THE CORRELATION AND CO-ORDINATION OF THESE LAWS.
The conclusions we have reached as to the laws which govern the
distribution of wealth recast a large and most important part of the
science of political economy, as at present taught, overthrowing some
of its most highly elaborated theories and shedding a new light on
some of its most important problems. Yet, in doing this, no disputable
ground has been occupied; not a single fundamental principle advanced
that is not already recognized.
The law of interest and the law of wages which we have substituted
for those now taught are necessary deductions from the great law
which alone makes any science of political economy possible—the
all-compelling law that is as inseparable from the human mind as
attraction is inseparable from matter, and without which it would be
impossible to previse or calculate upon any human action, the most
trivial or the most important. This fundamental law, that men seek to
gratify their desires with the least exertion, becomes, when viewed in
its relation to one of the factors of production, the law of rent; in
relation to another, the law of interest; and in relation to a third,
the law of wages. And in accepting the law of rent, which, since the
time of Ricardo, has been accepted by every economist of standing, and
which, like a geometrical axiom, has but to be understood to compel
assent, the law of interest and law of wages, as I have stated them,
are inferentially accepted, as its necessary sequences. In fact,
it is only relatively that they can be called sequences, as in the
recognition of the law of rent they too must be recognized. For on
what depends the recognition of the law of rent? Evidently upon the
recognition of the fact that the effect of competition is to prevent
the return to labor and capital being anywhere greater than upon the
poorest land in use. It is in seeing this that we see that the owner
of land will be able to claim as rent all of its produce which exceeds
what would be yielded to an equal application of labor and capital on
the poorest land in use.
The harmony and correlation of the laws of distribution as we have now
apprehended them are in striking contrast with the want of harmony
which characterizes these laws as presented by the current political
economy. Let us state them side by side:
_The Current Statement._ _The True Statement._
RENT depends on the margin RENT depends on the margin
of cultivation, rising as it of cultivation, rising as it
falls and falling as it rises. falls and falling as it rises.
WAGES depend upon the WAGES depend on the margin
ratio between the number of cultivation, falling
of laborers and the amount as it falls and rising as it
of capital devoted to their rises.
employment.
INTEREST depends upon the INTEREST (its ratio with wages
equation between the supply being fixed by the net
of and demand for power of increase which
capital; or, as is stated of attaches to capital) depends
profits, upon wages (or on the margin of
the cost of labor), rising cultivation, falling as it
as wages fall, and falling falls and rising as it rises.
as wages rise.
In the current statement the laws of distribution have no common
center, no mutual relation; they are not the correlating divisions of
a whole, but measures of different qualities. In the statement we have
given, they spring from one point, support and supplement each other,
and form the correlating divisions of a complete whole.