laborers to wages which give but a bare living.
This identification of the cause that associates poverty with progress
points to the remedy, but it is to so radical a remedy that I have
next deemed it necessary to inquire whether there is any other remedy.
Beginning the investigation again from another starting point, I have
passed in examination the measures and tendencies currently advocated
or trusted in for the improvement of the condition of the laboring
masses. The result of this investigation is to prove the preceding
one, as it shows that nothing short of making land common property can
permanently relieve poverty and check the tendency of wages to the
starvation point.
The question of justice now naturally arises, and the inquiry passes
into the field of ethics. An investigation of the nature and basis
of property shows that there is a fundamental and irreconcilable
difference between property in things which are the product of labor
and property in land; that the one has a natural basis and sanction
while the other has none, and that the recognition of exclusive
property in land is necessarily a denial of the right of property
in the products of labor. Further investigation shows that private
property in land always has, and always must, as development proceeds,
lead to the enslavement of the laboring class; that land owners can
make no just claim to compensation if society choose to resume its
right; that so far from private property in land being in accordance
with the natural perceptions of men, the very reverse is true, and
that in the United States we are already beginning to feel the effects
of having admitted this erroneous and destructive principle.
The inquiry then passes to the field of practical statesmanship. It
is seen that private property in land, instead of being necessary to
its improvement and use, stands in the way of improvement and use, and
entails an enormous waste of productive forces; that the recognition
of the common right to land involves no shock or dispossession, but is
to be reached by the simple and easy method of abolishing all taxation
save that upon land values. And this an inquiry into the principles of
taxation shows to be, in all respects, the best subject of taxation.
A consideration of the effects of the change proposed then shows that
it would enormously increase production; would secure justice in
distribution; would benefit all classes; and would make possible an
advance to a higher and nobler civilization.
The inquiry now rises to a wider field, and recommences from another
starting point. For not only do the hopes which have been raised
come into collision with the widespread idea that social progress is
possible only by slow race improvement, but the conclusions we have
arrived at assert certain laws which, if they are really natural laws,
must be manifest in universal history. As a final test, it therefore
becomes necessary to work out the law of human progress, for certain
great facts which force themselves on our attention, as soon as we
begin to consider this subject, seem utterly inconsistent with what
is now the current theory. This inquiry shows that differences in
civilization are not due to differences in individuals, but rather
to differences in social organization; that progress, always kindled
by association, always passes into retrogression as inequality is
developed; and that even now, in modern civilization, the causes which
have destroyed all previous civilizations are beginning to manifest
themselves, and that mere political democracy is running its course
toward anarchy and despotism. But it also identifies the law of social
life with the great moral law of justice, and, proving previous
conclusions, shows how retrogression may be prevented and a grander
advance begun. This ends the inquiry. The final chapter will explain
itself.
The great importance of this inquiry will be obvious. If it has been
carefully and logically pursued, its conclusions completely change the
character of political economy, give it the coherence and certitude of
a true science, and bring it into full sympathy with the aspirations of
the masses of men, from which it has long been estranged. What I have
done in this book, if I have correctly solved the great problem I have
sought to investigate, is, to unite the truth perceived by the school
of Smith and Ricardo to the truth perceived by the schools of Proudhon
and Lasalle; to show that _laissez faire_ (in its full true meaning)
opens the way to a realization of the noble dreams of socialism; to
identify social law with moral law, and to disprove ideas which in the
minds of many cloud grand and elevating perceptions.
This work was written between August, 1877, and March, 1879, and
the plates finished by September of that year. Since that time new
illustrations have been given of the correctness of the views herein
advanced, and the march of events—and especially that great movement
which has begun in Great Britain in the Irish land agitation—shows
still more clearly the pressing nature of the problem I have endeavored
to solve. But there has been nothing in the criticisms they have
received to induce the change or modification of these views—in fact,
I have yet to see an objection not answered in advance in the book
itself. And except that some verbal errors have been corrected and a
preface added, this edition is the same as previous ones.
HENRY GEORGE.
NEW YORK, _November_, 1880.
CONTENTS.
INTRODUCTORY.
PAGE
The Problem 3
BOOK I.—WAGES AND CAPITAL.
Chapter I.—The current doctrine of wages—its insufficiency 17
II.—The meaning of the terms 30
III.—Wages not drawn from capital, but produced by the labor 49
IV.—The maintenance of laborers not drawn from capital 70
V.—The real functions of capital 79
BOOK II.—POPULATION AND SUBSISTENCE.
Chapter I.—The Malthusian theory, its genesis and support 91
II.—Inferences from facts 103
III.—Inferences from analogy 129
IV.—Disproof of the Malthusian theory 140
BOOK III.—THE LAWS OF DISTRIBUTION.
Chapter I.—The inquiry narrowed to the laws of
distribution—necessary relation of these laws 153
II.—Rent and the law of rent 165
III.—Interest and the cause of interest 173
IV.—Of spurious capital and of profits often mistaken
for interest 189
V.—The law of interest 195
VI.—Wages and the law of wages 204
VII.—Correlation and co-ordination of these laws 217
VIII.—The statics of the problem thus explained 219
BOOK IV.—EFFECT OF MATERIAL PROGRESS UPON THE DISTRIBUTION OF WEALTH.
Chapter I.—The dynamics of the problem yet to seek 225
II.—Effect of increase of population upon the distribution
of wealth 228
III.—Effect of improvements in the arts upon the
distribution of wealth 242
IV.—Effect of the expectation raised by material progress 253
BOOK V.—THE PROBLEM SOLVED.
Chapter I.—The primary cause of recurring paroxysms of industrial
depression 261
II.—The persistence of poverty amid advancing wealth 280
BOOK VI.—THE REMEDY.
Chapter I.—Insufficiency of remedies currently advocated 297
II.—The true remedy 326
BOOK VII.—JUSTICE OF THE REMEDY.
Chapter I.—Injustice of private property in land 331
II.—Enslavement of laborers the ultimate result of
private property in land 345
III.—Claim of land owners to compensation 356
IV.—Property in land historically considered 366
V.—Property in land in the United States 383
BOOK VIII.—APPLICATION OF THE REMEDY.
Chapter I.—Private property in land inconsistent with the best
use of land 395
II.—How equal rights to the land may be asserted and
secured 401
III.—The proposition tried by the canons of taxation 406
IV.—Indorsements and objections 420
BOOK IX.—EFFECTS OF THE REMEDY.
Chapter I.—Of the effect upon the production of wealth 431
II.—Of the effect upon distribution and thence upon
production 438
III.—Of the effect upon individuals and classes 445
IV.—Of the changes that would be wrought in social
organization and social life 452
BOOK X.—THE LAW OF HUMAN PROGRESS.
Chapter I.—The current theory of human progress—its insufficiency 473
II.—Differences in civilization—to what due 487
III.—The law of human progress 503
IV.—How modern civilization may decline 524
V.—The central truth 541
CONCLUSION.
The problem of individual life 553
INTRODUCTORY.
THE PROBLEM.
Ye build! ye build! but ye enter not in,
Like the tribes whom the desert devoured in their sin;
From the land of promise ye fade and die,
Ere its verdure gleams forth on your wearied eye.
_—Mrs. Sigourney._
INTRODUCTORY.
THE PROBLEM.
The present century has been marked by a prodigious increase in
wealth-producing power. The utilization of steam and electricity, the
introduction of improved processes and labor-saving machinery, the
greater subdivision and grander scale of production, the wonderful
facilitation of exchanges, have multiplied enormously the effectiveness
of labor.
At the beginning of this marvelous era it was natural to expect, and
it was expected, that labor-saving inventions would lighten the toil
and improve the condition of the laborer; that the enormous increase in
the power of producing wealth would make real poverty a thing of the
past. Could a man of the last century—a Franklin or a Priestley—have
seen, in a vision of the future, the steamship taking the place of the
sailing vessel, the railroad train of the wagon, the reaping machine
of the scythe, the threshing machine of the flail; could he have heard
the throb of the engines that in obedience to human will, and for the
satisfaction of human desire, exert a power greater than that of all
the men and all the beasts of burden of the earth combined; could he
have seen the forest tree transformed into finished lumber—into doors,
sashes, blinds, boxes or barrels, with hardly the touch of a human
hand; the great workshops where boots and shoes are turned out by the
case with less labor than the old-fashioned cobbler could have put on
a sole; the factories where, under the eye of a girl, cotton becomes
cloth faster than hundreds of stalwart weavers could have turned it out
with their handlooms; could he have seen steam hammers shaping mammoth
shafts and mighty anchors, and delicate machinery making tiny watches;
the diamond drill cutting through the heart of the rocks, and coal oil
sparing the whale; could he have realized the enormous saving of labor
resulting from improved facilities of exchange and communication—sheep
killed in Australia eaten fresh in England, and the order given by the
London banker in the afternoon executed in San Francisco in the morning
of the same day; could he have conceived of the hundred thousand
improvements which these only suggest, what would he have inferred as
to the social condition of mankind?
It would not have seemed like an inference; further than the vision
went it would have seemed as though he saw; and his heart would have
leaped and his nerves would have thrilled, as one who from a height
beholds just ahead of the thirst-stricken caravan the living gleam of
rustling woods and the glint of laughing waters. Plainly, in the sight
of the imagination, he would have beheld these new forces elevating
society from its very foundations, lifting the very poorest above the
possibility of want, exempting the very lowest from anxiety for the
material needs of life; he would have seen these slaves of the lamp of
knowledge taking on themselves the traditional curse, these muscles of
iron and sinews of steel making the poorest laborer’s life a holiday,
in which every high quality and noble impulse could have scope to grow.
And out of these bounteous material conditions he would have seen
arising, as necessary sequences, moral conditions realizing the golden
age of which mankind have always dreamed. Youth no longer stunted and
starved; age no longer harried by avarice; the child at play with the
tiger; the man with the muck-rake drinking in the glory of the stars!
Foul things fled, fierce things tame; discord turned to harmony! For
how could there be greed where all had enough? How could the vice, the
crime, the ignorance, the brutality, that spring from poverty and the
fear of poverty, exist where poverty had vanished? Who should crouch
where all were freemen; who oppress where all were peers?
More or less vague or clear, these have been the hopes, these the
dreams born of the improvements which give this wonderful century
its preëminence. They have sunk so deeply into the popular mind as
radically to change the currents of thought, to recast creeds and
displace the most fundamental conceptions. The haunting visions of
higher possibilities have not merely gathered splendor and vividness,
but their direction has changed—instead of seeing behind the faint
tinges of an expiring sunset, all the glory of the daybreak has decked
the skies before.
It is true that disappointment has followed disappointment, and that
discovery upon discovery, and invention after invention, have neither
lessened the toil of those who most need respite, nor brought plenty to
the poor. But there have been so many things to which it seemed this
failure could be laid, that up to our time the new faith has hardly
weakened. We have better appreciated the difficulties to be overcome;
but not the less trusted that the tendency of the times was to overcome
them.
Now, however, we are coming into collision with facts which there can
be no mistaking. From all parts of the civilized world come complaints
of industrial depression; of labor condemned to involuntary idleness;
of capital massed and wasting; of pecuniary distress among business
men; of want and suffering and anxiety among the working classes. All
the dull, deadening pain, all the keen, maddening anguish, that to
great masses of men are involved in the words “hard times,” afflict
the world to-day. This state of things, common to communities differing
so widely in situation, in political institutions, in fiscal and
financial systems, in density of population and in social organization,
can hardly be accounted for by local causes. There is distress where
large standing armies are maintained, but there is also distress where
the standing armies are nominal; there is distress where protective
tariffs stupidly and wastefully hamper trade, but there is also
distress where trade is nearly free; there is distress where autocratic
government yet prevails, but there is also distress where political
power is wholly in the hands of the people; in countries where paper is
money, and in countries where gold and silver are the only currency.
Evidently, beneath all such things as these, we must infer a common
cause.
That there is a common cause, and that it is either what we call
material progress or something closely connected with material
progress, becomes more than an inference when it is noted that the
phenomena we class together and speak of as industrial depression are
but intensifications of phenomena which always accompany material
progress, and which show themselves more clearly and strongly as
material progress goes on. Where the conditions to which material
progress everywhere tends are most fully realized—that is to say, where
population is densest, wealth greatest, and the machinery of production
and exchange most highly developed—we find the deepest poverty, the
sharpest struggle for existence, and the most of enforced idleness.
It is to the newer countries—that is, to the countries where material
progress is yet in its earlier stages—that laborers emigrate in search
of higher wages, and capital flows in search of higher interest. It is
in the older countries—that is to say, the countries where material
progress has reached later stages—that widespread destitution is
found in the midst of the greatest abundance. Go into one of the new
communities where Anglo-Saxon vigor is just beginning the race of
progress; where the machinery of production and exchange is yet rude
and inefficient; where the increment of wealth is not yet great enough
to enable any class to live in ease and luxury; where the best house is
but a cabin of logs or a cloth and paper shanty, and the richest man is
forced to daily work—and though you will find an absence of wealth and
all its concomitants, you will find no beggars. There is no luxury, but
there is no destitution. No one makes an easy living, nor a very good
living; but every one _can_ make a living, and no one able and willing
to work is oppressed by the fear of want.
But just as such a community realizes the conditions which all
civilized communities are striving for, and advances in the scale
of material progress—just as closer settlement and a more intimate
connection with the rest of the world, and greater utilization of
labor-saving machinery, make possible greater economies in production
and exchange, and wealth in consequence increases, not merely in the
aggregate, but in proportion to population—so does poverty take a
darker aspect. Some get an infinitely better and easier living, but
others find it hard to get a living at all. The “tramp” comes with
the locomotive, and almshouses and prisons are as surely the marks
of “material progress” as are costly dwellings, rich warehouses, and
magnificent churches. Upon streets lighted with gas and patrolled by
uniformed policemen, beggars wait for the passer-by, and in the shadow
of college, and library, and museum, are gathering the more hideous
Huns and fiercer Vandals of whom Macaulay prophesied.
This fact—the great fact that poverty and all its concomitants show
themselves in communities just as they develop into the conditions
toward which material progress tends—proves that the social
difficulties existing wherever a certain stage of progress has been
reached, do not arise from local circumstances, but are, in some way or
another, engendered by progress itself.
And, unpleasant as it may be to admit it, it is at last becoming
evident that the enormous increase in productive power which has marked
the present century and is still going on with accelerating ratio,
has no tendency to extirpate poverty or to lighten the burdens of
those compelled to toil. It simply widens the gulf between Dives and
Lazarus, and makes the struggle for existence more intense. The march
of invention has clothed mankind with powers of which a century ago
the boldest imagination could not have dreamed. But in factories where
labor-saving machinery has reached its most wonderful development,
little children are at work; wherever the new forces are anything like
fully utilized, large classes are maintained by charity or live on the
verge of recourse to it; amid the greatest accumulations of wealth,
men die of starvation, and puny infants suckle dry breasts; while
everywhere the greed of gain, the worship of wealth, shows the force of
the fear of want. The promised land flies before us like the mirage.
The fruits of the tree of knowledge turn as we grasp them to apples of
Sodom that crumble at the touch.
It is true that wealth has been greatly increased, and that the
average of comfort, leisure, and refinement has been raised; but these
gains are not general. In them the lowest class do not share.[1] I do
not mean that the condition of the lowest class has nowhere nor in
anything been improved; but that there is nowhere any improvement which
can be credited to increased productive power. I mean that the tendency
of what we call material progress is in nowise to improve the condition
of the lowest class in the essentials of healthy, happy human life.
Nay, more, that it is still further to depress the condition of the
lowest class. The new forces, elevating in their nature though they be,
do not act upon the social fabric from underneath, as was for a long
time hoped and believed, but strike it at a point intermediate between
top and bottom. It is as though an immense wedge were being forced, not
underneath society, but through society. Those who are above the point
of separation are elevated, but those who are below are crushed down.
This depressing effect is not generally realized, for it is not
apparent where there has long existed a class just able to live. Where
the lowest class barely lives, as has been the case for a long time
in many parts of Europe, it is impossible for it to get any lower,
for the next lowest step is out of existence, and no tendency to
further depression can readily show itself. But in the progress of new
settlements to the conditions of older communities it may clearly be
seen that material progress does not merely fail to relieve poverty—it
actually produces it. In the United States it is clear that squalor
and misery, and the vices and crimes that spring from them, everywhere
increase as the village grows to the city, and the march of development
brings the advantages of the improved methods of production and
exchange. It is in the older and richer sections of the Union that
pauperism and distress among the working classes are becoming most
painfully apparent. If there is less deep poverty in San Francisco than
in New York, is it not because San Francisco is yet behind New York in
all that both cities are striving for? When San Francisco reaches the
point where New York now is, who can doubt that there will also be
ragged and barefooted children on her streets?
This association of poverty with progress is the great enigma of our
times. It is the central fact from which spring industrial, social,
and political difficulties that perplex the world, and with which
statesmanship and philanthropy and education grapple in vain. From it
come the clouds that overhang the future of the most progressive and
self-reliant nations. It is the riddle which the Sphinx of Fate puts
to our civilization, and which not to answer is to be destroyed. So
long as all the increased wealth which modern progress brings goes but
to build up great fortunes, to increase luxury and make sharper the
contrast between the House of Have and the House of Want, progress is
not real and cannot be permanent. The reaction must come. The tower
leans from its foundations, and every new story but hastens the final
catastrophe. To educate men who must be condemned to poverty, is but to
make them restive; to base on a state of most glaring social inequality
political institutions under which men are theoretically equal, is to
stand a pyramid on its apex.
All-important as this question is, pressing itself from every quarter
painfully upon attention, it has not yet received a solution which
accounts for all the facts and points to any clear and simple remedy.
This is shown by the widely varying attempts to account for the
prevailing depression. They exhibit not merely a divergence between
vulgar notions and scientific theories, but also show that the
concurrence which should exist between those who avow the same general
theories breaks up upon practical questions into an anarchy of opinion.
Upon high economic authority we have been told that the prevailing
depression is due to overconsumption; upon equally high authority,
that it is due to overproduction; while the wastes of war, the
extension of railroads, the attempts of workmen to keep up wages, the
demonetization of silver, the issues of paper money, the increase of
labor-saving machinery, the opening of shorter avenues to trade, etc.,
are separately pointed out as the cause, by writers of reputation.
And while professors thus disagree, the ideas that there is a necessary
conflict between capital and labor, that machinery is an evil, that
competition must be restrained and interest abolished, that wealth may
be created by the issue of money, that it is the duty of government
to furnish capital or to furnish work, are rapidly making way among
the great body of the people, who keenly feel a hurt and are sharply
conscious of a wrong. Such ideas, which bring great masses of men,
the repositories of ultimate political power, under the leadership of
charlatans and demagogues, are fraught with danger; but they cannot be
successfully combated until political economy shall give some answer to
the great question which shall be consistent with all her teachings,
and which shall commend itself to the perceptions of the great masses
of men.
It must be within the province of political economy to give such
an answer. For political economy is not a set of dogmas. It is the
explanation of a certain set of facts. It is the science which, in the
sequence of certain phenomena, seeks to trace mutual relations and to
identify cause and effect, just as the physical sciences seek to do in
other sets of phenomena. It lays its foundations upon firm ground. The
premises from which it makes its deductions are truths which have the
highest sanction; axioms which we all recognize; upon which we safely
base the reasoning and actions of everyday life, and which may be
reduced to the metaphysical expression of the physical law that motion
seeks the line of least resistance—viz., that men seek to gratify their
desires with the least exertion. Proceeding from a basis thus assured,
its processes, which consist simply in identification and separation,
have the same certainty. In this sense it is as exact a science as
geometry, which, from similar truths relative to space, obtains its
conclusions by similar means, and its conclusions when valid should
be as self-apparent. And although in the domain of political economy
we cannot test our theories by artificially produced combinations
or conditions, as may be done in some of the other sciences, yet
we can apply tests no less conclusive, by comparing societies in
which different conditions exist, or by, in imagination, separating,
combining, adding or eliminating forces or factors of known direction.
I propose in the following pages to attempt to solve by the methods of
political economy the great problem I have outlined. I propose to seek
the law which associates poverty with progress, and increases want with
advancing wealth; and I believe that in the explanation of this paradox
we shall find the explanation of those recurring seasons of industrial
and commercial paralysis which, viewed independently of their relations
to more general phenomena, seem so inexplicable. Properly commenced
and carefully pursued, such an investigation must yield a conclusion
that will stand every test, and as truth, will correlate with all other
truth. For in the sequence of phenomena there is no accident. Every
effect has a cause, and every fact implies a preceding fact.
That political economy, as at present taught, does not explain the
persistence of poverty amid advancing wealth in a manner which accords
with the deep-seated perceptions of men; that the unquestionable truths
which it does teach are unrelated and disjointed; that it has failed to
make the progress in popular thought that truth, even when unpleasant,
must make; that, on the contrary, after a century of cultivation,
during which it has engrossed the attention of some of the most
subtle and powerful intellects, it should be spurned by the statesman,
scouted by the masses, and relegated in the opinion of many educated
and thinking men to the rank of a pseudo-science in which nothing is
fixed or can be fixed—must, it seems to me, be due not to any inability
of the science when properly pursued, but to some false step in its
premises, or overlooked factor in its estimates. And as such mistakes
are generally concealed by the respect paid to authority, I propose in
this inquiry to take nothing for granted, but to bring even accepted
theories to the test of first principles, and should they not stand the
test, freshly to interrogate facts in the endeavor to discover their
law.
I propose to beg no question, to shrink from no conclusion, but to
follow truth wherever it may lead. Upon us is the responsibility of
seeking the law, for in the very heart of our civilization to-day women
faint and little children moan. But what that law may prove to be is
not our affair. If the conclusions that we reach run counter to our
prejudices, let us not flinch; if they challenge institutions that have
long been deemed wise and natural, let us not turn back.
BOOK I.
WAGES AND CAPITAL.
CHAPTER I.—THE CURRENT DOCTRINE—ITS INSUFFICIENCY.
CHAPTER II.—THE MEANING OF THE TERMS.
CHAPTER III.—WAGES NOT DRAWN FROM CAPITAL, BUT PRODUCED BY THE LABOR.
CHAPTER IV.—THE MAINTENANCE OF LABORERS NOT DRAWN FROM CAPITAL.
CHAPTER V.—THE REAL FUNCTIONS OF CAPITAL.
He that is to follow philosophy must be a freeman in mind.
—_Ptolemy_.
CHAPTER I.
THE CURRENT DOCTRINE OF WAGES—ITS INSUFFICIENCY.
Reducing to its most compact form the problem we have set out to
investigate, let us examine, step by step, the explanation which
political economy, as now accepted by the best authority, gives of it.
The cause which produces poverty in the midst of advancing wealth is
evidently the cause which exhibits itself in the tendency, everywhere
recognized, of wages to a minimum. Let us, therefore, put our inquiry
into this compact form:
_Why, in spite of increase in productive power, do wages tend to a
minimum which will give but a bare living?_
The answer of the current political economy is, that wages are fixed
by the ratio between the number of laborers and the amount of capital
devoted to the employment of labor, and constantly tend to the lowest
amount on which laborers will consent to live and reproduce, because
the increase in the number of laborers tends naturally to follow and
overtake any increase in capital. The increase of the divisor being
thus held in check only by the possibilities of the quotient, the
dividend may be increased to infinity without greater result.
In current thought this doctrine holds all but undisputed sway. It
bears the indorsement of the very highest names among the cultivators
of political economy, and though there have been attacks upon it, they
are generally more formal than real.[2] It is assumed by Buckle as
the basis of his generalizations of universal history. It is taught in
all, or nearly all, the great English and American universities, and
is laid down in text-books which aim at leading the masses to reason
correctly upon practical affairs, while it seems to harmonize with the
new philosophy, which, having in a few years all but conquered the
scientific world, is now rapidly permeating the general mind.
Thus entrenched in the upper regions of thought, it is in cruder form
even more firmly rooted in what may be styled the lower. What gives to
the fallacies of protection such a tenacious hold, in spite of their
evident inconsistencies and absurdities, is the idea that the sum to
be distributed in wages is in each community a fixed one, which the
competition of “foreign labor” must still further subdivide. The same
idea underlies most of the theories which aim at the abolition of
interest and the restriction of competition, as the means whereby the
share of the laborer in the general wealth can be increased; and it
crops out in every direction among those who are not thoughtful enough
to have any theories, as may be seen in the columns of newspapers and
the debates of legislative bodies.
And yet, widely accepted and deeply rooted as it is, it seems to me
that this theory does not tally with obvious facts. For, if wages
depend upon the ratio between the amount of labor seeking employment
and the amount of capital devoted to its employment, the relative
scarcity or abundance of one factor must mean the relative abundance
or scarcity of the other. Thus, capital must be relatively abundant
where wages are high, and relatively scarce where wages are low. Now,
as the capital used in paying wages must largely consist of the capital
constantly seeking investment, the current rate of interest must be
the measure of its relative abundance or scarcity. So, if it be true
that wages depend upon the ratio between the amount of labor seeking
employment and the capital devoted to its employment, then high wages,
the mark of the relative scarcity of labor, must be accompanied by low
interest, the mark of the relative abundance of capital, and reversely,
low wages must be accompanied by high interest.
This is not the fact, but the contrary. Eliminating from interest the
element of insurance, and regarding only interest proper, or the return
for the use of capital, is it not a general truth that interest is
high where and when wages are high, and low where and when wages are
low? Both wages and interest have been higher in the United States
than in England, in the Pacific than in the Atlantic States. Is it
not a notorious fact that where labor flows for higher wages, capital
also flows for higher interest? Is it not true that wherever there has
been a general rise or fall in wages there has been at the same time
a similar rise or fall in interest? In California, for instance, when
wages were higher than anywhere else in the world, so also was interest
higher. Wages and interest have in California gone down together. When
common wages were $5 a day, the ordinary bank rate of interest was
twenty-four per cent. per annum. Now that common wages are $2 or $2.50
a day, the ordinary bank rate is from ten to twelve per cent.
Now, this broad, general fact, that wages are higher in new countries,
where capital is relatively scarce, than in old countries, where
capital is relatively abundant, is too glaring to be ignored. And
although very lightly touched upon, it is noticed by the expounders
of the current political economy. The manner in which it is noticed
proves what I say, that it is utterly inconsistent with the accepted
theory of wages. For in explaining it such writers as Mill, Fawcett,
and Price virtually give up the theory of wages upon which, in the
same treatises, they formally insist. Though they declare that wages
are fixed by the ratio between capital and laborers, they explain the
higher wages and interest of new countries by the greater relative
production of wealth. I shall hereafter show that this is not the fact,
but that, on the contrary, the production of wealth is relatively
larger in old and densely populated countries than in new and sparsely
populated countries. But at present I merely wish to point out the
inconsistency. For to say that the higher wages of new countries are
due to greater proportionate production, is clearly to make the ratio
with production, and not the ratio with capital, the determinator of
wages.
Though this inconsistency does not seem to have been perceived by
the class of writers to whom I refer, it has been noticed by one of
the most logical of the expounders of the current political economy.
Professor Cairnes[3] endeavors in a very ingenious way to reconcile
the fact with the theory, by assuming that in new countries, where
industry is generally directed to the production of food and what in
manufactures is called raw material, a much larger proportion of the
capital used in production is devoted to the payment of wages than in
older countries where a greater part must be expended in machinery and
material, and thus, in the new country, though capital is scarcer, and
interest is higher, the amount determined to the payment of wages is
really larger, and wages are also higher. For instance, of $100,000
devoted in an old country to manufactures, $80,000 would probably
be expended for buildings, machinery and the purchase of materials,
leaving but $20,000 to be paid out in wages; whereas in a new country,
of $30,000 devoted to agriculture, etc., not more than $5,000 would be
required for tools, etc., leaving $25,000 to be distributed in wages.
In this way it is explained that the wage fund may be comparatively
large where capital is comparatively scarce, and high wages and high
interest accompany each other.
In what follows I think I shall be able to show that this explanation
is based upon a total misapprehension of the relations of labor to
capital—a fundamental error as to the fund from which wages are drawn;
but at present it is necessary only to point out that the connection
in the fluctuation of wages and interest in the same countries and
in the same branches of industry cannot thus be explained. In those
alternations known as “good times” and “hard times” a brisk demand
for labor and good wages is always accompanied by a brisk demand for
capital and stiff rates of interest. While, when laborers cannot find
employment and wages droop, there is always an accumulation of capital
seeking investment at low rates.[4] The present depression has been
no less marked by want of employment and distress among the working
classes than by the accumulation of unemployed capital in all the great
centers, and by nominal rates of interest on undoubted security. Thus,
under conditions which admit of no explanation consistent with the
current theory, do we find high interest coinciding with high wages,
and low interest with low wages—capital seemingly scarce when labor is
scarce, and abundant when labor is abundant.
