truth, have been based upon a misunderstanding of the meaning of the
word "labor." If a man came to you in the mill one day, and said: "See
that great machine with all its levers and springs and wheels working
in such beautiful harmony. It was made entirely by manual workers,
such as moulders, blacksmiths and machinists; no brain workers had
anything to do with it," you would suspect that man of being a fool,
Jonathan. You know, even though you are no economist, that the labor
of the inventor and of the men who drew the plans of the various parts
was just as necessary as the labor of the manual workers. I have
already shown you, when discussing the case of Mr. Mallock, that
Socialists have never claimed that wealth was produced by manual labor
alone, and that brain labor is always unproductive. All the great
political economists have included both mental and manual labor in
their use of the term, that being, indeed, the only sensible use of
the word known to our language.
It is very easy work, my friend, for a clever juggler of words to
erect a straw man, label the dummy "Socialism" and then pull it to
pieces. But it is not very useful work, nor is it an honest
intellectual occupation. I say to you, friend Jonathan, that when
writers like Mr. Mallock contend that "ability," as distinguished from
labor, must be considered as a principal factor in production, they
must be regarded as being either mentally weak or deliberate
perverters of the truth. You know, and every man of fair sense knows,
that ability in the abstract never could produce anything at all.
Take Mr. Edison, for example. He is a man of wonderful ability--one of
the greatest men of this or any other age. Suppose Mr. Edison were to
say: "I know I have a great deal of _ability_; I think that I will
just sit down with folded hands and depend upon the mere possession of
my ability to make a living for me"--what do you think would happen?
If Mr. Edison were to go to some lonely spot, without tools or food,
making up his mind that he need not work; that he could safely depend
upon his ability to produce food for him while he sat idle or slept,
he would starve. Ability is like a machine, Jonathan. If you have the
finest machine in the world and keep it in a garret it will produce
nothing at all. You might as well have a pile of stones there as the
machine.
But connect the machine with the motor and place a competent man in
charge of it, and the machine at once becomes a means of production.
Ability is likewise useless and impotent unless it is expressed in the
form of either manual or mental labor. And when it is so embodied in
labor, it is quite useless and foolish to talk of ability as separate
from the labor in which it is embodied.
_The third principle of Socialist economics is that the value of
things produced for sale is, under normal conditions, determined by
the amount of labor socially necessary, on an average, for their
production. This is called the labor theory of value._
Many people have attacked this theory, Jonathan, and it has been
"refuted," "upset," "smashed" and "destroyed" by nearly every hack
writer on economics living. But, for some reason, the number of people
who accept it is constantly increasing in spite of the number of
times it has been "exposed" and "refuted." It is worth our while to
consider it briefly.
You will observe that I have made two important qualifications in the
above statement of the theory: first, that the law applies only to
things produced for sale, and second, that it is only under normal
conditions that it holds true. Many very clever men try to prove this
law of value wrong by citing the fact that articles are sometimes sold
for enormous prices, out of all proportion to the amount of labor it
took to produce them in the first instance. For example, it took
Shakespeare only a few minutes to write a letter, we may suppose, but
if a genuine letter in the poet's handwriting were offered for sale in
one of the auction rooms where such things are sold it would fetch an
enormous price; perhaps more than the yearly salary of the President
of the United States.
The value of the letter would not be due to the amount of labor
Shakespeare devoted to the writing of it, but to its _rarity_. It
would have what the economists call a "scarcity value." The same is
true of a great many other things, such as historical relics, great
works of art, and so on. These things are in a class by themselves.
But they constitute no important part of the business of modern
society. We are not concerned with them, but with the ordinary, every
day production of goods for sale. The truth of this law of value is
not to be determined by considering these special objects of rarity,
but the great mass of things produced in our workshops and factories.
Now, note the second qualification. I say that the value of things
produced for sale _under normal conditions_ is determined by the
amount of labor _socially necessary_, on an average, for their
production. Some of the clever, learnedly-ignorant writers on
Socialism think that they have completely destroyed this theory of
value when they have only misrepresented it and crushed the image of
their own creating.
