Social wealth: the sole factors and exact ratios in its acquirement and apportionment

Preface

The purpose for which these pages are offered to the public is simply to direct inquiry to questions intimately related to all human life and employment, so that no useful member of society need remain indifferent to them. We are living under a system of capitalistic aggrandizement, or commercial monarchism, which has no parallel in the history of the race. Our teachers in Economics do not disavow, if they do not expressly put forth, the claim that this impoverishment of the many to enrich the few is in accordance with the orderly evolution of society, and in harmony with the natural laws of trade.

Our political savants offer us nothing but what is most delusive and contradictory, while servilely bowing to the demands of a dominant plutocracy. On the other hand, we have importations of the thought of European Radicals, Communists, Nihilists, with suggestions of revolution, and of measures of reform ranging from Anarchism on the one hand, to the entire control of all social industry by the state on the other.

In this conflict of thought and nescience, it has seemed to me there must be some Natural Relation between the worker and the soil from which all must subsist ; that there is a principle of law which will vi PREFACE.

give an equitable share of the products of industry to each who shares the labor, and a just principle of agreement and consent in regard to such production and division.

I am persuaded there is also a development of these laws subject to "arrest," to "retardation and acceleration," and that to discover and record their growth, is the only true province of the Legislator, not the manufacture of statutory enactments. My aim has been to direct the attention of all, rich or poor, learned or unlearned, to this line of thought. If in any degree I have succeeded, my labor will not have been in vain.

There are doubtless great social wrongs to be righted, great injustices to be corrected ; but when with reasoning minds we read the great lessons of history, we discover that Science, or exact and systemized knowledge, has been the great means of progress in every field and in every age, and are assured that through intelligent industry Nature has provided for the satisfaction of all rational human wants. Industrial Freedom, and that only, can change the conditions which afflict the toiling poor, or give to justly acquired competence its required security and conservation.

CHAPTEE I.

INTBODUCTOEY.

No systematic attempt has ever been made to reduce to a science the phenomena which are presented in social industry and the allotment of social wealth, which embodies the normal relations of the active agent, man, to nature and to the opportunities and potencies which the earth yields to his control. Only fragmentary parts of any history of industry are known to us, and nothing but the general features of its early development can now be ascertained. Society itself is but an outgrowth of an industry which has really determined the character of social progress from stage to stage. The subjection of labor has meant, in every period, the debasement and destruction of the people. Through outrage and fraud industrial growth has been checked, and its power to elevate mankind thwarted and destroyed. The grossest ignorance and narrowest private selfseeking have alone sought to escape work and its duties, and the most brutal ambition was required to degrade and enslave it.

Busied with the records of glorified conquest, the pomp of kings, and the displays of martial triumphs, the general historian has had but little to say of that industrial life of the people which has sustained while it has had to suffer all the calamities of war. From the glimpses he has afforded us, however, we see clearly the subjected and enslaved condition which it has ever occupied ; a condition attempted to be justified by the casuistry of each apologist for tyranny, and even by political economists — that men will not work unless compelled to (by the lash or fear of starvation) ; thus making the unworthy desire for the product of another's labor the excuse for enslaving him, and the degradation resulting therefrom the justification for its own perpetuation. Through every form of barbarism, feudalism, and civilism, industry has been mostly enslaved — much of the time in a gross material form ; always through force, fraud, and fictions of law and positive classlegislation. The savage, who at the same time sought excitement and sustenance in the chase, with feeble mentality left those inclined to work at liberty to perfect some product, since, whenever through lust or envy he desired, he could capture and appropriate it by taking the life of the producer. Under barbarism, compulsory servitude became well-nigh universal, and remains now, as ever, the distinguishing trait of that stage of development. Here industry begins to assume some form of organization, and is directed with some order and system. Functions and powers were absorbed, and dominion assumed by the strong and cunning, and various castes were established to perpetuate the independence of a few and the subjugation of the industrious many. Under civilism, industry, as it became freed from the peculiar institution of slavery, evinces a greater tendency to organization, and under a system of bets or bribes, commonly called wages, effects "division of labor," and a power of production unknown to the earlier forms. But without any intelligent or equitable system of division of products, its results are scarcely, if at all, more beneficent, often resulting in what political economists call over-production, as well as in the production of things which are non- wealth, or destructive to social well-being. The earlier and barbaric forms of slavery extend to our own time, and up to a quite recent date have existed in the most advanced nations. Slavery, the slave trade, and privateering, or warfare for plunder, were known as late as our fathers' time, and were the foundation of most of the large fortunes which are more than a half-century old.