All these well known facts, which coincide with each other, point to
a relation between wages and interest, but it is to a relation of
conjunction, not of opposition. Evidently they are utterly inconsistent
with the theory that wages are determined by the ratio between labor
and capital, or any part of capital.
How, then, it will be asked, could such a theory arise? How is it that
it has been accepted by a succession of economists, from the time of
Adam Smith to the present day?
If we examine the reasoning by which in current treatises this theory
of wages is supported, we see at once that it is not an induction from
observed facts, but a deduction from a previously assumed theory—viz.,
that wages are drawn from capital. It being assumed that capital is the
source of wages, it necessarily follows that the gross amount of wages
must be limited by the amount of capital devoted to the employment
of labor, and hence that the amount individual laborers can receive
must be determined by the ratio between their number and the amount of
capital existing for their recompense.[5] This reasoning is valid, but
the conclusion, as we have seen, does not correspond with the facts.
The fault, therefore, must be in the premises. Let us see.
I am aware that the theorem that wages are drawn from capital is
one of the most fundamental and apparently best settled of current
political economy, and that it has been accepted as axiomatic by all
the great thinkers who have devoted their powers to the elucidation
of the science. Nevertheless, I think it can be demonstrated to be
a fundamental error—the fruitful parent of a long series of errors,
which vitiate most important practical conclusions. This demonstration
I am about to attempt. It is necessary that it should be clear and
conclusive, for a doctrine upon which so much important reasoning is
based, which is supported by such a weight of authority, which is so
plausible in itself, and is so liable to recur in different forms,
cannot be safely brushed aside in a paragraph.
The proposition I shall endeavor to prove, is:
_That wages, instead of being drawn from capital, are in reality drawn
from the product of the labor for which they are paid._[6]
Now, inasmuch as the current theory that wages are drawn from capital
also holds that capital is reimbursed from production, this at first
glance may seem a distinction without a difference—a mere change
in terminology, to discuss which would be but to add to those
unprofitable disputes that render so much that has been written upon
politico-economic subjects as barren and worthless as the controversies
of the various learned societies about the true reading of the
inscription on the stone that Mr. Pickwick found. But that it is much
more than a formal distinction will be apparent when it is considered
that upon the difference between the two propositions are built up all
the current theories as to the relations of capital and labor; that
from it are deduced doctrines that, themselves regarded as axiomatic,
bound, direct, and govern the ablest minds in the discussion of the
most momentous questions. For, upon the assumption that wages are drawn
directly from capital, and not from the product of the labor, is based,
not only the doctrine that wages depend upon the ratio between capital
and labor, but the doctrine that industry is limited by capital—that
capital must be accumulated before labor is employed, and labor cannot
be employed except as capital is accumulated; the doctrine that every
increase of capital gives or is capable of giving additional employment
to industry; the doctrine that the conversion of circulating capital
into fixed capital lessens the fund applicable to the maintenance of
labor; the doctrine that more laborers can be employed at low than
at high wages; the doctrine that capital applied to agriculture will
maintain more laborers than if applied to manufactures; the doctrine
that profits are high or low as wages are low or high, or that they
depend upon the cost of the subsistence of laborers; together with such
paradoxes as that a demand for commodities is not a demand for labor,
or that certain commodities may be increased in cost by a reduction in
wages or diminished in cost by an increase in wages.
In short, all the teachings of the current political economy, in the
widest and most important part of its domain, are based more or less
directly upon the assumption that labor is maintained and paid out
of existing capital before the product which constitutes the ultimate
object is secured. If it be shown that this is an error, and that
on the contrary the maintenance and payment of labor do not even
temporarily trench on capital, but are directly drawn from the product
of the labor, then all this vast superstructure is left without support
and must fall. And so likewise must fall the vulgar theories which also
have their base in the belief that the sum to be distributed in wages
is a fixed one, the individual shares in which must necessarily be
decreased by an increase in the number of laborers.
The difference between the current theory and the one I advance is, in
fact, similar to that between the mercantile theory of international
exchanges and that with which Adam Smith supplanted it. Between the
theory that commerce is the exchange of commodities for money, and the
theory that it is the exchange of commodities for commodities, there
may seem no real difference when it is remembered that the adherents
of the mercantile theory did not assume that money had any other use
than as it could be exchanged for commodities. Yet, in the practical
application of these two theories, there arises all the difference
between rigid governmental protection and free trade.
If I have said enough to show the reader the ultimate importance of
the reasoning through which I am about to ask him to follow me, it
will not be necessary to apologize in advance either for simplicity
or prolixity. In arraigning a doctrine of such importance—a doctrine
supported by such a weight of authority, it is necessary to be both
clear and thorough.
Were it not for this I should be tempted to dismiss with a sentence
the assumption that wages are drawn from capital. For all the vast
superstructure which the current political economy builds upon this
doctrine is in truth based upon a foundation which has been merely
taken for granted, without the slightest attempt to distinguish the
apparent from the real. Because wages are generally paid in money, and
in many of the operations of production are paid before the product
is fully completed, or can be utilized, it is inferred that wages are
drawn from pre-existing capital, and, therefore, that industry is
limited by capital—that is to say that labor cannot be employed until
capital has been accumulated, and can only be employed to the extent
that capital has been accumulated.
Yet in the very treatises in which the limitation of industry by
capital is laid down without reservation and made the basis for the
most important reasonings and elaborate theories, we are told that
capital is stored-up or accumulated labor—“that part of wealth which
is saved to assist future production.” If we substitute for the word
“capital” this definition of the word, the proposition carries its own
refutation, for that labor cannot be employed until the results of
labor are saved becomes too absurd for discussion.
Should we, however, with this _reductio ad absurdum_, attempt to
close the argument, we should probably be met with the explanation,
not that the first laborers were supplied by Providence with the
capital necessary to set them to work, but that the proposition merely
refers to a state of society in which production has become a complex
operation.
But the fundamental truth, that in all economic reasoning must
be firmly grasped, and never let go, is that society in its most
highly developed form is but an elaboration of society in its rudest
beginnings, and that principles obvious in the simpler relations of
men are merely disguised and not abrogated or reversed by the more
intricate relations that result from the division of labor and the
use of complex tools and methods. The steam grist mill, with its
complicated machinery exhibiting every diversity of motion, is simply
what the rude stone mortar dug up from an ancient river bed was in
its day—an instrument for grinding corn. And every man engaged in it,
whether tossing wood into the furnace, running the engine, dressing
stones, printing sacks or keeping books, is really devoting his labor
to the same purpose that the pre-historic savage did when he used his
mortar—the preparation of grain for human food.
And so, if we reduce to their lowest terms all the complex operations
of modern production, we see that each individual who takes part in
this infinitely subdivided and intricate network of production and
exchange is really doing what the primeval man did when he climbed the
trees for fruit or followed the receding tide for shellfish—endeavoring
to obtain from nature by the exertion of his powers the satisfaction of
his desires. If we keep this firmly in mind, if we look upon production
as a whole—as the co-operation of all embraced in any of its great
groups to satisfy the various desires of each, we plainly see that the
reward each obtains for his exertions comes as truly and as directly
from nature as the result of that exertion, as did that of the first
man.
To illustrate: In the simplest state of which we can conceive, each
man digs his own bait and catches his own fish. The advantages of the
division of labor soon become apparent, and one digs bait while the
others fish. Yet evidently the one who digs bait is in reality doing
as much toward the catching of fish as any of those who actually take
the fish. So when the advantages of canoes are discovered, and instead
of all going a-fishing, one stays behind and makes and repairs canoes,
the canoe-maker is in reality devoting his labor to the taking of fish
as much as the actual fishermen, and the fish which he eats at night
when the fishermen come home are as truly the product of his labor as
of theirs. And thus when the division of labor is fairly inaugurated,
and instead of each attempting to satisfy all of his wants by direct
resort to nature, one fishes, another hunts, a third picks berries, a
fourth gathers fruit, a fifth makes tools, a sixth builds huts, and a
seventh prepares clothing—each one is to the extent he exchanges the
direct product of his own labor for the direct product of the labor of
others really applying his own labor to the production of the things he
uses—is in effect satisfying his particular desires by the exertion of
his particular powers; that is to say, what he receives he in reality
produces. If he digs roots and exchanges them for venison, he is in
effect as truly the procurer of the venison as though he had gone in
chase of the deer and left the huntsman to dig his own roots. The
common expression, “I made so and so,” signifying “I earned so and so,”
or “I earned money with which I purchased so and so,” is, economically
speaking, not metaphorically but literally true. Earning is making.
Now, if we follow these principles, obvious enough in a simpler state
of society, through the complexities of the state we call civilized,
we shall see clearly that in every case in which labor is exchanged
for commodities, production really precedes enjoyment; that wages are
the earnings—that is to say, the makings of labor—not the advances of
capital, and that the laborer who receives his wages in money (coined
or printed, it may be, before his labor commenced) really receives in
return for the addition his labor has made to the general stock of
wealth, a draft upon that general stock, which he may utilize in any
particular form of wealth that will best satisfy his desires; and that
neither the money, which is but the draft, nor the particular form of
wealth which he uses it to call for, represents advances of capital
for his maintenance, but on the contrary represents the wealth, or
a portion of the wealth, his labor has already added to the general
stock.
Keeping these principles in view we see that the draughtsman, who, shut
up in some dingy office on the banks of the Thames, is drawing the
plans for a great marine engine, is in reality devoting his labor to
the production of bread and meat as truly as though he were garnering
the grain in California or swinging a lariat on a La Plata pampa; that
he is as truly making his own clothing as though he were shearing sheep
in Australia or weaving cloth in Paisley, and just as effectually
producing the claret he drinks at dinner as though he gathered the
grapes on the banks of the Garonne. The miner who, two thousand feet
under ground in the heart of the Comstock, is digging out silver ore,
is, in effect, by virtue of a thousand exchanges, harvesting crops in
valleys five thousand feet nearer the earth’s center; chasing the whale
through Arctic icefields; plucking tobacco leaves in Virginia; picking
coffee berries in Honduras; cutting sugar cane on the Hawaiian Islands;
gathering cotton in Georgia or weaving it in Manchester or Lowell;
making quaint wooden toys for his children in the Hartz Mountains; or
plucking amid the green and gold of Los Angeles orchards the oranges
which, when his shift is relieved, he will take home to his sick
wife. The wages which he receives on Saturday night at the mouth of
the shaft, what are they but the certificate to all the world that he
has done these things—the primary exchange in the long series which
transmutes his labor into the things he has really been laboring for?
* * * * *
All this is clear when looked at in this way; but to meet this
fallacy in all its strongholds and lurking places we must change our
investigation from the deductive to the inductive form. Let us now
see, if, beginning with facts and tracing their relations, we arrive
at the same conclusions as are thus obvious when, beginning with first
principles, we trace their exemplification in complex facts.
FOOTNOTES:
[1] It is true that the poorest may now in certain ways enjoy what
the richest a century ago could not have commanded, but this does not
show improvement of condition so long as the ability to obtain the
necessaries of life is not increased. The beggar in a great city may
enjoy many things from which the backwoods farmer is debarred, but that
does not prove the condition of the city beggar better than that of the
independent farmer.
[2] This seems to me true of Mr. Thornton’s objections, for while he
denies the existence of a predetermined wage fund, consisting of a
portion of capital set apart for the purchase of labor, he yet holds
(which is the essential thing) that wages are drawn from capital, and
that increase or decrease of capital is increase or decrease of the
fund available for the payment of wages. The most vital attack upon
the wage fund doctrine of which I know is that of Professor Francis A.
Walker (The Wages Question: New York, 1876), yet he admits that wages
are in large part advanced from capital—which, so far as it goes,
is all that the stanchest supporter of the wage fund theory could
claim—while he fully accepts the Malthusian theory. Thus his practical
conclusions in nowise differ from those reached by expounders of the
current theory.
[3] Some Leading Principles of Political Economy Newly Expounded,
Chapter 1, Part 2.
[4] Times of commercial panic are marked by high rates of discount, but
this is evidently not a high rate of interest, properly so-called, but
a high rate of insurance against risk.
[5] For instance McCulloch (Note VI to Wealth of Nations) says: “That
portion of the capital or wealth of a country which the employers of
labor intend to or are willing to pay out in the purchase of labor,
may be much larger at one time than another. But whatever may be its
absolute magnitude, it obviously forms the only source from which any
portion of the wages of labor can be derived. No other fund is in
existence from which the laborer, as such, can draw a single shilling.
And hence _it follows_ that the average rate of wages, or the share of
the national capital appropriated to the employment of labor falling,
at an average, to each laborer, must entirely depend on its amount as
compared with the number of those amongst whom it has to be divided.”
Similar citations might be made from all the standard economists.
[6] We are speaking of labor expended in production, to which it is
best for the sake of simplicity to confine the inquiry. Any question
which may arise in the reader’s mind as to wages for unproductive
services had best therefore be deferred.
CHAPTER II.
THE MEANING OF THE TERMS.
Before proceeding further in our inquiry, let us make sure of the
meaning of our terms, for indistinctness in their use must inevitably
produce ambiguity and indeterminateness in reasoning. Not only is it
requisite in economic reasoning to give to such words as “wealth,”
“capital,” “rent,” “wages,” and the like, a much more definite sense
than they bear in common discourse, but, unfortunately, even in
political economy there is, as to some of these terms, no certain
meaning assigned by common consent, different writers giving to the
same term different meanings, and the same writers often using a term
in different senses. Nothing can add to the force of what has been
said by so many eminent authors as to the importance of clear and
precise definitions, save the example, not an infrequent one, of the
same authors falling into grave errors from the very cause they warned
against. And nothing so shows the importance of language in thought as
the spectacle of even acute thinkers basing important conclusions upon
the use of the same word in varying senses. I shall endeavor to avoid
these dangers. It will be my effort throughout, as any term becomes of
importance, to state clearly what I mean by it, and to use it in that
sense and in no other. Let me ask the reader to note and to bear in
mind the definitions thus given, as otherwise I cannot hope to make
myself properly understood. I shall not attempt to attach arbitrary
meanings to words, or to coin terms, even when it would be convenient
to do so, but shall conform to usage as closely as is possible, only
endeavoring so to fix the meaning of words that they may clearly
express thought.
What we have now on hand is to discover whether, as a matter of fact,
wages are drawn from capital. As a preliminary, let us settle what
we mean by wages and what we mean by capital. To the former word a
sufficiently definite meaning has been given by economic writers,
but the ambiguities which have attached to the use of the latter in
political economy will require a detailed examination.
As used in common discourse “wages” means a compensation paid to a
hired person for his services; and we speak of one man “working for
wages,” in contradistinction to another who is “working for himself.”
The use of the term is still further narrowed by the habit of applying
it solely to compensation paid for manual labor. We do not speak of
the wages of professional men, managers or clerks, but of their fees,
commissions, or salaries. Thus the common meaning of the word wages
is the compensation paid to a hired person for manual labor. But in
political economy the word wages has a much wider meaning, and includes
all returns for exertion. For, as political economists explain, the
three agents or factors in production are land, labor, and capital, and
that part of the produce which goes to the second of these factors is
by them styled wages.
Thus the term labor includes all human exertion in the production of
wealth, and wages, being that part of the produce which goes to labor,
includes all reward for such exertion. There is, therefore, in the
politico-economic sense of the term wages no distinction as to the kind
of labor, or as to whether its reward is received through an employer
or not, but wages means the return received for the exertion of labor,
as distinguished from the return received for the use of capital, and
the return received by the landholder for the use of land. The man who
cultivates the soil for himself receives his wages in its produce,
just as, if he uses his own capital and owns his own land, he may also
receive interest and rent; the hunter’s wages are the game he kills;
the fisherman’s wages are the fish he takes. The gold washed out by
the self-employing gold-digger is as much his wages as the money paid
to the hired coal miner by the purchaser of his labor,[7] and, as Adam
Smith shows, the high profits of retail storekeepers are in large part
wages, being the recompense of their labor and not of their capital.
In short, whatever is received as the result or reward of exertion is
“wages.”
This is all it is now necessary to note as to “wages,” but it is
important to keep this in mind. For in the standard economic works this
sense of the term wages is recognized with greater or less clearness
only to be subsequently ignored.
But it is more difficult to clear away from the idea of capital the
ambiguities that beset it, and to fix the scientific use of the
term. In general discourse, all sorts of things that have a value or
will yield a return are vaguely spoken of as capital, while economic
writers vary so widely that the term can hardly be said to have a
fixed meaning. Let us compare with each other the definitions of a few
representative writers:
“That part of a man’s stock,” says Adam Smith (Book II, Chap. I),
“which he expects to afford him a revenue, is called his capital,”
and the capital of a country or society, he goes on to say, consists
of (1) machines and instruments of trade which facilitate and abridge
labor; (2) buildings, not mere dwellings, but which may be considered
instruments of trade—such as shops, farmhouses, etc.; (3) improvements
of land which better fit it for tillage or culture; (4) the acquired
and useful abilities of all the inhabitants; (5) money; (6) provisions
in the hands of producers and dealers, from the sale of which they
expect to derive a profit; (7) the material of, or partially completed,
manufactured articles still in the hands of producers or dealers;
(8) completed articles still in the hands of producers or dealers.
The first four of these he styles fixed capital, and the last four
circulating capital, a distinction of which it is not necessary to our
purpose to take any note.
Ricardo’s definition is:
“Capital is that part of the wealth of a country which is employed
in production, and consists of food, clothing, tools, raw materials,
machinery, etc., necessary to give effect to labor.”—_Principles of
Political Economy, Chapter V._
This definition, it will be seen, is very different from that of
Adam Smith, as it excludes many of the things which he includes—as
acquired talents, articles of mere taste or luxury in the possession
of producers or dealers; and includes some things he excludes—such as
food, clothing, etc., in the possession of the consumer.
McCulloch’s definition is:
“The capital of a nation really comprises all those portions of the
produce of industry existing in it that _may be_ directly employed
either to support human existence or to facilitate production.”—_Notes
on Wealth of Nations, Book II, Chap. I._
This definition follows the line of Ricardo’s, but is wider. While
it excludes everything that is not capable of aiding production, it
includes everything that is so capable, without reference to actual
use or necessity for use—the horse drawing a pleasure carriage being,
according to McCulloch’s view, as he expressly states, as much capital
as the horse drawing a plow, because he may, if need arises, be used to
draw a plow.
John Stuart Mill, following the same general line as Ricardo and
McCulloch, makes neither the use nor the capability of use, but the
determination to use, the test of capital. He says:
“Whatever things are destined to supply productive labor with the
shelter, protection, tools and materials which the work requires, and
to feed and otherwise maintain the laborer during the process, are
capital.”—_Principles of Political Economy, Book I, Chap. IV._
These quotations sufficiently illustrate the divergence of the masters.
Among minor authors the variance is still greater, as a few examples
will suffice to show.
Professor Wayland, whose “Elements of Political Economy” has long been
a favorite text-book in American educational institutions, where there
has been any pretense of teaching political economy, gives this lucid
definition:
“The word capital is used in two senses. In relation to product it
means any substance on which industry is to be exerted. In relation
to industry, the material on which industry is about to confer value,
that on which it has conferred value; the instruments which are used
for the conferring of value, as well as the means of sustenance by
which the being is supported while he is engaged in performing the
operation.”—_Elements of Political Economy, Book I, Chap. I._
Henry C. Carey, the American apostle of protectionism, defines capital
as “the instrument by which man obtains mastery over nature, including
in it the physical and mental powers of man himself.” Professor Perry,
a Massachusetts free trader, very properly objects to this that it
hopelessly confuses the boundaries between capital and labor, and then
himself hopelessly confuses the boundaries between capital and land
by defining capital as “any valuable thing outside of man himself
from whose use springs a pecuniary increase or profit.” An English
economic writer of high standing, Mr. Wm. Thornton, begins an elaborate
examination of the relations of labor and capital (“On Labor”) by
stating that he will include land with capital, which is very much as
if one who proposed to teach algebra should begin with the declaration
that he would consider the signs plus and minus as meaning the same
thing and having the same value. An American writer, also of high
standing, Professor Francis A. Walker, makes the same declaration in
his elaborate book on “The Wages Question.” Another English writer,
N. A. Nicholson (“The Science of Exchanges,” London, 1873), seems to
cap the climax of absurdity by declaring in one paragraph (p. 26) that
“capital must of course be accumulated by saving,” and in the very next
paragraph stating that “the land which produces a crop, the plow which
turns the soil, the labor which secures the produce, and the produce
itself, if a material profit is to be derived from its employment,
are all alike capital.” But how land and labor are to be accumulated
by saving them he nowhere condescends to explain. In the same way a
standard American writer, Professor Amasa Walker (p. 66, “Science of
Wealth”), first declares that capital arises from the net savings of
labor and then immediately afterward declares that land is capital.
I might go on for pages, citing contradictory and self-contradictory
definitions. But it would only weary the reader. It is unnecessary
to multiply quotations. Those already given are sufficient to show
how wide a difference exists as to the comprehension of the term
capital. Any one who wants further illustration of the “confusion
worse confounded” which exists on this subject among the professors of
political economy may find it in any library where the works of these
professors are ranged side by side.
Now, it makes little difference what name we give to things, if when
we use the name we always keep in view the same things and no others.
But the difficulty arising in economic reasoning from these vague and
varying definitions of capital is that it is only in the premises of
reasoning that the term is used in the peculiar sense assigned by the
definition, while in the practical conclusions that are reached it is
always used, or at least it is always understood, in one general and
definite sense. When, for instance, it is said that wages are drawn
from capital, the word capital is understood in the same sense as when
we speak of the scarcity or abundance, the increase or decrease, the
destruction or increment, of capital—a commonly understood and definite
sense which separates capital from the other factors of production,
land and labor, and also separates it from like things used merely for
gratification. In fact, most people understand well enough what capital
is until they begin to define it, and I think their works will show
that the economic writers who differ so widely in their definitions use
the term in this commonly understood sense in all cases except in their
definitions and the reasoning based on them.
This common sense of the term is that of wealth devoted to procuring
more wealth. Dr. Adam Smith correctly expresses this common idea
when he says: “That part of a man’s stock which he expects to afford
him revenue is called his capital.” And the capital of a community
is evidently the sum of such individual stocks, or that part of the
aggregate stock which is expected to procure more wealth. This also is
the derivative sense of the term. The word capital, as philologists
trace it, comes down to us from a time when wealth was estimated in
cattle, and a man’s income depended upon the number of head he could
keep for their increase.
The difficulties which beset the use of the word capital, as an exact
term, and which are even more strikingly exemplified in current
political and social discussions than in the definitions of economic
writers, arise from two facts—first, that certain classes of things,
the possession of which to the individual is precisely equivalent
to the possession of capital, are not part of the capital of the
community; and, second, that things of the same kind may or may not be
capital, according to the purpose to which they are devoted.
With a little care as to these points, there should be no difficulty in
obtaining a sufficiently clear and fixed idea of what the term capital
as generally used properly includes; such an idea as will enable us
to say what things are capital and what are not, and to use the word
without ambiguity or slip.
Land, labor, and capital are the three factors of production. If we
remember that capital is thus a term used in contradistinction to
land and labor, we at once see that nothing properly included under
either one of these terms can be properly classed as capital. The
term land necessarily includes, not merely the surface of the earth
as distinguished from the water and the air, but the whole material
universe outside of man himself, for it is only by having access to
land, from which his very body is drawn, that man can come in contact
with or use nature. The term land embraces, in short, all natural
materials, forces, and opportunities, and, therefore, nothing that is
freely supplied by nature can be properly classed as capital. A fertile
field, a rich vein of ore, a falling stream which supplies power,
may give to the possessor advantages equivalent to the possession of
capital, but to class such things as capital would be to put an end to
the distinction between land and capital, and, so far as they relate to
each other, to make the two terms meaningless. The term labor, in like
manner, includes all human exertion, and hence human powers whether
natural or acquired can never properly be classed as capital. In common
parlance we often speak of a man’s knowledge, skill, or industry as
constituting his capital; but this is evidently a metaphorical use of
language that must be eschewed in reasoning that aims at exactness.
Superiority in such qualities may augment the income of an individual
just as capital would, and an increase in the knowledge, skill, or
industry of a community may have the same effect in increasing its
production as would an increase of capital; but this effect is due to
the increased power of labor and not to capital. Increased velocity
may give to the impact of a cannon ball the same effect as increased
weight, yet, nevertheless, weight is one thing and velocity another.
Thus we must exclude from the category of capital everything that
may be included either as land or labor. Doing so, there remain only
things which are neither land nor labor, but which have resulted from
the union of these two original factors of production. Nothing can be
properly capital that does not consist of these—that is to say, nothing
can be capital that is not wealth.
But it is from ambiguities in the use of this inclusive term wealth
that many of the ambiguities which beset the term capital are derived.
As commonly used the word “wealth” is applied to anything having an
exchange value. But when used as a term of political economy it must
be limited to a much more definite meaning, because many things are
commonly spoken of as wealth which in taking account of collective or
general wealth cannot be considered as wealth at all. Such things have
an exchange value, and are commonly spoken of as wealth, insomuch as
they represent as between individuals, or between sets of individuals,
the power of obtaining wealth; but they are not truly wealth, inasmuch
as their increase or decrease does not affect the sum of wealth.
Such are bonds, mortgages, promissory notes, bank bills, or other
stipulations for the transfer of wealth. Such are slaves, whose value
represents merely the power of one class to appropriate the earnings
of another class. Such are lands, or other natural opportunities,
the value of which is but the result of the acknowledgment in favor
of certain persons of an exclusive right to their use, and which
represents merely the power thus given to the owners to demand a share
of the wealth produced by those who use them. Increase in the amount of
bonds, mortgages, notes, or bank bills cannot increase the wealth of
the community that includes as well those who promise to pay as those
who are entitled to receive. The enslavement of a part of their number
could not increase the wealth of a people, for what the enslavers
gained the enslaved would lose. Increase in land values does not
represent increase in the common wealth, for what land owners gain by
higher prices, the tenants or purchasers who must pay them will lose.
And all this relative wealth, which, in common thought and speech, in
legislation and law, is undistinguished from actual wealth, could,
without the destruction or consumption of anything more than a few
drops of ink and a piece of paper, be utterly annihilated. By enactment
of the sovereign political power debts might be canceled, slaves
emancipated, and land resumed as the common property of the whole
people, without the aggregate wealth being diminished by the value of a
pinch of snuff, for what some would lose others would gain. There would
be no more destruction of wealth than there was creation of wealth
when Elizabeth Tudor enriched her favorite courtiers by the grant of
monopolies, or when Boris Godoonof made Russian peasants merchantable
property.
All things which have an exchange value are, therefore, not wealth, in
the only sense in which the term can be used in political economy. Only
such things can be wealth the production of which increases and the
destruction of which decreases the aggregate of wealth. If we consider
what these things are, and what their nature is, we shall have no
difficulty in defining wealth.
When we speak of a community increasing in wealth—as when we say that
England has increased in wealth since the accession of Victoria, or
that California is a wealthier country than when it was a Mexican
territory—we do not mean to say that there is more land, or that
the natural powers of the land are greater, or that there are more
people, for when we wish to express that idea we speak of increase of
population; or that the debts or dues owing by some of these people
to others of their number have increased; but we mean that there is
an increase of certain tangible things, having an actual and not
merely a relative value—such as buildings, cattle, tools, machinery,
agricultural and mineral products, manufactured goods, ships, wagons,
furniture, and the like. The increase of such things constitutes an
increase of wealth; their decrease is a lessening of wealth; and the
community that, in proportion to its numbers, has most of such things
is the wealthiest community. The common character of these things is
that they consist of natural substances or products which have been
adapted by human labor to human use or gratification, their value
depending on the amount of labor which upon the average would be
required to produce things of like kind.
