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diff --git a/old/66518-0.txt b/old/66518-0.txt deleted file mode 100644 index fcb6263..0000000 --- a/old/66518-0.txt +++ /dev/null @@ -1,8715 +0,0 @@ -The Project Gutenberg eBook of Labour and the Popular Welfare, by W. H. -Mallock - -This eBook is for the use of anyone anywhere in the United States and -most other parts of the world at no cost and with almost no restrictions -whatsoever. You may copy it, give it away or re-use it under the terms -of the Project Gutenberg License included with this eBook or online at -www.gutenberg.org. If you are not located in the United States, you -will have to check the laws of the country where you are located before -using this eBook. - -Title: Labour and the Popular Welfare - -Author: W. H. Mallock - -Release Date: October 11, 2021 [eBook #66518] - -Language: English - -Character set encoding: UTF-8 - -Produced by: Chris Curnow, Quentin Campbell, and the Online Distributed - Proofreading Team at https://www.pgdp.net (This file was - produced from images generously made available by The Internet - Archive) - -*** START OF THE PROJECT GUTENBERG EBOOK LABOUR AND THE POPULAR WELFARE *** - - - Transcriber’s Note - -In the following transcription, italic text is denoted by _underscores_. -Small capitals in the original text have been transcribed as ALL -CAPITALS. - -Numbered markers (◆¹, ◆², etc.) have been added to this transcription -to indicate the line in a paragraph at which the text of the -corresponding marginal note (sidenote) started. - -The corresponding marginal notes are numbered ◆1, ◆2, etc. They are -enclosed in square brackets and prefixed with the word ‘Sidenote’. They -are placed immediately above the paragraph to which they were attached -in the book. - -See end of this document for details of corrections and other changes. - - - ————————————— Start of Book ————————————— - - - - - LABOUR - - AND THE - - POPULAR WELFARE - - - BY - - W. H. MALLOCK - - AUTHOR OF ‘IS LIFE WORTH LIVING?’ ‘SOCIAL EQUALITY,’ ETC. - - - SIXTH THOUSAND - - - LONDON - ADAM AND CHARLES BLACK - 1895 - - - - - PREFACE TO NEW EDITION - - -In republishing this work at a low price, I wish to reiterate -emphatically what is said of it in the opening chapter,—namely, that -any clearheaded Radical, as distinct from the New Unionist, the -Socialistic dreamer, and the Agitator, will find nothing in it to jar -against his sympathies, or to conflict with his opinions, any more than -the most strenuous Conservative will. If the word “party” is used in -its usual sense, this is a volume absolutely free from any party bias. - -It has, however, since its first publication, some nine months ago, -been attacked continually, not by Socialistic writers only (whose -attack was natural), but by Radicals also, who, apparently quite -mistaking the drift of it, have done their best to detect in it flaws, -fallacies, and inaccuracies. As any work like the present, whose aim is -essentially practical, is worse than useless unless the reader is able -to feel confidence in it, let me say a few words as to the degree of -confidence which is claimed, after nine months of criticism, for the -facts and arguments set forth in the following pages. - -Let the reader emphasise in his mind the division between facts and -arguments, for they stand on a different footing. In estimating the -truth of any general arguments, the final appeal is to the common -sense of the reader. The reader is himself the judge of them; and the -moment he understands and assents to them, they belong to himself as -much as they ever did to the writer. On the other hand, the historical -facts, or statistics, by which arguments are illustrated, or on which -they are based, claim acceptance on the authority, not of our internal -common sense, but of external evidence. Let me speak separately, then, -of the arguments of this book, and of the facts quoted in it. - -Of the arguments, whether taken individually or as a whole, it will be -enough here to say that no hostile critic of these has been able in any -way to meet them. The only writers who have affected to do so have, -either intentionally or unintentionally, entirely failed to understand -them; and when they have seemed to be refuting anything, they have -been refuting only their own misconceptions or misrepresentations. It -is impossible in a short preface to say more than this; but in order -to illustrate the truth of the foregoing statement, a paper published -by me in the _Fortnightly Review_ is (by kind permission of Messrs. -Chapman and Hall) reprinted as an Appendix to the present volume. That -paper consists of an examination of the criticisms made, on behalf -of the Fabian Society, by Mr. Bernard Shaw on two previous papers of -my own published (also in the _Fortnightly Review_) under the title -of “Fabian Economics,” in which the main arguments of this book were -condensed. It is true that many of these arguments are here stated -merely in outline, and in a popular rather than in a philosophical -form, as is explained more fully in the Preface to the First Edition. -But it may be safely asserted that there is hardly a single Socialistic -argument used by the Socialistic party in this country to which this -present book does not contain a reply, or at all events a clear -indication of the grounds on which a reply is to be founded. - -With regard to the historical facts, and especially the statistics -here brought forward, it is necessary to speak more particularly. The -broad historical facts—facts connected with the development of wealth -in this country—are incapable of contradiction, and have never been -contradicted. Hostile critics have directed their principal attacks -against the statistics, endeavouring to show that certain of the -figures were inaccurate, and arguing that, this being so, the whole -contents of the book were unreliable. - -The most minute attack of this kind which has been brought to my notice -dealt with certain figures which were no doubt erroneous, and indeed -unmeaning; but had the critic examined the volume with more care, he -would have seen that every one of these figures was a misprint, and was -corrected in a list of errata which accompanied the first edition. - -Other critics have confined themselves almost entirely to the figures -given by me with regard to two questions—the landed rental of this -country, as distinct from the rent of houses; and the growth of the -national income during the past hundred years. - -With regard to both of these questions it should be distinctly -understood that absolute accuracy is impossible; and I have given the -statistics in round numbers only. But, for the purpose for which the -figures are quoted, approximate accuracy is as useful as absolute -accuracy, even were the latter attainable; and every attempt to correct -the figures as given in this volume has only served to show how -substantially accurate these figures are, and how totally unaffected -would be the argument, even were any of the suggested corrections -accepted. - -The landed rental of the country is given by me as something under -_a hundred million pounds_. It has been asserted that were the -ground-rents in towns properly estimated, the true rental would be -found to be _a hundred and fifty million pounds_ or _a hundred and -eighty million pounds_. It is no doubt difficult to differentiate in -town properties the total rental from the ground rental; but the most -recent investigations made into this question, so far as it affects -London, will throw light on the question as a whole. The highest -estimate of the present ground-rental of London as related to the total -rental gives the proportion of the former to the latter as _fifteen_ -to _forty_. Now house rent in London is higher than in any other town -in the kingdom; therefore, if we assume the same proportion to obtain -in all other towns, we shall be over-estimating the ground-rent of the -country as a whole, instead of underestimating it. If we take this -extreme calculation—which is obviously too great—it will be found to -yield a result as to the total landed rental exceeding only by ten per -cent that given in this volume. It will therefore be easily seen that -the figures given by me are substantially accurate, and sufficiently -accurate for all purposes of political and social argument. - -Precisely the same thing is to be said with regard to the figures given -as to the growth of the national income and the capitalised value of -the country. The estimates of various statisticians will be found to -differ from one another by something like ten per cent; but these -differences do not in the least affect the essential character and -meaning of the great facts in question. Let us take, for instance, two -facts stated in this volume—that the capital of the country during the -past century has increased in the proportion of _two_ to _ten_; and -the income per head of the country in the proportion of _fourteen_ to -_thirty-four_ or _thirty-five_. We will suppose some critic to prove -that these proportions should be _three_ to _eleven_, or _twelve_ to -_thirty-three_. Now, large as the error thus detected might be from -some points of view, it would be absolutely immaterial to the large -and general question in connection with which the figures are quoted in -this volume. - -The enormous increase in our national income and our national capital -is doubted or denied by no one. Now let us express the increase in -income as a supposed increase in the average height of the rooms -inhabited by the population. According, then, to the figures given by -me, we might say in this case that at the beginning of the century the -average house was _seven feet_ high—only high enough for tall men to -stand up in; and that now houses have been so improved that the average -height of a living-room is _seventeen feet_. If any one, dwelling on -the fact of such a change as this, were inquiring into its causes, and -were basing arguments on its assumed reality, what difference would it -make if some opponent were to prove triumphantly that the height of -the average room now was not _seventeen feet_, but _sixteen feet six -inches_, and that four generations ago it had been _six feet_ instead -of _seven_? The difference in the estimates of our national income -during the past ninety or a hundred years are not more important for -the purpose of any general argument than the difference just supposed -with regard to the height of two living-rooms; and readers may rest -assured that the round numbers given by me with regard to the growth of -the national income and the national capital are so near the admitted -and indisputable truth of things, that no possible correction of them -would substantially alter any one of the arguments which they are here -quoted to illustrate. - - _September 1894._ - - - - - PREFACE TO FIRST EDITION - - -Nearly all the general truths of Economic Science are, directly or -indirectly, truths about the character or the actions of human beings. -It is, consequently, always well to warn the readers of economic -works, that in Political Economy, more than in any other science, -every general rule is fringed with exceptions and modifications; and -that instances are never far to seek which seem to prove the reverse -of what the general rule states, or to make the statement of it appear -inaccurate. But such general rules need be none the less true for this; -nor for practical purposes any the less safe to reason from. They -resemble, in fact, these general truths with regard to the seasons, -which we do and must reason from, even in so uncertain a climate as our -own. It is, for instance, a truth from which we all reason, that summer -is dryer and warmer than winter; and yet there is a frequent occurrence -of individual days, which, taken by themselves, contradict it. So, too, -those economic definitions, the subjects of which are human actions or -faculties, can be entirely accurate only in the _majority_ of cases to -which they apply; and these cases will be fringed always by a margin -of doubtful ones. But the definitions, for all that, need be none the -less practically true. Day and night are fringed with doubtful hours -of twilight; but our clear knowledge of how midnight differs from noon -is not made less clear by our doubts as to whether a certain hour at -sunrise ought to be called an hour of night or morning. - -It is especially desirable to prefix this warning to a work as short -as the present. In larger and more elaborate works, the writer can -particularise the more important exceptions and modifications to which -his rules and definitions are subject. But in a short work this task -must be left to the common sense of the reader. For popular purposes, -however, brevity of statement has one great advantage, namely, that -of clearness; and, as the significance of the exceptions cannot be -understood without the rules, it is almost essential first to state the -rules without obscuring them by the exceptions. There are few readers -probably who will not see that the general propositions and principles -laid down in the following pages, require, in order to fit them to -certain cases, various additions and qualifications. It is necessary -only for the reader to bear in mind that these propositions need be -none the less broadly and vitally true, because any succinct statement -of them is unavoidably incomplete. - - - - - CONTENTS - - - BOOK I - - THE DIVISIBLE WEALTH OF THE UNITED KINGDOM - - CHAP. PAGE - - I. The Welfare of the Home, as the Logical End of - Government— - - A Ground of Agreement for all Parties 3 - Facts and Principles which are the same for everybody 6 - The Income of the Individual as the Aim and Test of - Government 8 - Private Income and the Empire 10 - Patriotism and the Home 11 - Cupidity as a motive in Politics 12 - The right Education of Cupidity 13 - - - II. The Conditions involved in the idea of a Legislative - Redistribution of Wealth; and the Necessary - Limitations of the Results— - - Cupidity and the Poorer Classes 14 - The Limits of Sane Cupidity as fixed by the Total - Production 16 - Unforeseen Results of an Equal Division of Wealth 18 - Contemporary Agitator on Slavery 20 - Workmen as their own Masters 21 - Ownership of the Means of Labour impossible for - Modern Workman 22 - Equality possible only under a Universal Wage-System 24 - Equality and Universal Labour 26 - - - III. The Pecuniary Results to the Individual of an Equal - Division, first of the National Income, and secondly - of certain parts of it— - - The Income of Great Britain 27 - Division of the National Income 29 - How to divide the Income equally 30 - Shares of Men, Women, and Children 31 - The Maximum Income of a Bachelor 32 - Smallness of the result 33 - Maximum Income of a Married Couple 34 - Practical absurdity of an Equal Division of Income 36 - A complete Redivision of Property advocated by nobody 38 - The attack on Landed Property 40 - Popular ignorance as to the Real Rental of the - Landlords 42 - The Landed Aristocracy 44 - Multitude of Small Landowners 45 - Owners of Railway Shares and Consols 46 - Inappreciable cost of the Monarchy 47 - Forcible Redistribution impossible 48 - - - IV. The Nature of the National Wealth: first, of the - National Capital; second, of the National Income. - Neither of these is susceptible of Arbitrary - Division— - - Difference between Wealth and Money 49 - Wealth as a whole not divisible like Money 52 - More luxurious forms of Wealth incapable of division 54 - The Wealth of Great Britain considered as Capital 56 - The elements which compose the National Capital 58 - Ludicrous results of an Equal Division of Capital 60 - Division of Income, not of Capital, alone worth - considering 62 - Elements which compose the National Income 64 - Material Goods and Services 66 - Home-made Goods and Imports 67 - Two-thirds of the Population dependent on Imported - Food 68 - Variation of the National Income relatively to the - Population 70 - Incomes of other countries compared with that of - our own 72 - Productivity of Industry not determined by Time 74 - Unperceived increase of the Income of the United - Kingdom 76 - Immense Possible Shrinkage in our National Income 78 - The Great Problem 80 - - - BOOK II - - THE CHIEF FACTOR IN THE PRODUCTION