Civilism, thus far, has hardly done more than to refine and render more subtle the subjection of labor to lordly will. From conquests with bludgeons, swords and spears, as in the earlier ages, it has inaugurated a war of cunning and fraud, whose weapons are technical terms, shrewd devices, class legislation, and forms of law recognizing no rights as supreme but those of property and " the law of the market." But an era of science has at length dawned, and industry stands revealed, though not yet popularly acknowledged, as the prime agent of all growth, and of every element in social refinement and progress. And in the absence of any system of economics which even recognizes the relations between human work and the complementary material agents, there arises a demand for an analysis of the elements of industry, which science shows to be the basis of all social economy and ethics. Careful investigation into all the motives to human action, the relation of man to the earth, the principle of conservation, by which accumulation is determined, as well as division, must have a place. There is required in this scientific age a systematic and thorough adjustment of the subject of industrial evolution. "We have social, political, and ethical systems as perfect as they can be, while our disintegrated and wholly empirical system of industry remains. We have no comprehensive, nor indeed comprehensible, explanation of the industrial phenomena by which the conscientious man can even guess when he has done his duty, or the moralist determine the simplest question thereunder. As little can the politician or civilian, however inclined, honestly decide whether certain measures will result in more good than evil, more happiness than misery, to mankind ; for the simple reason that religion, morality, and civilization are not the sources of human progress, but are the blossoms and fruitage of the social growth itself, which has its root in human industry.*

The industrial problem is therefore the fundamental one. That the wealth of society is most unequally distributed is a fact so patent and universally admitted that it is only necessary to call attention to it. That the work which creates it is rewarded in no just proportion, but rather by an inverse ratio to its importance and utility, as well as to its severity and repulsiveness, is equally undenied and undeni-

* " Where industry is wanting, there can neither he honesty toward men nor true worship of the Infinite Worker." — J. H. Hunt.

able. The most arduous labor under our mixed economics * is usually the poorest paid, while often the light and trivial, and even the hurtful, is frequently rewarded with a fabulous income, t

The only qualification ever associated with the universal admission of these statements is, that all have equal opportunity, and that since some work up from poverty to wealth, and take the great prizes in the business lottery or race, all can do so, and if any fail, it is their own fault ! Economists do not attempt to deny the inequalities of present division. They merely explain in a superficial way how the inequality comes about, without reference to the fundamental cause, or even suggesting any change in the system which produces it, unless it be to apply a little more of the same thing — special legislation and class rule.

But even the science of economics starts upon the

* While claiming to be "an exact physical science," it treats "values" indiscriminately, whether increased or diminished by supply and demand, or by the interference of unreasoning executive or legislative will; by scarcity of a season, or the cornering of a market, or by any speculative conspiracy; by the natural laws of trade, or by the subjecting to the rule of the market "by act of parliament" and "force of arms," tilings foreign to its sway; and whether relating to the commodities which may be increased indefinitely, or to the buyer and seller, the men themselves, or to the land, of which no increased supply is possible.

f " It is inequality in the wages of those who do the work of the world which calls for the attention both of students and statesmen, and inequality in what the wages will buy."— Edward Atkinson.

By the latter he means that the man who gets the lowest wages pays the highest, the retail price, for what he buys. Attention is called for, also, to the disproportionate wages of those who do none of "the work of the world."