Thus wealth, as alone the term can be used in political economy,
consists of natural products that have been secured, moved, combined,
separated, or in other ways modified by human exertion, so as to fit
them for the gratification of human desires. It is, in other words,
labor impressed upon matter in such a way as to store up, as the heat
of the sun is stored up in coal, the power of human labor to minister
to human desires. Wealth is not the sole object of labor, for labor is
also expended in ministering directly to desire; but it is the object
and result of what we call productive labor—that is, labor which gives
value to material things. Nothing which nature supplies to man without
his labor is wealth, nor yet does the expenditure of labor result in
wealth unless there is a tangible product which has and retains the
power of ministering to desire.
Now, as capital is wealth devoted to a certain purpose, nothing can
be capital which does not fall within this definition of wealth. By
recognizing and keeping this in mind, we get rid of misconceptions
which vitiate all reasoning in which they are permitted, which befog
popular thought, and have led into mazes of contradiction even acute
thinkers.
But though all capital is wealth, all wealth is not capital. Capital is
only a part of wealth—that part, namely, which is devoted to the aid of
production. It is in drawing this line between the wealth that is and
the wealth that is not capital that a second class of misconceptions
are likely to occur.
The errors which I have been pointing out, and which consist in
confounding with wealth and capital things essentially distinct, or
which have but a relative existence, are now merely vulgar errors.
They are widespread, it is true, and have a deep root, being held,
not merely by the less educated classes, but seemingly by a large
majority of those who in such advanced countries as England and
the United States mold and guide public opinion, make the laws in
Parliaments, Congresses and Legislatures, and administer them in the
courts. They crop out, moreover, in the disquisitions of many of those
flabby writers who have burdened the press and darkened counsel by
numerous volumes which are dubbed political economy, and which pass
as text-books with the ignorant and as authority with those who do
not think for themselves. Nevertheless, they are only vulgar errors,
inasmuch as they receive no countenance from the best writers on
political economy. By one of those lapses which flaw his great work
and strikingly evince the imperfections of the highest talent, Adam
Smith counts as capital certain personal qualities, an inclusion which
is not consistent with his original definition of capital as stock
from which revenue is expected. But this error has been avoided by his
most eminent successors, and in the definitions, previously given, of
Ricardo, McCulloch, and Mill, it is not involved. Neither in their
definitions nor in that of Smith is involved the vulgar error which
confounds as real capital things which are only relatively capital,
such as evidences of debt, land values, etc. But as to things which are
really wealth, their definitions differ from each other, and widely
from that of Smith, as to what is and what is not to be considered
as capital. The stock of a jeweler would, for instance, be included
as capital by the definition of Smith, and the food or clothing in
possession of a laborer would be excluded. But the definitions of
Ricardo and McCulloch would exclude the stock of the jeweler, as would
also that of Mill, if understood as most persons would understand the
words I have quoted. But as explained by him, it is neither the nature
nor the destination of the things themselves which determines whether
they are or are not capital, but the intention of the owner to devote
either the things or the value received from their sale to the supply
of productive labor with tools, materials, and maintenance. All these
definitions, however, agree in including as capital the provisions and
clothing of the laborer, which Smith excludes.
Let us consider these three definitions, which represent the best
teachings of current political economy:
To McCulloch’s definition of capital as “all those portions of the
produce of industry that may be directly employed either to support
human existence or to facilitate production,” there are obvious
objections. One may pass along any principal street in a thriving town
or city and see stores filled with all sorts of valuable things, which,
though they cannot be employed either to support human existence or to
facilitate production, undoubtedly constitute part of the capital of
the storekeepers and part of the capital of the community. And he can
also see products of industry capable of supporting human existence
or facilitating production being consumed in ostentation or useless
luxury. Surely these, though they might, _do not_ constitute part of
capital.
Ricardo’s definition avoids including as capital things which might
be but are not employed in production, by covering only such as are
employed. But it is open to the first objection made to McCulloch’s. If
only wealth that may be, or that is, or that is destined to be, used
in supporting producers, or assisting production, is capital, then the
stocks of jewelers, toy dealers, tobacconists, confectioners, picture
dealers, etc.—in fact, all stocks that consist of, and all stocks in so
far as they consist of articles of luxury, are not capital.
If Mill, by remitting the distinction to the mind of the capitalist,
avoids this difficulty (which does not seem to me clear), it is by
making the distinction so vague that no power short of omniscience
could tell in any given country at any given time what was and what was
not capital.
But the great defect which these definitions have in common is
that they include what clearly cannot be accounted capital, if any
distinction is to be made between laborer and capitalist. For they
bring into the category of capital the food, clothing, etc., in the
possession of the day laborer, which he will consume whether he works
or not, as well as the stock in the hands of the capitalist, with which
he proposes to pay the laborer for his work.
Yet, manifestly, this is not the sense in which the term capital is
used by these writers when they speak of labor and capital as taking
separate parts in the work of production and separate shares in the
distribution of its proceeds; when they speak of wages as drawn from
capital, or as depending upon the ratio between labor and capital, or
in any of the ways in which the term is generally used by them. In
all these cases the term capital is used in its commonly understood
sense, as that portion of wealth which its owners do not propose to use
directly for their own gratification, but for the purpose of obtaining
more wealth. In short, by political economists, in everything except
their definitions and first principles, as well as by the world at
large, “that part of a man’s stock,” to use the words of Adam Smith,
“which he expects to afford him revenue is called his capital.” This is
the only sense in which the term capital expresses any fixed idea—the
only sense in which we can with any clearness separate it from wealth
and contrast it with labor. For, if we must consider as capital
everything which supplies the laborer with food, clothing, shelter,
etc., then to find a laborer who is not a capitalist we shall be forced
to hunt up an absolutely naked man, destitute even of a sharpened
stick, or of a burrow in the ground—a situation in which, save as the
result of exceptional circumstances, human beings have never yet been
found.
It seems to me that the variance and inexactitude in these definitions
arise from the fact that the idea of what capital is has been deduced
from a preconceived idea of how capital assists production. Instead of
determining what capital is, and then observing what capital does, the
functions of capital have first been assumed, and then a definition of
capital made which includes all things which do or may perform those
functions. Let us reverse this process, and, adopting the natural
order, ascertain what the thing is before settling what it does. All
we are trying to do, all that it is necessary to do, is to fix, as
it were, the metes and bounds of a term that in the main is well
apprehended—to make definite, that is, sharp and clear on its verges, a
common idea.
If the articles of actual wealth existing at a given time in a given
community were presented _in situ_ to a dozen intelligent men who
had never read a line of political economy, it is doubtful if they
would differ in respect to a single item, as to whether it should be
accounted capital or not. Money which its owner holds for use in his
business or in speculation would be accounted capital; money set aside
for household or personal expenses would not. That part of a farmer’s
crop held for sale or for seed, or to feed his help in part payment of
wages, would be accounted capital; that held for the use of his own
family would not be. The horses and carriage of a hackman would be
classed as capital, but an equipage kept for the pleasure of its owner
would not. So no one would think of counting as capital the false hair
on the head of a woman, the cigar in the mouth of a smoker, or the toy
with which a child is playing; but the stock of a hair dealer, of a
tobacconist, or of the keeper of a toy store, would be unhesitatingly
set down as capital. A coat which a tailor had made for sale would be
accounted capital, but not the coat he had made for himself. Food in
the possession of a hotel-keeper or a restaurateur would be accounted
capital, but not the food in the pantry of a housewife, or in the lunch
basket of a workman. Pig iron in the hands of the smelter, or founder,
or dealer, would be accounted capital, but not the pig iron used as
ballast in the hold of a yacht. The bellows of a blacksmith, the looms
of a factory, would be capital, but not the sewing machine of a woman
who does only her own work; a building let for hire, or used for
business or productive purposes, but not a homestead. In short, I think
we should find that now, as when Dr. Adam Smith wrote, “that part of
a man’s stock which he expects to yield him a revenue is called his
capital.” And, omitting his unfortunate slip as to personal qualities,
and qualifying somewhat his enumeration of money, it is doubtful if
we could better list the different articles of capital than did Adam
Smith in the passage which in the previous part of this chapter I have
condensed.
Now, if, after having thus separated the wealth that is capital from
the wealth that is not capital, we look for the distinction between
the two classes, we shall not find it to be as to the character,
capabilities, or final destination of the things themselves, as has
been vainly attempted to draw it; but it seems to me that we shall
find it to be as to whether they are or are not in the possession of
the consumer.[8] Such articles of wealth as in themselves, in their
uses, or in their products, are yet to be exchanged are capital;
such articles of wealth as are in the hands of the consumer are not
capital. Hence, if we define capital as _wealth in course of exchange_,
understanding exchange to include not merely the passing from hand to
hand, but also such transmutations as occur when the reproductive or
transforming forces of nature are utilized for the increase of wealth,
we shall, I think, comprehend all the things that the general idea of
capital properly includes, and shut out all it does not. Under this
definition, it seems to me, for instance, will fall all such tools as
are really capital. For it is as to whether its services or uses are
to be exchanged or not which makes a tool an article of capital or
merely an article of wealth. Thus, the lathe of a manufacturer used
in making things which are to be exchanged is capital, while the lathe
kept by a gentleman for his own amusement is not. Thus, wealth used
in the construction of a railroad, a public telegraph line, a stage
coach, a theater, a hotel, etc., may be said to be placed in the course
of exchange. The exchange is not effected all at once, but little by
little, with an indefinite number of people. Yet there is an exchange,
and the “consumers” of the railroad, the telegraph line, the stage
coach, theater or hotel, are not the owners, but the persons who from
time to time use them.
Nor is this definition inconsistent with the idea that capital is that
part of wealth devoted to production. It is too narrow an understanding
of production which confines it merely to the making of things.
Production includes not merely the making of things, but the bringing
of them to the consumer. The merchant or storekeeper is thus as truly a
producer as is the manufacturer, or farmer, and his stock or capital is
as much devoted to production as is theirs. But it is not worth while
now to dwell upon the functions of capital, which we shall be better
able to determine hereafter. Nor is the definition of capital I have
suggested of any importance. I am not writing a text-book, but only
attempting to discover the laws which control a great social problem,
and if the reader has been led to form a clear idea of what things are
meant when we speak of capital my purpose is served.
But before closing this digression let me call attention to what is
often forgotten—namely, that the terms “wealth,” “capital,” “wages,”
and the like, as used in political economy are abstract terms, and
that nothing can be generally affirmed or denied of them that cannot
be affirmed or denied of the whole class of things they represent. The
failure to bear this in mind has led to much confusion of thought,
and permits fallacies, otherwise transparent, to pass for obvious
truths. Wealth being an abstract term, the idea of wealth, it must be
remembered, involves the idea of exchange ability. The possession of
wealth to a certain amount is potentially the possession of any or all
species of wealth to that equivalent in exchange. And, consequently, so
of capital.
FOOTNOTES:
[7] This was recognized in common speech in California, where the
placer miners styled their earnings their “wages,” and spoke of making
high wages or low wages according to the amount of gold taken out.
[8] Money may be said to be in the hands of the consumer when devoted
to the procurement of gratification, as, though not in itself devoted
to consumption, it represents wealth which is; and thus what in the
previous paragraph I have given as the common classification would be
covered by this distinction, and would be substantially correct. In
speaking of money in this connection, I am of course speaking of coin,
for although paper money may perform all the functions of coin, it is
not wealth, and cannot therefore be capital.
CHAPTER III.
WAGES NOT DRAWN FROM CAPITAL, BUT PRODUCED BY THE LABOR.
The importance of this digression will, I think, become more and more
apparent as we proceed in our inquiry, but its pertinency to the branch
we are now engaged in may at once be seen.
It is at first glance evident that the economic meaning of the term
wages is lost sight of, and attention is concentrated upon the common
and narrow meaning of the word, when it is affirmed that wages are
drawn from capital. For, in all those cases in which the laborer is
his own employer and takes directly the produce of his labor as its
reward, it is plain enough that wages are not drawn from capital, but
result directly as the product of the labor. If, for instance, I devote
my labor to gathering birds’ eggs or picking wild berries, the eggs or
berries I thus get are my wages. Surely no one will contend that in
such a case wages are drawn from capital. There is no capital in the
case. An absolutely naked man, thrown on an island where no human being
has before trod, may gather birds’ eggs or pick berries.
Or if I take a piece of leather and work it up into a pair of shoes,
the shoes are my wages—the reward of my exertion. Surely they are not
drawn from capital—either my capital or any one else’s capital—but are
brought into existence by the labor of which they become the wages; and
in obtaining this pair of shoes as the wages of my labor, capital is
not even momentarily lessened one iota. For, if we call in the idea of
capital, my capital at the beginning consists of the piece of leather,
the thread, etc. As my labor goes on, value is steadily added, until,
when my labor results in the finished shoes, I have my capital plus the
difference in value between the material and the shoes. In obtaining
this additional value—my wages—how is capital at any time drawn upon?
Adam Smith, who gave the direction to economic thought that has
resulted in the current elaborate theories of the relation between
wages and capital, recognized the fact that in such simple cases as I
have instanced, wages are the produce of labor, and thus begins his
chapter upon the wages of labor (Chapter VIII):
“_The produce of labor constitutes the natural recompense or wages
of labor._ In that original state of things which precedes both the
appropriation of land and the accumulation of stock, the whole produce
of labor belongs to the laborer. He has neither landlord nor master to
share with him.”
Had the great Scotchman taken this as the initial point of his
reasoning, and continued to regard the produce of labor as the natural
wages of labor, and the landlord and master but as sharers, his
conclusions would have been very different, and political economy
to-day would not embrace such a mass of contradictions and absurdities;
but instead of following the truth obvious in the simple modes of
production as a clew through the perplexities of the more complicated
forms, he momentarily recognizes it, only immediately to abandon it,
and stating that “in every part of Europe twenty workmen serve under a
master for one that is independent,” he recommences the inquiry from a
point of view in which the master is considered as providing from his
capital the wages of his workmen.
It is evident that in thus placing the proportion of self-employing
workmen as but one in twenty, Adam Smith had in mind but the mechanic
arts, and that, including all laborers, the proportion who take their
earnings directly, without the intervention of an employer, must,
even in Europe a hundred years ago, have been much greater than this.
For, besides the independent laborers who in every community exist in
considerable numbers, the agriculture of large districts of Europe has,
since the time of the Roman Empire, been carried on by the metayer
system, under which the capitalist receives his return from the laborer
instead of the laborer from the capitalist. At any rate, in the United
States, where any general law of wages must apply as fully as in
Europe, and where in spite of the advance of manufactures a very large
part of the people are yet self-employing farmers, the proportion of
laborers who get their wages through an employer must be comparatively
small.
But it is not necessary to discuss the ratio in which self-employing
laborers anywhere stand to hired laborers, nor is it necessary to
multiply illustrations of the truism that where the laborer takes
directly his wages they are the product of his labor, for as soon as
it is realized that the term wages includes all the earnings of labor,
as well when taken directly by the laborer in the results of his labor
as when received from an employer, it is evident that the assumption
that wages are drawn from capital, on which as a universal truth such
a vast superstructure is in standard politico-economic treatises so
unhesitatingly built, is at least in large part untrue, and the utmost
that can with any plausibility be affirmed, is that some wages, _i.e._
wages received by the laborer from an employer, are drawn from capital.
This restriction of the major premise at once invalidates all the
deductions that are made from it; but without resting here, let us see
whether even in this restricted sense it accords with the facts. Let
us pick up the clew where Adam Smith dropped it, and advancing step
by step, see whether the relation of facts which is obvious in the
simplest forms of production does not run through the most complex.
Next in simplicity to “that original state of things,” of which many
examples may yet be found, where the whole produce of labor belongs to
the laborer, is the arrangement in which the laborer, though working
for another person, or with the capital of another person, receives
his wages in kind—that is to say, in the things his labor produces. In
this case it is as clear as in the case of the self-employing laborer
that the wages are really drawn from the product of the labor, and not
at all from capital. If I hire a man to gather eggs, to pick berries,
or to make shoes, paying him from the eggs, the berries, or the shoes
that his labor secures, there can be no question that the source of
the wages is the labor for which they are paid. Of this form of hiring
is the saer-and-daer stock tenancy, treated of with such perspicuity
by Sir Henry Maine in his “Early History of Institutions,” and which
so clearly involved the relation of employer and employed as to render
the acceptor of cattle the man or vassal of the capitalist who thus
employed him. It was on such terms as these that Jacob worked for
Laban, and to this day, even in civilized countries, it is not an
infrequent mode of employing labor. The farming of land on shares,
which prevails to a considerable extent in the Southern States of the
Union and in California, the metayer system of Europe, as well as the
many cases in which superintendents, salesmen, etc., are paid by a
percentage of profits, what are they but the employment of labor for
wages which consist of part of its produce?
The next step in the advance from simplicity to complexity is where the
wages, though estimated in kind, are paid in an equivalent of something
else. For instance, on American whaling ships the custom is not to
pay fixed wages, but a “lay,” or proportion of the catch, which varies
from a sixteenth to a twelfth to the captain down to a three-hundredth
to the cabin-boy. Thus, when a whaleship comes into New Bedford or San
Francisco after a successful cruise, she carries in her hold the wages
of her crew, as well as the profits of her owners, and an equivalent
which will reimburse them for all the stores used up during the voyage.
Can anything be clearer than that these wages—this oil and bone which
the crew of the whaler have taken—have not been drawn from capital,
but are really a part of the produce of their labor? Nor is this fact
changed or obscured in the slightest degree where, as a matter of
convenience, instead of dividing up between the crew their proportion
of the oil and bone, the value of each man’s share is estimated at the
market price, and he is paid for it in money. The money is but the
equivalent of the real wages, the oil and bone. In no way is there any
advance of capital in this payment. The obligation to pay wages does
not accrue until the value from which they are to be paid is brought
into port. At the moment when the owner takes from his capital money to
pay the crew he adds to his capital oil and bone.
So far there can be no dispute. Let us now take another step, which
will bring us to the usual method of employing labor and paying wages.
The Farallone Islands, off the Bay of San Francisco, are a hatching
ground of sea-fowl, and a company who claim these islands employ men in
the proper season to collect the eggs. They might employ these men for
a proportion of the eggs they gather, as is done in the whale fishery
and probably would do so if there were much uncertainty attending the
business; but as the fowl are plentiful and tame, and about so many
eggs can be gathered by so much labor, they find it more convenient to
pay their men fixed wages. The men go out and remain on the islands,
gathering the eggs and bringing them to a landing, whence, at intervals
of a few days, they are taken in a small vessel to San Francisco
and sold. When the season is over the men return and are paid their
stipulated wages in coin. Does not this transaction amount to the same
thing as if, instead of being paid in coin, the stipulated wages were
paid in an equivalent of the eggs gathered? Does not the coin represent
the eggs, by the sale of which it was obtained, and are not these
wages as much the product of the labor for which they are paid as the
eggs would be in the possession of a man who gathered them for himself
without the intervention of any employer?
To take another example, which shows by reversion the identity of wages
in money with wages in kind. In San Buenaventura lives a man who makes
an excellent living by shooting for their oil and skins the common hair
seals which frequent the islands forming the Santa Barbara Channel.
When on these sealing expeditions he takes two or three Chinamen along
to help him, whom at first he paid wholly in coin. But it seems that
the Chinese highly value some of the organs of the seal, which they dry
and pulverize for medicine, as well as the long hairs in the whiskers
of the male seal, which, when over a certain length, they greatly
esteem for some purpose that to outside barbarians is not very clear.
And this man soon found that the Chinamen were very willing to take
instead of money these parts of the seals killed, so that now, in large
part, he thus pays them their wages.
Now, is not what may be seen in all these cases—the identity of wages
in money with wages in kind—true of all cases in which wages are paid
for productive labor? Is not the fund created by the labor really the
fund from which the wages are paid?
It may, perhaps, be said: “There is this difference— where a man works
for himself, or where, when working for an employer, he takes his
wages in kind, his wages depend upon the result of his labor. Should
that, from any misadventure, prove futile, he gets nothing. When he
works for an employer, however, he gets his wages anyhow—they depend
upon the performance of the labor, not upon the result of the labor.”
But this is evidently not a real distinction. For on the average, the
labor that is rendered for fixed wages not only yields the amount of
the wages, but more; else employers could make no profit. When wages
are fixed, the employer takes the whole risk and is compensated for
this assurance, for wages when fixed are always somewhat less than
wages contingent. But though when fixed wages are stipulated the
laborer who has performed his part of the contract has usually a
legal claim upon the employer, it is frequently, if not generally,
the case that the disaster which prevents the employer from reaping
benefit from the labor prevents him from paying the wages. And in one
important department of industry the employer is legally exempt in
case of disaster, although the contract be for wages certain and not
contingent. For the maxim of admiralty law is, that “freight is the
mother of wages,” and though the seaman may have performed his part,
the disaster which prevents the ship from earning freight deprives him
of claim for his wages.
In this legal maxim is embodied the truth for which I am contending.
Production is always the mother of wages. Without production, wages
would not and could not be. It is from the produce of labor, not from
the advances of capital that wages come.
Wherever we analyze the facts this will be found to be true. For labor
always precedes wages. This is as universally true of wages received
by the laborer from an employer as it is of wages taken directly by
the laborer who is his own employer. In the one class of cases as
in the other, reward is conditioned upon exertion. Paid sometimes by
the day, oftener by the week or month, occasionally by the year, and
in many branches of production by the piece, the payment of wages by
an employer to an employee always implies the previous rendering of
labor by the employee for the benefit of the employer, for the few
cases in which advance payments are made for personal services are
evidently referable either to charity or to guarantee and purchase. The
name “retainer,” given to advance payments to lawyers, shows the true
character of the transaction, as does the name “blood money” given in
’longshore vernacular to a payment which is nominally wages advanced
to sailors, but which in reality is purchase money—both English and
American law considering a sailor as much a chattel as a pig.
I dwell on this obvious fact that labor always precedes wages, because
it is all-important to an understanding of the more complicated
phenomena of wages that it should be kept in mind. And obvious as it
is, as I have put it, the plausibility of the proposition that wages
are drawn from capital—a proposition that is made the basis for such
important and far-reaching deductions—comes in the first instance from
a statement that ignores and leads the attention away from this truth.
That statement is, that labor cannot exert its productive power unless
supplied by capital with maintenance.[9] The unwary reader at once
recognizes the fact that the laborer must have food, clothing, etc.,
in order to enable him to perform the work, and having been told that
the food, clothing, etc., used by productive laborers are capital, he
assents to the conclusion that the consumption of capital is necessary
to the application of labor, and from this it is but an obvious
deduction that industry is limited by capital—that the demand for labor
depends upon the supply of capital, and hence that wages depend upon
the ratio between the number of laborers looking for employment and the
amount of capital devoted to hiring them.
But I think the discussion in the previous chapter will enable any
one to see wherein lies the fallacy of this reasoning—a fallacy
which has entangled some of the most acute minds in a web of their
own spinning. It is in the use of the term capital in two senses. In
the primary proposition that capital is necessary to the exertion of
productive labor, the term “capital” is understood as including all
food, clothing, shelter, etc.; whereas, in the deductions finally
drawn from it, the term is used in its common and legitimate meaning
of wealth devoted, not to the immediate gratification of desire, but
to the procurement of more wealth—of wealth in the hands of employers
as distinguished from laborers. The conclusion is no more valid than
it would be from the acceptance of the proposition that a laborer
cannot go to work without his breakfast and some clothes, to infer
that no more laborers can go to work than employers first furnish
with breakfasts and clothes. Now, the fact is that laborers generally
furnish their own breakfasts and the clothes in which they go to work;
and the further fact is that capital (in the sense in which the word
is used in distinction to labor) in exceptional cases sometimes may,
but is never compelled to make advances to labor before the work
begins. Of all the vast number of unemployed laborers in the civilized
world to-day, there is probably not a single one willing to work who
could not be employed without any advance of wages. A great proportion
would doubtless gladly go to work on terms which did not require the
payment of wages before the end of a month; it is doubtful if there are
enough to be called a class who would not go to work and wait for their
wages until the end of the week, as most laborers habitually do; while
there are certainly none who would not wait for their wages until the
end of the day, or if you please, until the next meal hour. The precise
time of the payment of wages is immaterial; the essential point—the
point I lay stress on—is that it is _after_ the performance of work.
The payment of wages, therefore, always implies the previous rendering
of labor. Now, what does the rendering of labor in production imply?
Evidently the production of wealth, which, if it is to be exchanged
or used in production, is capital. Therefore, the payment of capital
in wages pre-supposes a production of capital by the labor for which
the wages are paid. And as the employer generally makes a profit, the
payment of wages is, so far as he is concerned, but the return to the
laborer of a portion of the capital he has received from the labor. So
far as the employee is concerned, it is but the receipt of a portion of
the capital his labor has previously produced. As the value paid in the
wages is thus exchanged for a value brought into being by the labor,
how can it be said that wages are drawn from capital or advanced by
capital? As in the exchange of labor for wages the employer always gets
the capital created by the labor before he pays out capital in the
wages, at what point is his capital lessened even temporarily?[10]
Bring the question to the test of facts. Take, for instance, an
employing manufacturer who is engaged in turning raw material into
finished products—cotton into cloth, iron into hardware, leather into
boots, or so on, as may be, and who pays his hands, as is generally
the case, once a week. Make an exact inventory of his capital on
Monday morning before the beginning of work, and it will consist of
his buildings, machinery, raw materials, money on hand, and finished
products in stock. Suppose, for the sake of simplicity, that he
neither buys nor sells during the week, and after work has stopped
and he has paid his hands on Saturday night, take a new inventory of
his capital. The item of money will be less, for it has been paid
out in wages; there will be less raw material, less coal, etc., and
a proper deduction must be made from the value of the buildings
and machinery for the week’s wear and tear. But if he is doing a
remunerative business, which must on the average be the case, the item
of finished products will be so much greater as to compensate for all
these deficiencies and show in the summing up an increase of capital.
Manifestly, then, the value he paid his hands in wages was not drawn
from his capital, or from any one else’s capital. It came, not from
capital, but from the value created by the labor itself. There was no
more advance of capital than if he had hired his hands to dig clams,
and paid them with a part of the clams they dug. Their wages were as
truly the produce of their labor as were the wages of the primitive
man, when, long “before the appropriation of land and the accumulation
of stock,” he obtained an oyster by knocking it with a stone from the
rocks.
As the laborer who works for an employer does not get his wages until
he has performed the work, his case is similar to that of the depositor
in a bank who cannot draw money out until he has put money in. And as
by drawing out what he has previously put in, the bank depositor does
not lessen the capital of the bank, neither can laborers by receiving
wages lessen even temporarily either the capital of the employer or
the aggregate capital of the community. Their wages no more come from
capital than the checks of depositors are drawn against bank capital.
It is true that laborers in receiving wages do not generally receive
back wealth in the same form in which they have rendered it, any more
than bank depositors receive back the identical coins or bank notes
they have deposited, but they receive it in equivalent form, and as
we are justified in saying that the depositor receives from the bank
the money he paid in, so are we justified in saying that the laborer
receives in wages the wealth he has rendered in labor.
That this universal truth is so often obscured, is largely due to that
fruitful source of economic obscurities, the confounding of wealth with
money; and it is remarkable to see so many of those who, since Dr. Adam
Smith made the egg stand on its head, have copiously demonstrated the
fallacies of the mercantile system, fall into delusions of the very
same kind in treating of the relations of capital and labor. Money
being the general medium of exchanges, the common flux through which
all transmutations of wealth from one form to another take place,
whatever difficulties may exist to an exchange will generally show
themselves on the side of reduction to money, and thus it is sometimes
easier to exchange money for any other form of wealth than it is to
exchange wealth in a particular form into money, for the reason that
there are more holders of wealth who desire to make some exchange
than there are who desire to make any particular exchange. And so a
producing employer who has paid out his money in wages may sometimes
find it difficult to turn quickly back into money the increased value
for which his money has really been exchanged, and is spoken of as
having exhausted or advanced his capital in the payment of wages. Yet,
unless the new value created by the labor is less than the wages paid,
which can be only an exceptional case, the capital which he had before
in money he now has in goods—it has been changed in form, but not
lessened.
There is one branch of production in regard to which the confusions of
thought which arise from the habit of estimating capital in money are
least likely to occur, inasmuch as its product is the general material
and standard of money. And it so happens that this business furnishes
us, almost side by side, with illustrations of production passing from
the simplest to most complex forms.