OF THE - NATIONAL INCOME - - I. Of the various Factors in Production, and how to - distinguish the Amount produced by each— - - The Cause of Production generally 84 - The Production of Given Quantities 85 - Production a Century Ago 86 - Amount of Capital employed in it 87 - Land, Capital, and Human Exertion 88 - How much produced by each 89 - The chief Practical Problem in Contemporary Economics 90 - - - II. How the Product of Land is to be distinguished - from the Product of Human Exertion— - - Rent the Product of Land 93 - The Accepted Theory of Rent illustrated by an - Example 94 - The Product of Agricultural Labour 96 - The Product of Land 97 - Maximum Produce of Labour 98 - Surplus produced by Land 99 - Land a Producing Agent as distinct from Labour 100 - The Existence of Rent not affected by Socialism 102 - Rent necessarily the Property of whoever owns the - Land 104 - The Argument of this Volume embodied in the case - of Rent 106 - - - III. Of the Products of Machinery or Fixed Capital, - as distinguished from the Products of Human - Exertion— - - Capital of Two Kinds 108 - The part of the Product produced by Machinery or - Fixed Capital 110 - Example of Product of Machinery as distinct from - that of Labour 112 - The Products of a Machine necessarily the Property - of Owner 114 - The Cotton Industry in the Last Century 116 - Arkwright’s Machinery 118 - The Iron Industry of Great Britain 119 - Machinery and Production of Iron 120 - Machinery and Wage Capital 121 - - - IV. Of the Products of Circulating Capital, or Wage - Capital, as distinguished from the Products of - Human Exertion— - - Simplest Function of Wage Capital 122 - Distinguishing Function of Modern Wage Capital 124 - Wage Capital mainly productive as a means of - directing Labour 126 - Slaves and Free Labourers 128 - Wage Capital and Progress 129 - Wage Capital as related to the production of New - Inventions 130 - Capital the Tool of Knowledge 132 - Wage Capital and Arkwright 133 - Wage Capital as Potential Machinery 134 - How to discriminate the amount produced by Wage - Capital 136 - - - V. That the Chief Productive Agent in the modern world - is not Labour, but Ability, or the Faculty which - directs Labour— - - The best Labour sometimes useless 138 - Labour not the same faculty as the faculty which - directs Labour 140 - Extraordinary confusion in current Economic - Language 142 - Labour a Lesser Productive Agent 144 - Ability a Greater Productive Agent 145 - The Vital Distinction between Ability and Labour 146 - Ability not a form of Skilled Labour 148 - Capital applied successfully the same thing as - Ability 150 - Obvious Exceptions 152 - Ability the Brain of Capital 153 - Ability as the Force behind Capital the Cause of - all Progress 154 - - - VI. Of the Addition made during the last Hundred Years - by Ability to the Product of the National Labour. - This Increment the Product of Ability— - - Production in the Last Century 156 - Growth of Agricultural Products 158 - Growth of Production of Iron 159 - Ability and Agriculture in the Last Century 160 - The Maximum Product that can be due to Labour - alone 162 - Present Annual Product of Ability in the United - Kingdom 164 - The Product of Capital virtually Product of the - Ability of the Few 166 - - - BOOK III - - AN EXPOSURE OF THE CONFUSIONS IMPLIED IN SOCIALISTIC - THOUGHT AS TO THE MAIN AGENT IN MODERN PRODUCTION. - - I. The Confusion of Thought involved in the - Socialistic Conception of Labour— - - A confusing Socialistic Formula 171 - A Plausible Argument 173 - A Plausible Argument analysed 174 - Its implied meaning considered 175 - The real Taskmaster of Labour not an Employing - Class, but Nature 176 - Different position of Ability 178 - The Organist and Bellows-blower 179 - The Picture and the Canvas 180 - The Qualifying Factor 181 - Do all men possess Ability 182 - Labour itself non-progressive 183 - Ancient Labour equal to Modern 184 - A Remarkable Illustration 185 - Labour as trained by Watt 186 - Labour as assisted by Maudslay 187 - - - II. That the Ability which at any given period is a - Producing Agent, is a Faculty residing in and - belonging to living Men— - - A Socialistic Criticism 188 - Primæval Progress and Labour 190 - Rudimentary Ability 191 - Primæval and Modern Inventions 192 - A more Important Point 193 - The necessity for Managing Ability increased by - Inventive Ability 194 - The main results of Past Ability inherited by - Living Ability 196 - Productive Ability the Ability of Living Men 198 - Fresh demonstration of the Productivity of Ability 200 - - - III. That Ability is a natural Monopoly, due to the - congenital Peculiarities of a Minority. The - Fallacies of other Views exposed— - - An Error of Mr. Herbert Spencer’s 202 - A Philosophic Truth, but an Economic Falsehood 204 - Whole body of Successful Inventors a very small - Minority 206 - Ability and Opportunity 208 - Ability not produced by Opportunity 209 - Ability the Maker of its own Opportunities 210 - Ability as a matter of Character 212 - Function of such Ability 213 - Characters not equalised by Education or - Opportunity 214 - Progress due solely to the Few 216 - Progress in the Iron Industry 217 - Early Applications of Ability to British - Iron Production 218 - Ability opposed by the Age instead of - representing it 220 - Isolated Action of Ability 222 - Arkwright and his associates 223 - The Value of Watt’s Patent as estimated by - his Contemporaries 224 - Industrial Progress the work of the Few - only 226 - - - IV. The Conclusion arrived at in the preceding Book - restated. The Annual Amount produced by - Ability in the United Kingdom— - - Grades of Ability 228 - Proportion of Able Men to Labourers 230 - A Rough Calculation 231 - More than half our National Income produced by - a Small Minority 232 - - - BOOK IV - - THE REASONABLE HOPES OF LABOUR—THEIR MAGNITUDE, - AND THEIR BASIS - - I. How the Future and Hopes of the Labouring - Classes are bound up with the Prosperity of - the Classes who exercise Ability— - - Short Summary of the preceding Arguments 237 - The preceding Arguments from the Labourer’s Point - of View 240 - The Share of Labour in the growing Products of - Ability 242 - The amount produced by Labour 244 - The amount taken by Labour 245 - Continuous Recent Growth of the Receipts of Labour 246 - Growth of the Receipts of Labour during Queen - Victoria’s Reign 248 - Actual Gains of Labour beyond the Dreams of Socialism 250 - Two Points to be considered 252 - - - II. Of the Ownership of Capital, as distinct from its - Employment by Ability— - - Land and its Owners 253 - Passive Ownership of Capital 255 - The Class that Lives on Interest 256 - The Hope of Interest as a Motive 257 - Capital created and saved mainly for the sake - of Interest 258 - Family Feeling 260 - The Bequest of Capital 261 - Interest a Necessary Incident as the Price of - the Use of Capital 262 - A Part of the Interest of Capital constantly - appropriated by Labour 264 - Interest not to be confused with Large Profits 266 - Interest not to be confused with the Profits of - Sagacity 268 - Enormous gains of Labour at the expense of - Ability 270 - Labour and the Existing System 272 - - - III. Of the Causes owing to which, and the Means by - which Labour participates in the Growing Products - of Ability— - - A Miserable Class co-existing with General - Progress 273 - Relative Decrease of Poverty 276 - Two Causes of Popular Progress 277 - The Riches of a Minority 278 - How they are produced 279 - The Rich Man’s Progress 280 - The Rivalry of the Rich 282 - The Gain of Labour 283 - Popular Progress and Growth of Population 284 - The Gain of Labour limited by the Power of - Ability 286 - The Natural Gain of Labour 288 - Its relation to Politics 289 - Self-Help and State Help 290 - - - IV. Of Socialism and Trade Unionism—the Extent - and Limitation of their Power in increasing the - Income of Labour— - - So-called Socialism in England different from - Formal Socialism 291 - An Element of Socialism necessary to every State 294 - The Socialistic question entirely a question of - degree 296 - Socialism not directly operative in increasing the - Income of Labour 298 - Trade Unionism 300 - How it strengthens Labour 301 - How the power of striking grows with the growth of - Wages 302 - Natural Limits of the Powers of Trade Unionism 304 - Labour and Ability 306 - Higgling on Equal Terms 307 - The Power represented by Strikes not Labour, but - Labouring Men 308 - Leaders of Labouring Men rarely Leaders of Labour 310 - The Power of Trade Unionism important, though - limited 312 - Certain remaining points 314 - - - V. Of the enormous Encouragement to be derived - by Labour from a true View of the Situation; - and of the Connection between the Interests of - the Labourer and Imperial Politics— - - A Recapitulation 315 - The Practical Moral 317 - The True Functions of Trade Unionism and Socialism 318 - The Natural Progress of Labour a Stimulus to Effort 320 - The Future of Labour judged from its Past Progress 322 - The one thing on which the Hopes of Labour depend 324 - The Real Bargain of Labour not with Capital but - Ability 326 - Subordination to Ability no Indignity to Labour 328 - The Moral Debt of Ability to Labour 330 - Labour, Nature, and Ability 332 - The Home and Foreign Food 333 - Imperial Politics and the National Income 334 - The Labourer’s home 336 - - - ——————————————————————————————————————————————————————— - - - - - BOOK I - - - THE DIVISIBLE WEALTH OF THE - UNITED KINGDOM - - - - - ——————————————————————————————————————————————————————— - - - - - CHAPTER I - - _The Welfare of the Home, as the Logical End of Government._ - - - [Sidenote ◆1 The subject of this book, but has nothing to do with - party politics.] - -◆¹ I wish this book to be something which, when the subject of it is -considered, the reader perhaps will think it cannot possibly be. For -its subject—to describe it in the vague language of the day—is the -labour question, the social question, the social claims of the masses; -and it is these claims and questions as connected with practical -politics. Their connection with politics is close at the present -moment; in the immediate future it is certain to become much closer; -and yet my endeavour will be to treat them in such a way that men of -the most opposite parties—the most progressive Radical and the most -old-fashioned Tory—may find this book equally in harmony with their -sympathies, and equally useful and acceptable from their respective -points of view. - - [Sidenote ◆1 An example of the order of facts it deals with.] - - [Sidenote ◆2 Such facts as these not generally known; but when - once ascertained, necessarily the same for all parties:] - - [Sidenote ◆3 And it is equally to the advantage of all parties to - understand such facts.] - -◆¹ But if the reader will consider the matter further, he will see -that my endeavour is not necessarily so impracticable as it seems -to be. A very little reflection must be enough to show anybody that -many of the political problems about which men differ most widely are -concerned with an order of truths which, when once they have been -examined properly, are the same for all of us; and that a preliminary -agreement with regard to them is the only possible basis for any -rational disagreement. I will give one example—the land-question. -About no political problem is there more disagreement than about this; -and yet there are many points in it, about which men may indeed be -ignorant, but about which, except for ignorance, there cannot be any -controversy. Such for instance is the acreage of the United Kingdom, -the number of men by whom the acres are owned, the respective numbers -of large and of small properties, together with their respective -rentals, and the proportion which the national rent bears to the -national income. ◆² The truth about all these points is very easily -ascertained; and yet not one man in a hundred of those by whom the -land-question is discussed, appears to possess the smallest accurate -knowledge of it. A curious instance of this ignorance is to be found -in the popular reception accorded some years ago to the theories of -Mr. Henry George. If Mr. George’s reasonings were correct as applied -to this country, the rental of our titled and untitled aristocracy -would be now about _eight hundred millions_: and few of his admirers -quarrelled with this inference. But if they had only consulted official -records, and made themselves masters of the real facts of the case, -they would have seen at once that this false and ludicrous estimate -was wrong by no less a sum than _seven hundred and seventy millions_; -that the _eight hundred millions_ of Mr. George’s fancy were in reality -not more than _thirty_; and that the rent, which according to him was -two-thirds of the national income, was not in reality more than two -and a quarter per cent of it. Now here is a fact most damaging to the -authority of a certain theorist with whom many Radicals are no doubt -in sympathy; but it none the less is a fact which any honest Radical is -as much concerned to know as is any honest Tory, and which may easily -supply the one with as many arguments as the other. ◆³ The Tory may -use it against the Radical rhetorician who denounces the landlords as -appropriating the whole wealth of the country. The Radical may use -it against the Tory who is defending the House of Peers, and may ask -why a class whose collective wealth is so small, should be specially -privileged to represent the interests of property: whilst those who -oppose protection may use it with equal force as showing how the -diffusion of property has been affected by free trade. - -Here is a fair sample, so far as particular facts are concerned, of -the order of truths with which I propose to deal: and if I can deal -with them in the way they ought to be dealt with, they will be as -interesting—and many will be as amusing—as they are practically useful. -It may indeed be said, without the smallest exaggeration, that the -salient facts which underlie our social problems of to-day, would, if -properly presented, be to the general reader as stimulating and fresh -as any novel or book of travels, besides being as little open to any -mere party criticism. - - [Sidenote ◆1 Besides such facts, this book deals with general - truths and principles, equally independent of party.] - -◆¹ But there are other truths, besides particular facts, which I -propose to urge on the reader’s attention also. There are general -truths, general considerations, and principles: and these too, like -the facts, will be found to have this same characteristic—that though -many of them are not generally realised, though many of them are often -forgotten, and though some of them are supposed to be the possession of -this or that party only, they do but require to be fairly and clearly -stated, to command the assent of every reflecting mind, and to show -themselves as common points from which, like diverging lines, all -rational politicians, whatever may be their differences, must start. - - [Sidenote ◆1 The proposition with which the argument starts is an - example of a truth of this kind.] - -◆¹ The very first principle to which I must call attention, and which -forms a key to my object throughout this entire book, will at once be -recognised by the reader as being of this kind. The Radical perhaps may -regard it as a mere truism; but the most bigoted Tory, on reflection, -will not deny that it is true. The great truth or principle of which I -speak is as follows. - - [Sidenote ◆1 The conditions of private happiness are the end of - all Government.] - - [Sidenote ◆2 These conditions are principally a question of - private income.] - - [Sidenote ◆3 The end of Government is therefore to secure adequate - incomes for the greatest possible number.] - -◆¹ The ultimate end of Government is to secure or provide for -the greatest possible number, not indeed happiness, as is often -inaccurately said, but the external conditions that make happiness -possible. As for happiness, that must come from ourselves, or at all -events from sources beyond the control of Governments. But though no -external conditions are sufficient to make it come, there are many -which are sufficient to drive it or to keep it permanently away; and -it is the end of all Government to minimise