ground that the real laws of trade tend constantly to equilibrium, or to a mean ratio, i. e., to the elimination of profit and the exchanging of commodities at cost of production. " Free competition," it is claimed, can alone secure, and will constantly tend to secure, equitable exchanges. "Why, then, should indispensable labor more and more be compelled to exchange itself for what itself has created, at a greater and greater disadvantage ? This is a question it makes no effort to explain, and, so far as the prominent writers are concerned, seems to be deemed unworthy of attention. Of course no process of exchanging equivalents could have produced the disparities we notice. No fair trade could have placed the values which each of two parties contributed wholly in the hands of one. No answer is furnished by the current commonplace, that it is accounted for by the superior industry and frugality of the one, and the idleness, extravagance, and dissipation of the other, for the successful are not more industrious, as a class, than the unfortunate poor, and by far are more given to extravagance and dissipation. But there is no equality of opportunity under existing laws and customs. In the race for wealth, which the economist seems as unable to define as to guide, the toiler is most heavily handicapped in the very start. It is quite true that one in a thousand or so, who has unusual strength or cunning, distances his competitors and gets to take place with those more favored ; the disadvantages lessening as he works to the front. But why should the weak be handicapped, while the strong carry no extra weight, but are helped on? The only reply vouchsafed is that "it has always been so, and always will be." That men are found willing to do the most repulsive work, and even that which is deleterious to health and tends greatly to shorten human life, for wages less than that which is paid a superfluous clerk for services of trifling utility, proves that free competition has little or nothing to do with the adjustment of labor to place in the working world, and that forced competitorship is only fully realized at the very bottom of the industrial scale.

It is overlooked that a large proportion of the exchanges which take place in the world are in nowise affected by the rule of the market, that each one shall get the most he can for what he parts with, while giving the least possible for what he requires. Indeed but a small proportion of the transfers in social life are subject to competitive offers at all ; and besides, in those transfers which are so subject, one party must yield to the other in each transaction all the profit which is realized by the other ; otherwise the exchange would be reciprocal, no matter what the nominal profit, and the benefit being mutual, no inequality could result. All services in the family, amounting to quite one-half of all labor, are noncompetitive. In retail trade most prices will be found customary rather than competitive, and whenever combination exists among dealers for reserved prices, competition ceases to operate altogether.

Prof. Henry Dunning Macleod has written a book — "Elements of Economics" — mainly to prove that value is wholly caused by " demand and supply," and that labor is "but one of the accidents of value and of wealth." From the standpoint of the trader this is very true, but from no other. It is by no means my intention to enter upon a fruitless discussion here of the origin of value, or of its true definitions, for the word has a score or more.* He suggests that a man might find a diamond worth a million dollars some lucky day, with very little labor ; though he must have known that the amount of labor, or product of labor, which some one is willing to give for it after it is found is what* alone makes it valuable ; and that if responsible parties would undertake to produce diamonds of equal intrinsic merit for the price of a day's labor, this diamond would bring no more. It is not the day's labor of the lucky finder which determines the price of this particular gem, but the unsuccessful thousands of days' search which are required before another like it can be found. To show that irregularity of demand and supply are the immediate and inciting cause of the fluctuation in prices proves little, since the supply which furnishes the market, and the means which alone make the demand effective, are both supplied by labor ; and a certain ratio would exist between

* Value, as defined by economists, is the ratio between two or more exchangeable commodities, and is generally limited to cost of production, or vibrates to either side by fluctuation of market. The specific value of a particular thing at a particular time and place is approximately the cost of reproducing or replacing it in the market, rather than the actual cost of that identical article, which might have been exceptionally great or small. I pointed out to Mr. Josiah Warren, nearly forty years ago, that profits, rent, and interest entered into "cost of production," and that while they have a warranty for being in our laws and customs, the enunciation of his formula " cost the limit of price," could have no practical effect except to direct attention to these strongly intrenched wrongs.

INTEODUCTOKY. 15

the two things exchanged corresponding to the amount of labor required to reproduce them if sold at a customary price to which there was no fluctuation. So that if " supply and demand " are the " sole cause of value," labor is the sole source both of the supply and of the means which makes the demand effective, or even possible.

The triumph which Macleod claims over Adam Smith is not over his apothegm that "labor was the original price paid for all things," but over Smith's omission to show how it occurred, if his premises were true, that all social wealth came into the possession of those who do no labor. It is easy to see how this became so under a system of chattel slavery, because the laborers were owned by the capitalists,' and all that was' produced over and above the cost of the slaves' maintenance went to the slavelord by the custom and statutes of the times. Labor, which in this respect scarcely differed from the services of horses and oxen, in its economic aspect, was still the essential thing in all production and in all exchanges Mr. Macleod is careful to point out that production "means placing any commodity in the market" at the time and place where the demand exists.