In the early days of California, as afterward in Australia, the placer
miner, who found in river bed or surface deposit the glittering
particles which the slow processes of nature had for ages been
accumulating, picked up or washed out his “wages” (so, too, he called
them) in actual money, for coin being scarce, gold dust passed as
currency by weight, and at the end of the day had his wages in money
in a buckskin bag in his pocket. There can be no dispute as to whether
these wages came from capital or not. They were manifestly the produce
of his labor. Nor could there be any dispute when the holder of a
specially rich claim hired men to work for him and paid them off in the
identical money which their labor had taken from gulch or bar. As coin
became more abundant, its greater convenience in saving the trouble and
loss of weighing assigned gold dust to the place of a commodity, and
with coin obtained by the sale of the dust their labor had procured,
the employing miner paid off his hands. Where he had coin enough to do
so, instead of selling his gold dust at the nearest store and paying
a dealer’s profit, he retained it until he got enough to take a trip,
or send by express to San Francisco, where at the mint he could have
it turned into coin without charge. While thus accumulating gold dust
he was lessening his stock of coin; just as the manufacturer, while
accumulating a stock of goods, lessens his stock of money. Yet no one
would be obtuse enough to imagine that in thus taking in gold dust and
paying out coin the miner was lessening his capital.
But the deposits that could be worked without preliminary labor
were soon exhausted, and gold mining rapidly took a more elaborate
character. Before claims could be opened so as to yield any return
deep shafts had to be sunk, great dams constructed, long tunnels cut
through the hardest rock, water brought for miles over mountain ridges
and across deep valleys, and expensive machinery put up. These works
could not be constructed without capital. Sometimes their construction
required years, during which no return could be hoped for, while the
men employed had to be paid their wages every week, or every month.
Surely, it will be said, in such cases, even if in no others, that
wages do actually come from capital; are actually advanced by capital;
and must necessarily lessen capital in their payment! Surely here, at
least, industry is limited by capital, for without capital such works
could not be carried on! Let us see:
* * * * *
It is cases of this class that are always instanced as showing that
wages are advanced from capital. For where wages are paid before the
object of the labor is obtained, or is finished—as in agriculture,
where plowing and sowing must precede by several months the harvesting
of the crop; as in the erection of buildings, the construction of
ships, railroads, canals, etc.—it is clear that the owners of the
capital paid in wages cannot expect an immediate return, but, as the
phrase is, must “outlay it,” or “lie out of it” for a time, which
sometimes amounts to many years. And hence, if first principles are
not kept in mind, it is easy to jump to the conclusion that wages are
advanced by capital.
But such cases will not embarrass the reader to whom in what has
preceded I have made myself clearly understood. An easy analysis will
show that these instances where wages are paid before the product is
finished, or even produced, do not afford any exception to the rule
apparent where the product is finished before wages are paid.
If I go to a broker to exchange silver for gold, I lay down my silver,
which he counts and puts away, and then hands me the equivalent in
gold, minus his commission. Does the broker advance me any capital?
Manifestly not. What he had before in gold he now has in silver, plus
his profit. And as he got the silver before he paid out the gold, there
is on his part not even momentarily an advance of capital.
Now, this operation of the broker is precisely analogous to what the
capitalist does, when, in such cases as we are now considering, he
pays out capital in wages. As the rendering of labor precedes the
payment of wages, and as the rendering of labor in production implies
the creation of value, the employer receives value before he pays out
value—he but exchanges capital of one form for capital of another form.
For the creation of value does not depend upon the finishing of the
product; it takes place at every stage of the process of production, as
the immediate result of the application of labor, and hence, no matter
how long the process in which it is engaged, labor always adds to
capital by its exertion before it takes from capital in its wages.
Here is a blacksmith at his forge making picks. Clearly he is making
capital—adding picks to his employer’s capital before he draws money
from it in wages. Here is a machinist or boilermaker working on
the keel-plates of a Great Eastern. Is not he also just as clearly
creating value—making capital? The giant steamship, as the pick, is
an article of wealth, an instrument of production, and though the one
may not be completed for years, while the other is completed in a
few minutes, each day’s work, in the one case as in the other, is as
clearly a production of wealth—an addition to capital. In the case of
the steamship, as in the case of the pick, it is not the last blow,
any more than the first blow, that creates the value of the finished
product—the creation of value is continuous, it immediately results
from the exertion of labor.
We see this very clearly wherever the division of labor has made it
customary for different parts of the full process of production to be
carried on by different sets of producers—that is to say, wherever we
are in the habit of estimating the amount of value which the labor
expended in any preparatory stage of production has created. And a
moment’s reflection will show that this is the case as to the vast
majority of products. Take a ship, a building, a jackknife, a book,
a lady’s thimble or a loaf of bread. They are finished products. But
they were not produced at one operation or by one set of producers.
And this being the case, we readily distinguish different points or
stages in the creation of the value which as completed articles they
represent. When we do not distinguish different parts in the final
process of production we do distinguish the value of the materials.
The value of these materials may often be again decomposed many times,
exhibiting as many clearly defined steps in the creation of the final
value. At each of these steps we habitually estimate a creation of
value, an addition to capital. The batch of bread which the baker is
taking from the oven has a certain value. But this is composed in part
of the value of the flour from which the dough was made. And this again
is composed of the value of the wheat, the value given by milling, etc.
Iron in the form of pigs is very far from being a completed product.
It must yet pass through several, or, perhaps, through many, stages of
production before it results in the finished articles that were the
ultimate objects for which the iron ore was extracted from the mine.
Yet, is not pig iron capital? And so the process of production is not
really completed when a crop of cotton is gathered, nor yet when it is
ginned and pressed; nor yet when it arrives at Lowell or Manchester;
nor yet when it is converted into yarn; nor yet when it becomes cloth;
but only when it is finally placed in the hands of the consumer. Yet
at each step in this progress there is clearly enough a creation of
value—an addition to capital. Why, therefore, although we do not so
habitually distinguish and estimate it, is there not a creation of
value—an addition to capital—when the ground is plowed for the crop?
Is it because it may possibly be a bad season and the crop may fail?
Evidently not; for a like possibility of misadventure attends every one
of the many steps in the production of the finished article. On the
average a crop is sure to come up, and so much plowing and sowing will
on the average result in so much cotton in the boll, as surely as so
much spinning of cotton yarn will result in so much cloth.
In short, as the payment of wages is always conditioned upon the
rendering of labor, the payment of wages in production, no matter
how long the process, never involves any advance of capital, or even
temporarily lessens capital. It may take a year, or even years, to
build a ship, but the creation of value of which the finished ship will
be the sum goes on day by day, and hour by hour, from the time the keel
is laid or even the ground is cleared. Nor by the payment of wages
before the ship is completed, does the master builder lessen either his
capital or the capital of the community, for the value of the partially
completed ship stands in place of the value paid out in wages. There is
no advance of capital in this payment of wages, for the labor of the
workmen during the week or month creates and renders to the builder
more capital than is paid back to them at the end of the week or month,
as is shown by the fact that if the builder were at any stage of the
construction asked to sell a partially completed ship he would expect a
profit.
And so, when a Sutro or St. Gothard tunnel or a Suez canal is cut,
there is no advance of capital. The tunnel or canal, as it is cut,
becomes capital as much as the money spent in cutting it—or, if you
please, the powder, drills, etc., used in the work, and the food,
clothes, etc., used by the workmen—as is shown by the fact that the
value of the capital stock of the company is not lessened as capital in
these forms is gradually changed into capital in the form of tunnel or
canal. On the contrary, it probably, and on the average, increases as
the work progresses, just as the capital invested in a speedier mode of
production would on the average increase.
And this is obvious in agriculture also. That the creation of value
does not take place all at once when the crop is gathered, but step
by step during the whole process which the gathering of the crop
concludes, and that no payment of wages in the interim lessens the
farmer’s capital, is tangible enough when land is sold or rented
during the process of production, as a plowed field will bring more
than an unplowed field, or a field that has been sown more than one
merely plowed. It is tangible enough when growing crops are sold, as
is sometimes done, or where the farmer does not harvest himself, but
lets a contract to the owner of harvesting machinery. It is tangible in
the case of orchards and vineyards which, though not yet in bearing,
bring prices proportionate to their age. It is tangible in the case
of horses, cattle and sheep, which increase in value as they grow
toward maturity. And if not always tangible between what may be called
the usual exchange points in production, this increase of value as
surely takes place with every exertion of labor. Hence, where labor
is rendered before wages are paid, the advance of capital is really
made by labor, and is from the employed to the employer, not from the
employer to the employed.
“Yet,” it may be said, “in such cases as we have been considering
capital is required!” Certainly; I do not dispute that. But it is not
required in order to make advances to labor. It is required for quite
another purpose. What that purpose is we may readily see.
When wages are paid in kind—that is to say, in wealth of the same
species as the labor produces; as, for instance, if I hire men to cut
wood, agreeing to give them as wages a portion of the wood they cut, a
method sometimes adopted by the owners or lessees of woodland, it is
evident that no capital is required for the payment of wages. Nor yet
when, for the sake of mutual convenience, arising from the fact that
a large quantity of wood can be more readily and more advantageously
exchanged than a number of small quantities, I agree to pay wages
in money, instead of wood, shall I need any capital, provided I can
make the exchange of the wood for money before the wages are due. It
is only when I cannot make such an exchange, or such an advantageous
exchange as I desire, until I accumulate a large quantity of wood that
I shall need capital. Nor even then shall I need capital if I can make
a partial or tentative exchange by borrowing on my wood. If I cannot,
or do not choose, either to sell the wood or to borrow upon it, and
yet wish to go ahead accumulating a large stock of wood, I shall need
capital. But manifestly, I need this capital, not for the payment of
wages, but for the accumulation of a stock of wood. Likewise in cutting
a tunnel. If the workmen were paid in tunnel (which, if convenient,
might easily be done by paying them in stock of the company), no
capital for the payment of wages would be required. It is only when
the undertakers wish to accumulate capital in the shape of a tunnel
that they will need capital. To recur to our first illustration: The
broker to whom I sell my silver cannot carry on his business without
capital. But he does not need this capital because he makes any advance
of capital to me when he receives my silver and hands me gold. He needs
it because the nature of the business requires the keeping of a certain
amount of capital on hand, in order that when a customer comes he may
be prepared to make the exchange the customer desires.
And so we shall find it in every branch of production. Capital has
never to be set aside for the payment of wages when the produce of the
labor for which the wages are paid is exchanged as soon as produced;
it is only required when this produce is stored up, or what is to the
individual the same thing, placed in the general current of exchanges
without being at once drawn against—that is, sold on credit. But the
capital thus required is not required for the payment of wages, nor
for advances to labor, as it is always represented in the produce of
the labor. It is never as an employer of labor that any producer needs
capital; when he does need capital, it is because he is not only an
employer of labor, but a merchant or speculator in, or an accumulator
of, the products of labor. This is generally the case with employers.
* * * * *
To recapitulate: The man who works for himself gets his wages in the
things he produces, as he produces them, and exchanges this value
into another form whenever he sells the produce. The man who works
for another for stipulated wages in money works under a contract of
exchange. He also creates his wages as he renders his labor, but he
does not get them except at stated times, in stated amounts, and in a
different form. In performing the labor he is advancing in exchange;
when he gets his wages the exchange is completed. During the time he
is earning the wages he is advancing capital to his employer, but at
no time, unless wages are paid before work is done, is the employer
advancing capital to him. Whether the employer who receives this
produce in exchange for the wages immediately re-exchanges it, or
keeps it for awhile, no more alters the character of the transaction
than does the final disposition of the product made by the ultimate
receiver, who may, perhaps, be in another quarter of the globe and at
the end of a series of exchanges numbering hundreds.
CHAPTER IV.
THE MAINTENANCE OF LABORERS NOT DRAWN FROM CAPITAL.
But a stumbling block may yet remain, or may recur, in the mind of the
reader.
As the plowman cannot eat the furrow, nor a partially completed steam
engine aid in any way in producing the clothes the machinist wears,
have I not, in the words of John Stuart Mill, “forgotten that the
people of a country are maintained and have their wants supplied, not
by the produce of present labor, but of past?” Or, to use the language
of a popular elementary work—that of Mrs. Fawcett—have I not “forgotten
that many months must elapse between the sowing of the seed and the
time when the produce of that seed is converted into a loaf of bread,”
and that “it is, therefore, evident that laborers cannot live upon
that which their labor is assisting to produce, but are maintained by
that wealth which their labor, or the labor of others, has previously
produced, which wealth is capital?”[11]
The assumption made in these passages—the assumption that it is so
self-evident that labor must be subsisted from capital that the
proposition has but to be stated to compel recognition—runs through
the whole fabric of current political economy. And so confidently is
it held that the maintenance of labor is drawn from capital that the
proposition that “population regulates itself by the funds which are
to employ it, and, therefore, always increases or diminishes with
the increase or diminution of capital,”[12] is regarded as equally
axiomatic, and in its turn made the basis of important reasoning.
Yet being resolved, these propositions are seen to be, not
self-evident, but absurd; for they involve the idea that labor cannot
be exerted until the products of labor are saved—thus putting the
product before the producer.
And being examined, they will be seen to derive their apparent
plausibility from a confusion of thought.
I have already pointed out the fallacy, concealed by an erroneous
definition, which underlies the proposition that because food, raiment
and shelter are necessary to productive labor, therefore industry
is limited by capital. To say that a man must have his breakfast
before going to work is not to say that he cannot go to work unless a
capitalist furnishes him with a breakfast, for his breakfast may, and
in point of fact in any country where there is not actual famine will,
come not from wealth set apart for the assistance of production, but
from wealth set apart for subsistence. And, as has been previously
shown, food, clothing, etc.—in short, all articles of wealth—are only
capital so long as they remain in the possession of those who propose,
not to consume, but to exchange them for other commodities or for
productive services, and cease to be capital when they pass into the
possession of those who will consume them; for in that transaction
they pass from the stock of wealth held for the purpose of procuring
other wealth, and pass into the stock of wealth held for purposes of
gratification, irrespective of whether their consumption will aid in
the production of wealth or not. Unless this distinction is preserved
it is impossible to draw the line between the wealth that is capital
and the wealth that is not capital, even by remitting the distinction
to the “mind of the possessor,” as does John Stuart Mill. For men do
not eat or abstain, wear clothes or go naked, as they propose to engage
in productive labor or not. They eat because they are hungry, and wear
clothes because they would be uncomfortable without them. Take the
food on the breakfast table of a laborer who will work or not that day
as he gets the opportunity. If the distinction between capital and
non-capital be the support of productive labor, is this food capital or
not? It is as impossible for the laborer himself as for any philosopher
of the Ricardo-Mill school to tell. Nor yet can it be told when it gets
into his stomach; nor, supposing that he does not get work at first,
but continues the search, can it be told until it has passed into the
blood and tissues. Yet the man will eat his breakfast all the same.
But, though it would be logically sufficient, it is hardly safe to rest
here and leave the argument to turn on the distinction between wealth
and capital. Nor is it necessary. It seems to me that the proposition
that present labor must be maintained by the produce of past labor will
upon analysis prove to be true only in the sense that the afternoon’s
labor must be performed by the aid of the noonday meal, or that before
you eat the hare he must be caught and cooked. And this, manifestly,
is not the sense in which the proposition is used to support the
important reasoning that is made to hinge upon it. That sense is, that
before a work which will not immediately result in wealth available
for subsistence can be carried on, there must exist such a stock of
subsistence as will support the laborers during the process. Let us see
if this be true:
The canoe which Robinson Crusoe made with such infinite toil and pains
was a production in which his labor could not yield an immediate
return. But was it necessary that, before he commenced, he should
accumulate a stock of food sufficient to maintain him while he felled
the tree, hewed out the canoe, and finally launched her into the sea?
Not at all. It was necessary only that he should devote part of his
time to the procurement of food while he was devoting part of his time
to the building and launching of the canoe. Or supposing a hundred men
to be landed, without any stock of provisions, in a new country. Will
it be necessary for them to accumulate a season’s stock of provisions
before they can begin to cultivate the soil? Not at all. It will be
necessary only that fish, game, berries, etc., shall be so abundant
that the labor of a part of the hundred may suffice to furnish daily
enough of these for the maintenance of all, and that there shall be
such a sense of mutual interest, or such a correlation of desires, as
shall lead those who in the present get the food to divide (exchange)
with those whose efforts are directed to future recompense.
What is true in these cases is true in all cases. It is not necessary
to the production of things that cannot be used as subsistence, or
cannot be immediately utilized, that there should have been a previous
production of the wealth required for the maintenance of the laborers
while the production is going on. It is only necessary that there
should be, somewhere within the circle of exchange, a contemporaneous
production of sufficient subsistence for the laborers, and a
willingness to exchange this subsistence for the thing on which the
labor is being bestowed.
And as a matter of fact, is it not true, in any normal condition of
things, that consumption is supported by contemporaneous production?
Here is a luxurious idler, who does no productive work either with
head or hand, but lives, we say, upon wealth which his father left
him securely invested in government bonds. Does his subsistence, as
a matter of fact, come from wealth accumulated in the past or from
the productive labor that is going on around him? On his table are
new-laid eggs, butter churned but a few days before, milk which the
cow gave this morning, fish which twenty-four hours ago were swimming
in the sea, meat which the butcher boy has just brought in time to be
cooked, vegetables fresh from the garden, and fruit from the orchard—in
short, hardly anything that has not recently left the hand of the
productive laborer (for in this category must be included transporters
and distributors as well as those who are engaged in the first stages
of production), and nothing that has been produced for any considerable
length of time, unless it may be some bottles of old wine. What this
man inherited from his father, and on which we say he lives, is not
actually wealth at all, but only the power of commanding wealth as
others produce it. And it is from this contemporaneous production that
his subsistence is drawn.
The fifty square miles of London undoubtedly contain more wealth
than within the same space anywhere else exists. Yet were productive
labor in London absolutely to cease, within a few hours people would
begin to die like rotten sheep, and within a few weeks, or at most a
few months, hardly one would be left alive. For an entire suspension
of productive labor would be a disaster more dreadful than ever yet
befell a beleaguered city. It would not be a mere external wall of
circumvallation, such as Titus drew around Jerusalem, which would
prevent the constant incoming of the supplies on which a great city
lives, but it would be the drawing of a similar wall around each
household. Imagine such a suspension of labor in any community, and you
will see how true it is that mankind really live from hand to mouth;
that it is the daily labor of the community that supplies the community
with its daily bread.
Just as the subsistence of the laborers who built the Pyramids was
drawn not from a previously hoarded stock, but from the constantly
recurring crops of the Nile Valley; just as a modern government
when it undertakes a great work of years does not appropriate to it
wealth already produced, but wealth yet to be produced, which is
taken from producers in taxes as the work progresses; so it is that
the subsistence of the laborers engaged in production which does not
directly yield subsistence comes from the production of subsistence in
which others are simultaneously engaged.
If we trace the circle of exchange by which work done in the production
of a great steam engine secures to the worker bread, meat, clothes and
shelter, we shall find that though between the laborer on the engine
and the producers of the bread, meat, etc., there may be a thousand
intermediate exchanges, the transaction, when reduced to its lowest
terms, really amounts to an exchange of labor between him and them.
Now the cause which induces the expenditure of the labor on the engine
is evidently that some one who has power to give what is desired by
the laborer on the engine wants in exchange an engine—that is to say,
there exists a demand for an engine on the part of those producing
bread, meat, etc., or on the part of those who are producing what the
producers of the bread, meat, etc., desire. It is this demand which
directs the labor of the machinist to the production of the engine, and
hence, reversely, the demand of the machinist for bread, meat, etc.,
really directs an equivalent amount of labor to the production of these
things, and thus his labor, actually exerted in the production of the
engine, virtually produces the things in which he expends his wages.
Or, to formularize this principle:
_The demand for consumption determines the direction in which labor
will be expended in production._
This principle is so simple and obvious that it needs no further
illustration, yet in its light all the complexities of our subject
disappear, and we thus reach the same view of the real objects and
rewards of labor in the intricacies of modern production that we gained
by observing in the first beginnings of society the simpler forms of
production and exchange. We see that now, as then, each laborer is
endeavoring to obtain by his exertions the satisfaction of his own
desires; we see that although the minute division of labor assigns to
each producer the production of but a small part, or perhaps nothing
at all, of the particular things he labors to get, yet, in aiding in
the production of what other producers want, he is directing other
labor to the production of the things he wants—in effect, producing
them himself. And thus, if he make jack-knives and eat wheat, the wheat
is really as much the produce of his labor as if he had grown it for
himself and left wheat-growers to make their own jack-knives.
We thus see how thoroughly and completely true it is, that in whatever
is taken or consumed by laborers in return for labor rendered, there
is no advance of capital to the laborers. If I have made jack-knives,
and with the wages received have bought wheat, I have simply exchanged
jack-knives for wheat—added jack-knives to the existing stock of wealth
and taken wheat from it. And as the demand for consumption determines
the direction in which labor will be expended in production, it cannot
even be said, so long as the limit of wheat production has not been
reached, that I have lessened the stock of wheat, for, by placing
jack-knives in the exchangeable stock of wealth and taking wheat out,
I have determined labor at the other end of a series of exchanges
to the production of wheat, just as the wheat grower, by putting in
wheat and demanding jack-knives, determined labor to the production of
jack-knives, as the easiest way by which wheat could be obtained.
And so the man who is following the plow—though the crop for which he
is opening the ground is not yet sown, and after being sown will take
months to arrive at maturity—he is yet, by the exertion of his labor in
plowing, virtually producing the food he eats and the wages he
receives. For, though plowing is but a part of the operation of
producing a crop, it _is_ a part, and as necessary a part as
harvesting. The doing of it is a step toward procuring a crop, which,
by the assurance which it gives of the future crop, sets free from the
stock constantly held the subsistence and wages of the plowman. This is
not merely theoretically true, it is practically and literally true. At
the proper time for plowing, let plowing cease. Would not the symptoms
of scarcity at once manifest themselves without waiting for the time of
the harvest? Let plowing cease, and would not the effect at once be
felt in counting-room, and machine shop, and factory? Would not loom
and spindle soon stand as idle as the plow? That this would be so, we
see in the effect which immediately follows a bad season. And if this
would be so, is not the man who plows really producing his subsistence
and wages as much as though during the day or week his labor actually
resulted in the things for which his labor is exchanged?
As a matter of fact, where there is labor looking for employment, the
want of capital does not prevent the owner of land which promises a
crop for which there is a demand from hiring it. Either he makes an
agreement to cultivate on shares, a common method in some parts of the
United States, in which case the laborers, if they are without means of
subsistence, will, on the strength of the work they are doing, obtain
credit at the nearest store; or, if he prefers to pay wages, the farmer
will himself obtain credit, and thus the work done in cultivation is
immediately utilized or exchanged as it is done. If anything more
will be used up than would be used up if the laborers were forced to
beg instead of to work (for in any civilized country during a normal
condition of things the laborers must be supported anyhow), it will be
the reserve capital drawn out by the prospect of replacement, and which
is in fact replaced by the work as it is done. For instance, in the
purely agricultural districts of Southern California there was in 1877
a total failure of the crop, and of millions of sheep nothing remained
but their bones. In the great San Joaquin Valley were many farmers
without food enough to support their families until the next harvest
time, let alone to support any laborers. But the rains came again in
proper season, and these very farmers proceeded to hire hands to plow
and to sow. For every here and there was a farmer who had been holding
back part of his crop. As soon as the rains came he was anxious to sell
before the next harvest brought lower prices, and the grain thus held
in reserve, through the machinery of exchanges and advances, passed to
the use of the cultivators—set free, in effect produced, by the work
done for the next crop.
The series of exchanges which unite production and consumption may be
likened to a curved pipe filled with water. If a quantity of water is
poured in at one end, a like quantity is released at the other. It is
not identically the same water, but is its equivalent. And so they
who do the work of production put in as they take out—they receive in
subsistence and wages but the produce of their labor.
FOOTNOTES:
[9] Industry is limited by capital.... There can be no more industry
than is supplied with materials to work up and food to eat.
Self-evident as the thing is, it is often forgotten that the people
of a country are maintained and have their wants supplied not by the
produce of present labor, but of past. They consume what has been
produced, not what is about to be produced. Now, of what has been
produced a part only is allotted to the support of productive labor,
and there will not and cannot be more of that labor than the portion
so allotted (which is the capital of the country) can feed and provide
with the materials and instruments of production.—_John Stuart Mill,
Principles of Political Economy, Book I, Chap. V, Sec. I._
[10] I speak of labor producing capital for the sake of greater
clearness. What labor always procures is either wealth, which may or
may not be capital, or services, the cases in which nothing is obtained
being merely exceptional cases of misadventure. Where the object of
the labor is simply the gratification of the employer, as where I
hire a man to black my boots, I do not pay the wages from capital,
but from wealth which I have devoted, not to reproductive uses, but
to consumption for my own satisfaction. Even if wages thus paid be
considered as drawn from capital, then by that act they pass from the
category of capital to that of wealth devoted to the gratification of
the possessor, as when a cigar dealer takes a dozen cigars from the
stock he has for sale and puts them in his pocket for his own use.
[11] Political Economy for Beginners, by Millicent Garrett Fawcett,
Chap. III, p. 25.
[12] The words quoted are Ricardo’s (Chap. II); but the idea is common
in standard works.
CHAPTER V.
THE REAL FUNCTIONS OF CAPITAL.
It may now be asked, If capital is not required for the payment of
wages or the support of labor during production, what, then, are its
functions?
The previous examination has made the answer clear. Capital, as we have
seen, consists of wealth used for the procurement of more wealth, as
distinguished from wealth used for the direct satisfaction of desire;
or, as I think it may be defined, of wealth in the course of exchange.
Capital, therefore, increases the power of labor to produce wealth:
(1) By enabling labor to apply itself in more effective ways, as by
digging up clams with a spade instead of the hand, or moving a vessel
by shoveling coal into a furnace, instead of tugging at an oar. (2) By
enabling labor to avail itself of the reproductive forces of nature,
as to obtain corn by sowing it, or animals by breeding them. (3) By
permitting the division of labor, and thus, on the one hand, increasing
the efficiency of the human factor of wealth, by the utilization of
special capabilities, the acquisition of skill, and the reduction of
waste; and, on the other, calling in the powers of the natural factor
at their highest, by taking advantage of the diversities of soil,
climate and situation, so as to obtain each particular species of
wealth where nature is most favorable to its production.
Capital does not supply the materials which labor works up into wealth,
as is erroneously taught; the materials of wealth are supplied by
nature. But such materials partially worked up and in the course of
exchange are capital.
Capital does not supply or advance wages, as is erroneously taught.
Wages are that part of the produce of his labor obtained by the laborer.
Capital does not maintain laborers during the progress of their work,
as is erroneously taught. Laborers are maintained by their labor, the
man who produces, in whole or in part, anything that will exchange for
articles of maintenance, virtually producing that maintenance.
Capital, therefore, does not limit industry, as is erroneously taught,
the only limit to industry being the access to natural material. But
capital may limit the form of industry and the productiveness of
industry, by limiting the use of tools and the division of labor.
That capital may limit the form of industry is clear. Without the
factory, there could be no factory operatives; without the sewing
machine, no machine sewing; without the plow, no plowman; and without
a great capital engaged in exchange, industry could not take the
many special forms which are concerned with exchanges. It is also as
clear that the want of tools must greatly limit the productiveness
of industry. If the farmer must use the spade because he has not
capital enough for a plow, the sickle instead of the reaping machine,
the flail instead of the thresher; if the machinist must rely upon
the chisel for cutting iron; the weaver on the hand loom, and so
on, the productiveness of industry cannot be a tithe of what it is
when aided by capital in the shape of the best tools now in use.
Nor could the division of labor go further than the very rudest and
almost imperceptible beginnings, nor the exchanges which make it
possible extend beyond the nearest neighbors, unless a portion of the
things produced were constantly kept in stock or in transit. Even the
pursuits of hunting, fishing, gathering nuts, and making weapons
could not be specialized so that an individual could devote himself to
any one, unless some part of what was procured by each was reserved
from immediate consumption, so that he who devoted himself to the
procurement of things of one kind could obtain the others as he wanted
them, and could make the good luck of one day supply the shortcomings
of the next. While to permit the minute subdivision of labor that is
characteristic of, and necessary to, high civilization, a great amount
of wealth of all descriptions must be constantly kept in stock or in
transit. To enable the resident of a civilized community to exchange
his labor at option with the labor of those around him and with the
labor of men in the most remote parts of the globe, there must be
stocks of goods in warehouses, in stores, in the holds of ships, and in
railway cars, just as to enable the denizen of a great city to draw at
will a cupful of water, there must be thousands of millions of gallons
stored in reservoirs and moving through miles of pipe.
