The second relates to those forms of individual income which are covered by the word interest, when used in a comprehensive sense. It being admitted by the later socialists, in opposition to the earlier, that the directive ability of the few is, in the modern world, a productive agency no less truly than labour is, many of these socialists are now anxious to concede that the man of ability is entitled to such values, no matter how large, as are due to the active exercise of his own exceptional powers; but they contend that, as soon as his personal activity ceases, his claim to any influx of further wealth should therewith cease also. Let him spend his accumulations, they say, on his own gratifications as he will; but neither he nor his descendants can be suffered in moral justice to hold or apply them in such a manner that they will renew themselves, and yield an income to recipients who do nothing to make them fructify. To numbers of people who repudiate most of the socialistic programme, this doctrine as to interest appeals as at once just and practicable. If the state could appropriate all incomes due to interest, as distinct from those which represent the product of active ability, an enormous fund would, they think, be available for general distribution, and the ideals of socialism, in so far as they are practicable or desirable, might thus be realised by other than socialistic means. This argument, likewise, will have its own chapter—or rather two chapters—allotted to it.

The third of these arguments or proposals which, though not in themselves socialistic, are popularly associated with socialism, relates to equality of opportunity. To this also I will devote a separate chapter.

FOOTNOTES:

[17] While these pages were being corrected for the press, a number of utterances have been made by English clerics—Episcopalian and Nonconformist—precisely similar in purpose and spirit to those of the author here quoted.



CHAPTER XII

THE JUST REWARD OF LABOUR AS ESTIMATED BY ITS ACTUAL PRODUCTS

Since the educated socialists of to-day admit that in the modern world wealth is produced by two functionally different classes—a majority who labour and a minority by whom this labour is directed; or by two different faculties—namely, labour and directive ability—the question of how much of the total product or its value is produced by one class or agency, and how much by the other, is, for all social reformers, and not for socialists only, a question of the first importance; for in the minds of numbers, who care little about ideal transfigurations of society, the doctrines of socialism leave one vivid conviction, which is this—that, though the labourers in the modern world do not produce everything, though the ability of those directing them is a productive agent also, and though part of the wealth of modern nations is undoubtedly produced by this, yet the men of ability produce much less than they manage to keep, while the labourers produce much more than is represented by the wages which they get; that labour in this way, even if in no other, is suffering at present a general and intolerable wrong; and that socialism is simply a system by which this wrong will be righted.[18]

Now, this alleged wrong is essentially an affair of quantity. If the products of any typical firm—one, let us say, which produces chemicals—are represented by the number a hundred, and if fifty represents the amount which at present is the share of labour, the rest being taken by men of directive ability—a picked body of organisers, chemists, and inventors—labour, it is contended, produces more than the fifty, which is all that it at present gets. Yes; but how much more? It is not contended that it produces the entire hundred. Does it produce, then, sixty, or sixty-five, or seventy, or eighty-three, or what? Unless such a wrong as this can have some extent assigned to it—unless it can be measured approximately by reference to some intelligible standard—it is not only difficult to deal with it; it is impossible to be sure that it exists. Of course we are here not contemplating individual cases. That some employes may, under existing conditions, get less than their work is worth, is possible and likely enough. It is equally likely or possible that others may get more. We must confine ourselves to what happens generally. We must take labour as a whole, on the one hand, and directive ability on the other, and ask how we may estimate, with rough but substantial accuracy, the proportion of the joint product respectively produced by each.

At first sight it may seem that this problem is incapable of any definite solution; and some socialistic writers have done their best to obscure it. The efficiency of labour, they say, is in the modern world largely due, no doubt, to the action of directive ability; but ability could produce nothing unless it had labour to direct; whence it is inferred that the claim of labour on the product may in justice be almost anything short of the absolute total. To this abstract argument we will presently come back; but we will first examine another urged by a celebrated thinker, which, though less extreme in its implications, would, were it only sound, be even more fatal to our chances of arriving at the conclusion sought for. The thinker to whom I refer is Mill, who assigns to this argument a very prominent place in the opening chapter of his Principles of Political Economy.

Certain economists have, so he says, debated "whether nature gives more assistance to labour in one kind of industry than in another"; and he endeavours to show that the question is in its very essence unanswerable. "When two conditions," he proceeds, "are equally necessary for producing the effect at all, it is unmeaning to say that so much is produced by one, and so much by the other. It is like attempting to decide which of the factors five and six contributes most to the production of thirty." And if this argument is true of nature and labour, it is equally true of labour and the ability by which labour is directed. Thus a great ocean liner which, in Mill's language, would be "the effect," could not be produced at all without the labour of several thousand labourers; and it is equally true that it could not be produced at all unless the masters of various sciences, designers, inventors, and organisers, directed the labour of the labourers in certain specific ways. Both conditions, then, being "necessary for producing the effect at all," the portions of it due to each would, according to Mill's argument, be indeterminable. Let us consider, therefore, if Mill's argument is sound. We shall find that it is vitiated by a fallacy which will, as soon as we have perceived it, show us the way to the truth of which we are now in search. Let us begin with taking the argument as he himself applies it.

He brings it forward with special reference to agriculture, and aims it at the contention of a certain school of economists that nature in agriculture did more than in other industries. To urge this, says Mill, is nonsense, for the simple reason that though nature in agriculture does something, it is impossible to determine whether the something is relatively much or little. Let us, he says in effect, take the products of any farm, which we may for convenience' sake symbolise as so many loaves; and it is obviously absurd to inquire which produces most of them—the soil or the farm labourers. The soil without the labourers would produce no loaves at all. The labourers would produce no loaves if they had not the soil to work upon.

Now, if there were only one farm in the world, and one grade of labour, and if every acre of this farm, when the same labour was applied to it, would always yield the same amount of produce—let us say one loaf—Mill's argument would be true. The actual state of the case is, however, very different. Acres vary very greatly in quality; and if we take four acres of varying degrees of fertility, to all of which is applied the same amount of labour, then, while from the worst of the acres this labour will elicit one loaf, it will elicit from the others, let us say, according to their degrees of fertility, two loaves, three loaves, and four loaves respectively. Here the labour being in each of the four cases the same, and the additional loaves resulting in three cases only, it is obvious that the difference between the larger products and the less is not due to the labour, but to certain additional qualities present, in the three superior acres and not present in the worst one. In other words, although in producing loaves—or, as Mill describes it, "the effect"—the parts played by labour and nature are indefinite and incommensurable so long as the land, the labour, and the effect remain all three the same, the parts become immediately measurable when the effect begins to vary, and one of the causes, and only one of them, at the same time varies also.

This truth can be yet further elucidated by the very illustration which Mill cities in disproof of it. It is absurd to ask, he says, whether the number five or six does most, when they are multiplied together, to produce "the effect" thirty. This is true so long as "the effect" thirty is constant; but if on occasions the thirty is increased to forty, and if whenever this happens the six has increased to eight, we know that the extra ten which our multiplication yields us is not due to the five, the number which remains unchanged, but to an extra two now present in the number that was once six. Or again let us take as "the effect" the speed of a motor-car which is raced over a mile of road. Unless two conditions were present—the engine and some ground to run upon—the car could not run at all; and if there were only one road and one car in the world, it would be absurd to inquire how much of the speed was due to the merits of the engine, and how much to the character of the road's surface. But if, the car remaining unchanged, the surface of the road was improved, and a speed was thereupon developed of thirty miles an hour instead of twenty, we should, with regard to the increment, at once be able to say that it was due to the surface of the road, and was not due to the engine. Conversely, if the road were unchanged, but the car had a new engine, and the speed under these conditions increased in the same way, the increment would be evidently attributable to the engine and not the road.

And the same observations apply to labour and directive ability, whenever the operations of both are essential to a given product. If the ability and the labour were always inevitably constant, and the product as to quality and amount were similarly constant also, we could not say that so much or so little of the effect was due to one cause, and so much or so little to the other. If there were in the world only a thousand shipwrights, and these men, working always under the same director, always produced in a year one ship of an unchanging kind, we could not say which of its parts or how much of its value were due to the man directing, and which or how much were due to the men directed. But if for one year this director were to retire and another was to take his place, and, the same labourers being directed by this new master, the result was the production not of one ship but of two; and if, when the year was ended, and the old master came back again, the annual product once more was not the two ships but one, we could then say, as a matter of common-sense with regard to the year during which the two vessels were built, that the second vessel, whatever might be the case with the first, was due wholly to the ability of the master, and not to the labour of the men. In other words, the ability of the director of labour produces so much of the product, or of that product's value as exceeds what was produced by the labourers before their labour was directed by him, and would cease to be produced any longer as soon as his direction was withdrawn.