It does not mean that if a quick, efficient workman, with good tools,
takes a day to make a coat, while another workman, who is slow, clumsy
and inefficient, and has only poor tools, takes six days to make a
table that the table will be worth six coats upon the market. That
would be a foolish proposition, Jonathan. It would mean that if one
workman made a coat in one day, while another workman took two days to
make exactly the same kind of coat, that the one made by the slow,
inefficient workman would bring twice as much as the other, even
though they were so much alike that they could not be distinguished
one from the other.
Only an ignoramus could believe that. No Socialist writer ever made
such a foolish claim, yet all the attacks upon the economic principles
of Socialism are based upon that idea!
Now that I have told you what it does _not_ mean, let me try to make
plain just what it _does_ mean. I shall use a very simple illustration
which you can readily apply to the whole of industry for yourself. If
it ordinarily takes a day to make a coat, if that is the average time
taken, and it also takes on an average a day to make a table, then,
also on an average, one coat will be worth just as much as one table.
But I must explain that it is not possible to bring the production of
coats and tables down to the simple measurement. When the tailor takes
the piece of cloth to cut out the coat, he has in that material
something that already embodies human labor. Somebody had to weave
that cloth upon a loom. Before that somebody had to make the loom.
And before that loom could make cloth somebody had to raise sheep and
shear them to get the wool. And before the carpenter could make the
table, somebody had to go into the forest and fell a tree, after which
somebody had to bring that tree, cut up into planks or logs, to the
carpenter. And before he could use the lumber somebody had to make the
tools with which he worked.
I think you will understand now why I placed emphasis on the words
"socially necessary." It is not possible for the individual buyer to
ascertain just how much social labor is contained in a coat or a
table, but their values are fixed by the competition and higgling
which is the law of capitalism. "It jest works out so," as an old
negro preacher said to me once.
I have said that competition is the law of capitalism. All political
economists recognize that as true. But we have, as I have explained in
a former letter, come to a point where capitalism has broken away from
competition in many industries. We have a state of affairs under which
the economic laws of competitive society do not apply. Monopoly prices
have always been regarded as exceptions to economic law.
If this technical economic discussion seems a little bit difficult, I
beg you nevertheless to try and master it, Jonathan. It will do you
good to think out these questions. Perhaps I can explain more clearly
what is meant by monopoly conditions being exceptional. All through
the Middle Ages it was the custom for governments to grant monopolies
to favored subjects, or to sell them in order to raise ready money.
Queen Elizabeth, for instance, granted and sold many such monopolies.
A man who had a monopoly of something which nearly everybody had to
use could fix his own price, the only limit being the people's
patience or their ability to pay. The same thing is true of patented
articles and of monopolies granted to public service corporations.
Generally, it is true, in the franchises of these corporations,
nowadays, there is a price limit fixed beyond which they must not go,
but it is still true that the normal competitive economic law has been
set aside by the creation of monopoly.
When a trust is formed, or when there is a price agreement, or what is
politely called "an understanding among gentlemen" to that effect, a
similar thing happens. We have monopoly prices.
This is an important thing for the working class, though it is
sometimes forgotten. How much your wages will secure in the way of
necessities is just as important to you as the amount of wages you
get. In other words, the amount you can get in comforts and
commodities for use is just as important as the amount you can get in
dollars and cents. Sometimes money wages increase while real wages
decrease. I could fill a book with statistics to show this, but I will
only quote one example. Professor Rauschenbusch cites it in his
excellent book, _Christianity and the Social Crisis_, a book I should
like you to read, Jonathan. He quotes _Dun's Review_, a standard
financial authority, to the effect that what $724 would buy in 1897 it
took $1013 to buy in 1901.