But to say that capital may limit the form of industry or the
productiveness of industry is a very different thing from saying that
capital limits industry. For the dictum of the current political
economy that “capital limits industry,” means not that capital limits
the form of labor or the productiveness of labor, but that it limits
the exertion of labor. This proposition derives its plausibility
from the assumption that capital supplies labor with materials and
maintenance—an assumption that we have seen to be unfounded, and which
is indeed transparently preposterous the moment it is remembered that
capital is produced by labor, and hence that there must be labor before
there can be capital. Capital may limit the form of industry and the
productiveness of industry; but this is not to say that there could be
no industry without capital, any more than it is to say that without
the power loom there could be no weaving; without the sewing machine
no sewing; no cultivation without the plow; or that in a community of
one, like that of Robinson Crusoe, there could be no labor because
there could be no exchange.
And to say that capital _may_ limit the form and productiveness of
industry is a different thing from saying that capital _does_. For the
cases in which it can be truly said that the form of productiveness
of the industry of a community is limited by its capital, will, I
think, appear upon examination to be more theoretical than real.
It is evident that in such a country as Mexico or Tunis the larger
and more general use of capital would greatly change the forms of
industry and enormously increase its productiveness; and it is often
said of such countries that they need capital for the development of
their resources. But is there not something back of this—a want which
includes the want of capital? Is it not the rapacity and abuses of
government, the insecurity of property, the ignorance and prejudice of
the people, that prevent the accumulation and use of capital? Is not
the real limitation in these things, and not in the want of capital,
which would not be used even if placed there? We can, of course,
imagine a community in which the want of capital would be the only
obstacle to an increased productiveness of labor, but it is only by
imagining a conjunction of conditions that seldom, if ever, occurs,
except by accident or as a passing phase. A community in which capital
has been swept away by war, conflagration, or convulsion of nature,
and, possibly, a community composed of civilized people just settled in
a new land, seem to me to furnish the only examples. Yet how quickly
the capital habitually used is reproduced in a community that has been
swept by war, has long been noticed, while the rapid production of the
capital it can, or is disposed to use, is equally noticeable in the
case of a new community.
I am unable to think of any other than such rare and passing conditions
in which the productiveness of labor is really limited by the want of
capital. For, although there may be in a community individuals who from
want of capital cannot apply their labor as efficiently as they would,
yet so long as there is a sufficiency of capital in the community at
large, the real limitation is not the want of capital, but the want
of its proper distribution. If bad government rob the laborer of his
capital, if unjust laws take from the producer the wealth with which
he would assist production, and hand it over to those who are mere
pensioners upon industry, the real limitation to the effectiveness
of labor is in misgovernment, and not in want of capital. And so of
ignorance, or custom, or other conditions which prevent the use of
capital. It is they, not the want of capital, that really constitute
the limitation. To give a circular saw to a Terra del Fuegan, a
locomotive to a Bedouin Arab, or a sewing machine to a Flathead squaw,
would not be to add to the efficiency of their labor. Neither does it
seem possible by giving anything else to add to their capital, for any
wealth beyond what they had been accustomed to use as capital would
be consumed or suffered to waste. It is not the want of seeds and
tools that keeps the Apache and the Sioux from cultivating the soil.
If provided with seeds and tools they would not use them productively
unless at the same time restrained from wandering and taught to
cultivate the soil. If all the capital of a London were given them in
their present condition, it would simply cease to be capital, for they
would only use productively such infinitesimal part as might assist in
the chase, and would not even use that until all the edible part of the
stock thus showered upon them had been consumed. Yet such capital as
they do want they manage to acquire, and in some forms in spite of the
greatest difficulties. These wild tribes hunt and fight with the best
weapons that American and English factories produce, keeping up with
the latest improvements. It is only as they became civilized that they
would care for such other capital as the civilized state requires, or
that it would be of any use to them.
In the reign of George IV., some returning missionaries took with them
to England a New Zealand chief called Hongi. His noble appearance
and beautiful tatooing attracted much attention, and when about to
return to his people he was presented by the monarch and some of the
religious societies with a considerable stock of tools, agricultural
instruments, and seeds. The grateful New Zealander did use this capital
in the production of food, but it was in a manner of which his English
entertainers little dreamed. In Sydney, on his way back, he exchanged
it all for arms and ammunition, with which, on getting home, he began
war against another tribe with such success that on the first battle
field three hundred of his prisoners were cooked and eaten, Hongi
having preluded the main repast by scooping out and swallowing the
eyes and sucking the warm blood of his mortally wounded adversary, the
opposing chief.[13] But now that their once constant wars have ceased,
and the remnant of the Maoris have largely adopted European habits,
there are among them many who have and use considerable amounts of
capital.
Likewise it would be a mistake to attribute the simple modes of
production and exchange which are resorted to in new communities solely
to a want of capital. These modes, which require little capital, are
in themselves rude and inefficient, but when the conditions of such
communities are considered, they will be found in reality the most
effective. A great factory with all the latest improvements is the most
efficient instrument that has yet been devised for turning wool or
cotton into cloth, but only so where large quantities are to be made.
The cloth required for a little village could be made with far less
labor by the spinning wheel and hand loom. A perfecting press will, for
each man required, print many thousand impressions while a man and a
boy would be printing a hundred with a Stanhope or Franklin press; yet
to work off the small edition of a country newspaper the old-fashioned
press is by far the most efficient machine. To carry occasionally two
or three passengers, a canoe is a better instrument than a steamboat;
a few sacks of flour can be transported with less expenditure of
labor by a pack horse than by a railroad train; to put a great stock
of goods into a cross-roads store in the backwoods would be but to
waste capital. And, generally, it will be found that the rude devices
of production and exchange which obtain among the sparse populations
of new countries result not so much from the want of capital as from
inability profitably to employ it.
As, no matter how much water is poured in, there can never be in a
bucket more than a bucketful, so no greater amount of wealth will be
used as capital than is required by the machinery of production and
exchange that under all the existing conditions—intelligence, habit,
security, density of population, etc.—best suit the people. And I am
inclined to think that as a general rule this amount will be had—that
the social organism secretes, as it were, the necessary amount of
capital just as the human organism in a healthy condition secretes the
requisite fat.
But whether the amount of capital ever does limit the productiveness
of industry, and thus fix a maximum which wages cannot exceed, it is
evident that it is not from any scarcity of capital that the poverty
of the masses in civilized countries proceeds. For not only do wages
nowhere reach the limit fixed by the productiveness of industry, but
wages are relatively the lowest where capital is most abundant. The
tools and machinery of production are in all the most progressive
countries evidently in excess of the use made of them, and any prospect
of remunerative employment brings out more than the capital needed. The
bucket is not only full; it is overflowing. So evident is this, that
not only among the ignorant, but by men of high economic reputation, is
industrial depression attributed to the abundance of machinery and the
accumulation of capital; and war, which is the destruction of capital,
is looked upon as the cause of brisk trade and high wages—an idea
strangely enough, so great is the confusion of thought on such matters,
countenanced by many who hold that capital employs labor and pays wages.
* * * * *
Our purpose in this inquiry is to solve the problem to which so many
self-contradictory answers are given. In ascertaining clearly what
capital really is and what capital really does, we have made the
first, and an all-important step. But it is only a first step. Let us
recapitulate and proceed.
We have seen that the current theory that wages depend upon the ratio
between the number of laborers and the amount of capital devoted to the
employment of labor is inconsistent with the general fact that wages
and interest do not rise and fall inversely, but conjointly.
This discrepancy having led us to an examination of the grounds of
the theory, we have seen, further, that, contrary to the current
idea, wages are not drawn from capital at all, but come directly from
the produce of the labor for which they are paid. We have seen that
capital does not advance wages or subsist laborers, but that its
functions are to assist labor in production with tools, seed, etc., and
with the wealth required to carry on exchanges.
We are thus irresistibly led to practical conclusions so important as
amply to justify the pains taken to make sure of them.
For if wages are drawn, not from capital, but from the produce of
labor, the current theories as to the relations of capital and labor
are invalid, and all remedies, whether proposed by professors of
political economy or workingmen, which look to the alleviation of
poverty either by the increase of capital or the restriction of the
number of laborers or the efficiency of their work, must be condemned.
If each laborer in performing the labor really creates the fund from
which his wages are drawn, then wages cannot be diminished by the
increase of laborers, but, on the contrary, as the efficiency of labor
manifestly increases with the number of laborers, the more laborers,
other things being equal, the higher should wages be.
But this necessary proviso, “other things being equal,” brings us to a
question which must be considered and disposed of before we can further
proceed. That question is, Do the productive powers of nature tend
to diminish with the increasing drafts made upon them by increasing
population?
FOOTNOTES:
[13] New Zealand and its Inhabitants. Rev. Richard Taylor. London,
1855. Chap. XXI.
BOOK II.
POPULATION AND SUBSISTENCE.
CHAPTER I.—THE MALTHUSIAN THEORY, ITS GENESIS AND SUPPORT.
CHAPTER II.—INFERENCES FROM FACTS.
CHAPTER III.—INFERENCES FROM ANALOGY.
CHAPTER IV.—DISPROOF OF THE MALTHUSIAN THEORY.
Are God and Nature then at strife,
That Nature lends such evil dreams?
So careful of the type she seems,
So careless of the single life.
—_Tennyson._
CHAPTER I.
THE MALTHUSIAN THEORY, ITS GENESIS AND SUPPORT.
Behind the theory we have been considering lies a theory we have yet to
consider. The current doctrine as to the derivation and law of wages
finds its strongest support in a doctrine as generally accepted—the
doctrine to which Malthus has given his name—that population naturally
tends to increase faster than subsistence. These two doctrines, fitting
in with each other, frame the answer which the current political
economy gives to the great problem we are endeavoring to solve.
In what has preceded, the current doctrine that wages are determined
by the ratio between capital and laborers has, I think, been shown to
be so utterly baseless as to excite surprise as to how it could so
generally and so long obtain. It is not to be wondered at that such a
theory should have arisen in a state of society where the great body of
laborers seem to depend for employment and wages upon a separate class
of capitalists, nor yet that under these conditions it should have
maintained itself among the masses of men, who rarely take the trouble
to separate the real from the apparent. But it is surprising that a
theory which on examination appears to be so groundless could have been
successively accepted by so many acute thinkers as have during the
present century devoted their powers to the elucidation and development
of the science of political economy.
The explanation of this otherwise unaccountable fact is to be found in
the general acceptance of the Malthusian theory. The current theory of
wages has never been fairly put upon its trial, because, backed by the
Malthusian theory, it has seemed in the minds of political economists a
self-evident truth. These two theories mutually blend with, strengthen,
and defend each other, while they both derive additional support from a
principle brought prominently forward in the discussions of the theory
of rent—viz., that past a certain point the application of capital and
labor to land yields a diminishing return. Together they give such
an explanation of the phenomena presented in a highly organized and
advancing society as seems to fit all the facts, and which has thus
prevented closer investigation.
Which of these two theories is entitled to historical precedence it is
hard to say. The theory of population was not formulated in such a way
as to give it the standing of a scientific dogma until after that had
been done for the theory of wages. But they naturally spring up and
grow with each other, and were both held in a form more or less crude
long prior to any attempt to construct a system of political economy.
It is evident, from several passages, that though he never fully
developed it, the Malthusian theory was in rudimentary form present in
the mind of Adam Smith, and to this, it seems to me, must be largely
due the misdirection which on the subject of wages his speculations
took. But, however this may be, so closely are the two theories
connected, so completely do they complement each other, that Buckle,
reviewing the history of the development of political economy in his
“Examination of the Scotch Intellect during the Eighteenth Century,”
attributes mainly to Malthus the honor of “decisively proving” the
current theory of wages by advancing the current theory of the pressure
of population upon subsistence. He says in his “History of Civilization
in England,” Vol. 3, Chap. 5:
“Scarcely had the Eighteenth Century passed away when it was
decisively proved that the reward of labor depends solely on two
things; namely, the magnitude of that national fund out of which all
labor is paid, and the number of laborers among whom the fund is to
be divided. This vast step in our knowledge is due, mainly, though
not entirely, to Malthus, whose work on population, besides marking
an epoch in the history of speculative thought, has already produced
considerable practical results, and will probably give rise to others
more considerable still. It was published in 1798; so that Adam Smith,
who died in 1790, missed what to him would have been the intense
pleasure of seeing how, in it, his own views were expanded rather
than corrected. Indeed, it is certain that without Smith there would
have been no Malthus; that is, unless Smith had laid the foundation,
Malthus could not have raised the superstructure.”
The famous doctrine which ever since its enunciation has so powerfully
influenced thought, not alone in the province of political economy,
but in regions of even higher speculation, was formulated by Malthus
in the proposition that, as shown by the growth of the North American
colonies, the natural tendency of population is to double itself
at least every twenty-five years, thus increasing in a geometrical
ratio, while the subsistence that can be obtained from land “under
circumstances the most favorable to human industry could not possibly
be made to increase faster than in an arithmetical ratio, or by an
addition every twenty-five years of a quantity equal to what it at
present produces.” “The necessary effects of these two different
rates of increase, when brought together,” Mr. Malthus naïvely goes
on to say, “will be very striking.” And thus (Chap. I) he brings them
together:
“Let us call the population of this island eleven millions; and
suppose the present produce equal to the easy support of such a
number. In the first twenty-five years the population would be
twenty-two millions, and the food being also doubled, the means of
subsistence would be equal to this increase. In the next twenty-five
years the population would be forty-four millions, and the means of
subsistence only equal to the support of thirty-three millions. In the
next period the population would be equal to eighty-eight millions,
and the means of subsistence just equal to the support of half that
number. And at the conclusion of the first century, the population
would be a hundred and seventy-six millions, and the means of
subsistence only equal to the support of fifty-five millions; leaving
a population of a hundred and twenty-one millions totally unprovided
for.
“Taking the whole earth instead of this island, emigration would of
course be excluded; and supposing the present population equal to a
thousand millions, the human species would increase as the numbers
1, 2, 4, 8, 16, 32, 64, 128, 256, and subsistence as 1, 2, 3, 4, 5,
6, 7, 8, 9. In two centuries the population would be to the means of
subsistence as 256 to 9; in three centuries, 4,096 to 13, and in two
thousand years the difference would be almost incalculable.”
Such a result is of course prevented by the physical fact that no
more people can exist than can find subsistence, and hence Malthus’
conclusion is, that this tendency of population to indefinite increase
must be held back either by moral restraint upon the reproductive
faculty, or by the various causes which increase mortality, which he
resolves into vice and misery. Such causes as prevent propagation he
styles the preventive check; such causes as increase mortality he
styles the positive check. This is the famous Malthusian doctrine, as
promulgated by Malthus himself in the “Essay on Population.”
It is not worth while to dwell upon the fallacy involved in the
assumption of geometrical and arithmetical rates of increase, a play
upon proportions which hardly rises to the dignity of that in the
familiar puzzle of the hare and the tortoise, in which the hare is
made to chase the tortoise through all eternity without coming up with
him. For this assumption is not necessary to the Malthusian doctrine,
or at least is expressly repudiated by some of those who fully accept
that doctrine; as, for instance, John Stuart Mill, who speaks of it
as “an unlucky attempt to give precision to things which do not
admit of it, which every person capable of reasoning must see is
wholly superfluous to the argument.”[14] The essence of the Malthusian
doctrine is, that population tends to increase faster than the power of
providing food, and whether this difference be stated as a geometrical
ratio for population and an arithmetical ratio for subsistence, as
by Malthus; or as a constant ratio for population and a diminishing
ratio for subsistence, as by Mill, is only a matter of statement. The
vital point, on which both agree, is, to use the words of Malthus,
“that there is a natural tendency and constant effort in population to
increase beyond the means of subsistence.”
The Malthusian doctrine, as at present held, may be thus stated in its
strongest and least objectionable form:
That population, constantly tending to increase, must, when
unrestrained, ultimately press against the limits of subsistence, not
as against a fixed, but as against an elastic barrier, which makes the
procurement of subsistence progressively more and more difficult. And
thus, wherever reproduction has had time to assert its power, and is
unchecked by prudence, there must exist that degree of want which will
keep population within the bounds of subsistence.
Although in reality not more repugnant to the sense of harmonious
adaptation by creative beneficence and wisdom than the complacent
no-theory which throws the responsibility for poverty and its
concomitants upon the inscrutable decrees of Providence, without
attempting to trace them, this theory, in avowedly making vice and
suffering the necessary results of a natural instinct with which are
linked the purest and sweetest affections, comes rudely in collision
with ideas deeply rooted in the human mind, and it was, as soon as
formally promulgated, fought with a bitterness in which zeal was often
more manifest than logic. But it has triumphantly withstood the ordeal,
and in spite of the refutations of the Godwins, the denunciations of
the Cobbetts, and all the shafts that argument, sarcasm, ridicule, and
sentiment could direct against it, to-day it stands in the world of
thought as an accepted truth, which compels the recognition even of
those who would fain disbelieve it.
The causes of its triumph, the sources of its strength, are not
obscure. Seemingly backed by an indisputable arithmetical truth—that a
continuously increasing population must eventually exceed the capacity
of the earth to furnish food or even standing room, the Malthusian
theory is supported by analogies in the animal and vegetable kingdoms,
where life everywhere beats wastefully against the barriers that hold
its different species in check—analogies to which the course of modern
thought, in leveling distinctions between different forms of life, has
given a greater and greater weight; and it is apparently corroborated
by many obvious facts, such as the prevalence of poverty, vice, and
misery amid dense populations; the general effect of material progress
in increasing population without relieving pauperism; the rapid growth
of numbers in newly settled countries and the evident retardation of
increase in more densely settled countries by the mortality among the
class condemned to want.
The Malthusian theory furnishes a general principle which accounts
for these and similar facts, and accounts for them in a way which
harmonizes with the doctrine that wages are drawn from capital, and
with all the principles that are deduced from it. According to the
current doctrine of wages, wages fall as increase in the number of
laborers necessitates a more minute division of capital; according
to the Malthusian theory, poverty appears as increase in population
necessitates the more minute division of subsistence. It requires but
the identification of capital with subsistence, and number of laborers
with population, an identification made in the current treatises on
political economy, where the terms are often converted, to make the
two propositions as identical formally as they are substantially.[15]
And thus it is, as stated by Buckle in the passage previously quoted,
that the theory of population advanced by Malthus has appeared to prove
decisively the theory of wages advanced by Smith.
Ricardo, who a few years subsequent to the publication of the “Essay on
Population” corrected the mistake into which Smith had fallen as to the
nature and cause of rent, furnished the Malthusian theory an additional
support by calling attention to the fact that rent would increase as
the necessities of increasing population forced cultivation to less
and less productive lands, or to less and less productive points on
the same lands, thus explaining the rise of rent. In this way was
formed a triple combination, by which the Malthusian theory has been
buttressed on both sides—the previously received doctrine of wages and
the subsequently received doctrine of rent exhibiting in this view but
special examples of the operation of the general principle to which the
name of Malthus has been attached—the fall in wages and the rise in
rents which come with increasing population being but modes in which
the pressure of population upon subsistence shows itself.
Thus taking its place in the very framework of political economy (for
the science as currently accepted has undergone no material change or
improvement since the time of Ricardo, though in some minor points
it has been cleared and illustrated), the Malthusian theory, though
repugnant to sentiments before alluded to, is not repugnant to other
ideas, which, in older countries at least, generally prevail among the
working classes; but, on the contrary, like the theory of wages by
which it is supported and in turn supports, it harmonizes with them. To
the mechanic or operative the cause of low wages and of the inability
to get employment is obviously the competition caused by the pressure
of numbers, and in the squalid abodes of poverty what seems clearer
than that there are too many people?
But the great cause of the triumph of this theory is, that, instead
of menacing any vested right or antagonizing any powerful interest,
it is eminently soothing and reassuring to the classes who, wielding
the power of wealth, largely dominate thought. At a time when old
supports were falling away, it came to the rescue of the special
privileges by which a few monopolize so much of the good things of this
world, proclaiming a natural cause for the want and misery which, if
attributed to political institutions, must condemn every government
under which they exist. The “Essay on Population” was avowedly a reply
to William Godwin’s “Inquiry concerning Political Justice,” a work
asserting the principle of human equality; and its purpose was to
justify existing inequality by shifting the responsibility for it from
human institutions to the laws of the Creator. There was nothing new
in this, for Wallace, nearly forty years before, had brought forward
the danger of excessive multiplication as the answer to the demands of
justice for an equal distribution of wealth; but the circumstances of
the times were such as to make the same idea, when brought forward by
Malthus, peculiarly grateful to a powerful class, in whom an intense
fear of any questioning of the existing state of things had been
generated by the outburst of the French Revolution.
Now, as then, the Malthusian doctrine parries the demand for reform,
and shelters selfishness from question and from conscience by the
interposition of an inevitable necessity. It furnishes a philosophy by
which Dives as he feasts can shut out the image of Lazarus who faints
with hunger at his door; by which wealth may complacently button up
its pocket when poverty asks an alms, and the rich Christian bend
on Sundays in a nicely upholstered pew to implore the good gifts of
the All Father without any feeling of responsibility for the squalid
misery that is festering but a square away. For poverty, want, and
starvation are by this theory not chargeable either to individual
greed or to social mal-adjustments; they are the inevitable results
of universal laws, with which, if it were not impious, it were as
hopeless to quarrel as with the law of gravitation. In this view, he
who in the midst of want has accumulated wealth, has but fenced in a
little oasis from the driving sand which else would have overwhelmed
it. He has gained for himself, but has hurt nobody. And even if the
rich were literally to obey the injunctions of Christ and divide their
wealth among the poor, nothing would be gained. Population would be
increased, only to press again upon the limits of subsistence or
capital, and the equality that would be produced would be but the
equality of common misery. And thus reforms which would interfere with
the interests of any powerful class are discouraged as hopeless. As the
moral law forbids any forestalling of the methods by which the natural
law gets rid of surplus population and thus holds in check a tendency
to increase potent enough to pack the surface of the globe with human
beings as sardines are packed in a box, nothing can really be done,
either by individual or by combined effort, to extirpate poverty,
save to trust to the efficacy of education and preach the necessity of
prudence.
A theory that, falling in with the habits of thought of the poorer
classes, thus justifies the greed of the rich and the selfishness of
the powerful, will spread quickly and strike its roots deep. This has
been the case with the theory advanced by Malthus.
And of late years the Malthusian theory has received new support in
the rapid change of ideas as to the origin of man and the genesis of
species. That Buckle was right in saying that the promulgation of
the Malthusian theory marked an epoch in the history of speculative
thought could, it seems to me, be easily shown; yet to trace its
influence in the higher domains of philosophy, of which Buckle’s own
work is an example, would, though extremely interesting, carry us
beyond the scope of this investigation. But how much be reflex and how
much original, the support which is given to the Malthusian theory
by the new philosophy of development, now rapidly spreading in every
direction, must be noted in any estimate of the sources from which
this theory derives its present strength. As in political economy, the
support received from the doctrine of wages and the doctrine of rent
combined to raise the Malthusian theory to the rank of a central truth,
so the extension of similar ideas to the development of life in all its
forms has the effect of giving it a still higher and more impregnable
position. Agassiz, who, to the day of his death, was a strenuous
opponent of the new philosophy, spoke of Darwinism as “Malthus all
over,”[16] and Darwin himself says the struggle for existence “is the
doctrine of Malthus applied with manifold force to the whole animal and
vegetable kingdoms.”[17]
It does not, however, seem to me exactly correct to say that the theory
of development by natural selection or survival of the fittest is
extended Malthusianism, for the doctrine of Malthus did not originally
and does not necessarily involve the idea of progression. But this
was soon added to it. McCulloch[18] attributes to the “principle of
increase” social improvement and the progress of the arts, and declares
that the poverty that it engenders acts as a powerful stimulus to the
development of industry, the extension of science and the accumulation
of wealth by the upper and middle classes, without which stimulus
society would quickly sink into apathy and decay. What is this but the
recognition in regard to human society of the developing effects of the
“struggle for existence” and “survival of the fittest,” which we are
now told on the authority of natural science have been the means which
Nature has employed to bring forth all the infinitely diversified and
wonderfully adapted forms which the teeming life of the globe assumes?
What is it but the recognition of the force, which, seemingly cruel and
remorseless, has yet in the course of unnumbered ages developed the
higher from the lower type, differentiated the man and the monkey, and
made the Nineteenth Century succeed the age of stone?
Thus commended and seemingly proved, thus linked and buttressed, the
Malthusian theory—the doctrine that poverty is due to the pressure
of population against subsistence, or, to put it in its other form,
the doctrine that the tendency to increase in the number of laborers
must always tend to reduce wages to the minimum on which laborers can
reproduce—is now generally accepted as an unquestionable truth, in
the light of which social phenomena are to be explained, just as for
ages the phenomena of the sidereal heavens were explained upon the
supposition of the fixity of the earth, or the facts of geology upon
that of the literal inspiration of the Mosaic record. If authority were
alone to be considered, formally to deny this doctrine would require
almost as much audacity as that of the colored preacher who recently
started out on a crusade against the opinion that the earth moves
around the sun, for in one form or another, the Malthusian doctrine has
received in the intellectual world an almost universal indorsement,
and in the best as in the most common literature of the day may be
seen cropping out in every direction. It is indorsed by economists
and by statesmen, by historians and by natural investigators; by
social science congresses and by trade unions; by churchmen and by
materialists; by conservatives of the strictest sect and by the most
radical of radicals. It is held and habitually reasoned from by many
who never heard of Malthus and who have not the slightest idea of what
his theory is.
Nevertheless, as the grounds of the current theory of wages have
vanished when subjected to a candid examination, so, do I believe, will
vanish the grounds of this, its twin. In proving that wages are not
drawn from capital we have raised this Antæus from the earth.
FOOTNOTES:
[14] Principles of Political Economy, Book II, Chap. IX., Sec. VI.—Yet
notwithstanding what Mill says, it is clear that Malthus himself lays
great stress upon his geometrical and arithmetical ratios, and it
is also probable that it is to these ratios that Malthus is largely
indebted for his fame, as they supplied one of those high-sounding
formulas that with many people carry far more weight than the clearest
reasoning.
[15] The effect of the Malthusian doctrine upon the definitions of
capital may, I think, be seen by comparing (see pp. 32, 33, 34) the
definition of Smith, who wrote prior to Malthus, with the definitions
of Ricardo, McCulloch and Mill, who wrote subsequently.
[16] Address before Massachusetts State Board of Agriculture, 1872.
Report U. S. Department of Agriculture, 1873.
[17] Origin of Species, Chap. III.
[18] Note IV. to Wealth of Nations.
CHAPTER II.
INFERENCES FROM FACTS.
The general acceptance of the Malthusian theory and the high authority
by which it is indorsed have seemed to me to make it expedient to
review its grounds and the causes which have conspired to give it such
a dominating influence in the discussion of social questions.
But when we subject the theory itself to the test of straightforward
analysis, it will, I think, be found as utterly untenable as the
current theory of wages.
In the first place, the facts which are marshaled in support of this
theory do not prove it, and the analogies do not countenance it.
And in the second place, there are facts which conclusively disprove it.
I go to the heart of the matter in saying that there is no warrant,
either in experience or analogy, for the assumption that there is any
tendency in population to increase faster than subsistence. The facts
cited to show this simply show that where, owing to the sparseness
of population, as in new countries, or where, owing to the unequal
distribution of wealth, as among the poorer classes in old countries,
human life is occupied with the physical necessities of existence,
the tendency to reproduce is at a rate which would, were it to go on
unchecked, some time exceed subsistence. But it is not a legitimate
inference from this that the tendency to reproduce would show itself
in the same force where population was sufficiently dense and wealth
distributed with sufficient evenness to lift a whole community above
the necessity of devoting their energies to a struggle for mere
existence. Nor can it be assumed that the tendency to reproduce, by
causing poverty, must prevent the existence of such a community; for
this, manifestly, would be assuming the very point at issue, and
reasoning in a circle. And even if it be admitted that the tendency to
multiply must ultimately produce poverty, it cannot from this alone
be predicated of existing poverty that it is due to this cause, until
it be shown that there are no other causes which can account for it—a
thing in the present state of government, laws, and customs, manifestly
impossible.