That in the case of any result which requires separable causes for its production, this method of allocating to these causes respectively so much of the result and so much of it only, is a method always adopted in all practical reasoning, may be seen by taking a result which is not beneficial but criminal. Twenty Russian labourers, all loyal to the Czar, are, let us say, employed to dig out a cellar under a certain street, and to fill it with cases which ostensibly contain wine. Subsequently, as the Czar is passing, he is killed by a huge explosion. It then becomes apparent that the so-called cellar was a mine, and the harmless-looking cases had really been filled with dynamite. Now, if all those concerned in the consummation of this catastrophe were tried, it is perfectly evident that the part played by the labourers would be sharply discriminated from that played by the man employing them; and, although they contributed something which was necessary to the production of the result, it would certainly have been admitted by General Trepoff himself that they had contributed nothing to its essential and criminal elements. It is equally evident that the increment of wealth which results from the obedience of labourers to injunctions which do not emanate from themselves, is produced by the man who gives the injunctions, and not by the men who obey them.

But here we must return to the argument, already mentioned in passing, which may be restated thus: A thousand labourers, directed by their own intelligence only, produce a product whose amount we will call a thousand. The same labourers are directed by a man of ability, and the product rises from one thousand to two. But if the production of this second thousand is to be credited to the man of ability on the ground that, were the ability absent, no second thousand would be produced, we may reach by the same reasoning a conclusion precisely opposite, and credit not only the first, but both the thousands to labour, on the ground that, if the labour were absent, nothing would be produced at all. The argument is plausible; and in order to understand its fallacy we must give our attention to a fact, not generally realised, which is involved in all practical reasoning about all causes whatsoever.

If we use the word "cause" in its strict speculative sense, the number of causes involved in the simplest effect is infinite. Let us take, for example, the speed of a horse which wins a race. Why does the speed of this horse exceed that of the others? We may in answer point to qualities of its individual organism. But these will carry us back to all its recorded ancestors—sires and dams for a large number of generations: and even so we shall have been taken but a small part of our way. The remotest of these ancestors—why were they horses at all? For our answer we must travel through the stages of organic evolution, till we reach the point at which animal and vegetable life were one. Had any of these antecedents been missing, the winning race-horse would not have won the race. Nor is this all. We have to include in our causes air, gravitation, and the fact that the earth is solid. No horse could win on turf which was based on vapour. But by all the thousands who witness a great race this whole mass of ulterior, though necessary, causes is ignored. The only causes which for them have any practical interest are those comprised in the organism of the winning horse itself. Who would contend that this horse had not won its own victory, on the ground that part of its own speed—a part which could not be calculated—was contributed by the crust of the earth, or the general constitution of the universe? Any one arguing thus would be howled down as a madman. Now, why is this? Why would the common-sense of mankind, in a practical matter like a race, instinctively exercise this kind of eclecticism, concentrating itself on certain causes and absolutely ignoring others? Such behaviour is not arbitrary. It depends on a principle inherent in all practical reasoning whatsoever. Let us see what this principle is.

When, with any practical purpose in view, we insist that anything is the cause of anything else, or produces anything else, we are always selecting, out of an incalculable number of causes, one cause or agency which, under the circumstances in view, may or may not be present; which a careless person may neglect to introduce; which an ignorant person may be persuaded to take away; or a recognition of which will influence human conduct somehow; while all other causes, which no one proposes to take away, or which no one is able to take away, are assumed by all parties, but they are not considered by anybody. Why should they be considered? Not only are they so numerous that no intellect could deal with them, but they have, since with regard to them there is no difference of opinion, no place in any practical discussion at all. If a ton of stone is to be placed on a piece of framework, men may reasonably discuss whether the framework is strong enough to bear it, or whether material is not being wasted in making it stronger than necessary. What will happen without an additional girder? Or what will happen if we take two girders away? Will the stone fall or not? These questions belong to the domain of practical reasoning because to take a girder away, or else introduce fresh ones, lies within the power of the disputants. But no practical men would think of complicating the discussion by calculating what would happen if they suspended the action of gravitation, in which case the stone would need no support whatever; for to suspend the action of gravitation is within the power of nobody. If two men are debating in the middle of the night at midsummer whether there is enough oil in the lamp to keep it alight till sunrise, they are debating a question of a strictly practical kind: for it rests with them to put in more oil or not. What will happen if they do not? That is the point at issue. But they neither of them would debate what would happen if the movement of the earth were retarded, and the midsummer morning were delayed till the hour at which it dawns in winter. They do not discuss this contingency, for they rightly assume it to be impossible, and consequently the discussion of it would have no practical meaning.

And now let us go back to the question of labour and ability; and we shall see, in the case of products to the production of which both are essential, that, while ability is the practical cause of all such amounts or values as exceed what would have been produced by labour if there were no ability to direct it, it cannot be claimed in any similar sense that all amounts and values are conversely produced by labour, which exceed what would have been produced by the action of directive ability, if no labour existed for such ability to direct.

The reason why labour, in this respect, differs from ability is as follows: Whether directive ability shall or shall not exert itself depends upon human volitions which, according to circumstances, are alterable, just as it depends upon alterable human volitions whether a framework of steel be constructed in this way or in that; or whether a lamp be replenished with oil or no. But whether ordinary manual labour shall or shall not exert itself, is not similarly dependent on human volition at all. Let a nation be organised, no matter on what principles, the majority of the citizens will have to labour in any case. The supposition of their labouring is bound up with the supposition of their existence. To suppose that the labourers as a whole could permanently cease to labour, is like supposing that they could exist and yet permanently cease to breathe. They can cease to labour for moments, just as for moments a man can hold his breath, as they do on the occasion of a strike; but they can do so for moments only. Except in a region where climatic conditions are exceptional, what makes men labour is not an employing class, but nature. Directive ability does not make them labour; it finds them labouring. It finds them like wheels which are driven by an eternal stream, and which must turn and turn for ever, until they fall to pieces. To inquire, then, what would happen if labour ceased to exert itself is like inquiring what would happen if the earth were to retard its diurnal motion, or if some natural force—for example, that of gravitation—were to strike work for the sake of intimidating the cause of all things. Such suppositions are for practical purposes meaningless. But with the directive ability of the few, as opposed to the directed labour of the many, the case is dramatically different. For while there never can be any question of the directive faculties of the few being left alone in a world where there is no labour—for in the case of the majority, nature, the eternal taskmaster, will always make labour compulsory, so long as stomachs want food and naked backs want clothing—there constantly has been, and there may be again, a question of whether this mass of ordinary human labour shall find any exceptional ability so developed and so organised as to direct it. In the earlier states of society no such ability was operative. In savage communities it is not operative now; and there is constantly a question, among modern civilised nations, whenever the security of social institutions is threatened, of the action of this faculty being temporarily suspended altogether, either because those persons possessing it are deprived of the motives without which they will not exert it, or else because the labourers individually, on one ground or another, are impatient of submitting themselves to the direction of any intelligences but their own.

In other words, when we are seeking to measure the products due respectively to directive ability and to labour, by computing what would happen if either of these agencies were withdrawn, the withdrawal of one of them—that is to say, of ability—can alone be taken as possible by any practical reasoner. We have before us practically two alternatives only. One is a condition of things under which the exceptional ability of the few directs and co-ordinates the labour of the average many. The other is a condition of things under which the labour of the average many has to exert itself with the same severe continuity, but is guided, co-ordinated, and stimulated by none of those special faculties which raise a few men above the general level of efficiency. When these special faculties are applied to the direction of average labour, the output of wealth increases. When their application is interfered with or ceases, the output of wealth declines; and in the only practical sense of the words "cause" or "producer," these faculties of direction, or the exceptional persons who exercise them, are the true causes or producers of the whole of that portion of wealth which comes into being with their activity, and disappears or dwindles with their inaction.

The practical validity of this method of computation has been formally recognised, though not completely understood, by some of the later socialists themselves. Mr. Webb, for example, and his associates, have admitted that, of the wealth of the modern world a considerable part consists of "the rent of business ability."[19] This way of expressing the matter is true so far as it goes. It expresses, however, one-half of the truth only. Mr. Webb and his friends mean that, if we take the world as it is, the products due to ability in any given industry consist of the quantity by which the products of one firm, because it is managed by a man of superior talent, exceed the products of another firm which differs from the first only in the fact that it is managed by another man whose talent is not so great. They assume as their starting-point, in every case, the presence of directive ability sufficient to organise the labourers in such a way that the products of the entire group shall provide the labourers with wages which are up to a certain standard, and a minimum of profit or of surplus values besides. This lowest grade of ability is one of the postulates of their argument, just as in calculating agricultural rent the first postulate of our argument is a lowest grade of land.

Now, in connection with many questions of a more or less limited kind, this assimilation of the products of superior ability to rent, and of ability of a lower grade to land which is practically rentless, will serve our purpose well enough. Between the two cases, however, there is a vast and underlying difference; and when we consider our present problem under its widest and most vital aspect, it is the difference, not the likeness, between them, which constitutes our main concern. The nature of this difference has been pointed out already. When we are discussing rent and agriculture, land is a necessary assumption, for unless there were land, there could be no agriculture at all; but there can be, has been, and still is in the world, abundance of labour without directive ability; and while it would be meaningless to ask what would happen to rent if all land disappeared, the question of what would happen to labour if all ability were in abeyance is precisely the question raised by all schemes of economic revolution, and one which has been constantly illustrated by the facts of economic history.