conditions such as these. -Now these conditions, though their details vary in various cases, are -essentially alike in all. They are a want of the necessaries, or a want -of the decencies of life, or an excessive difficulty in obtaining them, -or a recurring impossibility of doing so. ◆² They are conditions in -fact which principally, though not entirely, result from an uncertain -or an insufficient income. The ultimate duty of a Government is -therefore towards the incomes of the governed; ◆³ and the three chief -tests of whether a Government is good or bad, are first the number of -families in receipt of sufficient incomes, secondly the security with -which the receipt of such incomes can be counted on, and lastly the -quality of the things which such incomes will command. - - [Sidenote ◆1 This view not necessarily materialistic, nor - unpatriotic:] - -◆¹ Some people however—perhaps even some Radicals—may be tempted to -say that this is putting the case too strongly, and is caricaturing -the truth rather than fairly stating it. They may say that it excludes -or degrades to subordinate positions all the loftier ends both of -individual and of national life, such as moral and mental culture, and -the power and greatness of the country: but in reality it does nothing -of the kind. - - [Sidenote ◆1 For income is necessary for mental as well as - physical welfare,] - - [Sidenote ◆2 And the complete welfare of the citizens is what - gives meaning to patriotism.] - -◆¹ In the first place, with regard to moral and mental culture, if -these are really desired by the individual citizen, they will be -included amongst the things which his income will help him to obtain: -and an insufficient income certainly tends to deprive him of them. -If he wishes to have books, he must have money to buy books: and if -he wishes his children to be educated, there must be money to pay -for teaching them. In the second place, with regard to the power and -greatness of the country, though for many reasons ◆² we are apt -to forget the fact, it is the material welfare of the home, or the -maintenance of the domestic income, that really gives to them the whole -of their fundamental meaning. Our Empire and our power of defending -it have a positive money value, which affects the prosperity of every -class in the country: and though this may not be the only ground on -which our Empire can be justified, it is the only ground on which, -considering what it costs, its maintenance can be justified in the eyes -of a critical democracy. Supposing, it could be shown to demonstration -that the loss of our Empire and our influence would do no injury to -our trade, or make one British household poorer, it is impossible to -suppose that the democracy of Great Britain would continue for long, -from mere motives of sentiment, to sanction the expense, or submit to -the anxiety and the danger, which the maintenance of an Empire like our -own constantly and necessarily involves. - - [Sidenote ◆1 Further, patriotism will only flourish in a country - which secures for its citizens the conditions of a happy - life.] - -◆¹ But let us waive this argument, and admit that a sense of our -country’s greatness, quite apart from any thought of our own material -advantage, enlarges and elevates the mind as nothing else can—that -to be proud of our country and proud of ourselves as belonging to it, -to feel ourselves partners in the majesty of the great battle-ship, -in the menace of Gibraltar stored with its sleeping thunders, or the -boastful challenge of the flag that floats in a thousand climates, is -a privilege which it is easier to underrate than exaggerate. Let us -admit all this. But these large and ennobling sentiments are all of -them dependent on the welfare of the home in this way:—they are hardly -possible for those whose home conditions are miserable. Give a man -comfort in even the humblest cottage, and the glow of patriotism may, -and probably will, give an added warmth to that which shines on him -from his fireside. But if his children are crying for food, and he is -shivering by a cold chimney, he will not find much to excite him in the -knowledge that we govern India. Thus, from whatever point of view we -regard the matter, the welfare of the home as secured by a sufficient -income is seen to be at once the test and the end of Government; and it -ceases to be the end of patriotism only when it becomes the foundation -of it. - - [Sidenote ◆1 Cupidity, therefore, or the desire for sufficient - income, is a legitimate basis for popular interest in - politics;] - -◆¹ Here, then, is the principle which I assume throughout this volume. -And now, I think that, having explained it thus, I may, without offence -to either Tory or Radical, venture to condemn, as strongly as its -stupidity deserves, the way in which politicians are at present so -often attacked for appealing to what is called the cupidity of the -poorer classes. Cupidity is in itself the most general and legitimate -desire to which any politician or political party can appeal. It is -illegitimate only when it is excited by illegitimate methods: and -these methods are of two obvious kinds. One is an exaggeration of the -advantages which are put before the people as obtainable: the other is -the advocacy of a class of measures as means to them, by which not even -a part of them could be, in reality, obtained. Everybody must see that -a cupidity which is excited thus is one of the most dangerous elements -by which the prosperity of a country can be threatened. But a cupidity -which is excited in the right way, which is controlled by a knowledge -of what wealth really exists, and of the fundamental conditions on -which its distribution depends—is merely another name for spirit, -energy, and intelligence. - - [Sidenote ◆1 The aim of this book is to educate popular cupidity.] - -◆¹ My one aim then, in writing this book, is to educate the cupidity of -voters, no matter what their party, by popularising knowledge of this -non-controversial kind. And such knowledge will be found, as I have -said already, to be composed partly of particular facts, and partly -of general truths. We will begin with the consideration of certain -particular facts, which must, however, be prefaced by a few general -observations. - - - - - CHAPTER II - - _The Conditions involved in the idea of a Legislative - Redistribution of Wealth; and the Necessary - Limitations of the Results._ - - - [Sidenote ◆1 All men ask of a Government either the increase or - the maintenance of their incomes.] - -◆¹ Let me then repeat that we start with assuming cupidity as not only -the general foundation, but also as the inevitable, the natural, and -the right foundation, of the interest which ordinary men of all classes -take in politics. We assume that where the ordinary man, of whatever -class or party, votes for a member of Parliament, or supports any -political measure, he is primarily actuated by one of two hopes, or -both of them—the first being the hope of securing the continuance of -his present income, the second being the hope of increasing it. Now, to -secure what they have already got is the hope of all classes; but to -increase it by legislation is the hope of the poorer only. It is of -course perfectly true that the rich as well as the poor are anxious, as -a rule, to increase their incomes when they can; but they expect to do -so by their own ability and enterprise, and they look to legislation -for merely such negative help as may be given by affording their -abilities fair play. - - [Sidenote ◆1 The poor alone look for an increase of income by - direct legislative means. They are right in doing this.] - - [Sidenote ◆2 The cupidity which this book chiefly deals with is - the cupidity of the poorer classes.] - -◆¹ But with the poorer classes the case is entirely different. They -look to legislation for help of a direct and positive kind, which -may tend to increase their incomes, without any new effort of their -own: and not only do they do this themselves, but the richer classes -sympathise with the desire that makes them do so. It is, for instance, -by no means amongst the poorer classes only that the idea of seizing -on the land, without compensating the owners, has found favour as a -remedy for distress and poverty generally. Owners of every kind of -property, except land, have been found to advocate it; whilst as to -such vaguer and less startling proposals, as the “restoration of the -labourer to the soil,” the limitation of the hours of labour, or the -gradual acquirement by the State of many of our larger industries—the -persistent way in which these are being kept before the public, is due -quite as much to men of means as to poor men. ◆² It is then with the -cupidity of the poorer classes that we are chiefly concerned to deal; -and the great question before us may briefly be put thus: By what sort -of social legislation may the incomes of the poorer classes—or, in -other words, the incomes of the great mass of the community—be, in the -first place, made more constant; and, in the second place, increased? - - [Sidenote ◆1 The first question to ask is: What is the maximum - amount which it would be theoretically possible for them - to obtain? For this is much exaggerated.] - -◆¹ But before proceeding to this inquiry, there is a preliminary -question to be disposed of. What is the maximum increase which any -conceivable legislation could conceivably secure for them out of the -existing resources of the country? Not only unscrupulous agitators, but -many conscientious reformers, speak of the results to be hoped for from -a better distribution of riches, in terms so exaggerated as to have -no relation to facts; and ideas of the wildest kind are very widely -diffused as to the degree of opulence which it would be possible to -secure for all. The consequence is that at the present moment popular -cupidity has no rational standard. It will therefore be well, before -we go further, to reduce these ideas—I do not say to the limits -which facts will warrant—but to the limits which facts set on what is -theoretically and conceivably possible. - - [Sidenote ◆1 An ascertainable limit is placed to this amount by - circumstances.] - - [Sidenote ◆2 And this amount would be obtainable only under - certain conditions,] - -◆¹ Let me then call attention to the self-evident truth, that the -largest income which could possibly be secured for everybody, could not -be more than an equal share of the actual gross income enjoyed by the -entire nation. Now it happens that we know with substantial accuracy -what the gross amount of the income of the nation now is, and I will -presently show what is the utmost which each individual could hope for -from the most successful attempt at a redistribution of everything. ◆² -But the mere pecuniary results of a revolution of this kind are not the -only results of which we must take account. There are others which it -will be well to glance at before proceeding to our figures. - - [Sidenote ◆1 One of which would entirely change the existing - character of wealth.] - -◆¹ Though an equal division of wealth would, as we soon shall see, -bring a large addition to the income of a considerable majority of -the nation, the advantages which the recipients would gain from this -addition, would be very different from the advantages which an -individual would gain now, from the same annual sum coming to him from -invested capital. In other words, if wealth were equally distributed, -it would, from the very necessity of the case, lose half the qualities -for which it is at present most coveted. - - [Sidenote ◆1 Were wealth equally distributed, nobody would have an - independence.] - -◆¹ At present wealth suggests before all things what is commonly called -“an independence”—something on which a man can live independently -of his own exertions. But the moment a whole nation possessed it in -equal quantities this power of giving an independence would go from -it suddenly and for ever. If a workman who at present makes _seventy -pounds_ a year, would receive, by an equal division, an additional -_forty pounds_, it is indeed true that no additional work could be -entailed on him. The work which at present gets him _seventy pounds_, -would in that case get him _a hundred and ten_. But he would never be -able, if he preferred leisure to wealth, to forego the _seventy pounds_ -and live in idleness on the _forty pounds_; as he would be able to do -now if the additional _forty pounds_ were the interest of a legacy left -him by his maiden aunt. Unless he continued to work, as he had worked -hitherto, he would lose not only the first sum, but the second. - - [Sidenote ◆1 Every one would have to work as hard as he does now;] - -This is self-evident, when we consider what is the essence of such a -situation, namely that the position of everybody is identical. For if -everybody preferred to be idle, no wealth could be produced at all. -However great nominally might be the value of our national property, -it is perfectly clear that everybody could not live at leisure in -it: and from the very nature of the case, in a nation where all are -equal, what cannot be done by all, could not be done by anybody. ◆¹ -If, therefore, we estimate the income possible for each individual -as an equal fraction of the present income of the nation, it must be -remembered that, to produce the total out of which these fractions are -to come, everybody would have to work as hard as he does now. And more -than that, it would be the concern of all to see that his share of -work was not being shirked by anybody. This is at present the concern -of the employer only: but under the conditions we are now considering, -everybody would be directly interested in becoming his neighbour’s -taskmaster. - - [Sidenote ◆1 And be even more under the dominion of the employer - than he is now;] - -These last considerations lead us to another aspect of the subject, -with which every intelligent voter should make himself thoroughly -familiar, and which every honest speaker would force on the attention -of his hearers. A large number of agitators, who are either ignorant or -entirely reckless, but who nevertheless possess considerable gifts of -oratory, ◆¹ are constantly endeavouring to associate, in the popular -mind, the legitimate hope of obtaining an increased income, with an -insane hostility to conditions which alone make such an increase -possible. These men[1] are accustomed to declaim against the slavery of -the working classes, quite as much as against their inadequate rate of -payment. By slavery they mean what they call “enslavement to capital.” -Capital means the implements and necessaries of production. These, they -argue, are no longer owned by the workmen as they were in former times: -and thus the workers are no longer their own masters. They must work -under the direction of those who can give them the means of working; -and this, they are urged to believe, reduces them to the condition of -slaves. - - [Sidenote ◆1 Nor could any one hope to own the instruments of - production used by him.] - - [Sidenote ◆2 Self-contradictions of agitators, who say that - capitalism means slavery, and that socialism would make - the worker free.] - - [Sidenote ◆3 The industrial discipline of the State would - necessarily be much harder than that of the private - employer.] - -Of course, in these representations there is a certain amount of truth: -but it is difficult to conceive of anything more stupidly and more -wantonly misleading, than the actual meaning which they are employed by -the agitators to convey. For that meaning is nothing else than this—◆¹ -that under improved conditions, when wealth is better distributed, the -so-called slavery will disappear, the workers will be their own masters -again, and will each own, as formerly, the implements and the materials -of his work. But, as no one knows better than the extreme socialists, -and as any intelligent man can see easily for himself, such a course of -events is not only not possible, but is the exact reverse of that on -which the progress of the workers must depend. ◆² The wildest agitator -admits, and the most ignorant agitator knows, that the wealth of the -modern world, on the growth of which they insist, and which, for the -very reason that its growth has