This is abundantly shown in the “Essay on Population” itself. This
famous book, which is much oftener spoken of than read, is still well
worth perusal, if only as a literary curiosity. The contrast between
the merits of the book itself and the effect it has produced, or is
at least credited with (for though Sir James Stewart, Mr. Townsend,
and others, share with Malthus the glory of discovering “the principle
of population,” it was the publication of the “Essay on Population”
that brought it prominently forward), is, it seems to me, one of the
most remarkable things in the history of literature; and it is easy to
understand how Godwin, whose “Political Justice” provoked the “Essay
on Population,” should until his old age have disdained a reply. It
begins with the assumption that population tends to increase in a
geometrical ratio, while subsistence can at best be made to increase
only in an arithmetical ratio—an assumption just as valid, and no
more so, than it would be, from the fact that a puppy doubled the
length of his tail while he added so many pounds to his weight, to
assert a geometric progression of tail and an arithmetical progression
of weight. And, the inference from the assumption is just such as
Swift in satire might have credited to the savans of a previously
dogless island, who, by bringing these two ratios together, might
deduce the very “striking consequence” that by the time the dog grew
to a weight of fifty pounds his tail would be over a mile long, and
extremely difficult to wag, and hence recommend the prudential check
of a bandage as the only alternative to the positive check of constant
amputations. Commencing with such an absurdity, the essay includes a
long argument for the imposition of a duty on the importation, and
the payment of a bounty for the exportation of corn, an idea that has
long since been sent to the limbo of exploded fallacies. And it is
marked throughout the argumentative portions by passages which show on
the part of the reverend gentleman the most ridiculous incapacity for
logical thought—as, for instance, that if wages were to be increased
from eighteen pence or two shillings per day to five shillings, meat
would necessarily increase in price from eight or nine pence to two or
three shillings per pound, and the condition of the laboring classes
would therefore not be improved, a statement to which I can think of
no parallel so close as a proposition I once heard a certain printer
gravely advance—that because an author, whom he had known, was forty
years old when he was twenty, the author must now be eighty years old
because he (the printer) was forty. This confusion of thought does not
merely crop out here and there; it characterizes the whole work.[19]
The main body of the book is taken up with what is in reality a
refutation of the theory which the book advances, for Malthus’
review of what he calls the positive checks to population is simply
the showing that the results which he attributes to over-population
actually arise from other causes. Of all the cases cited, and pretty
much the whole globe is passed over in the survey, in which vice and
misery check increase by limiting marriages or shortening the term of
human life, there is not a single case in which the vice and misery can
be traced to an actual increase in the number of mouths over the power
of the accompanying hands to feed them; but in every case the vice and
misery are shown to spring either from unsocial ignorance and rapacity,
or from bad government, unjust laws or destructive warfare.
Nor what Malthus failed to show has any one since him shown. The globe
may be surveyed and history may be reviewed in vain for any instance
of a considerable country[20] in which poverty and want can be fairly
attributed to the pressure of an increasing population. Whatever be the
possible dangers involved in the power of human increase, they have
never yet appeared. Whatever may some time be, this never yet has been
the evil that has afflicted mankind. Population always tending to
overpass the limit of subsistence! How is it, then, that this globe of
ours, after all the thousands, and it is now thought millions, of years
that man has been upon the earth, is yet so thinly populated? How is
it, then, that so many of the hives of human life are now deserted—that
once cultivated fields are rank with jungle, and the wild beast licks
her cubs where once were busy haunts of men?
It is a fact, that, as we count our increasing millions, we are apt
to lose sight of—nevertheless it is a fact—that in what we know of
the world’s history decadence of population is as common as increase.
Whether the aggregate population of the earth is now greater than at
any previous epoch is a speculation which can deal only with guesses.
Since Montesquieu, in the early part of the last century, asserted,
what was then probably the prevailing impression, that the population
of the earth had, since the Christian era, greatly declined, opinion
has run the other way. But the tendency of recent investigation
and exploration has been to give greater credit to what have been
deemed the exaggerated accounts of ancient historians and travelers,
and to reveal indications of denser populations and more advanced
civilizations than had before been suspected, as well as of a higher
antiquity in the human race. And in basing our estimates of population
upon the development of trade, the advance of the arts, and the size
of cities, we are apt to underrate the density of population which the
intensive cultivations, characteristic of the earlier civilizations,
are capable of maintaining—especially where irrigation is resorted
to. As we may see from the closely cultivated districts of China and
Europe a very great population of simple habits can readily exist with
very little commerce and a much lower stage of those arts in which
modern progress has been most marked, and without that tendency to
concentrate in cities which modern populations show.[21]
Be this as it may, the only continent which we can be sure now contains
a larger population than ever before is Europe. But this is not true
of all parts of Europe. Certainly Greece, the Mediterranean Islands,
and Turkey in Europe, probably Italy, and possibly Spain, have
contained larger populations than now, and this may be likewise true of
Northwestern and parts of Central and Eastern Europe.
America also has increased in population during the time we know of
it; but this increase is not so great as is popularly supposed, some
estimates giving to Peru alone at the time of the discovery a greater
population than now exists on the whole continent of South America. And
all the indications are that previous to the discovery the population
of America had been declining. What great nations have run their
course, what empires have arisen and fallen in “that new world which
is the old,” we can only imagine. But fragments of massive ruins yet
attest a grander pre-Incan civilization; amid the tropical forests of
Yucatan and Central America are the remains of great cities forgotten
ere the Spanish conquest; Mexico, as Cortez found it, showed the
superimposition of barbarism upon a higher social development, while
through a great part of what is now the United States are scattered
mounds which prove a once relatively dense population, and here and
there, as in the Lake Superior copper mines, are traces of higher arts
than were known to the Indians with whom the whites came in contact.
As to Africa there can be no question. Northern Africa can contain but
a fraction of the population that it had in ancient times; the Nile
Valley once held an enormously greater population than now, while south
of the Sahara there is nothing to show increase within historic times,
and widespread depopulation was certainly caused by the slave trade.
As for Asia, which even now contains more than half the human race,
though it is not much more than half as densely populated as Europe,
there are indications that both India and China once contained larger
populations than now, while that great breeding ground of men from
which issued swarms that overran both countries and sent great waves
of people rolling upon Europe, must have been once far more populous.
But the most marked change is in Asia Minor, Syria, Babylonia, Persia,
and in short that vast district which yielded to the conquering arms of
Alexander. Where were once great cities and teeming populations are now
squalid villages and barren wastes.
It is somewhat strange that among all the theories that have been
raised, that of a fixed quantity to human life on this earth has not
been broached. It would at least better accord with historical facts
than that of the constant tendency of population to outrun subsistence.
It is clear that population has here ebbed and there flowed; its
centers have changed; new nations have arisen and old nations declined;
sparsely settled districts have become populous and populous districts
have lost their population; but as far back as we can go without
abandoning ourselves wholly to inference, there is nothing to show
continuous increase, or even clearly to show an aggregate increase
from time to time. The advance of the pioneers of peoples has, so far
as we can discern, never been into uninhabited lands—their march has
always been a battle with some other people previously in possession;
behind dim empires vaguer ghosts of empire loom. That the population
of the world must have had its small beginnings we confidently infer,
for we know that there was a geologic era when human life could not
have existed, and we cannot believe that men sprang up all at once, as
from the dragon teeth sowed by Cadmus; yet through long vistas, where
history, tradition and antiquities shed a light that is lost in faint
glimmers, we may discern large populations. And during these long
periods the principle of population has not been strong enough fully
to settle the world, or even so far as we can clearly see materially
to increase its aggregate population. Compared with its capacities to
support human life the earth as a whole is yet most sparsely populated.
There is another broad, general fact which cannot fail to strike any
one who, thinking of this subject, extends his view beyond modern
society. Malthusianism predicates a universal law—that the natural
tendency of population is to outrun subsistence. If there be such a
law, it must, wherever population has attained a certain density,
become as obvious as any of the great natural laws which have been
everywhere recognized. How is it, then, that neither in classical
creeds and codes, nor in those of the Jews, the Egyptians, the Hindoos,
the Chinese, nor any of the peoples who have lived in close association
and have built up creeds and codes, do we find any injunctions to the
practice of the prudential restraints of Malthus; but that, on the
contrary, the wisdom of the centuries, the religions of the world, have
always inculcated ideas of civic and religious duty the very reverse
of those which the current political economy enjoins, and which Annie
Besant is now trying to popularize in England?
And it must be remembered that there have been societies in which the
community guaranteed to every member employment and subsistence. John
Stuart Mill says (Book II, Chap. XII, Sec. 2), that to do this without
state regulation of marriages and births, would be to produce a state
of general misery and degradation. “These consequences,” he says, “have
been so often and so clearly pointed out by authors of reputation
that ignorance of them on the part of educated persons is no longer
pardonable.” Yet in Sparta, in Peru, in Paraguay, as in the industrial
communities which appear almost everywhere to have constituted the
primitive agricultural organization, there seems to have been an utter
ignorance of these dire consequences of a natural tendency.
Besides the broad, general facts I have cited, there are facts
of common knowledge which seem utterly inconsistent with such an
overpowering tendency to multiplication. If the tendency to reproduce
be so strong as Malthusianism supposes, how is it that families so
often become extinct—families in which want is unknown? How is it,
then, that when every premium is offered by hereditary titles and
hereditary possessions, not alone to the principle of increase, but
to the preservation of genealogical knowledge and the proving up of
descent, that in such an aristocracy as that of England, so many
peerages should lapse, and the House of Lords be kept up from century
to century only by fresh creations?
For the solitary example of a family that has survived any great
lapse of time, even though assured of subsistence and honor, we must
go to unchangeable China. The descendants of Confucius still exist
there, and enjoy peculiar privileges and consideration, forming,
in fact, the only hereditary aristocracy. On the presumption that
population tends to double every twenty-five years, they should,
in 2,150 years after the death of Confucius, have amounted to
859,559,193,106,709,670,198,710,528 souls. Instead of any such
unimaginable number, the descendants of Confucius, 2,150 years after
his death, in the reign of Kanghi, numbered 11,000 males, or say 22,000
souls. This is quite a discrepancy, and is the more striking when it
is remembered that the esteem in which this family is held on account
of their ancestor, “the Most Holy Ancient Teacher,” has prevented
the operation of the positive check, while the maxims of Confucius
inculcate anything but the prudential check.
Yet, it may be said, that even this increase is a great one. Twenty-two
thousand persons descended from a single pair in 2,150 years is far
short of the Malthusian rate. Nevertheless, it is suggestive of
possible overcrowding.
But consider. Increase of descendants does not show increase of
population. It could only do this when the breeding was in and in.
Smith and his wife have a son and daughter, who marry respectively some
one else’s daughter and son, and each have two children. Smith and his
wife would thus have four grandchildren; but there would be in the
one generation no greater number than in the other—each child would
have four grandparents. And supposing this process were to go on, the
line of descent might constantly spread out into hundreds, thousands
and millions; but in each generation of descendants there would be no
more individuals than in any previous generation of ancestors. The web
of generations is like lattice-work or the diagonal threads in cloth.
Commencing at any point at the top, the eye follows lines which at the
bottom widely diverge; but beginning at any point at the bottom, the
lines diverge in the same way to the top. How many children a man may
have is problematical. But that he had two parents is certain, and
that these again had two parents each is also certain. Follow this
geometrical progression through a few generations and see if it does
not lead to quite as “striking consequences” as Mr. Malthus’ peopling
of the solar systems.
But from such considerations as these let us advance to a more definite
inquiry. I assert that the cases commonly cited as instances of
over-population will not bear investigation. India, China, and Ireland
furnish the strongest of these cases. In each of these countries, large
numbers have perished by starvation and large classes are reduced to
abject misery or compelled to emigrate. But is this really due to
over-population?
Comparing total population with total area, India and China are far
from being the most densely populated countries of the world. According
to the estimates of MM. Behm and Wagner, the population of India is
but 132 to the square mile and that of China 119, whereas Saxony has
a population of 442 to the square mile; Belgium 441; England 422; the
Netherlands 291; Italy 234 and Japan 233.[22] There are thus in both
countries large areas unused or not fully used, but even in their more
densely populated districts there can be no doubt that either could
maintain a much greater population in a much higher degree of comfort,
for in both countries is labor applied to production in the rudest and
most inefficient ways, and in both countries great natural resources
are wholly neglected. This arises from no innate deficiency in the
people, for the Hindoo, as comparative philology has shown, is of our
own blood, and China possessed a high degree of civilization and the
rudiments of the most important modern inventions when our ancestors
were wandering savages. It arises from the form which the social
organization has in both countries taken, which has shackled productive
power and robbed industry of its reward.
In India from time immemorial, the working classes have been ground
down by exactions and oppressions into a condition of helpless and
hopeless degradation. For ages and ages the cultivator of the soil
has esteemed himself happy if, of his produce, the extortion of the
strong hand left him enough to support life and furnish seed; capital
could nowhere be safely accumulated or to any considerable extent be
used to assist production; all wealth that could be wrung from the
people was in the possession of princes who were little better than
robber chiefs quartered on the country, or in that of their farmers
or favorites, and was wasted in useless or worse than useless luxury,
while religion, sunken into an elaborate and terrible superstition,
tyrannized over the mind as physical force did over the bodies of
men. Under these conditions, the only arts that could advance were
those that ministered to the ostentation and luxury of the great. The
elephants of the rajah blazed with gold of exquisite workmanship, and
the umbrellas that symbolized his regal power glittered with gems; but
the plow of the ryot was only a sharpened stick. The ladies of the
rajah’s harem wrapped themselves in muslins so fine as to take the name
of woven wind, but the tools of the artisan were of the poorest and
rudest description, and commerce could only be carried on, as it were,
by stealth.
Is it not clear that this tyranny and insecurity have produced the want
and starvation of India; and not, as according to Buckle, the pressure
of population upon subsistence that has produced the want, and the
want the tyranny.[23] Says the Rev. William Tennant, a chaplain in the
service of the East India Company, writing in 1796, two years before
the publication of the “Essay on Population:”
“When we reflect upon the great fertility of Hindostan, it is amazing
to consider the frequency of famine. It is evidently not owing to
any sterility of soil or climate; the evil must be traced to some
political cause, and it requires but little penetration to discover
it in the avarice and extortion of the various governments. The great
spur to industry, that of security, is taken away. Hence no man raises
more grain than is barely sufficient for himself, and the first
unfavorable season produces a famine.
“The Mogul government at no period offered full security to the
prince, still less to his vassals; and to peasants the most scanty
protection of all. It was a continued tissue of violence and
insurrection, treachery and punishment, under which neither commerce
nor the arts could prosper, nor agriculture assume the appearance of a
system. Its downfall gave rise to a state still more afflictive, since
anarchy is worse than misrule. The Mohammedan government, wretched
as it was, the European nations have not the merit of overturning.
It fell beneath the weight of its own corruption, and had already
been succeeded by the multifarious tyranny of petty chiefs, whose
right to govern consisted in their treason to the state, and whose
exactions on the peasants were as boundless as their avarice. The
rents to government were, and, where natives rule, still are, levied
twice a year by a merciless banditti, under the semblance of an army,
who wantonly destroy or carry off whatever part of the produce may
satisfy their caprice or satiate their avidity, after having hunted
the ill-fated peasants from the villages to the woods. Any attempt
of the peasants to defend their persons or property within the mud
walls of their villages only calls for the more signal vengeance on
those useful, but ill-fated mortals. They are then surrounded and
attacked with musketry and field pieces till resistance ceases, when
the survivors are sold, and their habitations burned and leveled
with the ground. Hence you will frequently meet with the ryots
gathering up the scattered remnants of what had yesterday been their
habitation, if fear has permitted them to return; but oftener the
ruins are seen smoking, after a second visitation of this kind,
without the appearance of a human being to interrupt the awful silence
of desolation. This description does not apply to the Mohammedan
chieftains alone; it is equally applicable to the Rajahs in the
districts governed by Hindoos.”[24]
To this merciless rapacity, which would have produced want and famine
were the population but one to a square mile and the land a Garden
of Eden, succeeded, in the first era of British rule in India, as
merciless a rapacity, backed by a far more irresistible power. Says
Macaulay, in his essay on Lord Clive:
“Enormous fortunes were rapidly accumulated at Calcutta, while
millions of human beings were reduced to the extremity of
wretchedness. They had been accustomed to live under tyranny, but
never under tyranny like this. They found the little finger of the
Company thicker than the loins of Surajah Dowlah. * * * It resembled
the government of evil genii, rather than the government of human
tyrants. Sometimes they submitted in patient misery. Sometimes they
fled from the white man as their fathers had been used to fly from the
Maharatta, and the palanquin of the English traveler was often carried
through silent villages and towns that the report of his approach had
made desolate.”
Upon horrors that Macaulay thus but touches, the vivid eloquence of
Burke throws a stronger light—whole districts surrendered to the
unrestrained cupidity of the worst of human kind, poverty-stricken
peasants fiendishly tortured to compel them to give up their little
hoards, and once populous tracts turned into deserts.
But the lawless license of early English rule has been long restrained.
To all that vast population the strong hand of England has given a
more than Roman peace; the just principles of English law have been
extended by an elaborate system of codes and law officers designed
to secure to the humblest of these abject peoples the rights of
Anglo-Saxon freemen; the whole peninsula has been intersected by
railways, and great irrigation works have been constructed. Yet, with
increasing frequency, famine has succeeded famine, raging with greater
intensity over wider areas.
Is not this a demonstration of the Malthusian theory? Does it not
show that no matter how much the possibilities of subsistence are
increased, population still continues to press upon it? Does it not
show, as Malthus contended, that, to shut up the sluices by which
superabundant population is carried off, is but to compel nature to
open new ones, and that unless the sources of human increase are
checked by prudential regulation, the alternative of war is famine?
This has been the orthodox explanation. But the truth, as may be seen
in the facts brought forth in recent discussions of Indian affairs in
the English periodicals, is that these famines, which have been, and
are now, sweeping away their millions, are no more due to the pressure
of population upon the natural limits of subsistence than was the
desolation of the Carnatic when Hyder Ali’s horsemen burst upon it in a
whirlwind of destruction.
The millions of India have bowed their necks beneath the yokes of
many conquerors, but worst of all is the steady, grinding weight of
English domination—a weight which is literally crushing millions out
of existence, and, as shown by English writers, is inevitably tending
to a most frightful and widespread catastrophe. Other conquerors have
lived in the land, and, though bad and tyrannous in their rule, have
understood and been understood by the people; but India now is like a
great estate owned by an absentee and alien landlord. A most expensive
military and civil establishment is kept up, managed and officered by
Englishmen who regard India as but a place of temporary exile; and an
enormous sum, estimated as at least £20,000,000 annually, raised from a
population where laborers are in many places glad in good times to work
for 1½d. to 4d. a day, is drained away to England in the shape of
remittances, pensions, home charges of the government, etc.—a tribute
for which there is no return. The immense sums lavished on railroads
have, as shown by the returns, been economically unproductive; the
great irrigation works are for the most part costly failures. In large
parts of India the English, in their desire to create a class of landed
proprietors, turned over the soil in absolute possession to hereditary
tax-gatherers, who rack-rent the cultivators most mercilessly. In
other parts, where the rent is still taken by the State in the shape
of a land tax, assessments are so high, and taxes are collected so
relentlessly, as to drive the ryots, who get but the most scanty living
in good seasons, into the claws of money lenders, who are, if possible,
even more rapacious than the zemindars. Upon salt, an article of prime
necessity everywhere, and of especial necessity where food is almost
exclusively vegetable, a tax of nearly twelve hundred per cent. is
imposed, so that its various industrial uses are prohibited, and large
bodies of the people cannot get enough to keep either themselves or
their cattle in health. Below the English officials are a horde of
native employees who oppress and extort. The effect of English law,
with its rigid rules, and, to the native, mysterious proceedings, has
been but to put a potent instrument of plunder into the hands of the
native money lenders, from whom the peasants are compelled to borrow on
the most extravagant terms to meet their taxes, and to whom they are
easily induced to give obligations of which they know not the meaning.
“We do not care for the people of India,” writes Florence Nightingale,
with what seems like a sob. “The saddest sight to be seen in the
East—nay, probably in the world—is the peasant of our Eastern Empire.”
And she goes on to show the causes of the terrible famines, in taxation
which takes from the cultivators the very means of cultivation, and the
actual slavery to which the ryots are reduced as “the consequences of
our own laws;” producing in “the most fertile country in the world, a
grinding, chronic semi-starvation in many places where what is called
famine does not exist.”[25] “The famines which have been devastating
India,” says H. M. Hyndman,[26] “are in the main financial famines.
Men and women cannot get food, because they cannot save the money to
buy it. Yet we are driven, so we say, to tax these people more.” And
he shows how, even from famine stricken districts, food is exported in
payment of taxes, and how the whole of India is subjected to a steady
and exhausting drain, which, combined with the enormous expenses of
government, is making the population year by year poorer. The exports
of India consist almost exclusively of agricultural products. For at
least one-third of these, as Mr. Hyndman shows, no return whatever is
received; they represent tribute—remittances made by Englishmen in
India, or expenses of the English branch of the Indian government.[27]
And for the rest, the return is for the most part government stores, or
articles of comfort and luxury used by the English masters of India. He
shows that the expenses of government have been enormously increased
under Imperial rule; that the relentless taxation of a population so
miserably poor that the masses are not more than half fed, is robbing
them of their scanty means for cultivating the soil; that the number
of bullocks (the Indian draft animal) is decreasing, and the scanty
implements of culture being given up to money lenders, from whom “we,
a business people, are forcing the cultivators to borrow at 12, 24, 60
per cent.[28] to build and pay the interest on the cost of vast public
works, which have never paid nearly five per cent.” Says Mr. Hyndman:
“The truth is that Indian society as a whole has been frightfully
impoverished under our rule, and that the process is now going on at an
exceedingly rapid rate”—a statement which cannot be doubted, in view of
the facts presented not only by such writers as I have referred to, but
by Indian officials themselves. The very efforts made by the government
to alleviate famines do, by the increased taxation imposed, but
intensify and extend their real cause. Although in the recent famine
in Southern India six millions of people, it is estimated, perished
of actual starvation, and the great mass of those who survived were
actually stripped, yet the taxes were not remitted and the salt tax,
already prohibitory to the great bulk of these poverty stricken people,
was increased forty per cent., just as after the terrible Bengal famine
in 1770 the revenue was actually driven up, by raising assessments upon
the survivors and rigorously enforcing collection.
In India now, as in India in past times, it is only the most
superficial view that can attribute want and starvation to pressure of
population upon the ability of the land to produce subsistence. Could
the cultivators retain their little capital—could they be released
from the drain which, even in non-famine years, reduces great masses
of them to a scale of living not merely below what is deemed necessary
for the sepoys, but what English humanity gives to the prisoners in
the jails—reviving industry, assuming more productive forms, would
undoubtedly suffice to keep a much greater population. There are still
in India great areas uncultivated, vast mineral resources untouched,
and it is certain that the population of India does not reach, as
within historical times it never has reached, the real limit of the
soil to furnish subsistence, or even the point where this power begins
to decline with the increasing drafts made upon it. The real cause
of want in India has been, and yet is, the rapacity of man, not the
niggardliness of nature.
What is true of India is true of China. Densely populated as China is
in many parts, that the extreme poverty of the lower classes is to be
attributed to causes similar to those which have operated in India,
and not to too great population, is shown by many facts. Insecurity
prevails, production goes on under the greatest disadvantages, and
exchange is closely fettered. Where the government is a succession of
squeezings, and security for capital of any sort must be purchased of
a mandarin; where men’s shoulders are the great reliance for inland
transportation; where the junk is obliged to be constructed so as to
unfit it for a sea-boat; where piracy is a regular trade, and robbers
often march in regiments, poverty would prevail and the failure of a
crop result in famine, no matter how sparse the population.[29] That
China is capable of supporting a much greater population is shown not
only by the great extent of uncultivated land to which all travelers
testify, but by the immense unworked mineral deposits which are there
known to exist. China, for instance, is said to contain the largest and
finest deposit of coal yet anywhere discovered. How much the working
of these coal beds would add to the ability to support a greater
population, may readily be imagined. Coal is not food, it is true; but
its production is equivalent to the production of food. For, not only
may coal be exchanged for food, as is done in all mining districts, but
the force evolved by its consumption may be used in the production of
food, or may set labor free for the production of food.
Neither in India nor China, therefore, can poverty and starvation be
charged to the pressure of population against subsistence. It is not
dense population, but the causes which prevent social organization
from taking its natural development and labor from securing its full
return, that keep millions just on the verge of starvation, and every
now and again force millions beyond it. That the Hindoo laborer thinks
himself fortunate to get a handful of rice, that the Chinese eat rats
and puppies, is no more due to the pressure of population than it is
due to the pressure of population that the Digger Indians live on
grasshoppers, or the aboriginal inhabitants of Australia eat the worms
found in rotten wood.
Let me be understood. I do not mean merely to say that India or China
could, with a more highly developed civilization, maintain a greater
population, for to this any Malthusian would agree. The Malthusian
doctrine does not deny that an advance in the productive arts would
permit a greater population to find subsistence. But the Malthusian
theory affirms—and this is its essence—that, whatever be the capacity
for production, the natural tendency of population is to come up with
it, and, in the endeavor to press beyond it, to produce, to use the
phrase of Malthus, that degree of vice and misery which is necessary
to prevent further increase; so that as productive power is increased,
population will correspondingly increase, and in a little time produce
the same results as before. What I say is this: that nowhere is there
any instance which will support this theory; that nowhere can want be
properly attributed to the pressure of population against the power to
procure subsistence in the then existing degree of human knowledge;
that everywhere the vice and misery attributed to over-population
can be traced to the warfare, tyranny, and oppression which prevent
knowledge from being utilized and deny the security essential to
production. The reason why the natural increase of population does not
produce want, we shall come to hereafter. The fact that it has not
yet anywhere done so, is what we are now concerned with. This fact
is obvious with regard to India and China. It will be obvious, too,
wherever we trace to their causes the results which on superficial view
are often taken to proceed from over-population.
Ireland, of all European countries, furnishes the great stock example
of over-population. The extreme poverty of the peasantry and the low
rate of wages there prevailing, the Irish famine, and Irish emigration,
are constantly referred to as a demonstration of the Malthusian theory
worked out under the eyes of the civilized world. I doubt if a more
striking instance can be cited of the power of a preaccepted theory to
blind men as to the true relations of facts. The truth is, and it lies
on the surface, that Ireland has never yet had a population which the
natural powers of the country, in the existing state of the productive
arts, could not have maintained in ample comfort. At the period of her
greatest population (1840-45) Ireland contained something over eight
millions of people. But a very large proportion of them managed merely
to exist—lodging in miserable cabins, clothed with miserable rags, and
with but potatoes for their staple food. When the potato blight came,
they died by thousands. But was it the inability of the soil to support
so large a population that compelled so many to live in this miserable
way, and exposed them to starvation on the failure of a single root
crop? On the contrary, it was the same remorseless rapacity that robbed
the Indian ryot of the fruits of his toil and left him to starve where
nature offered plenty. A merciless banditti of tax-gatherers did not
march through the land plundering and torturing, but the laborer was
just as effectually stripped by as merciless a horde of landlords,
among whom the soil had been divided as their absolute possession,
regardless of any rights of those who lived upon it.
Consider the conditions of production under which this eight millions
managed to live until the potato blight came. It was a condition to
which the words used by Mr. Tennant in reference to India may as
appropriately be applied—“the great spur to industry, that of security,
was taken away.” Cultivation was for the most part carried on by
tenants at will, who, even if the rack-rents which they were forced
to pay had permitted them, did not dare to make improvements which
would have been but the signal for an increase of rent. Labor was
thus applied in the most inefficient and wasteful manner, and labor
was dissipated in aimless idleness that, with any security for its
fruits, would have been applied unremittingly. But even under these
conditions, it is a matter of fact that Ireland did more than support
eight millions. For when her population was at its highest, Ireland
was a food-exporting country. Even during the famine, grain and meat
and butter and cheese were carted for exportation along roads lined
with the starving and past trenches into which the dead were piled. For
these exports of food, or at least for a great part of them, there was
no return. So far as the people of Ireland were concerned, the food
thus exported might as well have been burned up or thrown into the sea,
or never produced. It went not as an exchange, but as a tribute—to pay
the rent of absentee landlords; a levy wrung from producers by those
who in no wise contributed to production.