Of such facts we may take the following, picturesque example: In the eighteenth century the Jesuit Fathers in Uruguay succeeded in teaching the natives a variety of Western arts, among others that of watch-making, and so long as the Jesuits were on the spot to direct them the natives exhibited much manual skill. But when, owing to political causes, the Jesuits were driven from the country, the natives sank back into their previous industrial helplessness. The temporary efficiency of their labour had been due to the ability that directed it; and as soon as that ability was withdrawn, the labour, left to itself, shrank again to its old relative inefficiency. Now, here we have a case precisely analogous to that which we have to deal with when considering at the present day how much of the products of any civilised nation is produced by the labour of the average units of the population, and how much by the ability of the exceptional men directing them. It is not a question of how much this or that group of labourers, which is directed by a man of the highest grade of ability, produces in excess of the products of some similar group which is directed by another man whose ability is somewhat inferior; it is a question of how much the same nation would produce, if every director of other men's labour were withdrawn, and the present labouring units left to their own devices.

These two questions, though not mutually exclusive, differ as much as the question of why one of two balloons rises above the earth to a height of three miles and a furlong, while a second balloon reaches the height of three miles only, differs from the question of why either of them rises in the air at all. Mr. Webb and his friends, with their theory of the rent of ability, confine themselves to the first of these—namely, the question of why one balloon rises a furlong higher than the other. The real question which we have to deal with here is why both balloons lift their aeronauts at least three miles into the clouds, while other men who have no balloon to lift them can get no higher than the top of the church steeple. Or to come back to literal fact, our problem must be expressed thus: Let us take the present population of Great Britain or America, and, having noted the wealth at present annually produced by it, ask ourselves what would happen if some duly qualified angel were to pick out and kill, or otherwise make away with, every man, who, in virtue of his assimilated scientific knowledge, his inventive gifts, his constructive and practical imagination, his energy, his initiative, and his natural powers of leadership, was better able to direct others than the other nine were to direct themselves?

We cannot make this experiment in precisely the way described; but history will provide us with equivalents which are sufficiently accurate for our purpose. There are, for example, in the case of Great Britain, data which have enabled statisticians with a considerable degree of unanimity to estimate the values produced per head of the industrial population at various periods from the reign of Charles II. till to-day, and to reduce these values to comparable terms of money. Now, we need not insist too much on the accuracy of the figures in question; but one broad fact is unmistakably shown by them—that the product per head towards the close of the nineteenth century was, to say the least of it, from four to five times as great as it was towards the close of the sixteenth. To what, then, was this increase in industrial productivity due? It was not due to any change in the spontaneous workings of nature. It can only have been due to some change in the character of human effort—either in that of the effort of each separate manual labourer, or else in that of the men by whom the labour of others is directed. The average labourer, however, at the close of the nineteenth century did not differ, as an isolated labouring unit, from the average labourer as he was at the time of the fire of London. The increase in industrial productivity must therefore be necessarily due to a change in the ability of those by whom the labourers are organised and directed. And here a priori reasoning is confirmed by actual facts, for the change which has taken place in the class which directs the labour of others has been, during the period in question, of the most notorious and astonishing kind. That class had been progressively absorbing into itself, and concentrating on the conduct of industry, ambitions, intelligences, and strong practical wills, which formerly found their outlets in very different channels—ecclesiastical, political, and more especially military. Man for man, then, industry became more productive, because to an increasing degree the ablest men of the nation concentrated their exceptional powers on directing the business of production; and any one who wished to push things to an extreme conclusion might contend that the entire amount—some four or five hundred per cent.—by which the product per head in the year 1880 exceeded the product per head some two hundred years before, was due to directive ability, and directive ability only; and that the labourers, in their capacity of labourers, had no claim whatsoever to it. We will, however, put the case in a much more moderate form. We will, for argument's sake, concede to self-directed labour all that increase in the values produced per head, which took place between the time of Charles II. and the general establishment in Great Britain of the modern industrial system, with its huge mills and factories, and its concomitant differentiation of the directing class from the directed—an event which had been securely accomplished at the beginning of the nineteenth century. In making this concession, we shall, indeed, be defying fact, and ignoring the improvements, alike in manufacture and agriculture, which had taken place during the hundred years preceding, especially during the last fifty of them, and which were solely due to a minority of exceptionally able men.[20] We shall thus be conceding to the labourer far more than his due. Certainly no one can contend that we concede too little.

Let us take, then, the beginning of the nineteenth century as our standing-point; and, assuming that labour was the sole producer then, compare its productivity per head with the productivity of industrial effort—of labour and ability combined—some eight or nine decades later. The labourers of Great Britain as a body, to the exclusion of all other classes, actually divided among themselves, about the year 1880, more wealth per head—something like forty-five per cent.—than would have been theirs if they had lived in the days of their own grandfathers, and been able to appropriate as wages the income of the entire country.

Let us, then, repeat the question which we asked just now. Where has this addition to the income of labour come from? That part of it is attributable to ability—the ability of the Watts, the Stephensons, the Arkwrights, the Bessemers, the Edisons, and so forth—nobody in his senses will deny. Can it be said that any of it is attributable to labour? The period now under consideration is so brief that this question is not hard to answer. It can easily be shown that man, as a labourer skilled or unskilled, has acquired individually no new efficiencies since—to say the least of it—the days of the Greeks and Romans. An ancient gem-engraver would to-day be eminent among modern craftsmen. The implements of the Roman surgeons, the proportional compasses used by the Roman architects, the force-pumps and taps used in the Roman houses—all things that could be produced by a man directing his own muscles—were produced in the Rome of Nero as perfectly as they could be produced to-day. To this fact our museums bear ample and minute witness; while the Colosseum and the Parthenon are quite enough to show that the masons of the ancient world were at least the equals of our own. If no advance, then, in the quality of manual labour as such has taken place in the course of two thousand years, it is idle to contend that its powers have increased in the course of eighty. But a still more remarkable proof that they actually have not done so, and that no such increase has contributed to the increase of modern wealth, is supplied by events belonging to these eighty years themselves. I refer to the policy pursued by the trade-unions of reducing the practical efficiency of all their members alike to the level which can be reached by those of them who are least active and dexterous. Bricklayers, for example, are forbidden by the English unions to lay, in a given time, more than a certain number of bricks, though by many of them this number could be doubled, and by some trebled, with ease. Now, although, from the point of view of those bodies who adopt it, such a policy has many advantages, and is perhaps a tactical necessity, this levelling down of labour to the minimum of individual efficiency is denounced by many critics as a prelude to industrial suicide, and the alarm which these persons feel is doubtless intelligible enough. It is, however, largely superfluous. The levelling process in question must of course involve a certain amount of waste; but its effect on production as a whole is under most circumstances inappreciable. Building as a whole is not checked by the fact that the best bricklayers may do no more than the worst. All kinds of commodities are multiplied, improved, and cheapened, while thousands of the operatives whose labour is involved in their production are allowed to attend to but one machine, when they might easily attend to three. In a word, while the unions have been doing their effective best to keep labour, as a productive agent, stationary, or even to diminish its efficiency, the product of industry as a whole exhibits an unchecked increase. And what is the explanation of this? Little as the trade-unions realise the fact themselves, their own policy is an object-lesson which supplies us with the simple answer. The answer is that the increase of modern wealth—certainly its increase during the past eighty years—has not been due to any change in the efficiency of labour at all; that labour is merely a unit which directive ability multiplies; that if in the year 1800 labour produced everything, and its total products then be expressed by the number five, the products of the industrial population would be five per head still, if ability, as a multiplying number, successively expressible by two and three and four, had not increased the quotient to ten, fifteen, and twenty; ability thus being the producer, not indeed of the five with which we start, but of all the increasing differences between this and the larger numbers.

To return then to definite facts, since in the year 1800 an equal division of all the wealth of Great Britain would have yielded to each family an income of eighty pounds, and since eighty years later an equal division of the total which was actually appropriated as wages by wage-paid labour alone, would have yielded to each labourer's family some twenty-five pounds in addition, the labouring class as a whole in Great Britain to-day, instead of receiving less than its labour produces, receives on the lowest computation from thirty to thirty-three per cent. more. Or, to put the matter otherwise, more than a fourth of its present income is drawn from a fund which would cease to have any existence if it were not for the continued activity of a specially gifted class, by whose brains the data of science are being constantly remastered and re-assimilated, and by whose energy they are applied to the minds and muscles of the many from the earliest hour of each working day to the latest. And what is true labour, its products, and receipts in Great Britain, is broadly true of them in America and all other countries also, where modern capitalism has arrived at the same stage of development.