been so enormous, is declared by them -to offer so rich a prize to the workers, mainly owes its existence -to improved conditions of production. Such persons know also that of -these conditions the chief have been the development of machinery, the -increased subdivision of employments, and the perfected co-operation -of the workers. But the development of machinery necessarily means -this—the transformation of (say) each thousand old-fashioned implements -into a single vast modern one of a hundred times their aggregate -power: and it means that at this single implement a thousand men shall -work. The increased subdivision of labour means that no man shall -make an entire thing, but merely some small part of it; and perfected -co-operation is another name for perfected discipline. It will be thus -seen that the conditions which the agitator calls those of slavery -are essential to the production of the wealth which is to constitute -the workers’ heritage. ◆³ It will be seen that the workers’ hope of -bettering their own position is so far from depending on a recovery -of any former freedom, that it involves yet further elaboration of -industrial discipline; and puts the old ownership of his own tools -by the individual farther and further away into the region of dreams -and impossibilities: and that no redistribution of wealth would even -tend to bring it back again. The weaver of the last century was the -owner of his own loom: and a great cotton-mill may now be owned by one -capitalist. But a co-operative cotton-mill that was owned by all the -workers, in the old sense of the word would not be owned by anybody. -Could any one of these thousand or more men say that any part of the -mill was his own personal property? Could he treat a single bolt, or -a brick, or a wheel, or a door-nail, as he might have treated a loom -left to him in his cottage by his father? Obviously not. No part of -the mill would be his own private property, any more than a train -starting from Euston Station is the property of any shareholder in -the London and North-Western Railway. His ownership would mean merely -that he was entitled to a share of the profits, and that he had one -vote out of a thousand in electing the managers. But however the -managers were elected, he would have to obey their orders; and their -discipline would be probably stricter than that of any private owner. -Much more would this be the case if the dream of the Socialist were -fulfilled, and if instead of each factory or business being owned by -its own workers, all the workers of the country collectively owned all -the businesses—all the machinery, all the raw materials, and all the -capital reserved for and spent in wages. For though the capital of -the country would be owned by the workers nominally, their use of it -would have to be regulated by a controlling body, namely the State. The -managers and the taskmasters would all be State officials, and be armed -with the powers of the State to enforce discipline. The individual -under such an arrangement, might gain in point of income; but if he is -foolish enough to adopt the view of the agitator, and regard himself as -the slave to capital now, he would be no less a slave to it were all -capitals amalgamated, and out of so many million shares he himself were -to own one. - - [Sidenote ◆1 For it must always be remembered that the idea of an - equal distribution of wealth necessarily presupposes the - State as sole employer and capitalist.] - -◆¹ It is particularly desirable in this particular place to fix -the reader’s attention on this aspect of the question, because -it is inseparably associated with the point we are preparing to -consider—namely, the pecuniary position in which the individual would -be placed by an equal division, were such possible, of the entire -national income. For we must bear in mind that not even in thought or -theory is an equal division of the national income possible, unless -all the products of the labour of every citizen are in the first place -taken by the State as sole employer and capitalist, and are then -distributed as wages in equal portions. Under no other conditions -could equality be more than momentary. If each worker himself sold his -own products to the consumer,—which he could not do, because no one -produces the whole of anything,—the strong and industrious would soon -be richer than the idle; and the man with no children richer than the -man with ten. Inequality would have begun again as soon as one day’s -work was over. Equality demands, as the Socialists are well aware, that -all incomes shall be wages paid by the State; and it implies further, -as we shall presently have occasion to observe—that equal wages shall -be paid to all individuals, not because they are equally productive, -but because they are all equally human. When therefore I speak, as I -shall do presently, of what each individual would receive, if wealth -were divided equally, I must be understood as meaning that he would -receive so much from the State. - - [Sidenote ◆1 A redistribution of wealth, if it increased the - incomes of some, would lessen the labour of nobody.] - - [Sidenote ◆2 The next chapter contains an examination of the - amount of income which would theoretically result from - an equal distribution in this country.] - -◆¹ Let us remember then that a redistribution of wealth would have in -itself no tendency to alter the existing conditions of the workers in -any respect except that of wages only. It would not tend to relieve -any man of a single hour of labour, to give him any more freedom in -choosing the nature of his work or the method of it, or make him less -liable to fines or other punishments for disobedience or unpunctuality. -◆² His only gain, if any, would be a simple gain in money. Let us now -proceed to deal with the pounds, shillings, and pence; and see what is -the utmost that this gain could come to. - - - - - CHAPTER III - - _The Pecuniary Results to the Individual of an Equal - Division, first of the National Income, and - secondly of certain parts of it._ - - - [Sidenote ◆1 The gross income of the United Kingdom.] - - [Sidenote ◆2 The whole amount attributed to the rich would not be - available for distribution.] - - [Sidenote ◆3 A certain deduction must therefore be made from the - estimated total.] - -◆¹ The gross income of the United Kingdom—the aggregate yearly amount -received by the entire population—is computed to be in round numbers -some _thirteen hundred million pounds_. But though this estimate may -be accepted as true under existing circumstances, we should find it -misleading as an estimate of the amount available for distribution. -So far as it relates to the income of the poorer classes, it would -be indeed still trustworthy; but the income of the richer—which is -the total charged with income-tax—we should find to be seriously -exaggerated, as considerable sums are included in it which are counted -twice over. ◆² For instance, the fee of a great London doctor for -attending a patient in the South of France would be about _twelve -hundred pounds_. Let us suppose this to be paid by a patient whose -income is _twelve thousand pounds_. The doctor pays income-tax on his -fee; the patient pays income-tax on his entire income; and thus the -whole sum charged with income-tax is _thirteen thousand two hundred -pounds_. But if we came to distribute it, we should find that there -was _twelve thousand pounds_ only. And there are many other cases of a -precisely similar nature. According to the calculations of Professor -Leone Levi, the total amount which was counted twice over thus, -amounted ten years ago to more than a _hundred million pounds_.[2] ◆³ -In order, therefore, to arrive at the sum which we may assume to be -susceptible of distribution, it will be necessary, therefore, to deduct -at least as much as this from the sum which was just now mentioned of -_thirteen hundred million pounds_.[3] Accordingly the income of the -country, if we estimate it with a view to dividing it, is in round -numbers, _twelve hundred million pounds_. - - [Sidenote ◆1 This, divided amongst all, would yield _thirty-two - pounds_ per head:] - - [Sidenote ◆2 But different sexes and ages would require different - amounts,] - - [Sidenote ◆3 The proportions of which are readily ascertainable.] - -◆¹ And now let us glance at our problem in its crudest and most -rudimentary form, and see what would be the share coming to each -individual, if these millions were divided equally amongst the entire -population. The entire population of the United Kingdom numbers a -little over _thirty-eight millions_; so our division sum is simple. -The share of each individual would be about _thirty-two pounds_. But -this sort of equality in distribution would satisfy nobody. It is not -worth talking about. For a quarter of the population are children -under ten years of age,[4] and nearly two-fifths are under fifteen: -and it would be absurd to assign to a baby seeking a pap-bottle, or -even to a boy—voracious as boys’ appetites are—the same sum that -would be assigned to a full-grown man or woman. ◆² In order to give -our distribution even the semblance of rationality, the shares must -be graduated according to the requirements of age and sex. The sort -of proportion to each other which these graduated shares should bear -might possibly be open to some unimportant dispute: but we cannot go -far wrong if we take for our guide the amount of food which scientific -authorities tell us is required respectively by men, women, and -children; together with the average proportion which actually obtains -at present, both between their respective wages and the respective -costs of their maintenance. ◆³ The result which we arrive at from -these sources of information is substantially as follows, and every -fresh inquiry confirms it. For every _pound_ which is required or -received by a man, _fifteen shillings_ does or should go to a woman, -_ten shillings_ to a boy, _nine shillings_ to a girl, and _four and -sixpence_ to an infant.[5] - - [Sidenote ◆1 The problem best approached by taking the family as - the unit:] - - [Sidenote ◆2 And then we can arrive at the share of each member.] - - [Sidenote ◆3 The maximum income that an equal distribution would - give a bachelor.] - -◆¹ So much, then, being admitted, we shall make our calculations best -by starting with the family as our unit, and coming to the individual -afterwards. The average family consists of four and a half persons; and -the families in the United Kingdom number _eight and a half millions_. -_Twelve hundred millions_—the sum we have to divide—would give each -family an income of _a hundred and forty pounds_. From this, however, -we should have to deduct taxes; and, since if all classes were equal, -all would have to be taxed equally,—the amount due from each family -would be considerable. Public expenditure, if the State directed -everything, would of necessity be larger than it is at present; but -even if we assume that it would remain at its present figure, each -family would have to contribute at least _sixteen pounds_.[6] Therefore -_sixteen pounds_ must be deducted from the _hundred and forty pounds_. -Accordingly we have for four and a half persons a net income of _a -hundred and twenty-six pounds_. Now these persons would be found to -consist on an average of a man and his wife, a youth, a girl, and a -half of a baby,—for when we deal with averages we must execute many -judgments like Solomon’s,—and if we distribute the income among them -in the proportion I just now indicated, the result we shall arrive at -will, in round numbers, be this. ◆² The man will have _fifty pounds_, -the woman _thirty-six pounds_, the youth _twenty-five pounds_, the girl -_twenty-four pounds_, and the half of the infant _five pounds_. And now -let us scrutinise the result a little further, and see how it looks in -various familiar lights. An equal distribution of the whole wealth of -the country would give every adult male about _nineteen shillings and -sixpence_ a week, and every adult female about _fourteen shillings_. -These sums would, however, be free of taxes; so in order to compare -them with the wages paid at present, we must add to them _two shillings -and sixpence_ and _two shillings_ respectively, which will raise them -respectively to _twenty-two shillings_, and to _sixteen shillings_: ◆³ -but a bachelor who is earning the former sum now, or an unmarried woman -who is now earning the latter, would neither of them, under any scheme -of equal distribution conceivable, come in for a penny of the plunder -taken from the rich. They already are receiving all that, on principles -of equality, they could claim. - -The smallness of this result is likely to startle anybody; but none the -less is it true: and it is well to consider it carefully, because the -reason why it startles us requires to be particularly noticed. Of the -female population of the country that is above fifteen years old, the -portion that works for wages is not so much as a half;[7] and of the -married women that do so, the portion is much smaller. The remainder -work, no doubt, quite as hard as the rest; but they work as wives and -mothers; and whatever money they have comes to them through their -husbands. Thus when the ordinary man considers the question of income, -he regards income as something which belongs exclusively to the man, -his wife and his children being things which the man maintains as he -pleases. But the moment the principle of equality of distribution is -accepted, all such ideas as these have to be rudely changed: for if -all of us have a claim to an equal share of wealth, just as the common -man’s claim is as good as that of the uncommon man, so the woman’s -claim is as good as the claim of either; and whatever her income might -be under such conditions, it would be hers in her own right, not in -that of anybody else. Accordingly it happens that an equal distribution -of wealth, though it would increase the present income of the ordinary -working man’s family, might actually, so far as the head of the family -was concerned, have the paradoxical result of making him feel that -personally he was poorer than before—not richer.