I know that I could make your wife see the importance of this, my
friend. She would tell you that when from time to time you have
announced that your wages were to be increased five or ten per cent.
she has made plans for spending the money upon little home
improvements, or perhaps for laying it aside for the dreaded "rainy
day." Perhaps she thought of getting a new rug, or a new sideboard for
the dining-room; or perhaps it was a piano for your daughter, who is
musical, she had set her heart on getting. The ten per cent. increase
seemed to make it all so easy and certain! But after a little while
she found that somehow the ten per cent. did not bring the coveted
things; that, although she was just as careful as could be, she
couldn't save, nor get the things she hoped to get.
Often you and I have heard the cry of trouble: "I don't know how or
why it is, but though I get ten per cent. more wages I am no better
off than before."
The Socialist theory of value is all right, my friend, and has not
been disturbed by the assaults made upon it by a host of little
critics. But Socialists have always known that the laws of competitive
society do not apply to monopoly, and that the monopolist has an
increased power to exploit and oppress the worker. That is one of the
chief reasons why we demand that the great monopolies be transformed
into common, or social, property.
_The fourth principle of Socialist economics is that the wages of the
workers represent only a part of the value of their labor product. The
remainder is divided among the non-producers in rent, interest and
profit. The fortunes of the rich idlers come from the unpaid-for labor
of the working class. This is the great theory of "surplus value,"
which economists are so fond of attacking._
I am not going to say much about the controversy concerning this
theory, Jonathan. In the first place, you are not an economist, and
there is a great deal in the discussion which is wholly irrelevant and
unprofitable; and, in the second place, you can study the question for
yourself. There are excellent chapters upon the subject in _Vail's
Principles of Scientific Socialism_, Boudin's _The Theoretical System
of Karl Marx_, and Hyndman's _Economics of Socialism_. You will also
find a simple exposition of the subject in my _Socialism, A Summary
and Interpretation of Socialist Principles_. It will also be well to
read _Wage-Labor and Capital_, a five cent booklet by Karl Marx.
But you do not need to be an economist to understand the essential
principles of this theory of surplus value and to judge of its truth.
I have never flattered you, Jonathan, as you know; I am in earnest
when I say that I am content to leave the matter to your own judgment.
I attach more importance to your decision, based upon a plain,
matter-of-fact observation of actual life, than to the opinion of many
a very learned economist cloistered away from the real world in a
musty atmosphere of books and mental abstractions. So think it out for
yourself, my friend.
You know that when a man takes a job as a wage-worker, he enters into
a contract to give something in return for a certain amount of money.
What is it that he thus sells? Not his actual labor, but his power and
will to labor. In other words, he undertakes to exert himself in a
manner desired by the capitalist who employs him for so much an hour,
so much a day, or so much a week as the case may be.
Now, how are the wages fixed? What determines the amount a man gets
for his labor? There are several factors. Let us consider them one by
one:
First, the man must have enough to keep himself alive and able to
work. If he does not get that much he will die, or be unfit to work.
Second, in order that the race may be maintained, and that there may
be a constant supply of labor, it is necessary that men as a rule
should have families. So, as we saw in a quotation from Adam Smith in
an earlier letter, the wages must, on an average, be enough to keep,
not only the man himself but those dependent upon him. These are the
bottom requirements of wages.
Now, the tendency is for wages to keep somewhere near this bottom
level. If nothing else interfered they would always tend to that
level. First of all, there is no scientific organization of the labor
force of the world. Sometimes the demand for labor in a particular
trade exceeds the supply, and then wages rise. Sometimes the supply is
greater than the demand, and then wages drop toward the bottom level.
If the man looking for a job is so fortunate as to know that there are
many places open to him, he will not accept low wages; on the other
hand, if the employer knows that there are ten men for every job, he
will not pay high wages. So, as with the prices of things in general,
supply and demand enter into the question of the price of labor in any
given time or place.
Then, also, by combination workingmen can sometimes raise their wages.
They can bring about a sort of monopoly-price for their labor-power.