Had this food been left to those who raised it; had the cultivators
of the soil been permitted to retain and use the capital their labor
produced; had security stimulated industry and permitted the adoption
of economical methods, there would have been enough to support in
bounteous comfort the largest population Ireland ever had, and the
potato blight might have come and gone without stinting a single
human being of a full meal. For it was not the imprudence “of Irish
peasants,” as English economists coldly say, which induced them to
make the potato the staple of their food. Irish emigrants, when they
can get other things, do not live upon the potato, and certainly in
the United States the prudence of the Irish character, in endeavoring
to lay by something for a rainy day, is remarkable. They lived on the
potato, because rack-rents stripped everything else from them. The
truth is, that the poverty and misery of Ireland have never been fairly
attributable to over-population.
McCulloch, writing in 1838, says, in Note IV to “Wealth of Nations:”
“The wonderful density of population in Ireland is the immediate cause
of the abject poverty and depressed condition of the great bulk of
the people. It is not too much to say that there are at present more
than double the persons in Ireland it is, with its existing means of
production, able either fully to employ or to maintain in a moderate
state of comfort.”
As in 1841 the population of Ireland was given as 8,175,124, we
may set it down in 1838 as about eight millions. Thus, to change
McCulloch’s negative into an affirmative, Ireland would, according
to the over-population theory, have been able to employ fully and
maintain in a moderate state of comfort something less than four
million persons. Now, in the early part of the preceding century, when
Dean Swift wrote his “Modest Proposal,” the population of Ireland was
about two millions. As neither the means nor the arts of production
had perceptibly advanced in Ireland during the interval, then—if the
abject poverty and depressed condition of the Irish people in 1838 were
attributable to over-population—there should, upon McCulloch’s own
admission, have been in Ireland in 1727 more than full employment, and
much more than a moderate state of comfort, for the whole two millions.
Yet, instead of this being the case, the abject poverty and depressed
condition of the Irish people in 1727 were such, that, with burning,
blistering irony, Dean Swift proposed to relieve surplus population
by cultivating a taste for roasted babies, and bringing yearly to the
shambles, as dainty food for the rich, 100,000 Irish infants!
It is difficult for one who has been looking over the literature of
Irish misery, as while writing this chapter I have been doing, to
speak in decorous terms of the complacent attribution of Irish want
and suffering to over-population which are to be found even in the
works of such high-minded men as Mill and Buckle. I know of nothing
better calculated to make the blood boil than the cold accounts of
the grasping, grinding tyranny to which the Irish people have been
subjected, and to which, and not to any inability of the land to
support its population, Irish pauperism and Irish famine are to be
attributed; and were it not for the enervating effect which the history
of the world proves to be everywhere the result of abject poverty, it
would be difficult to resist something like a feeling of contempt for
a race who, stung by such wrongs, have only occasionally murdered a
landlord!
Whether over-population ever did cause pauperism and starvation, may be
an open question; but the pauperism and starvation of Ireland can no
more be attributed to this cause than can the slave trade be attributed
to the over-population of Africa, or the destruction of Jerusalem
to the inability of subsistence to keep pace with reproduction. Had
Ireland been by nature a grove of bananas and bread-fruit, had her
coasts been lined by the guano-deposits of the Chinchas, and the sun
of lower latitudes warmed into more abundant life her moist soil, the
social conditions that have prevailed there would still have brought
forth poverty and starvation. How could there fail to be pauperism and
famine in a country where rack-rents wrested from the cultivator of
the soil all the produce of his labor except just enough to maintain
life in good seasons; where tenure at will forbade improvements and
removed incentive to any but the most wasteful and poverty-stricken
culture; where the tenant dared not accumulate capital, even if he
could get it, for fear the landlord would demand it in the rent; where
in fact he was an abject slave, who, at the nod of a human being like
himself, might at any time be driven from his miserable mud cabin, a
houseless, homeless, starving wanderer, forbidden even to pluck the
spontaneous fruits of the earth, or to trap a wild hare to satisfy
his hunger? No matter how sparse the population, no matter what
the natural resources, are not pauperism and starvation necessary
consequences in a land where the producers of wealth are compelled to
work under conditions which deprive them of hope, of self-respect, of
energy, of thrift; where absentee landlords drain away without return
at least a fourth of the net produce of the soil, and when, besides
them, a starving industry must support resident landlords, with their
horses and hounds, agents, jobbers, middlemen and bailiffs, an alien
state church to insult religious prejudices, and an army of policemen
and soldiers to overawe and hunt down any opposition to the iniquitous
system? Is it not impiety far worse than atheism to charge upon natural
laws misery so caused?
What is true in these three cases will be found upon examination true
of all cases. So far as our knowledge of facts goes, we may safely deny
that the increase of population has ever yet pressed upon subsistence
in such a way as to produce vice and misery; that increase of numbers
has ever yet decreased the relative production of food. The famines of
India, China, and Ireland can no more be credited to over-population
than the famines of sparsely populated Brazil. The vice and misery
that come of want can no more be attributed to the niggardliness of
Nature than can the six millions slain by the sword of Genghis Khan,
Tamerlane’s pyramid of skulls, or the extermination of the ancient
Britons or of the aboriginal inhabitants of the West Indies.
FOOTNOTES:
[19] Malthus’ other works, though written after he became famous, made
no mark, and are treated with contempt even by those who find in the
Essay a great discovery. The Encyclopædia Britannica, for instance,
though fully accepting the Malthusian theory, says of Malthus’
Political Economy: “It is very ill arranged, and is in no respect
either a practical or a scientific exposition of the subject. It is
in great part occupied with an examination of parts of Mr. Ricardo’s
peculiar doctrines, and with an inquiry into the nature and causes
of value. Nothing, however, can be more unsatisfactory than these
discussions. In truth Mr. Malthus never had any clear or accurate
perception of Mr. Ricardo’s theories, or of the principles which
determine the value in exchange of different articles.”
[20] I say considerable country, because there may be small islands,
such as Pitcairn’s Island, cut off from communication with the rest
of the world and consequently from the exchanges which are necessary
to the improved modes of production resorted to as population
becomes dense, which may seem to offer examples in point. A moment’s
reflection, however, will show that these exceptional cases are not in
point.
[21] As may be seen from the map in H. H. Bancroft’s “Native Races,”
the State of Vera Cruz is not one of those parts of Mexico noticeable
for its antiquities. Yet Hugo Fink, of Cordova, writing to the
Smithsonian Institute (Reports 1870), says there is hardly a foot in
the whole State in which by excavation either a broken obsidian knife
or a broken piece of pottery is not found; that the whole country is
intersected with parallel lines of stones intended to keep the earth
from washing away in the rainy season, which show that even the very
poorest land was put into requisition, and that it is impossible to
resist the conclusion that the ancient population was at least as dense
as it is at present in the most populous districts of Europe.
[22] I take these figures from the Smithsonian Report for 1873, leaving
out decimals. MM. Behm and Wagner put the population of China at
446,500,000, though there are some who contend that it does not exceed
150,000,000. They put the population of Hither India at 206,225,580,
giving 132.39 to the square mile; of Ceylon at 2,405,287 or 97.36 to
the square mile; of Further India at 21,018,062, or 27.94 to the square
mile. They estimate the population of the world at 1,377,000,000, an
average of 26.64 to the square mile.
[23] History of Civilization. Vol. I., Chap. 2. In this chapter
Buckle has collected a great deal of evidence of the oppression
and degradation of the people of India from the most remote times,
a condition which, blinded by the Malthusian doctrine, he has
accepted and made the cornerstone of his theory of the development of
civilization, he attributes to the ease with which food can there be
produced.
[24] Indian Recreations. By Rev. Wm. Tennant. London, 1804. Vol. I.,
Sec. XXXIX.
[25] Miss Nightingale (The People of India, in “Nineteenth Century”
for August, 1878) gives instances, which she says represent millions
of cases, of the state of peonage to which the cultivators of Southern
India have been reduced through the facilities afforded by the Civil
Courts to the frauds and oppressions of money lenders and minor native
officials. “Our Civil Courts are regarded as institutions for enabling
the rich to grind the faces of the poor, and many are fain to seek a
refuge from their jurisdiction within native territory,” says Sir David
Wedderburn, in an article on Protected Princes in India, in a previous
(July) number of the same magazine, in which he also gives a native
State, where taxation is comparatively light, as an instance of the
most prosperous population of India.
[26] See articles in “Nineteenth Century” for October, 1878, and March,
1879.
[27] Prof. Fawcett, in a recent article on the Proposed Loans to India,
calls attentions to such items as £1,200 for outfit and passage of a
member of the Governor General’s Council; £2,450 for outfit and passage
of Bishops of Calcutta and Bombay.
[28] Florence Nightingale says 100 per cent. is common, and even then
the cultivator is robbed in ways which she illustrates. It is hardly
necessary to say that these rates, like those of the pawnbroker, are
not interest in the economic sense of the term.
[29] The seat of recent famine in China was not the most thickly
settled districts.
CHAPTER III.
INFERENCES FROM ANALOGY.
If we turn from an examination of the facts brought forward in
illustration of the Malthusian theory to consider the analogies by
which it is supported, we shall find the same inconclusiveness.
The strength of the reproductive force in the animal and vegetable
kingdoms—such facts as that a single pair of salmon might, if preserved
from their natural enemies for a few years, fill the ocean; that a
pair of rabbits would, under the same circumstances, soon overrun a
continent; that many plants scatter their seeds by the hundred fold,
and some insects deposit thousands of eggs; and that everywhere through
these kingdoms each species constantly tends to press, and when not
limited by the number of its enemies, evidently does press, against
the limits of subsistence—is constantly cited, from Malthus down to
the text-books of the present day, as showing that population likewise
tends to press against subsistence, and, when unrestrained by other
means, its natural increase must necessarily result in such low wages
and want, or, if that will not suffice, and the increase still goes
on, in such actual starvation, as will keep it within the limits of
subsistence.
But is this analogy valid? It is from the vegetable and animal
kingdoms that man’s food is drawn, and hence the greater strength of
the reproductive force in the vegetable and animal kingdoms than in
man simply proves the power of subsistence to increase faster than
population. Does not the fact that all of the things which furnish
man’s subsistence have the power to multiply many fold—some of them
many thousand fold, and some of them many million or even billion
fold—while he is only doubling his numbers, show that, let human beings
increase to the full extent of their reproductive power, the increase
of population can never exceed subsistence? This is clear when it
is remembered that though in the vegetable and animal kingdoms each
species, by virtue of its reproductive power, naturally and necessarily
presses against the conditions which limit its further increase, yet
these conditions are nowhere fixed and final. No species reaches the
ultimate limit of soil, water, air, and sunshine; but the actual limit
of each is in the existence of other species, its rivals, its enemies,
or its food. Thus the conditions which limit the existence of such of
these species as afford him subsistence man can extend (in some cases
his mere appearance will extend them), and thus the reproductive forces
of the species which supply his wants, instead of wasting themselves
against their former limit, start forward in his service at a pace
which his powers of increase cannot rival. If he but shoot hawks,
food-birds will increase, if he but trap foxes the wild rabbits will
multiply; the honey bee moves with the pioneer, and on the organic
matter with which man’s presence fills the rivers, fishes feed.
Even if any consideration of final causes be excluded; even if it be
not permitted to suggest that the high and constant reproductive force
in vegetables and animals has been ordered to enable them to subserve
the uses of man, and that therefore the pressure of the lower forms of
life against subsistence does not tend to show that it must likewise be
so with man, “the roof and crown of things;” yet there still remains a
distinction between man and all other forms of life that destroys the
analogy. Of all living things, man is the only one who can give play
to the reproductive forces, more powerful than his own, which supply
him with food. Beast, insect, bird, and fish take only what they find.
Their increase is at the expense of their food, and when they have
reached the existing limits of food, their food must increase before
they can increase. But unlike that of any other living thing, the
increase of man involves the increase of his food. If bears instead of
men had been shipped from Europe to the North American continent, there
would now be no more bears than in the time of Columbus, and possibly
fewer, for bear food would not have been increased nor the conditions
of bear life extended, by the bear immigration, but probably the
reverse. But within the limits of the United States alone, there are
now forty-five millions of men where then there were only a few hundred
thousand, and yet there is now within that territory much more food
per capita for the forty-five millions than there was then for the few
hundred thousand. It is not the increase of food that has caused this
increase of men; but the increase of men that has brought about the
increase of food. There is more food, simply because there are more men.
Here is a difference between the animal and the man. Both the jay-hawk
and the man eat chickens, but the more jay-hawks the fewer chickens,
while the more men the more chickens. Both the seal and the man eat
salmon, but when a seal takes a salmon there is a salmon the less, and
were seals to increase past a certain point salmon must diminish; while
by placing the spawn of the salmon under favorable conditions man can
so increase the number of salmon as more than to make up for all he may
take, and thus, no matter how much men may increase, their increase
need never outrun the supply of salmon.
In short, while all through the vegetable and animal kingdoms the
limit of subsistence is independent of the thing subsisted, with man
the limit of subsistence is, within the final limits of earth, air,
water, and sunshine, dependent upon man himself. And this being the
case, the analogy which it is sought to draw between the lower forms of
life and man manifestly fails. While vegetables and animals do press
against the limits of subsistence, man cannot press against the limits
of his subsistence until the limits of the globe are reached. Observe,
this is not merely true of the whole, but of all the parts. As we
cannot reduce the level of the smallest bay or harbor without reducing
the level not merely of the ocean with which it communicates, but of
all the seas and oceans of the world, so the limit of subsistence in
any particular place is not the physical limit of that place, but the
physical limit of the globe. Fifty square miles of soil will in the
present state of the productive arts yield subsistence for only some
thousands of people, but on the fifty square miles which comprise the
city of London some three and a half millions of people are maintained,
and subsistence increases as population increases. So far as the limit
of subsistence is concerned, London may grow to a population of a
hundred millions, or five hundred millions, or a thousand millions, for
she draws for subsistence upon the whole globe, and the limit which
subsistence sets to her growth in population is the limit of the globe
to furnish food for its inhabitants.
But here will arise another idea from which the Malthusian theory
derives great support—that of the diminishing productiveness of land.
As conclusively proving the law of diminishing productiveness it is
said in the current treatises that were it not true that beyond a
certain point land yields less and less to additional applications
of labor and capital, increasing population would not cause any
extension of cultivation, but that all the increased supplies needed
could and would be raised without taking into cultivation any fresh
ground. Assent to this seems to involve assent to the doctrine that
the difficulty of obtaining subsistence must increase with increasing
population.
But I think the necessity is only in seeming. If the proposition be
analyzed it will be seen to belong to a class that depend for validity
upon an implied or suggested qualification—a truth relatively, which
taken absolutely becomes a non-truth. For that man cannot exhaust or
lessen the powers of nature follows from the indestructibility of
matter and the persistence of force. Production and consumption are
only relative terms. Speaking absolutely, man neither produces nor
consumes. The whole human race, were they to labor to infinity, could
not make this rolling sphere one atom heavier or one atom lighter,
could not add to or diminish by one iota the sum of the forces whose
everlasting circling produces all motion and sustains all life. As
the water that we take from the ocean must again return to the ocean,
so the food we take from the reservoirs of nature is, from the moment
we take it, on its way back to those reservoirs. What we draw from
a limited extent of land may temporarily reduce the productiveness
of that land, because the return may be to other land, or may be
divided between that land and other land, or, perhaps, all land; but
this possibility lessens with increasing area, and ceases when the
whole globe is considered. That the earth could maintain a thousand
billions of people as easily as a thousand millions is a necessary
deduction from the manifest truths that, at least so far as our agency
is concerned, matter is eternal and force must forever continue to
act. Life does not use up the forces that maintain life. We come into
the material universe bringing nothing; we take nothing away when we
depart. The human being, physically considered, is but a transient form
of matter, a changing mode of motion. The matter remains and the force
persists. Nothing is lessened, nothing is weakened. And from this it
follows that the limit to the population of the globe can be only the
limit of space.
Now this limitation of space—this danger that the human race may
increase beyond the possibility of finding elbow room—is so far off as
to have for us no more practical interest than the recurrence of the
glacial period or the final extinguishment of the sun. Yet remote and
shadowy as it is, it is this possibility which gives to the Malthusian
theory its apparently self-evident character. But if we follow it, even
this shadow will disappear. It, also, springs from a false analogy.
That vegetable and animal life tend to press against the limits of
space does not prove the same tendency in human life.
Granted that man is only a more highly developed animal; that the
ring-tailed monkey is a distant relative who has gradually developed
acrobatic tendencies, and the hump-backed whale a far-off connection
who in early life took to the sea—granted that back of these he is kin
to the vegetable, and is still subject to the same laws as plants,
fishes, birds, and beasts. Yet there is still this difference between
man and all other animals—he is the only animal whose desires increase
as they are fed; the only animal that is never satisfied. The wants
of every other living thing are uniform and fixed. The ox of to-day
aspires to no more than did the ox when man first yoked him. The
sea gull of the English Channel, who poises himself above the swift
steamer, wants no better food or lodging than the gulls who circled
round as the keels of Cæsar’s galleys first grated on a British beach.
Of all that nature offers them, be it ever so abundant, all living
things save man can take, and care for, only enough to supply wants
which are definite and fixed. The only use they can make of additional
supplies or additional opportunities is to multiply.
But not so with man. No sooner are his animal wants satisfied than new
wants arise. Food he wants first, as does the beast; shelter next, as
does the beast; and these given, his reproductive instincts assert
their sway, as do those of the beast. But here man and beast part
company. The beast never goes further; the man has but set his feet on
the first step of an infinite progression—a progression upon which the
beast never enters; a progression away from and above the beast.
The demand for quantity once satisfied, he seeks quality. The very
desires that he has in common with the beast become extended, refined,
exalted. It is not merely hunger, but taste, that seeks gratification
in food; in clothes, he seeks not merely comfort, but adornment; the
rude shelter becomes a house; the undiscriminating sexual attraction
begins to transmute itself into subtile influences, and the hard and
common stock of animal life to blossom and to bloom into shapes of
delicate beauty. As power to gratify his wants increases, so does
aspiration grow. Held down to lower levels of desire, Lucullus will
sup with Lucullus; twelve boars turn on spits that Antony’s mouthful
of meat maybe done to a turn; every kingdom of Nature be ransacked to
add to Cleopatra’s charms, and marble colonnades and hanging gardens
and pyramids that rival the hills arise. Passing into higher forms of
desire, that which slumbered in the plant and fitfully stirred in the
beast, awakes in the man. The eyes of the mind are opened, and he longs
to know. He braves the scorching heat of the desert and the icy blasts
of the polar sea, but not for food; he watches all night, but it is
to trace the circling of the eternal stars. He adds toil to toil, to
gratify a hunger no animal has felt; to assuage a thirst no beast can
know.
Out upon nature, in upon himself, back through the mists that shroud
the past, forward into the darkness that overhangs the future, turns
the restless desire that arises when the animal wants slumber in
satisfaction. Beneath things, he seeks the law; he would know how the
globe was forged and the stars were hung, and trace to their origins
the springs of life. And, then, as the man develops his nobler nature,
there arises the desire higher yet—the passion of passions, the hope
of hopes—the desire that he, even he, may somehow aid in making life
better and brighter, in destroying want and sin, sorrow and shame. He
masters and curbs the animal; he turns his back upon the feast and
renounces the place of power; he leaves it to others to accumulate
wealth, to gratify pleasant tastes, to bask themselves in the warm
sunshine of the brief day. He works for those he never saw and never
can see; for a fame, or maybe but for a scant justice, that can only
come long after the clods have rattled upon his coffin lid. He toils
in the advance, where it is cold, and there is little cheer from men,
and the stones are sharp and the brambles thick. Amid the scoffs of the
present and the sneers that stab like knives, he builds for the future;
he cuts the trail that progressive humanity may hereafter broaden into
a highroad. Into higher, grander spheres desire mounts and beckons, and
a star that rises in the east leads him on. Lo! the pulses of the man
throb with the yearnings of the god—he would aid in the process of the
suns!
Is not the gulf too wide for the analogy to span? Give more food,
open fuller conditions of life, and the vegetable or animal can but
multiply; the man will develop. In the one the expansive force can but
extend existence in new numbers; in the other, it will inevitably tend
to extend existence in higher forms and wider powers. Man is an animal;
but he is an animal plus something else. He is the mythic earth-tree,
whose roots are in the ground, but whose topmost branches may blossom
in the heavens!
Whichever way it be turned, the reasoning by which this theory of
the constant tendency of population to press against the limits
of subsistence is supported shows an unwarranted assumption, an
undistributed middle, as the logicians would say. Facts do not warrant
it, analogy does not countenance it. It is a pure chimera of the
imagination, such as those that for a long time prevented men from
recognizing the rotundity and motion of the earth. It is just such a
theory as that underneath us everything not fastened to the earth must
fall off; as that a ball dropped from the mast of a ship in motion must
fall behind the mast; as that a live fish placed in a vessel full of
water will displace no water. It is as unfounded, if not as grotesque,
as an assumption we can imagine Adam might have made had he been of
an arithmetical turn of mind and figured on the growth of his first
baby from the rate of its early months. From the fact that at birth it
weighed ten pounds and in eight months thereafter twenty pounds, he
might, with the arithmetical knowledge which some sages have supposed
him to possess, have ciphered out a result quite as striking as that
of Mr. Malthus; namely, that by the time it got to be ten years old it
would be as heavy as an ox, at twelve as heavy as an elephant, and at
thirty would weigh no less than 175,716,339,548 tons.
The fact is, there is no more reason for us to trouble ourselves about
the pressure of population upon subsistence than there was for Adam
to worry himself about the rapid growth of his baby. So far as an
inference is really warranted by facts and suggested by analogy, it
is that the law of population includes such beautiful adaptations as
investigation has already shown in other natural laws, and that we are
no more warranted in assuming that the instinct of reproduction, in
the natural development of society, tends to produce misery and vice,
than we should be in assuming that the force of gravitation must hurl
the moon to the earth and the earth to the sun, or than in assuming
from the contraction of water with reductions of temperature down to
thirty-two degrees that rivers and lakes must freeze to the bottom
with every frost, and the temperate regions of earth be thus rendered
uninhabitable by even moderate winters. That, besides the positive and
prudential checks of Malthus, there is a third check which comes into
play with the elevation of the standard of comfort and the development
of the intellect, is pointed to by many well-known facts. The
proportion of births is notoriously greater in new settlements, where
the struggle with nature leaves little opportunity for intellectual
life, and among the poverty-bound classes of older countries, who in
the midst of wealth are deprived of all its advantages and reduced
to all but an animal existence, than it is among the classes to whom
the increase of wealth has brought independence, leisure, comfort,
and a fuller and more varied life. This fact, long ago recognized in
the homely adage, “a rich man for luck, and a poor man for children,”
was noted by Adam Smith, who says it is not uncommon to find a poor
half-starved Highland woman has been the mother of twenty-three or
twenty-four children, and is everywhere so clearly perceptible that it
is only necessary to allude to it.
If the real law of population is thus indicated, as I think it must
be, then the tendency to increase, instead of being always uniform, is
strong where a greater population would give increased comfort, and
where the perpetuity of the race is threatened by the mortality induced
by adverse conditions; but weakens just as the higher development of
the individual becomes possible and the perpetuity of the race is
assured. In other words, the law of population accords with and is
subordinate to the law of intellectual development, and any danger
that human beings may be brought into a world where they cannot be
provided for arises not from the ordinances of nature, but from social
mal-adjustments that in the midst of wealth condemn men to want. The
truth of this will, I think, be conclusively demonstrated when, after
having cleared the ground, we trace out the true laws of social growth.
But it would disturb the natural order of the argument to anticipate
them now. If I have succeeded in maintaining a negative—in showing that
the Malthusian theory is not proved by the reasoning by which it is
supported—it is enough for the present. In the next chapter I propose
to take the affirmative and show that it is disproved by facts.
CHAPTER IV.
DISPROOF OF THE MALTHUSIAN THEORY.
So deeply rooted and thoroughly entwined with the reasonings of the
current political economy is this doctrine that increase of population
tends to reduce wages and produce poverty, so completely does it
harmonize with many popular notions, and so liable is it to recur in
different shapes, that I have thought it necessary to meet and show
in some detail the insufficiency of the arguments by which it is
supported, before bringing it to the test of facts; for the general
acceptance of this theory adds a most striking instance to the many
which the history of thought affords of how easily men ignore facts
when blindfolded by a preaccepted theory.
To the supreme and final test of facts we can easily bring this theory.
Manifestly the question whether increase of population necessarily
tends to reduce wages and cause want, is simply the question whether it
tends to reduce the amount of wealth that can be produced by a given
amount of labor.
This is what the current doctrine holds. The accepted theory is, that
the more that is required from nature the less generously does she
respond, so that doubling the application of labor will not double the
product; and hence, increase of population must tend to reduce wages
and deepen poverty, or, in the phrase of Malthus, must result in vice
and misery. To quote the language of John Stuart Mill:
“A greater number of people cannot, in any given state of
civilization, be collectively so well provided for as a smaller. The
niggardliness of nature, not the injustice of society, is the cause
of the penalty attached to over-population. An unjust distribution
of wealth does not aggravate the evil, but, at most, causes it be
somewhat earlier felt. It is in vain to say that all mouths which
the increase of mankind calls into existence bring with them hands.
The new mouths require as much food as the old ones, and the hands
do not produce as much. If all instruments of production were held
in joint property by the whole people, and the produce divided with
perfect equality among them, and if in a society thus constituted,
industry were as energetic and the produce as ample as at the present
time, there would be enough to make all the existing population
extremely comfortable; but when that population had doubled itself,
as, with existing habits of the people, under such an encouragement,
it undoubtedly would in little more than twenty years, what would
then be their condition? Unless the arts of production were in the
same time improved in an almost unexampled degree, the inferior
soils which must be resorted to, and the more laborious and scantily
remunerative cultivation which must be employed on the superior
soils, to procure food for so much larger a population, would, by
an insuperable necessity, render every individual in the community
poorer than before. If the population continued to increase at the
same rate, a time would soon arrive when no one would have more than
mere necessaries, and, soon after, a time when no one would have a
sufficiency of those, and the further increase of population would be
arrested by death.”[30]
All this I deny. I assert that the very reverse of these propositions
is true. I assert that in any given state of civilization a greater
number of people can collectively be better provided for than a
smaller. I assert that the injustice of society, not the niggardliness
of nature, is the cause of the want and misery which the current theory
attributes to over-population. I assert that the new mouths which an
increasing population calls into existence require no more food than
the old ones, while the hands they bring with them can in the natural
order of things produce more. I assert that, other things being equal,
the greater the population, the greater the comfort which an equitable
distribution of wealth would give to each individual. I assert that in
a state of equality the natural increase of population would constantly
tend to make every individual richer instead of poorer.
I thus distinctly join issue, and submit the question to the test of
facts.
But observe (for even at the risk of repetition I wish to warn the
reader against a confusion of thought that is observable even in
writers of great reputation), that the question of fact into which
this issue resolves itself is not in what stage of population is
most subsistence produced? but in what stage of population is there
exhibited the greatest power of producing wealth? For the power of
producing wealth in any form is the power of producing subsistence—and
the consumption of wealth in any form, or of wealth-producing power,
is equivalent to the consumption of subsistence. I have, for instance,
some money in my pocket. With it I may buy either food or cigars
or jewelry or theater tickets, and just as I expend my money do I
determine labor to the production of food, of cigars, of jewelry, or
of theatrical representations. A set of diamonds has a value equal
to so many barrels of flour—that is to say, it takes on the average
as much labor to produce the diamonds as it would to produce so much
flour. If I load my wife with diamonds, it is as much an exertion of
subsistence-producing power as though I had devoted so much food to
purposes of ostentation. If I keep a footman, I take a possible plowman
from the plow. The breeding and maintenance of a race-horse require
care and labor which would suffice for the breeding and maintenance
of many work-horses. The destruction of wealth involved in a general
illumination or the firing of a salute is equivalent to the burning
up of so much food; the keeping of a regiment of soldiers, or of a
war-ship and her crew, is the diversion to unproductive uses of labor
that could produce subsistence for many thousands of people. Thus the
power of any population to produce the necessaries of life is not to
be measured by the necessaries of life actually produced, but by the
expenditure of power in all modes.
There is no necessity for abstract reasoning. The question is one of
simple fact. Does the relative power of producing wealth decrease with
the increase of population?