[8] - - [Sidenote ◆1 The highest possible standard of living would be - represented by a man and wife without children.] - -◆¹ The man’s personal share, then, would be _twenty-two shillings_ a -week, and the woman’s _sixteen shillings_; and they could increase -their income in no way except by marrying. As many of their expenses -would be greatly diminished by being shared, they would by this -arrangement both be substantial gainers: but if the principle of -equality were properly carried out, they would gain very little further -by the appearance of children; for though we must assume that a certain -suitable sum would be paid them by the State for the maintenance of -each child, that would have to be spent for the child’s benefit. We -may, therefore, say that the utmost results which could possibly be -secured to the individual by a general confiscation and a general -redistribution of wealth, would be represented by the condition of a -childless man and wife, with _thirty-eight shillings_ a week, which -they could spend entirely on themselves: for all the wealth of the -nation that was not absorbed in supplying such incomes to men and women -who were childless, would be absorbed in supporting the children of -those who had them; thus merely equalising the conditions of large and -of small families, and enabling the couple with ten or a dozen children -to be personally as well off as the couple with none. Could such a -condition of wellbeing be made universal, many of the darkest evils of -civilisation would no doubt disappear: but it is well for a man who -imagines that the masses of this country are kept by unjust laws out of -the possession of some enormous heritage, to see how limited would be -the result, if the laws were to give them everything; and to reflect -that the largest income that would thus be assigned to any woman, would -be less than the income enjoyed at the present moment by multitudes of -unmarried girls who work in our Midland mills—girls whose wages amount -to _seventeen shillings_ a week, who pay their parents _a shilling_ a -day for board, and who spend the remainder, with a most charming taste, -on dress. - -He will have to reflect also that such a result as has been just -described could be produced only by an equality that would be -absolutely grotesque in its completeness—by every male being treated as -equal to every other male of the same age, and by every female being -treated similarly. The prime minister, the commander-in-chief, the most -important State official, would thus, if they were unmarried, be poorer -than many a factory-girl is at present; whilst if they were married, -they and their wives together would have but _four shillings_ a week -more than is at present earned by a mason, and _six shillings_ a week -less than is earned by an overlooker in a cotton-mill. - - [Sidenote ◆1 Absolute pecuniary equality, however, is not thought - possible by anybody;] - - [Sidenote ◆2 As the salaries asked for Members of Parliament by - the Labour Party show.] - -◆¹ But an equality of this kind, from a practical point of view, is -worth considering only as a means of reducing it to an absurdity. -Even were it established to-morrow, it could not be maintained for a -month, owing to the difficulty that would arise in connection with the -question of children: as unless a State official checked the weekly -bills of every parent, parents inevitably would save out of their -children’s allowances; and those with many children would be very soon -founding fortunes. And again it is obvious that different kinds of -occupation require from those engaged in them unequal expenditures; so -that the inevitable inequality of needs would make pecuniary equality -impossible. Indeed every practical man in our own country owns this, -however extreme his views; ◆² as is evidenced by the amounts which have -been suggested by the leaders of the Labour Party as a fit salary for -a paid Member of Parliament. These amounts vary from _three hundred -pounds_ a year to _four hundred pounds_; so that the unmarried Member -of Parliament, in the opinion of our most thoroughgoing democrats, -deserves an income from six to eight times as great as the utmost -income possible for the ordinary unmarried man. And there are many -occupations which will, if this be admitted, deserve to be paid on the -same or on even a higher scale. We may therefore take it for granted -that the most levelling politicians in the country, with whom it is -worth while to reason as practical and influential men, would spare -those incomes not exceeding _four hundred pounds_ a year, and would -probably increase the number of those between that amount and _a -hundred and fifty pounds_. Now the total amount of the incomes between -these limits is not far from _two hundred million pounds_: so if this -be deducted from the _twelve hundred million pounds_ which we just -now took as the sum to be divided equally, the incomes of the people -at large will be less by sixteen per cent than the sums at which they -were just now estimated; and the standard of average comfort will be -represented by a childless man and wife having _thirty-one shillings -and eightpence_ instead of _thirty-eight shillings_ a week. - - [Sidenote ◆1 General redistribution, then, is not thought possible - by any English party;] - - [Sidenote ◆2 But it is still instructive to consider the - theoretical results of it.] - -◆¹ We need not, however, dwell upon such details longer: for there -are few people who conceive even a redistribution like this to be -possible; and there would probably be fewer still who would run the -risk of attempting it, if they realised how limited would be the -utmost results of it to themselves. My only reason for dealing with -these schemes at all is that, ◆² whilst they are felt to be impossible -as soon as they are considered closely, they are yet the schemes -which invariably suggest themselves to the mind when first the idea -of any great social change is presented to it; and a knowledge of -their theoretical results, though it offers no indication of what may -actually be attainable, will sober our thoughts, and at the same time -stimulate them, by putting a distinct and business-like limit to what -is conceivable. - - [Sidenote ◆1 But there are certain parts of the national income - the redistribution of which has been actually advocated, - _i.e._: (1) the rent of the land; (2) the interest of - the National Debt; (3) the sums spent on the Monarchy.] - - [Sidenote ◆2 We will consider what the nation would gain by - confiscating the above.] - - [Sidenote ◆3 Absurd ideas as to the amount of the landed rental of - the country.] - -◆¹ And for this reason, before I proceed further, I shall ask the -reader to consider a few more theoretical estimates. The popular -agitator, and those whose opinions are influenced by him, do not -propose to seize upon all property; they content themselves with -proposing to appropriate certain parts of it. The parts generally fixed -upon are as follows:—First and foremost comes the landed rental[9] -of the country—the incomes of the iniquitous landlords. Second comes -the interest on the National Debt; third, the profits of the railway -companies; and last, the sum that goes to support the Monarchy. All -these annual sums have been proposed as subjects of confiscation, -though the process may generally be disguised under other names. ◆² -Let us take each of these separately, and see what the community at -large would gain by the appropriation of each. And we will begin with -the income of the landlords; for not only is this the property which is -most frequently attacked, but it is the one from the division of which -the largest results are expected. ◆³ It is indeed part of the creed of -a certain type of politician that, if the income of the landlords could -be only divided amongst the people, all poverty would be abolished, and -the great problem solved. - - [Sidenote ◆1 The popular conception of the wealth of the larger - landlords.] - -◆¹ In the minds of most of our extreme reformers, excepting a few -Socialists, the income of the landlords figures as something limitless; -and the landlords themselves as the representatives of all luxury. It -is not difficult to account for this. To any one who studies the aspect -of any of our rural landscapes, with a mind at all occupied with the -problem of the redistribution of wealth, the things that will strike -his eye most and remain uppermost in his mind, are the houses and parks -and woods belonging to the large landlords. Small houses and cottages, -though he might see a hundred of them in a three-miles’ drive, he -would hardly notice; but if in going from York to London he caught -glimpses of twelve large castles, he would think that the whole of -the Great Northern Railway was lined with them. And from impressions -derived thus two beliefs have arisen—first that the word “landlord” is -synonymous with “large landlord”; and secondly that large landlords own -most of the wealth of the kingdom. But ideas like these, when we come -to test them by facts, are found to be ludicrous in their falsehood. -If we take the entire rental derived from land, and compare it with -the profits derived from trade and capital, we shall find that, so far -as mere money is concerned, the land offers the most insignificant, -instead of the most important question[10] that could engage us. Of the -income of the nation, the entire rental of the land does not amount to -more than one-thirteenth; and during the last ten years it has fallen -about thirteen per cent. The community could not possibly get more than -all of it; and if all of it were divided in the proportions we have -already contemplated, it would give each man about twopence a day and -each woman about three half-pence.[11] - - [Sidenote ◆1 The landed aristocracy are not the chief - rent-receivers.] - - [Sidenote ◆2 A multitude of small proprietors receive twice as - much in rent as the entire landed aristocracy.] - - [Sidenote ◆3 The entire rental of the landed aristocracy is so - small that its confiscation would benefit no one.] - -◆¹ But the more important part of the matter still remains to be -noticed. The popular idea is, as I just now said, that we should, in -confiscating the rental of the kingdom, be merely robbing a handful -of rich men, who would be probably a deserving, and certainly an easy -prey. The facts of the case are, however, singularly different. It is -true, indeed, if we reckon the land by area, that the large landlords -own a preponderating part of it: but if we reckon the land by value, -the whole case is reversed; ◆² and we find that classes of men who are -supposed by the ordinary agitator to have no fixed interest in the -national soil at all, really draw from it a rental twice as great as -that of the class which is supposed to absorb the whole. I will give -the actual figures,[12] based upon official returns; and in order that -the reader may know my exact meaning, let me define the term that I -have just used—namely “large landlords”—as meaning owners of more than -_a thousand_ acres. No one, according to popular usage, would be called -a large landlord, who was not the owner of at least as much as this; -indeed the large landlord, as denounced by the ordinary agitator, is -generally supposed to be the owner of much more. Out of the aggregate -rental, then—that total sum which would, if divided, give each man -twopence a day—what goes to the large landlords is now considerably -less than _twenty-nine million pounds_. By far the larger part—namely -something like _seventy million pounds_—is divided amongst _nine -hundred and fifty thousand_ owners, of whose stake in the country the -agitator seems totally unaware; and in order to give to each man the -above daily dividend, it would be necessary to rob all this immense -multitude whose rentals are, on an average, _seventy-six pounds_ a -year.[13] Supposing, then, this nation of smaller landlords to be -spared, ◆³ and our robbery confined to peers and to country gentlemen, -the sum to be dealt with would be less than _twenty-nine million -pounds_; and out of the ruin of every park, manor, and castle in the -country, each adult male would receive less than three-farthings daily. - - [Sidenote ◆1 Were the National Debt and the Railways confiscated, - the results would likewise be hardly perceptible to the - nation as a whole.] - -◆¹ And now let us turn to the National Debt and to the railways. The -entire interest of the one and the entire profits of the other, would, -if divided equally amongst the population, give results a little, but -only a little, larger than the rental of the large landlords. But here -again, if the poorer classes were spared, and the richer investors -alone were singled out for attack, the small dividend of perhaps -one penny for each man daily, would be diminished to a sum yet more -insignificant. How true this is may be seen from the following figures -relating to the National Debt. Out of the _two hundred and thirty-six -thousand_ persons who held consols in 1880, _two hundred and sixteen -thousand_, or more than nine-tenths of the whole, derived from their -investments less than _ninety pounds_ a year; whilst nearly half of the -whole derived less than _fifteen pounds_. - - [Sidenote ◆1 The Monarchy costs so small a sum, that no one would - be the richer for its abolition.] - -◆¹ And lastly, let us consider the Monarchy, with all its pomp and -circumstance, the maintenance of which is constantly represented as -a burden seriously pressing on the shoulders of the working-class. I -am not arguing that in itself a Monarchy is better than a Republic. -I am considering nothing but its cost in money to the nation. Let -us see then what its maintenance actually costs each of us, and how -much each of us might conceivably gain by its abolition. The total -cost of the Monarchy is about _six hundred thousand pounds_ a year; -but ingenious Radicals have not infrequently argued that virtually, -though indirectly, it costs as much as _a million pounds_. Let us take -then this latter sum, and divide it amongst _thirty-eight million_ -people. What does it come to a head? It comes to something less than -_sixpence halfpenny_ a year. It costs each individual less to maintain -the Queen than it would cost him to drink her health in a couple of -pots of porter. The price of these pots is the utmost he could gain -by the abolition of the Monarchy. But does any one think that the -individual would gain so much—or indeed, gain anything? If he does, -he is singularly sanguine. Let him turn to countries that are under a -Republican government; and he will find that elected Presidents are apt -to cost more than Queens. - - [Sidenote ◆1 All such schemes of redistribution are illusory, not - only on account of the insignificance of their results,] - - [Sidenote ◆2 But also on account of a far deeper reason, on which - the whole problem depends.] - -◆¹ All these schemes, then, for attacking property as it exists, for -confiscating and redistributing by some forcible process of legislation -the whole or any part of the existing national income, are either -obviously impracticable, or their result would be insignificant. Their -utmost result indeed would not place any of the workers in so good a -position as is at present occupied by many of them. This is evident -from what has been seen already. ◆² But there is another reason which -renders such schemes illusory—a far more important one than any I have -yet touched upon, and of a far more fundamental kind. We will consider -this in the next chapter; and we shall find, when we have done so, that -it has brought us to the real heart of the question. - - - - - CHAPTER IV - - _The Nature of the National Wealth: first, of the - National Capital; second, of the National - Income. Neither of these is susceptible of - Arbitrary Division._ - - - [Sidenote ◆1 A legislative division of the national income is not - only disappointing in its theoretical results, but - practically impossible,] - -◆¹ We have just seen how disappointing, to those even who would gain -most by it, would be the results of an equal division of the national -income of this country, and how intolerable to all would be the general -conditions involved in it. In doing this, we have of course adopted, -for argument’s sake, an assumption which underlies all popular ideas of -such a process; namely, that if a Government were only strong enough -and possessed the requisite will, it could deal with the national -income in any way that might be desired; or, in other words, that the -national income is something that could be divided and distributed, -as an enormous heap of sovereigns could, according to the will of -any one who had them under his fingers. I am now going to show that -this assumption is entirely false, and that even were it desirable -theoretically that the national income should be redivided, it is not -susceptible of any such arbitrary division. - - [Sidenote ◆1 As will be shown in this chapter.] - -◆¹ To those who are unaccustomed to reflecting on economic problems, -and who more or less consciously associate the qualities of wealth -with those of the money in whose terms its amount is stated, I cannot -introduce this important subject better than by calling their attention -to the few following facts, which, simple and accessible as they are, -are not generally known. - - [Sidenote ◆1 Wealth is utterly unlike money in its divisible - qualities.] - - [Sidenote ◆2 The money of the United Kingdom is an imperceptible - fraction of its wealth.] - -◆¹ The capital value of the wealth of the United Kingdom is estimated -at something like _ten thousand million pounds_; but the entire amount -of sovereigns and shillings in the country does not exceed _a hundred -and forty-four million pounds_, nor that of the uncoined bullion, _a -hundred and twenty-two million pounds_. That is to say, for every -nominal _ten thousand_ sovereigns there does not exist in reality more -than _two hundred and twenty-six_. Were this sum divided amongst the -population equally, it would give every one a share of exactly _seven -pounds_. Again, this country produces every year wealth which we -express by calling it _thirteen hundred million pounds_. ◆² The amount -of gold and silver produced annually by the whole world is hardly -so much as _thirty-eight million pounds_. If the