It is not an absolute monopoly-price, however, for the reason that,
almost invariably, there are men outside of the unions, whose
competition has to be withstood. Also, the means of production and the
accumulated surplus belong to the capitalists so that they can
generally starve the workers into submission, or at least compromise,
in any struggle aiming at the establishment of monopoly-prices for
labor-power.
But there is one thing the workers can never do, except by destroying
capitalism: _they cannot get wages equal to the full value of their
product_. That would destroy the capitalist system, which is based
upon profit-making. All the luxury and wealth of the non-producers is
wrung from the labor of the producers. You can see that for yourself,
Jonathan, and I need not argue it further.
I do not care very much whether you call the part of the wealth which
goes to the non-producers "surplus value," or whether you call it
something else. The _name_ is not of great importance to us. We care
only for the reality. But I do want you to get firm hold of the simple
fact that when an idler gets a dollar he has not earned, some worker
must get a dollar less than he has earned.
Don't be buncoed by the word-jugglers who tell you that the profits of
the capitalists are the "fruits of abstinence," or the "reward of
managing ability," sometimes also called the "wages of superintendence."
These and other attempted explanations of capitalists' profits are
simply old wives' fables, Jonathan. Let us look for a minute at the
first of these absurd attempts to explain away the fact that profit is
only another name for unpaid-for labor. You know very well that
abstinence never yet produced anything. If I have a dollar in my
pocket and I say to myself, "I will not spend this dollar: I will
abstain from using it," the dollar does not increase in any way. It
remains just a dollar and no more. If I have a loaf of bread or a
bottle of wine and say to myself, "I will not use this bread, or this
wine, but will keep it in the cup-board," you know very well that I
shall not get any increase as a result of my abstinence. I do not get
anything more than I actually save.
Now, I am perfectly willing that any man shall have all that he can
save out of his own earnings. If no man had more there would be no
need of talking about "legislation to limit fortunes," no need of
protest against "swollen fortunes."
But now suppose, friend Jonathan, that while I have the dollar,
representing my "abstinence," in my pocket, a man who has not a dollar
comes to me and says, "I really must have a dollar to get food for my
wife and baby, or they will die. Lend me a dollar until next week and
I will pay you back two dollars." If I lend him the dollar and next
week take his two dollars, that is what is called the reward of my
abstinence. But in truth it is something quite different. It is usury.
Just because I happen to have something the other fellow has not got,
and which he must have, he is compelled to pay me interest. If he also
had a dollar in his pocket, I could get no interest from him.
It would be just the same if I had not abstained from anything. If,
for example, I had found the dollar which some other careful fellow
had lost, I could still get interest upon it. Or if I had inherited
money from my father, it might happen that, so far from being
abstemious and thrifty, I had been most extravagant, while the fellow
who came to borrow had been very thrifty and abstemious, but still
unable to provide for his family. Yet I should make him pay me
interest.
As a matter of fact, my friend, the rich have not abstained from
anything. They have not accumulated riches out of their savings,
through abstaining from buying things. On the contrary, they have
bought and enjoyed the costliest things. They have lived in fine
houses, worn costly clothing, eaten the choicest food, sent their sons
and daughters to the most expensive schools and colleges.
From all of these things the workers have abstained, Jonathan. They
have abstained from living in fine houses and lived in poor houses;
they have abstained from wearing costly clothes and worn the cheapest
and poorest clothes; they have abstained from choice food and eaten
only food that is coarse and cheap; they have abstained from sending
their sons and daughters to expensive schools and colleges and sent
them only to the lower grades of the public schools. If abstinence
were a source of wealth, the working people of every country would be
rich, for they have abstained from nearly everything that is worth
while.
There is one thing the rich have abstained from, however, which the
poor have indulged in freely--and that is _work_. I never heard of a
man getting rich through his own labor.