We are, let me say once more, not here contemplating individual cases. Of the total wage-fund divided among the labourers in any given country, too much may be given to some men, and too little to others; but of every million pounds which a million of such men receive, some two hundred and fifty thousand are distributed well or ill, which have not been produced by the efforts of these men themselves, but are due to the efforts of a class which is definitely outside their own.[21] If, then, it is contended that the just reward of labour is that total of wealth which labour itself produces, the idea that labour, in respect of its pecuniary remuneration, is, under present conditions, the victim of any general wrong, is so far from having any justification in fact that it only touches fact at all by representing a direct inversion of it. Labour, as a whole, does not, under existing conditions, get less than it produces.[22] It gets a very great deal more. If, therefore, the claims of labour are based on, and limited to, the amount of wealth which is produced by labour itself—that is to say, the total which it would now produce were the faculties of the directing and organising minority paralysed—what labour, thus appropriating the entire product, would receive, would be far less, not more, than what it actually receives to-day. Instead of defrauding it of any part of its due, the existing system is treating it with an extreme and even wanton generosity.

Is it, then, here contended, many readers will ask, that if matters are determined by ideal justice, or anything like practical wisdom, the remuneration of labour in general ought henceforth to be lessened, or at all events precluded from any possibility of increase? Is it contended that the employing and directing class should attempt or even desire to take back from those directed by it every increment of wealth possessed by them which is not produced by themselves? If any one thinks that such is the conclusion which is here suggested, let him suspend his opinion until, as we shall do in another chapter, we return to the subject and deal with it in a more comprehensive way. Our conclusion, as for the moment we must now be content to leave it, is not that the labourers have not a claim, practically valid, to the only portion of their income which has any tendency to grow, but merely that they should understand the source from which this portion is drawn—a source which consists of the efforts of other men, not of their own.

And now, before we return to this particular question, we will go on to deal with another which to a certain extent overlaps it, but is narrower in its compass, and seems, for that very reason, to many minds of greater practical moment. I mean the question of interest, or the income which comes to its recipients without any necessary effort on their own part to correspond to it.

FOOTNOTES:

[18] I met an interesting embodiment of this mood of mind in America, in the person of a slim young man, well-dressed, well-educated, refined in his speech and manners, who worked as a clerk or accountant in some large financial house. To my great astonishment he introduced himself to me as a socialist. "I don't believe like Marx," he said, "that labour produces everything, but I maintain that the task-work of the employed and directed labourer, of whatever grade—whether he uses a pen or a chisel—is always worth more than the wages which the employers pay him for performing it. I feel this myself with regard to my own firm. Month by month I am worth to it more than the sums it gives me. This," he went on, with an odd gleam in his eyes, "is what I may not endure to think of—that others should be always appropriating values which I have produced myself; and nine out of ten of the men who become socialists, do so because they feel as I do about this particular point."

[19] General Walker also seeks to assimilate the product of ability to rent; and my criticism of Mr. Webb in this respect applies to him also. General Walker's book was mentioned frequently in connection with my late addresses in America; and it was said by one or two critics that I had borrowed from, and ought to have acknowledged my debt to, him. As a matter of fact, I never saw his book till after my return to England, when I read it with interest and admiration. His doctrines with regard to the entrepreneur is, so far as it goes, fundamentally identical with the main argument of this volume. My criticism of him would be that he does not give to this particular part of his doctrine the foremost place which logically belongs to it; and that though attributing to the entrepreneur some special productive faculty distinct from labour, he starts his work with re-enumerating the old doctrine that labour, capital, and law are the only factors in production.

[20] For example, the silk factory at Derby, erected by Lombe, in the reign of George II., the machinery of which comprised 26,000 wheels.

[21] These figures represent less than the truth. They are merely given in order to indicate the general character of the situation to-day, as compared with that of an earlier, but still comparatively recent period. To go into details minutely would involve extensive and here needless discussion.

[22] A letter was sent me by a friend in America, from a writer who, commenting on my late addresses in that country, said that in the main he entirely agreed with my arguments, as against socialism; but that he could not divest himself of the belief that labour as a whole got less than it produced, and was thus as a whole suffering a chronic wrong. He suggested, however, a method, fundamentally analogous to that set forth in the text, of computing what labour, as such, does produce in reality. He gave his own opinion as to actual facts, as an impression merely; but how misleading impressions may be can be seen from his statements "that all very great fortunes, at all events, must be derived from the underpayment of labour." Had he only considered the case in detail, he would have seen that labour received the highest wages from some of the richest employers. According to his theory the wages of labour, in such cases, would touch the minimum.



CHAPTER XIII

INTEREST AND ABSTRACT JUSTICE

The essential feature of interest, as distinct from the income due to active ability, is that while the latter ceases as soon as the able man ceases to exert himself, the former continues to replenish the recipient's pockets, though for his part he does nothing, or need do nothing, in return for it. Since, then, the possession of this particular form of income is admittedly unconnected with any concurrent exertion on the part of those possessing it (such is the argument of the objectors) the whole portion of the national wealth which, in the form of interest, is at present appropriated by the presumably or the possibly idle, might obviously be appropriated by the state, and applied to public purposes, without lessening in any way even the highest of those rewards which are due to, and are needed to stimulate any active ability whatsoever, and hence without lessening the efficiency of the wealth-producing process as a whole. If we adopt the programme which this argument suggests, it will be possible, so its advocates say, to satisfy the demands of labour by a shorter and more direct method than that of committing ourselves to an estimate of what labour actually produces, and endeavouring to secure that the total which is paid to labour shall accord with it.

Now, this programme raises two separate questions. One question is whether the proposed confiscation of interest is in reality, as its advocates maintain it to be, practicable in the sense that the disturbances which it would necessarily cause would not interfere with the production of the fund which it is desired to distribute, and so perhaps leave all classes poorer and not richer than they are. The other question is whether such a confiscation would be just. To some people this second question will possibly seem superfluous. If it can be shown, they will say, that a policy, the avowed object of which is the enrichment of the many at the expense of the relatively few, could be really carried out successfully, and if the many had the power of insisting on it, an inquiry into its abstract justice is merely a waste of time; for whenever the wolf is face to face with the lamb, it will eat up the lamb first and justify its conduct afterwards. And in this argument there is a certain amount of truth; but those who take it for the whole truth allow their own cynicism to overreach them. The fact remains that even the wolves of the human world are obliged to assume, as a kind of necessary armour, and often as their principal weapon, a semblance of justice, however they may despise the reality. The brigand chief justifies his war on society by declaring that society has unjustly made war on him. The wildest demagogues, in their appeals to popular passion, as the history of the French Revolution and of all revolutions shows us, have always been obliged to exhibit the demands of mere self-interest as based on some general theory of what is morally just or right; and however much the theory may accommodate itself to the hope of private advantage, there are few demands made for any great social change which do not derive a large part of their force from persons with whom a belief in the justice of the demands stands first, while—so far at least as their own consciousness is concerned—the prospect of personal advantage stands second or nowhere. This is certainly so in the case which we are now considering. We will, therefore, begin with the question of abstract justice.

Let us begin, then, with reminding ourselves that when interest is attacked as such, on the ground that its recipients have themselves done nothing to produce it, whereas other incomes, no matter how large, are presumably the equivalents of some personal effort which corresponds to them, it is assumed that every man has, in natural justice, a right to such wealth as he actually himself produces; and what he produces, as we saw in the last chapter, is that amount of wealth which would not have been produced at all had his efforts not been made, or been other or less intense than they have been.

Thus far, then, for the purposes of the present discussion, all parties are agreed; but the moment the assailants of interest take the next step in their argument, we shall find that their errors begin—errors resulting, as we shall see, from an imperfect analysis of facts. For them the two types of correspondence between productive effort and product are, firstly, the manual labourer, who performs some daily task such as riveting plates or bricklaying, and receives an equivalent in wages at the end of each day or week; and, secondly, the manager of some great industrial enterprise, who spends each day so many hours in his office, issuing minute directions with regard to the conduct of his subordinates, and sending his receipts to the bank as they come in from his customers. But these types, though accurate so far as they go, do but cover a part of the actual field of fact. Practically, though of course not absolutely, they ignore the element of time. They represent effort and product as being always so nearly simultaneous that, although the former must literally precede the latter, yet, if we estimate life in terms of years, or even months, or weeks, a man has ceased to produce as soon as he has ceased to work.

Now, of certain forms of effort this may be true enough. A bricklayer, for example, as soon as he ceases to lay bricks, ceases to produce anything. His wall-building closes its effects with the walls which he himself has built. It does nothing to facilitate the building of other walls in the future. Similarly such ability as consists in a gift for personal management often ends its effects, and leaves no trace behind it, as soon as the manager possessing these gifts retires.