The spirit of trade, or "law of the market," does not look further than this, and even contests the right of the true owner to reclaim goods when they have been once sold in open market by parties who had no title to them. But nothing can be more certain than that commodities cannot be produced in market unless they have been transported and stored by labor, nor unless such other labor has been applied to them as will render them desirable and fitted for consumption. While fully admitting that under our system of land-tenure and of commercial custom the distinctions he makes are logical if not profound, it is difficult to see the sequence of his deductions, or how they in any way affect the general proposition that " work is the parent of wealth ;" for although " incorporeal wealth," the " debts created by bankers with which to buy money and other debts," and the formation of knowledge, which he deems " the creation of wealth out of nothing," may be exchangeable and have price, it is only because that in the last analysis they can command labor, as a title to a slave, or of a superior cunning which can obtain labor without reward, carries with it the price of so much labor as it commands. He has elaborated his thought that wealth is constituted of a great number of things which have no connection with labor, " and that no change of labor or cost of production has any influence on value, unless they produce a change in the relation of supply and demand." The italics are mine. Now, since this is precisely what labor always does ; that " intensity of demand," when effective, is wholly due to over-production of the thing or things offered in purchase of commodities ; and since the limitation of supply is caused by the Mftcfer-production of that which is desired, he has established his " compound ratio," but which, however important to a technical understanding of the fluctuations of prices, has no bearing whatever upon the more fundamental question as to the natural sequence of work and wealth.

This author is equally exact and equally superficial in his statement that " wealth consists exclusively of exchangeable rights ;" drawing no distinction between natural rights and legal rights, nor between individual and social wealth. He says, " Property is not a thing, but a right ; it includes all kinds of rights which can be exercised over anything, and is equivalent to absolute ownership." It is hence legitimate to infer that he recognizes no rights but those of property ; and since he says, in the same connection (see book ii., §61) that " jurisprudence is the science of rights," we are justified in concluding that neither in economics nor jurisprudence is there any place for the rights of man, or equities other than those connected with the control of property. Now, his main assumptions throughout can have no logical basis except upon the theory that all legislation and all governmental interference, as well as all customs, in whatever country, clime, or period, are scientific exponents of rights.

The former slave-holding oligarchy asserted that " that was property or rights which the law made so." But that these "elements of economics" work with the same facility with chattel slavery, and under every form of despotism, shows its value (not market) as a factor in political and social science. But we must not forget that this " science of dicker," as an able exponent once denominated it in my hearing, is only applicable to the "trade" side of commerce — ■ that which is effected by competitive processes. As we have already seen, however, only a certain portion of exchanges are effected by that. For where combination exists, as in the family or community, or among trade guilds, syndicates, or corporations, it does not operate. The highest salaried offices are often awarded as favors, and among most institutions sinecures are abundant. Opportunity and place are accorded out of friendship, family relation, personal influence, etc., so that competition is the exception rather than the rule in nearly all human affairs, except in the employment of the most dependent and depressed labor, and in the practice of rack-rent. Even in trade a friend will give a friend the advantage over a stranger, and a dealer in stocks, or a gambler in securities or produce, will often give a personal favorite " points " that will enable him to evade the law of the market. There are " deadheads " in every train, in every conveyance, or place of social gathering. Its operation, even where most complete, among unskilled laborers, is by no means universal, and by no honest employment of language can be colled free competition, as applied to them, since in selling his labor, the laborer, as we shall see hereafter, is compelled to sell that which, on its passive side, is in the possession already of the party or class to whom he sells.

As explained by Macleod, and even by Adam Smith, Eicardo, Mill, etc., economics embraces but a section or branch of social economy. It is as if a naturalist should treat of a tree, but make a thorough study of but a single branch or limb. This would give us a very good idea of the branch, but would not necessarily give us any knowledge of the character of the trunk, or of the root, or of their relation to the soil, from whose resources the branches had been grown and sustained through the root and trunk. It would be difficult to proceed without some reference to these, however, and so the economists of the earlier school admit, in a general way, that labor produces all wealth, but omit to follow the thought to its legitimate conclusion, and suggest a number of ways in which values arise and wealth accumulates, in which labor is but an unimportant factor, if indeed a factor at all.