whole of this were -appropriated by the United Kingdom, it would give annually to each -inhabitant only ten new shillings and a single new half-sovereign. -The United Kingdom, however, gets annually but a tenth of the world’s -money, so its annual share in reality is not so much as _four million -pounds_. Accordingly, that vast volume of wealth which we express by -calling it _thirteen hundred million pounds_, has but _four million -pounds_ of fresh money year by year to correspond to it. That is to -say, there is only one new sovereign for every new nominal sum of -_three hundred and twenty-five_. - - [Sidenote ◆1 The nature of wealth, as a whole, is quite - misconceived by most people;] - - [Sidenote ◆2 As we see by the metaphors they use to describe it.] - -◆¹ Wealth as a whole, therefore, is something so totally distinct from -money that there is no ground for presuming it to be divisible in the -same way. What is wealth, then, in a country like our own? To some -people this will seem a superfluous question. They will say that every -one knows what wealth is by experience—by the experience of possessing -it, or by the experience of wanting it. And in a certain sense this -is true, but not in any sense that concerns us here. In precisely the -same sense every one knows what health is; but that is very different -from knowing on what health depends; and to know the effects of wealth -on our own existence is very different from knowing the nature of the -thing that causes them. Indeed, as a matter of fact, what wealth really -consists of is a thing which very few people are ever at the trouble to -realise; and nothing shows that such is the case more clearly than the -false and misleading images which are commonly used to represent it. -◆² The most familiar of these are: “a treasure,” “a store,” “a hoard,” -or, as the Americans say, “a pile.” Now any one of these images is not -only not literally true, but embodies and expresses a mischievous and -misleading falsehood. It represents wealth as something which could be -carried off and divided—as a kind of plunder which might be seized by -a conquering army. But the truth is, that the amount of existing wealth -which can be accurately described, or could be possibly treated in this -way, is, in a country like ours, a very insignificant portion; and, -were social conditions revolutionised to any serious degree, much of -that portion would lose its value and cease to be wealth at all. - - [Sidenote ◆1 Many kinds of wealth that are considered typical - would become almost valueless if divided: for instance, - a great house and its contents.] - -◆¹ Let us take, for instance, some palatial house in London, which -catches the public gaze as a monument of wealth and splendour; and we -will suppose that a mob of five hundred people are incited to plunder -it by a leader who informs them that its contents are worth _two -hundred thousand pounds_. Assuming that estimate to be correct, would -it mean that of these five hundred people each would get a portion to -him worth _four hundred pounds_? Let us see what would really happen. -They would find enough wine, perhaps, to keep them all drunk for a -week; enough food to feed thirty of them for a day; and sheets and -blankets for possibly thirty beds. But this would not account for -many thousands out of the _two hundred thousand pounds_. The bulk of -that sum would be made up—how? _A hundred thousand pounds_ would be -probably represented by some hundred and fifty pictures, and the rest -by rare furniture, china, and works of art. Now all these things to -the pillagers would be absolutely devoid of value; for if such pillage -were general there would be nobody left to buy them; and they would -in themselves give the pillagers no pleasure. One can imagine the -feelings of a man who, expecting _four hundred pounds_, found himself -presented with an unsaleable Sèvres broth-basin, or a picture of a -Dutch burgomaster; or of five such men if for their share they were -given a buhl cabinet between them. We may be quite certain that the -broth-basin would be at once broken in anger; the cabinet would be -tossed up for, and probably used as a rabbit-hutch; and the men as a -body would endeavour to make up for their disappointment by ducking or -lynching the leader who had managed to make such fools of them. - - [Sidenote ◆1 Wealth, as a whole, even less susceptible of - division.] - -◆¹ And now let us consider the wealth of the kingdom as a whole. -Much as the bulk of it differs from the contents of a house of this -kind, it would, if seized on in any forcible way, prove even more -disappointing and elusive. - - [Sidenote ◆1 Wealth, as a whole, has two aspects: that of capital, - and that of income.] - - [Sidenote ◆2 We will first consider the national capital.] - -◆¹ We may consider it under two aspects. We may consider it as so much -annual income, or else as so much capital. In the last chapter we were -considering it as so much income, and presently we shall be doing so -again. But as capital may possibly strike the imagination of many as -something more tangible and easily seized, and likely to yield, if -redistributed, more satisfactory results, ◆² we will see first of what -items the estimated capital of this country is composed. To do so will -not only be instructive: it will also be curious and amusing. - - [Sidenote ◆1 This capital consists not of money;] - -◆¹ As I said just now, its value, expressed in money, is according to -the latest authorities about _ten thousand million pounds_.[14] As -actual money, however, forms so minute a portion of this,—the reader -will see that it is hardly more than one-fortieth,—we may, for our -present purpose, pass it entirely over; and our concern will be solely -with the things for which our millions are a mere expression. - - [Sidenote ◆1 But of three classes of things: the two first - comprising things not susceptible of division;] - -◆¹ It will be found that these things divide themselves into three -classes. The first consists of things which, from their very nature, -are not susceptible of any forcible division at all; the second -consists of things which are susceptible of division only by a process -of physically destroying them and pulling them into pieces; and each -of these two classes, in point of value, represents, roughly speaking, -nearly a quarter of the total. The third class alone, which represents -little more than a half, consists of things which, even theoretically, -could be divided without being destroyed. - - [Sidenote ◆1 The third class comprising all those things that - could be divided without destroying them; and forming - about half of the total.] - -◆¹ We will consider this third class first, which represents in the -estimates of statisticians _five thousand seven hundred million -pounds_. The principal things comprised in it are land, houses, -furniture, works of art, clothing, merchandise, provisions, and -live-stock; and such commodities in general as change hands over the -shopman’s counter, or in the market.[15] Of these items, by far the -largest is houses, which make up a quarter of the capital value of -the country, or _two thousand five hundred million pounds_. But more -than half this sum stands for houses which are much above the average -in size, and which do not form more than an eighth part of the whole; -and were they apportioned to a new class of occupants, they would lose -at least three-fourths of their present estimated value. So too with -regard to furniture and works of art, a large part of their estimated -value would, as we have seen already, disappear in distribution -likewise: and their estimated value is about a tenth of the whole we -are now considering. Land, of course, can, at all events in theory, -be divided with far greater advantage; and counts in the estimates -as _fifteen hundred million pounds_—or something under a sixth of the -whole. Merchandise, provisions, and movable goods in general can be -divided yet more readily; and so one would think could live-stock, -though this is hardly so in reality: but of the whole these three last -items form little more than a twentieth. - - [Sidenote ◆1 The results of dividing these would be ridiculous.] - -◆¹ And now, supposing all these divisible things to be divided, let us -see what the capital would look like which would be allotted to each -individual. Each individual would find himself possessed of a lodging -of some sort, together with clothes and furniture worth about _eight -pounds_. He would have about _eight pounds_’ worth of provisions and -miscellaneous movables, and a ring, a pin, or a brooch, worth about -_three pounds ten shillings_. He would also be the proprietor of one -acre of land, which would necessarily in many cases be miles away from -his dwelling, whilst as to stocking his acre, he would be met by the -following difficulty. He would find himself entitled to the twentieth -part of a horse, to two-thirds of a sheep, the fourth part of a cow, -and the tenth part of a pig. - - [Sidenote ◆1 The second class of things, comprising the national - capital, could not be divided without destroying them.] - - [Sidenote ◆2 The remaining class of things could not be divided at - all.] - -◆¹ Such then would be the result to the individual of dividing the -whole of our capital that could be divided without destroying it. This -is, as we said, a little more than half of the total; and now let -us turn to the two other quarters; beginning with the things which -could be indeed divided, but which would obviously be destroyed in -the process. Their estimated value is more than _two thousand million -pounds_: half of which sum is represented by the railways and shipping -of the kingdom; _six hundred million pounds_, by gasworks and the -machinery in our factories; and the rest, by roads and streets and -public works and buildings. ◆² These, it is obvious, are not suitable -for division; and still less divisible are the things in the class that -still remains. For of their total value, which amounts to some _two -thousand five hundred million pounds_, more than _a thousand million -pounds_, according to Mr. Giffen, represent the good-will of various -professions of business; and the whole of the remainder—nearly _fifteen -hundred million pounds_—represents nothing that is in the United -Kingdom at all, but merely legal claims on the part of particular -British subjects to a share in the proceeds of enterprise in other -countries. - -This last class consists of things which are merely rights and -advantages secured by law, and dependent on existing social conditions; -and it can be easily understood how they would disappear under any -attempt to seize them. But the remaining three quarters of our capital -consists of material things; and what we have seen with regard to them -may strike many people as incredible; for the moment we imagine them -violently seized and distributed, they seem to dwindle and shrivel up; -and the share of each individual suggests to one’s mind nothing but a -series of ludicrous pictures—pictures of men whose heritage in all this -unimaginable wealth is an acre of ground, two wheels of a steam-engine, -a bedroom, a pearl pin, and the tenth part of a pig. - - [Sidenote ◆1 Capital has no value at all, except when vivified by - use;] - -◆¹ The explanation, however, of this result is to be found in the -recognition of an exceedingly simple fact: that the capital of a -country is of hardly any value at all, and is, as capital, of no value -at all, when regarded merely as an aggregate of material things, and -not as material things made living by their connection with life. The -land, which is worth _fifteen hundred million pounds_, depends for its -value on the application of human labour to it, and the profitable -application of labour depends on skill and intelligence. The value -of the houses depends on our means of living in them—depends not on -themselves, but on the way in which they are inhabited. What are -railways or steamships, regarded as dead matter, or all the machinery -belonging to all the manufacturing companies? Nothing. They are no -more wealth than a decomposing corpse is a man. They become wealth -only when life fills them with movement by a power which, like all -vital processes, is one of infinite complexity: when multitudes are -massed in this or in that spot, or diffused sparsely over this or that -district; when trains move at appropriate seasons, and coal finds its -way from the mine to the engine-furnace. The only parts of the capital -in existence at any given moment, which deserve the name of capital -as mere material things, are the stores of food, fuel, and clothing -existing in granaries, shops, and elsewhere; and not only is the value -of these proportionately small, but, if not renewed constantly, they -would in a few weeks be exhausted. - - [Sidenote ◆1 And it obviously cannot be used if it is equally - distributed.] - - [Sidenote ◆2 Income is all that could conceivably be thus divided.] - -◆¹ It is plain then that, under the complicated system of production -to which the wealth of the modern world is due, an equal division of -the capital of a country like our own is not the way to secure an equal -division of wealth. ◆² The only thing that could conceivably be divided -is income. If, however, it is true that capital is, as we have seen -it is, in its very nature living, and ceases to be itself the moment -that life goes out of it, still more emphatically must the same thing -be said of income, for the sake of producing which capital is alone -accumulated. Agitators talk of the national income as if it were a dead -tree which a statesman like Mr. Gladstone could cut into chips and -distribute. It is not like a dead tree; it is like the living column -of a fountain, of which every particle is in constant movement, and of -which the substance is never for two minutes the same. - - [Sidenote ◆1 The national income consists of money no more than - the national capital does.] - - [Sidenote ◆2 It consists of other things, or rights to other - things;] - - [Sidenote ◆3 Namely, of perishable goods, durable goods, and - services.] - -◆¹ Let us examine the details of this income, and the truth of what -has been said will be apparent. The total amount, as we have seen, is -estimated at _thirteen hundred million pounds_; it is not, however, -made up of sovereigns, but of things of which sovereigns are nothing -more than the measure. ◆² The true income of the nation and the true -income of the individual consist alike of things which are actually -consumed or enjoyed; or of legal rights to such things which are -accumulated for future exercise. Of these last, which, in other words, -are savings, and are estimated to amount to _a hundred and thirty -million pounds_ annually, we need not speak here, except to deduct them -from the total spent. The total is thus reduced to _eleven hundred and -seventy million pounds_—or to things actually consumed or enjoyed, -which are valued at that figure. Now what are these things? That is -our present question. ◆³ By far the larger part of them comes under -the following heads: Food, Clothing, Lodging, Fuel and Lighting, the -attendance of Servants, the Defence of the Country and Empire, and the -Maintenance of Law and Order. These together represent about _eight -hundred million pounds_. Of the remaining _three hundred and seventy -million pounds_, about a third is represented by the transport of goods -and travelling; and not much more than a quarter of the total income, -or about _two hundred and seventy million pounds_, by new furniture, -pictures, books, plate, and other miscellaneous articles. The furniture -produced annually counts for something like _forty million pounds_; and -the new plate for not more than _five hundred thousand pounds_. - -And now let us examine these things from certain different points of -view, and see how in each case they group themselves into different -classes. - -In the first place, they may be classified thus: into things that -are wealth because they are consumed, things that are wealth because -they are owned, and things that are wealth because they are used or -occupied. Under the first heading come food, clothing, lighting, and -fuel; under the second, movable chattels; and under the third, the -occupation of houses,[16] the services of domestics, the carrying of -letters by the Post Office, transport and travelling, and the defences -and administration of the country. In other words, the first class -consists of new perishable goods, the second of new durable goods, and -the third not of goods at all, but of services and uses. The relative -amounts of value of the three will be shown with sufficient accuracy by -the following rough estimates. - -Of a total of _eleven hundred and seventy million pounds_, perishable -goods count for _five hundred and twenty million pounds_, durable goods -and chattels for _two hundred and fifty million pounds_, and services -and uses for _four hundred million pounds_. Thus, less than a quarter -of what we call the national income consists of material things which -we can keep and collect about us; little less than half consists of -material things which are only produced to perish, and perish almost -as fast as they are made; and more than a third consists of actions -and services which are not material at all, and pass away and renew -themselves even faster than food and fuel. - - [Sidenote ◆1 A large part of the national income consists of - things that are imported.] - - [Sidenote ◆2 Most of our food is imported.] - -◆¹ This is how the national income appears, as seen from one point -of view. Let us change our ground, and see how it appears to us from -another. We shall see the uses and the services—to the value of -_four hundred million pounds_—still grouped apart as before. But the -remaining elements, representing nearly _eight hundred million pounds_, -and consisting of durable and perishable material things, we shall -see dividing itself in an entirely new way—into material things made -at home, and material things imported. We shall see that the imported -things come to very nearly half;[17] and we shall see further that -amongst these imported things food forms incomparably the largest -item. But the significance of this fact is not fully apparent till we -consider what is the total amount of food consumed by us; and when we -do that, we shall see that, exclusive of alcoholic drinks, actually -more than half come to us from other countries.