But with many forms of ability the case is precisely opposite. The products of their exercise do not even begin to appear till after—often till long after—the exercise of the ability itself has altogether come to an end. Let us, for example, take the case of a play; and since socialists are still included among the objectors whom we have in view, let us take one of the popular plays written by Mr. Bernard Shaw. Such a play, as Mr. Shaw has publicly boasted—for otherwise I should not mention, and should know nothing of his private affairs—brings to its author wealth in the form of amazing royalties; but until it is acted it brings him no royalties at all, and the actors begin with it only when his own efforts are ended. Moreover, not only do these royalties only begin then, but having once begun, they have no tendency to exhaust themselves. On the contrary the chances are that they will go on increasing till the time arrives, if it ever does, when Mr. Shaw is no longer appreciated. Mr. Shaw, in fact, if he had written one of his most successful plays at twenty, might, so far as that play is concerned, be idle for ever afterwards, even if he lived to the age of Methuselah, and still be enjoying in royalties the product of his own exertions, though he had not exerted himself productively for some seven or eight hundred years.

There is no question here of whether, under these conditions, a person like Mr. Shaw might not feel himself constrained on some ground or other to surrender his copyright at some period prior to his own demise. The one point here insisted on is that he could not renounce it on the ground that the wealth protected by it was no longer produced by himself. If he is entitled to the royalties resulting from the performance of his play at any time, on the ground that every man has a right to the products of his own exertions, his right to the royalties resulting from its ten-thousandth performance is, on this ground, as good as his right to the royalties resulting from the first. The royalties on a play, in short, show how certain forms of effort, though not all, continue to yield a product for an indefinite period, though the original effort itself may be never again repeated; and herein these royalties are typical of modern interest generally. They do not, however, constitute in themselves more than a small part of it. We will therefore turn to interest of other kinds, the details of whose genesis are indeed widely different, but which consist similarly of a constant repetition of values, without any corresponding repetition of the effort in which the series originated.

Those which we will consider first are the products of organic nature, which have been dwelt upon by a well-known writer as showing us the ultimate source of industrial interest generally, and also at the same time its natural and essential justice. It may be a surprise to some to learn who this writer is. He is Henry George, who is best known to the public as the advocate of a measure of confiscation so crude and so arbitrary, that even socialists have condemned it as impracticable without serious modifications. Henry George, however, although he outdid most socialists in his attack on private wealth of one particular kind—that is to say, the rent of land—was equally vehement in his defence of the interest of industrial capital. Socialists say—and the aphorism is constantly repeated—"A man can get an income only by working or stealing; there is no third way." In answer to this, it was pointed out by George that one kind of wealth, at all events—and we may add that here we have wealth in its oldest form—consists of possessions yielding a natural increase, which has been neither made by the possessors, nor yet stolen by them from anybody else. That is to say, it consists of flocks and herds. A shepherd or herdsman starts with a single pair of animals, from which parents there arises a large progeny. This living increment has not been produced by the man, but it is still more obvious that it has not been produced by his neighbours, and it therefore belongs in justice to the man who owns the parents. George pointed out also that whole classes of possessions besides are, for by far the larger part of their value, equally independent either of corresponding work or of theft. Among such possessions are wines, whose quality improves with time, and which, if sold to-day, may be worth tenpence a bottle, but which four years hence may be worth perhaps half-a-crown. In all such cases—this was George's contention—we have some possession originally small to start with, which year by year is increased in amount or at least in value, not by the efforts of the possessor, but by the secret operations of nature. Here, he argued, we have capital in its typical form; and interest is the gift of nature to the man by whom the capital is owned.

George, however, is constrained to supplement this proposition by another. Though he assumes that of the products which are, in the modern world, actually paid as interest by the borrower of capital to the owners of it, the larger part consists of gifts of unaided nature, he admits that they are not the whole. He admits that a part of it is paid for the use of machinery. Now, such interest, he says, has a definitely different origin, and cannot intrinsically be justified in the same way; and if all wealth consisted of such commodities as are due to the efforts of man, and to the man-made machinery which assists him, all interest would be really, as it is said to be by some, indefensible. But, he continues, since interest on capital such as machinery is not the whole of the interest paid in the modern world, but is only a minor part of it, and since in the modern world all forms of capital are interchangeable, the laws which govern us in our dealings with the lesser quantity must necessarily be assimilated to those which govern us in our dealings with the greater. If a ram and a sheep are capital which yields just interest, because their wool and their progeny are increments due to nature, and if a ram and a sheep are exchangeable for some kind of machine, the possession of the one must be placed on a par with the possession of the other. The machine must be treated, though it is not so in strictness, as if it were prolific in the same sense as the beasts are; and a part of what it is used to produce must be paid by the user to the owner of it.

Now, both these arguments—that which deals with the fact of natural increase, and that which deals with the assimilation of all such possessions as are interchangeable—are in principle sound. The first, indeed, touches the very root of the whole matter; but the first is exaggerated in his statement of it, and unduly limited in his application, and the second is wholly unnecessary for proving what he desires to prove. The first is exaggerated in his statement of it because, as a matter of fact, the kind of capital whose interest is described by him as the gift of nature is not the major, it is only a minor part of the capital yielding interest under the conditions which obtain to-day. A part far larger is capital in the form of machinery; and if the distinction which George draws between the two is a true one, the case of the flocks and herds should be assimilated to that of the machines, not the case of the machines to that of the flocks and herds. Interest should be denied to both kinds of capital because machines are not naturally prolific, instead of being conceded to both because flocks and herds are so. We shall find, however, that the distinction which George seeks to establish is illusory, that both kinds of capital yield interest in the same way, and that his justification of it in the one case is equally applicable to it in the other.

His attempt to distinguish between the two takes the form of a criticism of Bastiat, according to whom the typical source of interest is the added productivity which a given amount of human effort acquires by the use of certain lendable implements. As a type of such implements or machines, Bastiat takes a plane. The maker of a plane lends this plane to another man, who is thus enabled to finish off in a week four more planks than he could have done had he used an adze. If, at the end of the week, the borrower does nothing more than return the plane in good repair to the lender, the borrower gains by the transaction; but the maker and lender not only gains nothing, he loses. For a week he loses his implement which he otherwise might have used himself, and the extra planks which, by the use of it, he could have produced just as easily as his fellow. Such an arrangement would be obviously and absurdly unjust. Justice demands—and practice here follows justice—that he get at the end of the week, not only his own plane back again, but two of the extra planks due to its use besides. A plane, in short—such is Bastiat's meaning, though he does not put it in this precise way—is a possession which is fruitful no less than a sheep and a ram are, or a wine which adds to its value by the mere process of being kept, and it, therefore, yields interest for a virtually similar reason. George, however, seeks to dispose of Bastiat's argument thus: If the maker of the plane lends it, he says, instead of himself using it, and the borrower borrows a plane, instead of himself making one, such an arrangement is simply due to the fact that both parties for the moment happen to find it convenient. For, George observes, it is no part of Bastiat's contention that the plane is due to the exertion of any faculties possessed by the maker only. Either man could make it, just as either man could use it. Why, then, should A pay a tribute to B for the use of something which, to-morrow, if not to-day, he could make for himself without paying anything to anybody?

Now, if Bastiat's plane is to be taken as signifying a plane only, the criticism of George is just. But what George forgets is that, if the plane means a plane only—an implement which any man could make just as well as the lender—interest on planes, besides being morally indefensible, would as a matter of fact never be paid at all. Bastiat's plane, however, stands for a kind of capital, the borrowing of which and the paying of interest on which, form one of the most constant features of the modern industrial world; and he evidently assumes, even if he does not say so, that for all this borrowing and paying there is some constant and sufficient reason. Now, the only reason can be—and George's own criticism implies this—that in order to produce the machine-capital borrowed certain faculties are needed which are not possessed by the borrowers; and though this may not be true of a simple hand-plane itself, it is emphatically true of the elaborate modern machinery of which Bastiat merely uses his hand-plane as a symbol. In order to produce such implements of production as these, the exertion of faculties is required which are altogether exceptional, such as high scientific knowledge, invention, and many others. Let invention—the most obvious of these—here do duty for all, and let us consider, for example, the mechanism of a modern cotton mill, or of a boot factory, or a Hoe printing press, or a plant for electric lighting. All these would be impossible if it had not been for inventive faculties as rare in their way as those of a playwright like Mr. Shaw.

No one will deny that when a play like "Man and Superman" first acquires a vogue which renders its performance profitable, the royalties paid to the author are values which he has himself created, not indeed by his faculties used directly, but by his faculties embodied in a work which he has accomplished once for all in the past, and which has thenceforward become a secondary and indefinitely enduring self; and if this is true of the royalties resulting from its first profitable performance, it would be equally true of those resulting from the last, even though this should take place on the eve of the Day of Judgment. With productive machinery the case is just the same. If Mr. Shaw, instead of writing "Man and Superman," had been the sole inventor of the steam-engine, and the only man capable of inventing it, every one will admit that he would, by this one inventive effort, have personally co-operated for a time with all users of steam-power, and been part-producer of the increment in which its use resulted. And if this would have been true of his invention when it was only two years old, it would be equally true now. He would still be co-operating with the users of every steam-engine in the world to-day, and adding to their products something which they could not have produced alone.