Even the inventor does not get rich by means of his own labor. To
begin with, there is no invention which is purely an individual
undertaking. I was talking the other day with one of the world's great
inventors upon this subject. He was explaining to me how he came to
invent a certain machine which has made his name famous. He explained
that for many years men had been facing a great difficulty and other
inventors had been trying to devise some means of meeting it. He had,
therefore, to begin with, the experience of thousands of men during
many years to give him a clear idea of what was required. And that was
a great thing to start with, Jonathan.
Secondly, he had the experiments of all the numerous other inventors
to guide him: he could profit by their failures. Not only did he know
what to avoid, because that great fund of others' experience, but he
also got many useful ideas from the work of some of the men who were
on the right line without knowing it. "I could not have invented it
if it were not for the men who went before me," he said.
Another point, Jonathan: In the wonderful machine the inventor was
discussing there are wheels and levers and springs. Somebody had to
invent the wheel, the lever and the spring before there could be a
machine at all. Who was it, I wonder! Do you know who made the first
wheel, or the first lever? Of course you don't! Nobody does. These
things were invented thousands of years ago, when the race still lived
in barbarism. Each age has simply extended their usefulness and
efficiency. So it is wrong to speak of any invention as the work of
one man. Into every great invention go the experience and experiments
of countless others.
So much for that side of the question. Now, let us look at another
side of the question which is sometimes lost sight of. A man invents a
machine: as I have shown you, it is as much the product of other men's
brains as of his own. It is really a social product. He gets a patent
upon the machine for a certain number of years, and that patent gives
him the right to say to the world "No one can use this machine unless
he pays me a royalty." He does not use the machine himself and keep
what he can make in competition with others' means of production. If
no one chooses to use his machine, then, no matter how good a thing it
may be, he gets nothing from his invention. So that even the inventor
is no exception to my statement that no man ever gets rich by his own
labor.
The inventor is not the real inventor of the machine: he only carries
on the work which others began thousands of years ago. He takes the
results of other people's inventive genius and adds his quota. But he
claims the whole. And when he has done his work and added his
contribution to the age-long development of mechanical modes of
production, he must depend again upon society, upon the labor of
others.
To return to the question of abstinence: I would not attempt to deny
that some men have saved part of their income and by investing it
secured the beginnings of great fortunes. I know that is so. But the
fortunes came out of the labor of other people. Somebody had to
produce the wealth, that is quite evident. And if the person who got
it was not that somebody, the producer, it is as clear as noonday that
the producer must have produced something he did not get.
No, my friend, the notion that profits are the reward of abstinence
and thrift is stupid in the extreme. The people who enjoy the
profit-incomes of the world, are, with few exceptions, people who have
not been either abstemious or thrifty.
But perhaps you will say that, while this may be true of the people
who to-day are getting enormous incomes from rent, interest or profit,
we must go further back; that we must go back to the beginning of
things when their fathers or their grandfathers began by investing
their savings.
To that I have no objection whatever, provided only that you are
willing to go back, not merely to the beginning of the individual
fortune, but to the beginning of the system. If your grandfather, or
great-grandfather, had been what is termed a thrifty and industrious
man, working hard, living poor, working his wife and little ones in
one long grind, all in order to save money to invest in business, you
might now be a rich man; that is, supposing you were heir to their
possessions.
That is not at all certain, for it is a fact that most of the men who
have hoarded their individual savings and then invested them have been
ruined and fooled. In the case of our railroads, for example, the
great majority of the early investors of savings went bankrupt. They
were swallowed up by the bigger fish, Jonathan. But assume it
otherwise, assume that the grandfather of some rich man of the present
day laid the foundation of the family fortune in the manner described,
don't you see that the system of robbing the worker of his product was
already established; that you must go back to the beginning of the
_system_?
And when you trace capital back to its origin, my friend, you will
always come to war or robbery. You can trace it back to the forcible
taking of the land away from the people. When the machine came,
bringing with it an industrial revolution, it was by the wealthy and
the ruthless that the machine was owned, not by the poor toilers. In
other words, my friends, there was simply a continuance of the old
rule of a class of overlords, under another name.