[18] The reader perhaps -may think that this imported portion consists largely of luxuries, -which, on occasion, we could do without. If he does think so, let him -confine his attention to those articles which are most necessary, and -most universally consumed—namely bread, meat, tea, coffee, and sugar—◆² -and he will see that our imports are to our home produce as _ninety_ to -_seventy-three_. If we strike out the last three, our position is still -more startling;[19] and most startling if we confine ourselves to the -prime necessary—bread. The imported wheat is to the home-grown wheat -as _twenty-six_ to _twelve_: that is to say, of the population of this -kingdom _twenty-six millions_ subsist on wheat that is imported, and -only _twelve millions_ on wheat that is grown at home; or, to put the -matter in a slightly different way, we all subsist on imported wheat -for eight months of the year. - - [Sidenote ◆1 Thus the national income is a product of infinite - complexity.] - -◆¹ And now let the reader reflect on what all this means. It means that -of the material part of the national income half consists, not of goods -which we ourselves produce, but of foreign goods which are exchanged -for them; and are exchanged for them only because, by means of the most -far-reaching knowledge, and the most delicate adaptation of skill, we -are able to produce goods fitted to the wants and tastes of distant -nations and communities, many of which are to most of us hardly even -known by name. On every workman’s breakfast-table is a meeting of all -the continents and of all the zones; and they are united there by a -thousand processes that never pause for a moment, and thoughts and -energies that never for a moment sleep. - - [Sidenote ◆1 Its amount also varies owing to infinitely - complicated causes,] - -◆¹ A consideration of these facts will be enough to bring home to -anybody the accuracy of the simile of which I made use just now, when -I compared the income of the nation to the column thrown up by a -fountain. He will see how, like such a column, it is a constant stream -of particles, taking its motion from a variety of complicated forces, -and how it is a phenomenon of force quite as much as a phenomenon of -matter. He will see that it is a living thing, not a dead thing: and -that it can no more be distributed by any mechanical division of it, -than the labour of a man can be distributed by cutting his limbs to -pieces. - -This simile of the fountain, though accurate, is, like most similes, -incomplete. It will, however, serve to introduce us to one peculiarity -more by which our national income is distinguished, and which has an -even greater significance than any we have yet dealt with. - -In figuring the national income as the water thrown up by a fountain, -we of course suppose its estimated amount or value to be represented -by the volume of the water and the height to which it is thrown. What -I am anxious now to impress on the attention of the reader is that the -height and volume of our national fountain of riches are never quite -the same from one year to another; whilst we need not extend our view -beyond the limits of one generation to see that they have varied in -the most astonishing manner. The height and volume of the fountain are -now very nearly double what they were when Mr. Gladstone was in Lord -Aberdeen’s Ministry.[20] - - [Sidenote ◆1 Which are quite independent of the growth of - population;] - -◆¹ Some readers will perhaps be tempted to say that in this there is -nothing wonderful, for it is due to the increase of population. But the -increase of population has nothing to do with the matter. It cannot -have anything to do with what I am now stating. For when I say that -within a certain period the income of the nation has doubled itself, -I mean that it has doubled itself in proportion to the population; so -that, no matter how many more millions of people there may be in the -country now than there were at the beginning of the period in question, -there is annually produced for each million of people now nearly -twice the income that was produced for each million of people then. -Or in other words, an equal division now would give each man nearly -double the amount that it would have given him when Mr. Gladstone was -beginning to be middle-aged. - - [Sidenote ◆1 As we may see by comparing the income of this country - with the income of others.] - -◆¹ But we must not be content with comparing our national income with -itself. Let us compare it also with the incomes of other countries; -and let it in all cases be understood that the comparison is between -the income as related to the respective populations, and not between -the absolute totals. We will begin with France. It is estimated -that, within the last hundred and ten years, the income of France -has, relatively to the population, increased more than fourfold. A -division of the income in 1780 would have given _six pounds_ a head to -everybody: a similar division now would give everybody _twenty-seven -pounds_. And yet the income of France, after all this rapid growth, -is to-day twenty-one per cent less than that of the United Kingdom. -Other comparisons we shall find even more striking. Relatively to the -respective populations, the income of the United Kingdom exceeds that -of Norway in the proportion of _thirty-four_ to _twenty_; that of -Switzerland, in the proportion of _thirty-four_ to _nineteen_; that -of Italy, in the proportion of _thirty-four_ to _twelve_; and that of -Russia, in the proportion of _thirty-four_ to _eleven_. The comparison -with Italy and Russia brings to light a remarkable fact. Were all the -property of the upper classes in those countries confiscated, and the -entire incomes distributed in equal shares, the share of each Russian -would be fifty per cent less, and of each Italian forty per cent less -than what each inhabitant of the United Kingdom would receive from a -division of the income of its wage-earning classes only. - -We find, therefore, that if we take equal populations of -men,—populations, let us say, of a million men each,—either belonging -to the same nation at different dates, or to different civilised -nations at the same date, that the incomes produced by no two of them -reach to the same amount; but that, on the contrary, the differences -between the largest income and the others range from twenty to two -hundred per cent. - - [Sidenote ◆1 The causes of these differences in income are not - differences of race,] - -◆¹ Now what is the reason of this? Perhaps it will be said that -differences of race are the reason. That may explain a little, but -it will not explain much; for these differences between the incomes -produced by equal bodies of men are not observable only when men are of -different races; but the most striking examples,—namely, those afforded -by our own country and France—are differences between the incomes -produced by the same race during different decades—by the same race, -and by many of the same individuals. - - [Sidenote ◆1 Nor of soil or climate,] - -◆¹ Perhaps then it will be said that they are due to differences of -soil and climate. But again, that will not explain the differences, at -various dates, between the incomes of the same countries; and though -it may explain a little, it will not explain much, of the differences -at the same date between the incomes of different countries. The soil -and climate, for instance, of the United Kingdom, are not in themselves -more suited for agriculture than the soil and climate of France and -Belgium; and yet for each individual actually engaged in agriculture, -this country produces in value twenty-five per cent more than France, -and forty per cent more than Belgium. I may add that it produces -forty-six per cent more than Germany, sixty-six per cent more than -Austria, and sixty per cent more than Italy.[21] - - [Sidenote ◆1 Nor of hours of labour,] - -◆¹ Perhaps then a third explanation will be suggested. These -differences will be said to be due to differences in the hours of -labour. But a moment’s consideration will show that that has nothing to -do with the problem; for when a million people in this country produced -half what they produce to-day, they had fewer holidays, and they worked -longer hours. Now that they have doubled the annual produce, they take -practically four weeks less in producing it.[22] Again, the hours of -labour for the manufacturing classes are in Switzerland twenty-six -per cent longer at the present time than in this country; and yet -the annual product, in proportion to the number of operatives, is -twenty-eight per cent less.[23] - -Agriculture gives us examples of the same discrepancy between the -labour expended and the value of the result obtained. In France, the -agricultural population is three times what it is in this country, but -the value of the agricultural produce is not so much as double.[24] - - [Sidenote ◆1 But are causes of some other kind which lie below the - surface,] - -Plainly, therefore, the growth of a nation’s income, under modern -conditions, does not depend on an increased expenditure of labour. -There might, indeed, seem some ground for leaping to the contrary -conclusion—that it grows in proportion as the hours of labour -are limited: but whatever incidental truth there may be in that -contention, it does not explain the main facts we are dealing with; for -some of the most rapid changes in the incomes of nations we find have -occurred during periods when the hours of labour remained unaltered; -and we find at the present moment that countries in which the hours of -labour are the same, differ even more, in point of income, from one -another than they differ from countries in which the hours of labour -are different. ◆¹ Whatever, therefore, the causes of such differences -may be, they are not simple and superficial causes like these. - - [Sidenote ◆1 And which requires to be carefully searched for.] - -I have alluded to the incomes of foreign countries only for the sake -of throwing more light on the income of our own. Let us again turn -to that. Half of that income, as we have seen, consists to-day of an -annual product new since the time when men still in their prime were -children; and this mysterious addition to our wealth has rapidly and -silently developed itself, without one person in a thousand being -aware of its extent, or realising the operation of any new forces that -might account for it. Let people of middle age look back to their own -childhood; and the England of that time, in aspects and modes of life, -will not seem to them very different from what it seems now. Let them -turn over a book of John Leech’s sketches, which appeared in _Punch_ -about the time of the first Exhibition; and, putting aside a few -changes in feminine fashion, they will see a faithful representation -of the life that still surrounds them. The street, the drawing-room, -the hunting-field, the railway-station—nothing will be obsolete, -nothing out-of-date. Nothing will suggest that since these sketches -were made any perceptible change has come over the conditions of our -civilisation. And yet, somehow or other, some changes have taken place, -owing to which our income has nearly doubled itself. ◆¹ In other words, -the existence of one-half of our wealth is due to causes, the nature, -the presence, and the operation of which, are hidden so completely -beneath the surface of life as to escape altogether the eye of ordinary -observation, and reveal themselves only to careful and deliberate -search. - - [Sidenote ◆1 For, unless we understand the causes which have made - our national income grow, we may, by interfering with - them unknowingly, make our income decrease:] - -◆¹ The practical moral of all this is obvious: that just as our income -has doubled itself without our being aware of the causes, and almost -without our being aware of the fact, so unless we learn what the causes -are, and are consequently able to secure for them fair play, or, at all -events, to avoid interfering with their operation, we may lose what we -have gained even more quickly than we have gained it, and annihilate -the larger part of what we are desirous to distribute. We have seen -that the national income is a living thing; and, as is the case with -other living things, the principles of its growth reside in parts of -the body which are themselves not sensitive to pain, but which may for -the moment be deranged and injured with impunity, and will betray their -injury only by results which arise afterwards, and which may not be -perceived till it is too late to remedy them. - - [Sidenote ◆1 And this is the danger of reckless social - legislation.] - -◆¹ Here lies the danger of reckless social legislation, and even of -the reckless formation of vague public opinion; for public opinion, in -a democratic country like ours, is legislation in its nebular stage: -and hence the only way to avert this danger is, first to do what we -have just now been doing,—to consider the amount and character of the -wealth with which we have to deal,—and secondly, to examine the causes -to which the production of this wealth has been due, and on which the -maintenance of its continued production must depend. - - [Sidenote ◆1 We will therefore, in the following Book, examine - what these causes are.] - -◆¹ Let the social reformer lay the following reflections to his heart. -Some of the more ardent and hopeful of the leaders of the Labour -Party to-day imagine that considerable changes in the distribution of -the national income may be brought about by the close of the present -century. In other words, they prophesy that the Government will seven -years hence do certain things with that year’s national income. But -the national income of that year is not yet in existence; and what -grounds have those sanguine persons for thinking that when it is -produced it will be as large, or even half as large, as the national -income is to-day? What grounds have they for believing that, if the -working-classes then take everything, they will be as rich as they are -now when they take only