Here, then, we see that in one respect at all events the two kinds of capital, which George attempts to contrast, yield interest for a precisely similar reason. Both consist of a productive power or agency which is external to the borrower himself; and it makes no difference to him whether the auxiliary power borrowed inheres in living tissue, or in a mechanism of brass or iron.

But the resemblance between these two forms of capital, and the identity of the reasons why both of them bear interest, do not end here. I quoted in a former chapter an observation of Mr. Sidney Webb's, which he himself applies in a very foolish way, but which is obviously true in itself, and in the present connection is pertinent. Some men he admits are incomparably more productive than others, because they happen to be born with a special kind of ability. But what is this ability itself? It is simply the result, he says, of a process which lies behind them—namely, the natural process of animal and human evolution; and its special products are like those of exceptionally fertile land. That is to say, the ability which produces modern machines is in reality just as much a force of nature as that which makes live-stock fertile, and brings raw wine to maturity. But the same line of argument will carry us much farther than this. As Dr. Beattie Crozier has shown in his work, The Wheel of Wealth, the part which nature plays in productive machinery is not confined to the brains of the gifted inventors and their colleagues. It is incorporated in, and identified with, the actual machines themselves. The lever, the cam, the eccentric, the crank, the piston, the turbine, the boiler with the vapour imprisoned in it—devices which it has taxed the brains of the greatest men to elaborate and to co-ordinate—were all latent in nature before these men made them actual; and when once such devices are actualised it is nature that makes them go. There is not merely a transformation of so much human energy into the same amount of natural energy; but nature adds to the former a non-human energy of her own; as—to take a good illustration of Dr. Crozier's—obviously happens in the case of a charge of gunpowder, which, "when used for purposes of blasting, has," he observes, "in itself a thousand times the quantity of pure economic power that is bought in the work of the labourers who supply and mix the ingredients." That is to say, whenever human talent invents and produces a machine which adds to the productivity of any one who uses it with sufficient intelligence, the inventor has shut up in his machine some part of the forces of nature, as though it were an efreet whom a magician has shut up in a bottle, and whose services he can keep for himself, or hand over to others. The efreets shut up in machinery will not work for human beings at all, unless there are human magicians who manage thus to imprison them. They therefore belong to the men who, in virtue of their special capacities, are alone capable of the effort requisite to perform this feat; and it matters nothing to others, by whom the efreets' services are borrowed, whether the effort in question occupied a year or a day, or whether it took place yesterday or fifty years ago.

The borrowed efreet produces the same surplus in either case, and interest is a part of this surplus which goes, not to the efreet himself (for this is not possible), but to his master, just as a cab-fare is paid to the cabman and not his horse.

Machine-capital, then—or capital in its typical modern form—consists of productive forces which are usable by, and which indeed exist for, the human race at large, because, and only because, they have been captured and imprisoned in implements by the efforts of exceptional men, whose energy thus exercised is perpetuated, and can be lent to others; and what these men receive as interest from those by whom their energy is borrowed, is a something ultimately due to the energy of the lenders themselves—nor is this fact in any way altered by lapse of time. Thus, so far as these special men are concerned, the alleged difference between earned income and unearned altogether disappears; and if one man lives in luxury for sixty years on the interest of an invention which it took him but a month to perfect, while another man every day has to toil for his daily bread, the difference between the two consists not in the fact that the one man works for his bread and the other man does nothing for it, but in the fact that the work of one produces more in a day than that of the other would do in a hundred lifetimes.

Here, however, we shall be met with two important objections. In the first place, it will no doubt have occurred to many readers that throughout the foregoing discussion we have assumed that the persons who receive interest on machinery are in all cases the persons by whom the machinery was invented and produced. To the actual inventors and producers it may, indeed, be conceded that the interest which they themselves receive has been earned by their own exertions; but no such concession, it will be said, can be made to these men's heirs. An Edison or a Bessemer may have produced whatever income has come to him in his latest years from the inventive efforts of his earliest; but if such a man has a son to whom this income descends—a half-witted degenerate who squanders it on wine and women, who will not work with his hands and who cannot work with his head—no one can pretend that, in any sense of the word, a fool like this produces any fraction of the thousands that he consumes. And though all of those who live on the interest of inherited capital are not foolish nor vicious, yet in this respect they are all of them in the same position—they have not produced their incomes, and so have no moral right to them.

In the second place, the following argument, which was discussed in an earlier chapter, will also be brought forward, refurbished for the present occasion. Let us grant, it will be said, that the inventions which have enriched the world were originally due to the talents of exceptional men, and that without these exceptional men the world would never have possessed them; but when once they have been made, and their powers seen in operation, the human race at large can, if left to itself, take over these powers from the inventors just as the inventors took them over from nature. Indeed, this constantly happens. Any boy with a turning-lathe can to-day make a model steam-engine, and no one will contend that such a model was not made by himself, on the ground that it could not have been made either by him or by anybody unless Watt, with his exceptional genius, had invented steam as a motive-power. One might as well contend that a savage does not really light his own fire, on the ground that the art of kindling wood was found out by Prometheus, and that no one, except for him, would have had any fires at all. The truth is, it will be said, that in such cases as these the powers of the exceptional man, originally confined to himself, are, when his invention is once in practical operation, naturally shared by his fellows, who can only be restrained from using them by artificial devices such as patents—these devices being at best, from a moral point of view, devices by which one man who has given a cheque to another man steals back half the money as soon as the cheque is cashed.

Now, both these arguments, so far as they go, are true; but neither has any bearing on the problem which is now before us. That problem arises—let me observe once more—out of the assumption that, as a matter of justice, every man has a right to the products of all such forces as are his own; whence it follows that nobody has a right to the products of any forces which are not definitely in himself. Let us take, then, the latter of the above arguments first. It would doubtless be absurd to contend, were Prometheus alive to-day, that because he invented the art of striking fire from flints he ought to be paid a tribute by every savage who boiled a kettle; for the savage can strike a flint as well as Prometheus himself could. But if fire could be kindled only by a particular sort of match which Prometheus alone could make, the fact that he was really the lighter of all fires would be obvious, and his claim to a payment in respect of the lighting of every one of them would be as sound as the claim of the lighter of street-lamps to his wages. If "Man and Superman" were not a play, but a hoot, which Mr. Shaw had invented in order to call attention to himself, and which any street boy could imitate with the same results, it would be idle for Mr. Shaw to claim a right to royalties from the street boys; but it would be idle only because it would not be possible to collect them. He is able to collect them on his play because, and only because, his play exists in a form which is susceptible of legal protection. If in justice he has a right to these, as he no doubt has, he would, if abstract justice were the sole determining factor, have an equal right to royalties on the use of his peculiar hoot. He fails to have any such right because, as a matter of fact, the principle of abstract justice with which we are here concerned—that every one has a right to everything that he himself produces—has, in common with all abstract moral principles whatsoever, no application to cases in which, from the nature of things, it is wholly impossible to enforce it.

And the same criticism is applicable to the other argument before us, which admits that a man who invents a productive machine, or who writes a remunerative play, is, so long as he lives, entitled, because he is the true producer of them, to certain profits arising from the use of either; but adds that his rights to such profits end with his own life, and lose all sanction in justice the moment they are transferred to an heir. In the heir's hands, it is urged, they entirely change their character, and, instead of enabling a man to secure what is honestly his own, become means by which he is enabled to steal what morally belongs to others.

Now, if it is seriously contended that nobody has a right to anything which at some time or other he has not personally produced, the interest on machinery, as soon as the inventor dies, not only ought not to belong to the inventor's heir, but it ought not to belong to anybody; for if this interest is not produced by the heir, it is certainly not produced by any of the heir's contemporaries. A contention like this is absurd; there must therefore be something amiss with the premises which lead up to it. Socialists who admit that an inventor during his lifetime has a right to the interest resulting from the use of his own inventions, endeavour to solve the difficulty by maintaining that after his death both invention and interest should pass into the hands of the state; but this doctrine, on whatever grounds it may be defended, cannot be defended as based on the principle now in question, that the sole valid title to possession is personal production. It must, if it is based on any abstract moral principle at all, be based on one of a much more general kind, according to which the ultimate standard of justice is not the deeds of the individual, but the general welfare of society.