It is upon the law of supply and demand that the whole science is now pivoted. This law, doubtless, would operate as contended, provided the conditions existed and were all which existed or effected exchange of services, commodities, or wealth. But the truth is that directly opposite conditions always exist, and that the assumed conditions could not possibly exist, except under circumstances which, it may be said, never or very rarely occur. As Mr. Thornton has elaborately shown, in his work on "Labor," the only circumstance under which supply and demand could have the claimed operation would be where all merchantable commodities were offered daily for what they would bring at public vendue, and where there was no* reserve price. He has shown, moreover, that the great proportion of nearly every form of wealth is always held in reserve, only the most perishable products being freely offered, and they are very often thrown into the river to remove a glut, but that labor itself is sold under wholly different conditions ; that for the laborer the law of supply and demand has a significance which it has and can have for no other dealer, inasmuch as while the ordinary dealer who may not be able to sell his stock to-day will be able to sell it to-morrow, often for more than he would have been willing to sell it for to-day, the laborer must sell his labor to-day, or it is wholly lost.*

From a different premise, but by a similar course of reasoning, Karl Marx arrived at a similar conclusion. He showed that, lacking opportunity, land, or

* Not only does this assumed law of supply and demand utterly fail in its salutary effect upon labor denied the Use of the land while exerting to the full the baneful effects of a forced competition in its operation, but upon land treated as property or capital it has an opposite effect. Increased demand not only, as with commodities, begets a temporary rise of price, but a continuous rise. Demand does not, as with commodities, beget an increased, or any supply whatever. Thus, while prices of commodities fluctuate and recede as much or more than they have appreciated, through a brisk demand which stimulates production, the price of land goes constantly upward with increased demand, no production being possible or conceivable, except in regard to lands transferred from a general to a specific use.

Of all commodities which can be held at a reserve price, land is the chief. It may be said it is always held so, the exceptions are so few. The reason is obvious. The land yields natural productions, and while labor is excluded from possession, it will gladly purchase the privilege oi gathering these products, or of applying itself to the cultivation of more desirable products. The land is a more safe investment, and may be held "for a rise" with. less risk than any commodity. It does not, like other commodities, deteriorate in quality or shrink in quantity. As a general thing, land is held everywhere for a rise. Where too much is attempted to be carried, it is true, parties may have to unload, and when mortgages are being foreclosed, or in business crises, there may be a break in value, but it will only last while the lands are passing into hands able to carry them. There is a considerable class of persons who often buy but never sell real estate. In every city, town, and village they are found, and indeed in all the country as well. Political economists insist on treating both land and labor as both capital and as commodities, yet the one, as we have seen, h mainly beyond the law of supply and demand, and the other is subject not to a free but a forced competition. Could a more valueless science be invoked to solve any industrial problem?

capital to exert his force upon, the laborer could not compete, because his labor could not be freely applied, and that the competition to which he is subjected with others situated unfavorably as himself is not a free but & forced competition.

This is also quite true, but the exact position is this : Labor, although the active factor in production, without land and opportunity, is abstract only, and as such can neither be bought nor sold. In working for an employer, it is not the labor which the worker sells, but the thing in which the labor has become concreted by its application to the land or to something grown or taken from the land. Bastiat is right in saying " services only are exchanged." In the abstract this is true, but the services which have no tangible or visible vehicle fail of any material appreciation. And, however nearly abstract any service may be, place and opportunity, and the presence of a party needing and willing to pay for such service, are necessary factors in the exchange.

Now, private property in land, not required by the owner for his use excludes labor from place and opportunity. There is no aim or logic for its existence, indeed, but to effect this very purpose. Its commercial value depends tvholly on its poiver to prevent work. It could not otherwise create a forced competition between laborers. Certainly supply and demand can have no legitimate operation between two parties, one of which has full dominion over the land and the opportunity which both must improve. The one has his labor in such relation to external nature as that it can readily be wrapped up in everything desired ; the other has no place to bestow it, and it must lie sterile. His labor, until applied, has no purchasing power. It is as impossible for these two to compete as to exchange, for the thing to be acted upon and turned into a commodity is in the hands of the owner of the land and the opportunity, not of the worker.

But suppose the landless man should hire or buy land of a third party and pay rent or interest to the amount say of one-half of what he could produce, how then could he compete with the other, who has no rent or interest to pay ? It will doubtless be answered that this rent or interest is what the owner of the land or money would obtain if he did no work at all, but merely let to others, and that consequently, as to the work he actually does, he stands on an equal ground with the other. This is, logically, much the same as the basis of Bicardo's theory of rent. How inadequate it is to the solution of any problem of industrial production seems not to have troubled the minds of any of the economists.