The facts are so patent that it is only necessary to call attention
to them. We have, in modern times, seen many communities advance in
population. Have they not at the same time advanced even more rapidly
in wealth? We see many communities still increasing in population. Are
they not also increasing their wealth still faster? Is there any doubt
that while England has been increasing her population at the rate of
two per cent. per annum, her wealth has been growing in still greater
proportion? Is it not true that while the population of the United
States has been doubling every twenty-nine[31] years her wealth has
been doubling at much shorter intervals? Is it not true that under
similar conditions—that is to say, among communities of similar people
in a similar stage of civilization—the most densely populated community
is also the richest? Are not the more densely populated Eastern States
richer in proportion to population than the more sparsely populated
Western or Southern States? Is not England, where population is
even denser than in the Eastern States of the Union, also richer in
proportion? Where will you find wealth devoted with the most lavishness
to non-productive use—costly buildings, fine furniture, luxurious
equipages, statues, pictures, pleasure gardens and yachts? Is it not
where population is densest rather than where it is sparsest? Where
will you find in largest proportion those whom the general production
suffices to keep without productive labor on their part—men of income
and of elegant leisure, thieves, policemen, menial servants, lawyers,
men of letters, and the like? Is it not where population is dense
rather than where it is sparse? Whence is it that capital overflows for
remunerative investment? Is it not from densely populated countries
to sparsely populated countries? These things conclusively show that
wealth is greatest where population is densest; that the production of
wealth to a given amount of labor increases as population increases.
These things are apparent wherever we turn our eyes. On the same level
of civilization, the same stage of the productive arts, government,
etc., the most populous countries are always the most wealthy.
Let us take a particular case, and that a case which of all that
can be cited seems at first blush best to support the theory we are
considering—the case of a community where, while population has largely
increased, wages have greatly decreased, and it is not a matter of
dubious inference but of obvious fact that the generosity of nature
has lessened. That community is California. When upon the discovery of
gold the first wave of immigration poured into California it found a
country in which nature was in the most generous mood. From the river
banks and bars the glittering deposits of thousands of years could be
taken by the most primitive appliances, in amounts which made an ounce
($16) per day only ordinary wages. The plains, covered with nutritious
grasses, were alive with countless herds of horses and cattle, so
plenty that any traveler was at liberty to shift his saddle to a fresh
steed, or to kill a bullock if he needed a steak, leaving the hide, its
only valuable part, for the owner. From the rich soil which came first
under cultivation, the mere plowing and sowing brought crops that
in older countries, if procured at all, can only be procured by the
most thorough manuring and cultivation. In early California, amid this
profusion of nature, wages and interest were higher than anywhere else
in the world.
This virgin profusion of nature has been steadily giving way before
the greater and greater demands which an increasing population has
made upon it. Poorer and poorer diggings have been worked, until now
no diggings worth speaking of can be found, and gold mining requires
much capital, large skill, and elaborate machinery, and involves great
risks. “Horses cost money,” and cattle bred on the sage-brush plains
of Nevada are brought by railroad across the mountains and killed in
San Francisco shambles, while farmers are beginning to save their straw
and look for manure, and land is in cultivation which will hardly
yield a crop three years out of four without irrigation. At the same
time wages and interest have steadily gone down. Many men are now glad
to work for a week for less than they once demanded for the day, and
money is loaned by the year for a rate which once would hardly have
been thought extortionate by the month. Is the connection between the
reduced productiveness of nature and the reduced rate of wages that of
cause and effect? Is it true that wages are lower because labor yields
less wealth? On the contrary! Instead of the wealth-producing power of
labor being less in California in 1879 than in 1849, I am convinced
that it is greater. And, it seems to me, that no one who considers how
enormously during these years the efficiency of labor in California
has been increased by roads, wharves, flumes, railroads, steamboats,
telegraphs, and machinery of all kinds; by a closer connection with the
rest of the world; and by the numberless economies resulting from a
larger population, can doubt that the return which labor receives from
nature in California is on the whole much greater now than it was in
the days of unexhausted placers and virgin soil—the increase in the
power of the human factor having more than compensated for the decline
in the power of the natural factor. That this conclusion is the correct
one is proved by many facts which show that the consumption of wealth
is now much greater, as compared with the number of laborers, than it
was then. Instead of a population composed almost exclusively of men
in the prime of life, a large proportion of women and children are
now supported, and other non-producers have increased in much greater
ratio than the population; luxury has grown far more than wages have
fallen; where the best houses were cloth and paper shanties, are now
mansions whose magnificence rivals European palaces; there are liveried
carriages on the streets of San Francisco and pleasure yachts on her
bay; the class who can live sumptuously on their incomes has steadily
grown; there are rich men beside whom the richest of the earlier years
would seem little better than paupers—in short, there are on every hand
the most striking and conclusive evidences that the production and
consumption of wealth have increased with even greater rapidity than
the increase of population, and that if any class obtains less it is
solely because of the greater inequality of distribution.
What is obvious in this particular instance is obvious where the
survey is extended. The richest countries are not those where nature
is most prolific; but those where labor is most efficient—not Mexico,
but Massachusetts; not Brazil, but England. The countries where
population is densest and presses hardest upon the capabilities of
nature, are, other things being equal, the countries where the largest
proportion of the produce can be devoted to luxury and the support of
non-producers, the countries where capital overflows, the countries
that upon exigency, such as war, can stand the greatest drain. That
the production of wealth must, in proportion to the labor employed,
be greater in a densely populated country like England than in new
countries where wages and interest are higher, is evident from the fact
that, though a much smaller proportion of the population is engaged in
productive labor, a much larger surplus is available for other purposes
than that of supplying physical needs. In a new country the whole
available force of the community is devoted to production—there is no
well man who does not do productive work of some kind, no well woman
exempt from household tasks. There are no paupers or beggars, no idle
rich, no class whose labor is devoted to ministering to the convenience
or caprice of the rich, no purely literary or scientific class, no
criminal class who live by preying upon society, no large class
maintained to guard society against them. Yet with the whole force of
the community thus devoted to production, no such consumption of wealth
in proportion to the whole population takes place, or can be afforded,
as goes on in the old country; for, though the condition of the lowest
class is better, and there is no one who cannot get a living, there is
no one who gets much more—few or none who can live in anything like
what would be called luxury, or even comfort, in the older country.
That is to say, that in the older country the consumption of wealth in
proportion to population is greater, although the proportion of labor
devoted to the production of wealth is less—or that fewer laborers
produce more wealth; for wealth must be produced before it can be
consumed.
It may, however, be said, that the superior wealth of older countries
is due not to superior productive power, but to the accumulations of
wealth which the new country has not yet had time to make.
It will be well for a moment to consider this idea of accumulated
wealth. The truth is, that wealth can be accumulated but to a slight
degree, and that communities really live, as the vast majority of
individuals live, from hand to mouth. Wealth will not bear much
accumulation; except in a few unimportant forms it will not keep. The
matter of the universe, which, when worked up by labor into desirable
forms, constitutes wealth, is constantly tending back to its original
state. Some forms of wealth will last for a few hours, some for a few
days, some for a few months, some for a few years; and there are very
few forms of wealth that can be passed from one generation to another.
Take wealth in some of its most useful and permanent forms—ships,
houses, railways, machinery. Unless labor is constantly exerted in
preserving and renewing them, they will almost immediately become
useless. Stop labor in any community, and wealth would vanish almost
as the jet of a fountain vanishes when the flow of water is shut off.
Let labor again exert itself, and wealth will almost as immediately
reappear. This has been long noticed where war or other calamity has
swept away wealth, leaving population unimpaired. There is not less
wealth in London to-day because of the great fire of 1666; nor yet
is there less wealth in Chicago because of the great fire of 1870.
On those fire-swept acres have arisen, under the hand of labor, more
magnificent buildings, filled with greater stocks of goods; and the
stranger who, ignorant of the history of the city, passes along those
stately avenues would not dream that a few years ago all lay so black
and bare. The same principle—that wealth is constantly recreated—is
obvious in every new city. Given the same population and the same
efficiency of labor, and the town of yesterday will possess and
enjoy as much as the town founded by the Romans. No one who has seen
Melbourne or San Francisco can doubt that if the population of England
were transported to New Zealand, leaving all accumulated wealth behind,
New Zealand would soon be as rich as England is now; or, conversely,
that if the population of England were reduced to the sparseness of the
present population of New Zealand, in spite of accumulated wealth, they
would soon be as poor. Accumulated wealth seems to play just about such
a part in relation to the social organism as accumulated nutriment does
to the physical organism. Some accumulated wealth is necessary, and to
a certain extent it may be drawn upon in exigencies; but the wealth
produced by past generations can no more account for the consumption
of the present than the dinners he ate last year can supply a man with
present strength.
But without these considerations, which I allude to more for their
general than for their special bearing, it is evident that superior
accumulations of wealth can account for greater consumption of wealth
only in cases where accumulated wealth is decreasing, and that wherever
the volume of accumulated wealth is maintained, and even more obviously
where it is increasing, a greater consumption of wealth must imply
a greater production of wealth. Now, whether we compare different
communities with each other, or the same community at different
times, it is obvious that the progressive state, which is marked by
increase of population, is also marked by an increased consumption
and an increased accumulation of wealth, not merely in the aggregate,
but per capita. And hence, increase of population, so far as it has
yet anywhere gone, does not mean a reduction, but an increase in the
average production of wealth.
And the reason of this is obvious. For, even if the increase of
population does reduce the power of the natural factor of wealth, by
compelling a resort to poorer soils, etc., it yet so vastly increases
the power of the human factor as more than to compensate. Twenty men
working together will, where nature is niggardly, produce more than
twenty times the wealth that one man can produce where nature is
most bountiful. The denser the population the more minute becomes the
subdivision of labor, the greater the economies of production and
distribution, and, hence, the very reverse of the Malthusian doctrine
is true; and, within the limits in which we have reason to suppose
increase would still go on, in any given state of civilization a
greater number of people can produce a larger proportionate amount of
wealth, and more fully supply their wants, than can a smaller number.
Look simply at the facts. Can anything be clearer than that the cause
of the poverty which festers in the centers of civilization is not in
the weakness of the productive forces? In countries where poverty is
deepest, the forces of production are evidently strong enough, if fully
employed, to provide for the lowest not merely comfort but luxury.
The industrial paralysis, the commercial depression which curses the
civilized world to-day, evidently springs from no lack of productive
power. Whatever be the trouble, it is clearly not in the want of
ability to produce wealth.
It is this very fact—that want appears where productive power is
greatest and the production of wealth is largest—that constitutes the
enigma which perplexes the civilized world, and which we are trying
to unravel. Evidently the Malthusian theory, which attributes want to
the decrease of productive power, will not explain it. That theory is
utterly inconsistent with all the facts. It is really a gratuitous
attribution to the laws of God of results which, even from this
examination, we may infer really spring from the mal-adjustments of
men—an inference which, as we proceed, will become a demonstration. For
we have yet to find what _does_ produce poverty amid advancing wealth.
FOOTNOTES:
[30] Principles of Political Economy, Book I., Chap. XIII., Sec. 2.
[31] The rate up to 1860 was 35 per cent. each decade.
BOOK III.
THE LAWS OF DISTRIBUTION.
CHAPTER I.—THE INQUIRY NARROWED TO THE LAWS OF DISTRIBUTION—NECESSARY
RELATION OF THESE LAWS.
CHAPTER II.—RENT AND THE LAW OF RENT.
CHAPTER III.—INTEREST AND THE CAUSE OF INTEREST.
CHAPTER IV.—OF SPURIOUS CAPITAL AND OF PROFITS OFTEN MISTAKEN FOR
INTEREST.
CHAPTER V.—THE LAW OF INTEREST.
CHAPTER VI.—WAGES AND THE LAW OF WAGES.
CHAPTER VII.—CORRELATION AND CO-ORDINATION OF THESE LAWS.
CHAPTER VIII.—THE STATICS OF THE PROBLEM THUS EXPLAINED.
The machines that are first invented to perform any particular
movement are always the most complex, and succeeding artists generally
discover that with fewer wheels, with fewer principles of motion
than had originally been employed, the same effects may be more
easily produced. The first philosophical systems, in the same manner,
are always the most complex, and a particular connecting chain, or
principle, is generally thought necessary to unite every two seemingly
disjointed appearances; but it often happens that one great connecting
principle is afterward found to be sufficient to bind together all the
discordant phenomena that occur in a whole species of things.—_Adam
Smith_, _Essay on the Principles which Lead and Direct Philosophical
Inquiries, as Illustrated by the History of Astronomy_.
CHAPTER I.
THE INQUIRY NARROWED TO THE LAWS OF DISTRIBUTION—THE NECESSARY RELATION
OF THESE LAWS.
The preceding examination has, I think, conclusively shown that the
explanation currently given, in the name of political economy, of the
problem we are attempting to solve, is no explanation at all.
That with material progress wages fail to increase, but rather tend
to decrease, cannot be explained by the theory that the increase of
laborers constantly tends to divide into smaller portions the capital
sum from which wages are paid. For, as we have seen, wages do not come
from capital, but are the direct produce of labor. Each productive
laborer, as he works, creates his wages, and with every additional
laborer there is an addition to the true wages fund—an addition to the
common stock of wealth, which, generally speaking, is considerably
greater than the amount he draws in wages.
Nor, yet, can it be explained by the theory that nature yields less to
the increasing drafts which an increasing population make upon her; for
the increased efficiency of labor makes the progressive state a state
of continually increasing production per capita, and the countries of
densest population, other things being equal, are always the countries
of greatest wealth.
So far, we have only increased the perplexities of the problem. We
have overthrown a theory which did, in some sort of fashion, explain
existing facts; but in doing so have only made existing facts seem
more inexplicable. It is as though, while the Ptolemaic theory was
yet in its strength, it had been proved simply that the sun and
stars do not revolve about the earth. The phenomena of day and night,
and of the apparent motion of the celestial bodies, would yet remain
unexplained, inevitably to reinstate the old theory unless a better
one took its place. Our reasoning has led us to the conclusion that
each productive laborer produces his own wages, and that increase in
the number of laborers should increase the wages of each; whereas,
the apparent facts are that there are many laborers who cannot obtain
remunerative employment, and that increase in the number of laborers
brings diminution of wages. We have, in short, proved that wages ought
to be highest where in reality they are lowest.
Nevertheless, even in doing this we have made some progress. Next to
finding what we look for, is to discover where it is useless to look.
We have at least narrowed the field of inquiry. For this, at least, is
now clear—that the cause which, in spite of the enormous increase of
productive power, confines the great body of producers to the least
share of the product upon which they will consent to live, is not the
limitation of capital, nor yet the limitation of the powers of nature
which respond to labor. As it is not, therefore, to be found in the
laws which bound the production of wealth, it must be sought in the
laws which govern distribution. To them let us turn.
* * * * *
It will be necessary to review in its main branches the whole subject
of the distribution of wealth. To discover the cause which, as
population increases and the productive arts advance, deepens the
poverty of the lowest class, we must find the law which determines
what part of the produce is distributed to labor as wages. To find the
law of wages, or at least to make sure when we have found it, we must
also determine the laws which fix the part of the produce which goes
to capital and the part which goes to land owners, for as land, labor,
and capital join in producing wealth, it is between these three that
the produce must be divided. What is meant by the produce or production
of a community is the sum of the wealth produced by that community—the
general fund from which, as long as previously existing stock is not
lessened, all consumption must be met and all revenues drawn. As I
have already explained, production does not merely mean the making of
things, but includes the increase of value gained by transporting or
exchanging things. There is a produce of wealth in a purely commercial
community, as there is in a purely agricultural or manufacturing
community; and in the one case, as in the others, some part of this
produce will go to capital, some part to labor, and some part, if
land have any value, to the owners of land. As a matter of fact, a
portion of the wealth produced is constantly going to the replacement
of capital, which is constantly consumed and constantly replaced. But
it is not necessary to take this into account, as it is eliminated by
considering capital as continuous, which, in speaking or thinking of
it, we habitually do. When we speak of the produce, we mean, therefore,
that part of the wealth produced above what is necessary to replace the
capital consumed in production; and when we speak of interest, or the
return to capital, we mean what goes to capital after its replacement
or maintenance.
It is, further, a matter of fact, that in every community which has
passed the most primitive stage some portion of the produce is taken
in taxation and consumed by government. But it is not necessary, in
seeking the laws of distribution, to take this into consideration. We
may consider taxation either as not existing, or as by so much reducing
the produce. And so, too, of what is taken from the produce by certain
forms of monopoly, which will be considered in a subsequent chapter
(Chap. IV), and which exercise powers analogous to taxation. After we
have discovered the laws of distribution we can then see what bearing,
if any, taxation has upon them.
We must discover these laws of distribution for ourselves—or, at least,
two out of the three. For, that they are not, at least as a whole,
correctly apprehended by the current political economy, may be seen,
irrespective of our preceding examination of one of them, in any of the
standard treatises.
This is evident, in the first place, from the terminology employed.
In all politico-economic works we are told that the three factors in
production are land, labor, and capital, and that the whole produce
is primarily distributed into three corresponding parts. Three terms,
therefore, are needed, each of which shall clearly express one of these
parts to the exclusion of the others. Rent, as defined, clearly enough
expresses the first of these parts—that which goes to the owners of
land. Wages, as defined, clearly enough expresses the second—that part
which constitutes the return to labor. But as to the third term—that
which should express the return to capital—there is in the standard
works a most puzzling ambiguity and confusion.
Of words in common use, that which comes nearest to exclusively
expressing the idea of return for the use of capital, is interest,
which, as commonly used, implies the return for the use of capital,
exclusive of any labor in its use or management, and exclusive of any
risk, except such as may be involved in the security. The word profits,
as commonly used, is almost synonymous with revenue; it means a gain,
an amount received in excess of an amount expended, and frequently
includes receipts that are properly rent; while it nearly always
includes receipts which are properly wages, as well as compensations
for the risk peculiar to the various uses of capital. Unless extreme
violence is done to the meaning of the word, it cannot, therefore, be
used in political economy to signify that share of the produce which
goes to capital, in contradistinction to those parts which go to labor
and to land owners.
Now, all this is recognized in the standard works on political economy.
Adam Smith well illustrates how wages and compensation for risk largely
enter into profits, pointing out how the large profits of apothecaries
and small retail dealers are in reality wages for their labor, and not
interest on their capital; and how the great profits sometimes made in
risky businesses, such as smuggling and the lumber trade, are really
but compensations for risk, which, in the long run, reduce the returns
to capital so used to the ordinary, or below the ordinary, rate.
Similar illustrations are given in most of the subsequent works, where
profit is formally defined in its common sense, with, perhaps, the
exclusion of rent. In all these works, the reader is told that profits
are made up of three elements—wages of superintendence, compensation
for risk, and _interest_, or the return for the use of capital.
Thus, neither in its common meaning nor in the meaning expressly
assigned to it in the current political economy, can profits have any
place in the discussion of the distribution of wealth between the three
factors of production. Either in its common meaning or in the meaning
expressly assigned to it, to talk about the distribution of wealth into
rent, wages, and profits is like talking of the division of mankind
into men, women, and human beings.
Yet this, to the utter bewilderment of the reader, is what is done in
all the standard works. After formally decomposing profits into wages
of superintendence, compensation for risk, and interest—the net return
for the use of capital—they proceed to treat of the distribution of
wealth between the rent of land, the wages of labor, and the PROFITS of
capital.
I doubt not that there are thousands of men who have vainly puzzled
their brains over this confusion of terms, and abandoned the effort
in despair, thinking that as the fault could not be in such great
thinkers, it must be in their own stupidity. If it is any consolation
to such men they may turn to Buckle’s “History of Civilization,” and
see how a man who certainly got a marvelously clear idea of what he
read, and who had read carefully the principal economists from Smith
down, was inextricably confused by this jumble of profits and interest.
For Buckle (Vol. 1, Chap. II, and notes) persistently speaks of the
distribution of wealth into rent, wages, interest, _and_ profits.
And this is not to be wondered at. For, after formally decomposing
profits into wages of superintendence, insurance, and interest, these
economists, in assigning causes which fix the general rate of profit,
speak of things which evidently affect only that part of profits which
they have denominated interest; and then, in speaking of the rate of
interest, either give the meaningless formula of supply and demand,
or speak of causes which affect the compensation for risk; evidently
using the word in its common sense, and not in the economic sense they
have assigned to it, from which compensation for risk is eliminated.
If the reader will take up John Stuart Mill’s “Principles of Political
Economy,” and compare the chapter on Profits (Book II, Chap. 15) with
the chapter on Interest (Book III, Chap. 23), he will see the confusion
thus arising exemplified in the case of the most logical of English
economists, in a more striking manner than I would like to characterize.
Now, such men have not been led into such confusion of thought without
a cause. If they, one after another, have followed Dr. Adam Smith,
as boys play “follow my leader,” jumping where he jumped, and falling
where he fell, it has been that there was a fence where he jumped and a
hole where he fell.
The difficulty from which this confusion has sprung is in the
preaccepted theory of wages. For reasons which I have before assigned,
it has seemed to them a self-evident truth that the wages of certain
classes of laborers depended upon the ratio between capital and the
number of laborers. But there are certain kinds of reward for exertion
to which this theory evidently will not apply, so the term wages has in
use been contracted to include only wages in the narrow common sense.
This being the case, if the term interest were used, as consistently
with their definitions it should have been used, to represent the third
part of the division of the produce, all rewards of personal exertion,
save those of what are commonly called wage-workers, would clearly have
been left out. But by treating the division of wealth as between rent,
wages, and profits, instead of between rent, wages, and interest, this
difficulty is glossed over, all wages which will not fall under the
preaccepted law of wages being vaguely grouped under profits, as wages
of superintendence.
To read carefully what economists say about the distribution of wealth
is to see that, though they correctly define it, wages, as they use
it in this connection, is what logicians would call an undistributed
term—it does not mean all wages, but only some wages—viz., the wages
of manual labor paid by an employer. So other wages are thrown over
with the return to capital, and included under the term profits,
and any clear distinction between the returns to capital and the
returns to human exertion thus avoided. The fact is that the current
political economy fails to give any clear and consistent account of the
distribution of wealth. The law of rent _is_ clearly stated, but it
stands unrelated. The rest is a confused and incoherent jumble.
The very arrangement of these works shows this confusion and
inconclusiveness of thought. In no politico-economic treatise that I
know of are these laws of distribution brought together, so that the
reader can take them in at a glance and recognize their relation to
each other; but what is said about each one is enveloped in a mass of
political and moral reflections and dissertations. And the reason is
not far to seek. To bring together the three laws of distribution as
they are now taught, is to show at a glance that they lack necessary
relation.
The laws of the distribution of wealth are obviously laws of
proportion, and must be so related to each other that any two being
given the third may be inferred. For to say that one of the three parts
of a whole is increased or decreased, is to say that one or both of the
other parts is, reversely, decreased or increased. If Tom, Dick, and
Harry are partners in business, the agreement which fixes the share of
one in the profits must at the same time fix either the separate or the
joint shares of the other two. To fix Tom’s share at forty per cent. is
to leave but sixty per cent. to be divided between Dick and Harry. To
fix Dick’s share at forty per cent. and Harry’s share at thirty-five
per cent. is to fix Tom’s share at twenty-five per cent.
But between the laws of the distribution of wealth, as laid down in
the standard works, there is no such relation. If we fish them out and
bring them together, we find them to be as follows:
Wages are determined by the ratio between the amount of capital devoted
to the payment and subsistence of labor and the number of laborers
seeking employment.
Rent is determined by the margin of cultivation; all lands yielding as
rent that part of their produce which exceeds what an equal application
of labor and capital could procure from the poorest land in use.
Interest is determined by the equation between the demands of borrowers
and the supply of capital offered by lenders. Or, if we take what is
given as the law of profits, it is determined by wages, falling as
wages rise and rising as wages fall—or, to use the phrase of Mill, by
the cost of labor to the capitalist.
The bringing together of these current statements of the laws of the
distribution of wealth shows at a glance that they lack the relation to
each other which the true laws of distribution must have. They do not
correlate and co-ordinate. Hence, at least two of these three laws are
either wrongly apprehended or wrongly stated. This tallies with what we
have already seen, that the current apprehension of the law of wages,
and, inferentially, of the law of interest, will not bear examination.
Let us, then, seek the true laws of the distribution of the produce of
labor into wages, rent, and interest. The proof that we have found them
will be in their correlation—that they meet, and relate, and mutually
bound each other.
With profits this inquiry has manifestly nothing to do. We want to
find what it is that determines the division of their joint produce
between land, labor, and capital; and profits is not a term that
refers exclusively to any one of these three divisions. Of the three
parts into which profits are divided by political economists—namely,
compensation for risk, wages of superintendence, and return for the use
of capital—the latter falls under the term interest, which includes
all the returns for the use of capital, and excludes everything else;
wages of superintendence falls under the term wages, which includes
all returns for human exertion, and excludes everything else; and
compensation for risk has no place whatever, as risk is eliminated
when all the transactions of a community are taken together. I shall,
therefore, consistently with the definitions of political economists,
use the term interest as signifying that part of the produce which
goes to capital.
To recapitulate:
Land, labor, and capital are the factors of production. The term land
includes all natural opportunities or forces; the term labor, all human
exertion; and the term capital, all wealth used to produce more wealth.
In returns to these three factors is the whole produce distributed.
That part which goes to land owners as payment for the use of natural
opportunities is called rent; that part which constitutes the reward
of human exertion is called wages; and that part which constitutes the
return for the use of capital is called interest. These terms mutually
exclude each other. The income of any individual may be made up from
any one, two, or all three of these sources; but in the effort to
discover the laws of distribution we must keep them separate.
* * * * *
Let me premise the inquiry which we are about to undertake by saying
that the miscarriage of political economy, which I think has now been
abundantly shown, can, it seems to me, be traced to the adoption of an
erroneous standpoint. Living and making their observations in a state
of society in which a capitalist generally rents land and hires labor,
and thus seems to be the undertaker or first mover in production, the
great cultivators of the science have been led to look upon capital
as the prime factor in production, land as its instrument, and labor
as its agent or tool. This is apparent on every page—in the form and
course of their reasoning, in the character of their illustrations,
and even in their choice of terms. Everywhere capital is the starting
point, the capitalist the central figure. So far does this go that both
Smith and Ricardo use the term “natural wages” to express the minimum
upon which laborers can live; whereas, unless injustice is natural, all
that the laborer produces should rather be held as his natural wages.
This habit of looking upon capital as the employer of labor has led
both to the theory that wages depend upon the relative abundance of
capital, and to the theory that interest varies inversely with wages,
while it has led away from truths that but for this habit would have
been apparent. In short, the misstep which, so far as the great laws of
distribution are concerned, has led political economy into the jungles,
instead of upon the mountain tops, was taken when Adam Smith, in his
first book, left the standpoint indicated in the sentence, “The produce
of labor constitutes the natural recompense or wages of labor,” to take
that in which capital is considered as employing labor and paying wages.
But when we consider the origin and natural sequence of things, this
order is reversed; and capital instead of first is last; instead of
being the employer of labor, it is in reality employed by labor. There
must be land before labor can be exerted, and labor must be exerted
before capital can be produced. Capital is a result of labor, and is
used by labor to assist it in further production. Labor is the active
and initial force, and labor is therefore the employer of capital.
Labor can be exerted only upon land, and it is from land that the
matter which it transmutes into wealth must be drawn. Land therefore is
the condition precedent, the field and material of labor. The natural
order is land, labor, capital; and, instead of starting from capital as
our initial point, we should start from land.
There is another thing to be observed. Capital is not a necessary
factor in production. Labor exerted upon land can produce wealth
without the aid of capital, and in the necessary genesis of things must
so produce wealth before capital can exist. Therefore the law of rent
and the law of wages must correlate each other and form a perfect whole
without reference to the law of capital, as otherwise these laws would
not fit the cases which can readily be imagined, and which to some
degree actually exist, in which capital takes no part in production.
And as capital is, as is often said, but stored-up labor, it is but a
form of labor, a subdivision of the general term labor; and its law
must be subordinate to, and independently correlate with, the law of
wages, so as to fit cases in which the whole produce is divided between
labor and capital, without any deduction for rent. To resort to the
illustration before used: The division of the produce between land,
labor and capital must be as it would be between Tom, Dick, and Harry,
if Tom and Dick were the original partners, and Harry came in but as an
assistant to and sharer with Dick.