Here it is true that the appeal is still to abstract justice, but it is not an appeal to abstract justice only. In order to condemn interest on any such ground as this, it is necessary to assume or prove that to make interest illegal, or to confiscate it by taxation when it arises, or by any other means to render its enjoyment impossible, will as a matter of fact have the result desired—namely, a permanent rise in the general level of prosperity. It is only by means of an assumption of this purely practical kind that the abstract moral principle can be applied to the case at all; and thus let us approach the problem from whatever side we will, we are brought from the region of theory down into that of practice, not, indeed, by an abrupt leap, but by a gradual and necessary transition. We are not abandoning our considerations of what, in abstract justice, ought to be; but we are compelled to interpret what ought to be by considerations of what, as the result of such and such arrangements, will be.

To sum up, then, the conclusions which we have reached thus far—if we confine our attention to those recipients of interest who have themselves produced the capital from which the interest is derived, and compare such incomes with those which renew themselves only as the result of continued effort, it is absolutely impossible, on any general theory of justice, to sanction the latter as earned, and condemn the former as unearned. If, on the other hand, we turn to those whose incomes consist of interest on capital produced by, and inherited from, their fathers, and if we argue that here at all events we come to a class of interest on which its living recipients can have no justifiable claim, since we start with admitting that it originates in the efforts of the dead, our argument, though plausible in its premises, is stultified by its logical consequence; since the same principle on which we are urged as a sacred duty to take the income in question away from its present possessors, would forbid our allowing it to pass into the possession of anybody else. In short, if continued daily labour, or else the exercise of invention, or some other form of ability, at some period of their lives by persons actually living, constitutes in justice the sole right to possession, the human race as a whole has no right to profit by any productive effort on the part of past generations; but each generation ought, so far as is practicable, to start afresh in the position of naked savages. The fact that nobody would maintain a fantastic proposition like this is sufficient to show that, on the tacit admission of everybody, it is impossible to attack interest by insisting on any abstract distinction between incomes that are earned and unearned, and treating the latter as felonious, while holding the former sacred. It is equally true, however, that on such grounds alone it is no less impossible to defend interest than to attack it; and here we arrive at what is the real truth of the matter—namely, that in cases like the present the principles of ideal justice do not, indeed, give us false guidance, but give us no guidance at all, unless we take them in connection with the concrete facts of society, and estimate social arrangements as being either right or wrong by reference to the practical consequences which do, or which would result from them.

The practical aspects of the question we will discuss in the following chapter.



CHAPTER XIV

THE SOCIALISTIC ATTACK ON INTEREST AND THE NATURE OF ITS SEVERAL ERRORS

If we reconsider what we have seen in the last chapter, we shall realise that the moral or theoretical attack on interest, as income which is unjustifiable because it has not been personally earned, is, when tested by the logic of those who make it, an attack, not on interest itself, but on bequest; and that such is the case will become even more evident when we see what the theory comes to, as translated into a practical programme.

The majority of those who attack interest to-day, no matter whether in other respects they are advocates of socialism or opponents of it, agree in declaring that what a man has personally produced he has a perfect right to enjoy and spend as he pleases. The only right they deny to him is the right to any further products which, before the capital has been spent by him, may result from the productive use of it. Now, the practical object with which this restriction is advocated is to render impossible, not accumulations of wealth (for these are recognised as legitimate when the reward of personal talent), but merely their perpetuation in the hands of others who are economically idle. So far, therefore, as this practical object is concerned, it would matter little whether the man by whom the accumulation was made were allowed to receive interest on it during his own lifetime or no, provided that this right to interest were not transmissible to his heir; or even whether he were allowed or were not allowed to leave anything to an heir at all. For the heir at best would merely receive a sum which, since it could not be used by him so as to bring about its own renewal, would be bound soon to exhaust itself; and the general effect of permitting bequests of this sterilised kind would differ from the effect of prohibiting bequests altogether, not because it would tend to render accumulated fortunes permanent, but only because it would protract for a decade or two the process of their inevitable dissipation.

We may, therefore, say that, for the purposes of the present discussion, the modern attack on interest, considered apart from any otherwise socialistic programme, practically translates itself into this—namely, the advocacy of a scheme which, as regards the actual producers of capital, leaves their existing rights both to principal and interest untouched, and would not even extinguish altogether their existing powers of bequest, but would limit the exercise of these to the principal sum only,[23] and prohibit the transmission to any private person of any right whatever to the usufruct of its productive employment.

Here, then, at last, we have something definite to discuss—a single proposed alteration in certain existing arrangements; and by comparing the situation which actually exists to-day with that which the proposed alteration, if carried into effect, would produce, we shall see whether the alteration is workable and practically defensible or no. Let us begin with the situation which actually exists to-day, confining ourselves to those features of it which are vital to the present issue.

Let us take two men of practically contrasted types, each of whom has inherited a capital of fifty thousand pounds. The ultimate object of each is, in one way or another, to make his capital provide him with the life that he most desires; but the first man is thoughtful, far-seeing, and shrewd, while the second cares for nothing but the gaiety and pleasure of the moment; and they deal with their capitals in accordance with their respective characters. The first meets, let us say, with the inventor of an agricultural machine, which will, if successfully manufactured, double the wheat crop of every acre to the cultivation of which it is applied. He places his capital, as a loan, in this inventor's hands. The machine is constructed, and used with the results desired; and the man who has lent the capital receives each year a proportion of the new loaves which are due to the machine's efficiency, and would not have existed otherwise. The second man invests his fortune in any kind of security which has the advantage of being turned easily into cash, and draws out month by month so many hundred pounds, without reference to anything but the pleasures he desires to purchase; and by the end of a few years both his capital and his income have disappeared.

Now, any one judging these men by the current standards of common-sense would, while praising the first as a model of moral prudence, condemn the second as a fool who had brought his ruin upon himself, and curtly dismiss him, if a bachelor, as being nobody's enemy but his own. But before we indorse either of these judgments as adequate, let us consider more minutely what in each case has been really done.

Let us start, then, with noting this. Whether a man invests his capital in any productive machine and then lives on the interest, or else spends it as income on his own personal pleasures, he is doing in one respect precisely the same thing. He is giving something to other men in order that they in return may make certain efforts for his benefit, of a kind which he himself prescribes. This is obviously true when, spending his capital as income, what he pays for is personal service, such as that of a butler or footman who polishes his silver plate. It is equally true when he pays for the plate itself. He is paying the silversmith so to exert his muscles that an ounce or a pound of silver may be wrought into a specific form. If he pays a toy-maker to make him a dancing-doll, he is virtually paying him to dance in his own person. He is paying him to go through a series of prescribed muscular movements. Similarly when he pays a large number of men to construct a productive machine instead of a doll or an ornament, he is paying for the muscular movements from which the machine results. Here we come back to one of the main economic truths to the elucidation of which our earlier chapters were devoted. It was there pointed out that the machinery of the modern world owes its existence to the fact that men of exceptional talent, by possessing the control of goods which a number of other men require, are able in return for the goods to make these other men exert themselves in a variety of minutely prescribed and elaborately co-ordinated ways. In short, all spending is, on the part of those who spend, a determination of the efforts of others in such ways as the spender pleases. Further, as was pointed out in an earlier chapter also, the only goods thus generally exchangeable for effort are those common necessaries of existence for which most men must always work, and which may here be represented by food, the first and the most important of them. Hence, whenever the question arises of how any given capital shall be treated—of whether it shall be invested or else spent as income—this capital must be regarded as existing in the indeterminate form of food, which is equally capable of being treated in one way or the other. And any man's capital represents for him, according to its amount, the power of feeding, and so determining the actions of a definite number of other men for some definite period. Since, therefore, the two capitalists whose conduct we have been taking as an illustration have been supposed by us to possess fifty thousand pounds apiece, we shall give precision to the situation if we say that each, at starting, has the power of feeding, and so determining the actions of, two hundred other men for a period of two years.

So much, then, being settled, let us consider these further facts. Both the capitalists, as we set out with observing, have in employing their capital the same ultimate object—namely, that of securing through the purchased efforts of others a continuous supply of things which will render their lives agreeable. And now in connection with this fact let us go back to another, which has also been pointed out before, that all efforts, the sole object of which is to please from moment to moment the man who directs and pays for them, are, whether embodied in the form of commodities or no, really reducible to some kind of personal service, if a toy-maker, in return for food, makes a dancing-doll for another man, he might just as well have pirouetted for so many hours himself; and if the purchaser would be more amused by a man's antics than by a puppet's, this is precisely what the toy-maker would have been set to do. In short, if we consider only the economic side of the matter, without reference to the moral, whenever a man spends anything on his own personal pleasure, he is virtually paying some other man, or a number of other men to dance for him.[24] What, therefore, both our capitalists desire as their ultimate object, is to keep as many men as they are able to provide with food always dancing for their pleasure, or in readiness to do so when wanted; but in setting themselves to achieve this object in their two different ways, what happens is as follows.

Both use their capital by dispensing it in the form of daily rations to two hundred other men, on condition that these men do something; but the first feeds the other men, not on condition that they dance for him, or do anything that ministers to his own immediate pleasure, but on condition that they construct a machine which will enable, as soon as it is finished, a given amount of human effort to double the amount of food which such effort would have produced otherwise. Thus, by the end of two years—the time which we suppose to be required for the machine's completion—though the original food-supply of the capitalist will all have been taken up and disappeared, its place will have been taken by a machine which will enable forever afterwards one-half of the two hundred men to produce food for the whole. A hundred men, therefore, are left for whom food can be permanently provided, without any effort to produce it being made by these men themselves; and since of this annual surplus a part—let us call it half—will be taken as interest on the machine by the man with whose capital it was constructed, he will now have the means of making fifty men dance for his pleasure in perpetuity; for as often as they have eaten up one supply of food, this, through the agency of the machine, will have been replaced by another.

Our second capitalist, meanwhile, who deals with his capital as income, starts with setting the dancers to dance for his behoof at once; and he keeps the whole two hundred dancing and doing nothing else, so long as he has food with which to feed them. This life is charming so long as it lasts, but in two years' time it abruptly comes to an end. The capitalist's cupboard is bare. He has no means of refilling it. The dancers will dance no more for him, for he cannot keep them alive; and the efforts for two years of two hundred men, as directed by a man who treats his capital as income, will now have resulted in nothing but the destruction of that capital itself, and a memory of muscular movements which, so far as the future is concerned, might just as well have been those of monkeys before the deluge.

Now, if we take the careers of our two capitalists as standing for the careers of two individuals only, and estimate them only as related to these men themselves, we might content ourselves with indorsing the judgment which conventional critics would pass on them, and say of the one that he had acted as his own best friend, and dismiss the other as nobody's enemy but his own. But we are, in our present inquiry, only concerned with individuals as illustrating kinds of conduct which are, or which might be, general; and the effects of their conduct, which we here desire to estimate, are its effects of it, not on themselves, but on society taken as a whole. If we look at the matter in this comprehensive way, we shall find that the facile judgments to which we have just alluded leave the deeper elements of our problem altogether untouched.

The difference between the ultimate results of the two ways of treating capital will, to the conventional critic, seem to have been sufficiently explained, by saying that the energy stored up in a given accumulation of food reappears when employed in one way, in the efficiency of a permanent machine; and is, when employed in the other, so far as human purposes are concerned, as completely lost as it would have been had it never existed. But if we reconsider a fact which was dwelt upon in our last chapter, we shall see that the difference is really much greater than this.

When the potential energy residing in so much food has been converted into the energy of so much human labour, and when this is so directed that a productive machine results from it, there is in the machine, as Dr. Crozier puts it, an indefinitely larger amount of "pure economic power," than that which has been expended in the work of the labourers' muscles. While the energy of the labourers has merely resulted in a bottle, or a cage, we may say, of sufficient strength, the genius of the man who directed them has captured and imprisoned an elemental slave in it, who, so long as the cage confines him, will supplement the efforts of human muscle with his own. But when the energy latent in food is converted into such efforts as dancing, the result produced is the equivalent of the human effort only. Thus in the modern world of scientific enterprise and invention, to invest capital in machinery and then live on the interest from it, means to press into the service of mankind an indefinite number of non-human auxiliaries, and year by year to live on a part of the products which these deathless captives are never tired of producing.

To spend capital as income on securing immediate pleasures means either to forgo the chance of adding any new auxiliaries to those that we possess already, or else to let those who are at our service already, one after one, escape us—or, in other words, to make the productive force now at the disposal of any prosperous modern country decline towards that zero of efficiency from which industrial progress starts, and which marks off helpless savagery from the first beginnings of civilisation.

It is no doubt inconceivable, in the case of any modern nation, that a climax of the kind just indicated could never reach its completion. If all the capitalists, for example, of Great Britain or America, were suddenly determined to live on their capital itself, they could do so only by continuing for a considerable time to employ a great deal of it precisely as it is employed at present. Indeed, so long as they continued to demand the luxuries which machines produce, it might seem that it was hardly possible for them to get rid of their capital at all. But what would really happen may be briefly explained thus:—

If we take the case of any modern country, the amount of its income at any given time depends for its sustentation on machines already in existence; and its increase is dependent on the gradual supersession of these by new ones yet more efficient. But the efficiency of the former would soon begin to decrease, and would ultimately disappear altogether, unless they were constantly repaired and their lost substance was renewed; while the latter would never exist unless there were men to make them. Hence, under modern conditions, in any prosperous and progressive country, a large portion of what is called the manufacturing class is always engaged, not in producing articles of consumption, comfort, or luxury, but in repairing and renewing the machines by which such articles are at present multiplied, or else in constructing new machines which shall supplement or replace the old. Thus, in Great Britain, towards the close of the nineteenth century, these makers and repairers of machinery were, with the exception of coal-miners, the industrial body whose proportional increase was greatest. In the modern world the spending of capital as income is a process which, in proportion as it became general, would accomplish itself by affecting the position of men like these. It would consist of a withdrawal of men who are at present occupied in maintaining existing machines, or else in constructing new ones from their anvils, hammers, files, lathes, and furnaces, and making them dance instead. This withdrawal would, in proportion as it became general, render the construction of new machines impossible, and would leave the efficiency of those now in use to exhaust itself.

That such is the case is illustrated on a small scale by the conduct of individuals who live on their capital now. If a farmer, whose capital consists largely of an agricultural plant, desires to spend more than his proceeds of his farm are worth, he virtually takes the men who have been mending his barns and reapers, and sets them to build a buggy which will take him to the neighbouring races. The varnish on the buggy is bought with the rust on the reaper's blades; the smart, weather-proof apron with the barn's unmended roof. If the managing body of a railroad pays a higher dividend to the shareholders than can be got out of its net earnings, the results are presently seen in cars that are growing dirty, in engines that break down, in rotten sleepers, and in trains that run off the track. The men who were once fed out of a certain portion of the traffic receipts to keep these things in repair, are now fed to dance for the shareholders, thus supplying them with spurious dividends. A farm or a railroad which was managed on these principles would ultimately cease to produce or to do anything for anybody; and if all modern capital were managed in a similar way, all the multiplied luxuries distinctive of modern civilisation would, one by one, disappear like crops which were left to rot for lack of machines to reap them with, and train services which had ceased because the engines were all burned out.

That such a climax should ever, in any modern country, complete itself cannot, let me say once more, be apprehended as a practical possibility; but it is practically impossible only because the earlier stages of the approach to it would lead to a situation that was intolerable long before it ceased to be irreparable. And here we reach the point to which the foregoing examination has been leading us. It is precisely this course of conduct, the end of which would be general ruin, that any attack on interest, by means of special taxation or otherwise, would, so long as it lasted, stimulate and render inevitable. Let me point out—though it ought in a general way to be self-evident—precisely how this is.

We start with assuming—for, as we have seen already, so much is conceded by those who attack interest to-day—that the owners of capital, however their rights may be restricted, still have rights to it of some kind. But a man's rights to his capital will not be rights at all unless they empower him to use it in one way or another as a means of ministering to his own personal desires; and it is possible for him so to use it in one or other of two ways only—either by keeping it in the form of some productive machine or plant, and living on a part of the values which this produces, or by trenching on the substance of the machine or the plant itself in the manner, and with the results, which have just been explained and analysed. If, therefore, capitalists are to be virtually deprived of their interest, either by means of a special tax on "unearned incomes" or otherwise, but are yet permitted to enjoy their capital somehow, no course is open to them but to employ for their private pleasures the men by whom this capital, in such forms as machines or railroads, is at present maintained, renewed, and kept from lapsing into a state in which it would be unable to do or to produce anything. And if any one still thinks that, by such a course of conduct, if ever it became general, as it would do under these conditions, the owners of capital would be injuring themselves alone, he need only reflect a little longer on one of our suggested illustrations, and ask himself whether the gradual deterioration of railroads would have no effect on the world beyond that of impoverishing the shareholders. It would obviously affect the many as much as it affected the few, and the kind of catastrophe that would result from the deterioration of railroads is typical of that which would result from the deterioration of capital generally.

It would, then, be a sufficient answer to those who attack interest, and propose to transfer it from its present recipients to the state, to elucidate, as has here been done, the two following points: firstly, that to interest as a means of enjoying wealth—the right to such enjoyment itself not being here disputed—the only alternative is a system which would thus prove fatal to everybody; and, further, that, conversely, the enjoyment of wealth through interest not only possesses this negative advantage, but is actively implicated in, and is the natural corollary of, that progressive accumulation of force in the form of productive machinery to which all the augmented wealth of the modern world is due. By the identification of the enjoyment of capital with the enjoyment of some portion of the products of it, the good of the individual capitalist is identified with the good of the community; for it will, in that case, be the object of all capitalists to raise the productivity of all capital to a maximum; while a system which would compel the possessor, if he is to enjoy his capital at all, to do so by diminishing its substance and allowing its powers to dwindle, would identify the only advantage he could possibly get for himself with the impoverishment of everybody else, and ultimately of himself also.