a part? The only ground on which such a belief -can be justified is the implied belief that the same conditions and -forces which have swelled the national income to its present vast -amount, will still continue in undisturbed operation. - -We will now proceed to consider what these conditions and forces are. - - - ——————————————————————————————————————————————————————— - - - - - BOOK II - - THE CHIEF FACTOR IN THE PRODUCTION - OF THE NATIONAL INCOME - - - - - ——————————————————————————————————————————————————————— - - - - - CHAPTER I - - _Of the various Factors in Production, and how to - distinguish the Amount produced by each._ - - -The inquiry on which we are entering really comprises two. I will -explain how. - -Although, as we have seen, of the yearly income of the nation a part -only consists of material things, yet the remainder depends upon these, -and its amount is necessarily in proportion to them. Accordingly, when -we are dealing with the question of how the income is produced, we may -represent the whole of it as a great heap of commodities, which every -year disappears, and is every year replaced by a new one. Here then we -have a heap of commodities on one side, and on the other the subjects -of our inquiry—namely, the conditions and forces which produce that -heap. - - [Sidenote ◆1 Land, Capital, and Human Exertion are the three - factors in production; but at present we may omit - Capital.] - -Now, as to what these conditions and forces are, there is a familiar -answer ready for us—◆¹ Land, Labour, and Capital; and, with a certain -reservation, we may take this to be true. But as Capital is itself the -result of Land and Labour, we need not, for the moment, treat Capital -separately; but we may say that the heap is produced by Land and Labour -simply. I use this formula, however, only for the purpose of amending -it. It will be better, for reasons with which I shall deal presently, -instead of the term Labour to use the term Human Exertion. And further, -we must remember this—the heap of commodities we have in view is no -mere abstraction, but represents the income of this country at some -definite date; so that when we are talking of the forces and conditions -that have produced it, we mean not only Human Exertion and Land, but -Human Exertion of a certain definite amount applied to Land of a -definite extent and quality. - - [Sidenote ◆1 The first point we notice is that the exertion of the - same number of men applied to the same land does not - always produce the same amount of wealth.] - - [Sidenote ◆2 This must be due to some varying element in the Human - Exertion in question.] - - [Sidenote ◆3 Let us compare production in this country 100 years - ago with production now.] - -◆¹ Now, as I pointed out in the last Book, one of the most remarkable -things about our national production of commodities, is that the yearly -exertion of the same number of men, applied to land of the same extent -and quality, has been far from producing always a heap of the same -size. On the contrary, the heap which it produces to-day is twice as -large as that which it produced in the days of our fathers; and nearly -three times as large as that which it produced in the days of our -grandfathers. Here then is the reason why the inquiry that is before -us is twofold. For we have at first to take some one of such heaps -singly—on several accounts it will be convenient to take the smallest, -namely that produced about a hundred years ago—and to analyse the parts -which Land and Human Exertion played respectively in the production of -_it_. Then, having seen how Land and Human Exertion produced in the -days of our grandfathers a heap of this special size, we must proceed -to inquire why three generations later the same land and the exertions -of a similar number of men produce a heap which is nearly three times -as large. For the difference of result cannot be due to nothing. ◆² -It must be due to some difference in one of the two causes—to the -presence in this cause of some varying element: and it is precisely -here—here in this varying element—that the main interest of our inquiry -centres. For if it is owing to a variation in this element that our -productive powers have nearly trebled themselves in the course of -three generations, nearly two-thirds of the income which the nation -enjoys at present depends on the present condition of this element -being maintained, and not being suffered—as it very easily might be—to -again become what it was three generations back. ◆³ Let us begin then -with taking the amount of commodities produced in this country at the -end of the last century, which is at once the most convenient and the -most natural period to select; for production was then entering on its -present stage of development, and its course from then till now is more -or less familiar to us all. - -We will start therefore with the fact that, about a hundred years ago, -our national income, if divided equally amongst the inhabitants of -the kingdom, would have yielded to each inhabitant a share of about -_fourteen pounds_; so that if we confine ourselves to Great Britain, -the population of which was then about _ten millions_, we have a -national income of _a hundred and forty million pounds_, or a heap of -commodities produced every year to an amount that is indicated by that -money value. Let us take then any one of the closing years of the last -century, and consider for a moment the causes at work in this island to -which the production of such a heap of commodities was due. - -In general language, these causes have been described already as Human -Exertion of a certain definite amount applied to Land of a certain -definite extent and quality; but it will now be well to restore to -its traditional place the accumulated result of past exertion—namely -Capital, and to think of it as a separate cause, according to the usual -practice. For everybody knows that at the close of the last century, -many sorts of machinery, and stores of all sorts of necessaries, were -made and accumulated to assist and maintain Labour; and it is of such -things that Capital principally consists. The Capital of Great Britain -was at that time about _sixteen hundred million pounds_.[25] We will -accordingly say that about a hundred years ago, the Land of this -island, the Capital of this island, and the Exertions of a population -of _ten million_ people produced together, every twelve months, a heap -of commodities worth _a hundred and forty million pounds_. We need -not, however, dwell, till later, on these details. For the present our -national production at this particular period may be taken to represent -the production of wealth generally. - - [Sidenote ◆1 How much in each case did Land, Capital, and Human - Exertion produce respectively?] - -◆¹ Now the question, let it be remembered, with which we are concerned -ultimately, is how wealth, as produced in the modern world, may be -distributed. Accordingly, since the distribution of it presupposes its -production, and since we are agreed generally as to what the causes of -its production are,—namely, Land, Capital, and Human Exertion,—our next -great step is to inquire what proportion of the product is to be set -down as due to each of these causes separately; for it is by this means -only that we can see how and to what extent our social arrangements -may be changed, without our production being diminished. And I cannot -introduce the subject in a better way than by quoting the following -passage from John Stuart Mill, in which he declares such an inquiry to -be both meaningless and impossible to answer; for that it _can_ be -answered, and that it is full of meaning, and that to ask and answer it -is a practical and fundamental necessity, will be made all the plainer -by the absurdity of Mill’s denial. - - [Sidenote ◆1 Mill declares this question to be meaningless;] - - [Sidenote ◆2 But his argument is answered, and is refuted both by - practical life and by his own writings.] - -◆¹ “Some writers,” he says, “have raised the question whether Nature -(or, in the language of economics, Land) gives more assistance to -Labour in one kind of industry or another, and have said that in some -occupations Labour does most; in others, Nature most. In this, however, -there seems much confusion of ideas. The part which Nature has in any -work of man is indefinite and immeasurable. It is impossible to decide -that in any one thing Nature does more than in any other. One cannot -even say that Labour does less. Less Labour may be required; but if -that which is required is absolutely indispensable, the result is just -as much the product of Labour as of Nature. When two conditions are -equally necessary for producing the effect at all, it is unmeaning to -say that so much of it is produced by one and so much by the other. -It is like attempting to decide which half of a pair of scissors has -most to do with the act of cutting; or, which of the factors—five or -six—has most to do with the production of thirty.” So writes Mill in -the first chapter of his _Principles of Political Economy_; and if what -he says is true with regard to Land and Labour (or, as we are calling -it, Human Exertion), it is equally true with regard to Human Exertion -and Capital; for without Human Exertion, Capital could produce nothing, -and without Capital modern industry would be impossible: and thus, -according to Mill’s argument, we cannot assign to either of them a -specific portion of the product. ◆² But Mill’s argument is altogether -unsound; and the actual facts of life, and a large part of Mill’s own -book, little as he perceived that it was so, are virtually a complete -refutation of it. - -To understand this, the reader need only reflect on those three -principal and familiar parts into which the annual income of every -civilised nation is divided, not only in actual practice, but -theoretically by Mill himself—namely Rent, Interest, and Wages.[26] -For these—what are they? The answer is very simple. They are portions -of the income which correspond, at all events in theory, to the amounts -produced respectively by Land, Capital, and Human Exertion; and which -are on that account distributed amongst three sets of men—those who own -the Land, those who own the Capital, and those who have contributed -the Exertion. There are many causes which in practice may prevent the -correspondence being complete; but that the general way in which the -income is actually distributed is based on the amount produced by these -three things respectively,—Land, Capital, and Human Exertion,—is a fact -which no one can doubt who has once taken the trouble to consider it. -It is thus perfectly clear that, contrary to what Mill says, though two -or more agencies may be equally indispensable to the production of any -wealth at all, it is not only not “unmeaning to say that so much is -produced by one and so much by the other,” but it is possible to make -the calculation with practical certainty and precision; and I will now -proceed to explain the principles on which it is made. - - - - - CHAPTER II - - _How the Product of Land is to be distinguished from - the Product of Human Exertion._ - - -The question before us will be most easily understood if we begin -with once again waiving any consideration of Capital, and if we deal -only with what Mill, in the passage just quoted, calls “Nature and -Labour”—or, in other words, with Land and Human Exertion. We will -also, for simplicity’s sake, confine ourselves to one use of land—its -primary and most important use, namely its use in agriculture or -food-production. - - [Sidenote ◆1 Rent is the proportion of the produce produced not by - Human Exertion, but by the Land itself;] - -◆¹ Now a British tenant-farmer who lives solely by his farming -obviously derives his whole income from the produce of the soil he -occupies; but the whole of this produce does not go to himself. Part is -paid away in the form of rent to his landlord, and part in the form -of wages to his labourers. We may however suppose, without altering -the situation, that he has no labourers under him—that he is his own -labourer as well as his own manager, and that the whole of the produce -that is not set aside as rent goes to himself as the wages of his own -exertion. The point on which I am going to insist is this—that whilst -the exertion has produced the product that is taken as wages, the -soil—or to speak more accurately—a certain quality in the soil has just -as truly produced the produce that goes in rent—in fact that “Nature -and Labour, though equally necessary for producing the effect at all,” -each produce respectively a certain definite part of it. - - [Sidenote ◆1 As will be shown in this chapter by reference to the - universally accepted theory of Rent.] - -◆¹ In order to prove this it will be enough to make really clear to -the reader the explanation of rent which is given by all economists—an -explanation in which men of the most opposite schools agree—men like -Ricardo, and men like Mr. Henry George; and of which Mill himself -is one of the most illustrious exponents. I shall myself attempt to -add nothing new to it, except a greater simplicity of statement and -illustration, and a special stress on a certain part of its meaning, -the importance of which has been hitherto disregarded. - -Now, as we are going to take the industry of agriculture for our -example, we shall mean by rent a portion of the agricultural products -derived from Human Exertion applied to a given tract of soil. Of such -products let us take corn, and use it, for simplicity’s sake, as -representing all the rest; and that being settled, let us go yet a -step further; and, for simplicity’s sake also, let us represent corn -by bread; and imagine that loaves develop themselves in the soil like -potatoes, and, when the ground is properly tilled, are dug up ready -for consumption. We shall figure rent therefore as a certain number -of loaves that are dug up from a given tract of soil. Now everybody -knows that all soils are not equally good. That there is good land and -that there is poor land is a fact quite familiar even to people who -have never spent a single day in the country. And this means, if we -continue the above supposition, that different fields of precisely the -same size, cultivated by similar men and with the same expenditure of -exertion, will yield to their respective cultivators different numbers -of loaves. - - [Sidenote ◆1 We will illustrate this by the case of three men of - equal power tilling three fields of unequal fertility.] - -◆¹ Let us take an example. Tom, Dick, and Harry, we will say, are three -brothers, who have each inherited a field of twelve acres. They are all -equally strong, and equally industrious: we may suppose, in fact, that -they all came into the world together, and are as like one another as -three Enfield rifles. Each works in his field for the same time every -day, digs up as many loaves as he can, and every evening brings them -home in a basket. But when they come to compare the number that has -been dug up by each, Tom always finds that he has fifteen loaves, Dick -that he has twelve, and Harry that he has only nine; the reason being -that in the field owned by Harry fewer loaves develop themselves than -in the fields owned by Tom and Dick. Harry digs up fewer, because there -are fewer to dig up. Let us consider Harry’s case first. - - [Sidenote ◆1 Labour must be held to produce so much as is - absolutely necessary for its own support.] - -◆¹ Each of the loaves is, we will say, worth fourpence; therefore -Harry, with his nine loaves, makes three shillings a day, or eighteen -shillings a week. This is just enough to support him, according to the -ideas and habits of his class. If his field were such that it yielded -him fewer loaves, or if he had to give even one of the loaves away, -the field would be useless; it would not be cultivated at all, either -by him, or by anybody, nor could it be; for the entire produce, which -would then go to the cultivator, would not be enough to induce, or -perhaps even to make him able, to cultivate it. But, as matters stand, -so long as the entire produce does go to him, and to no one else, we -must take it for granted that his exertion and his field between them -yield him a livelihood which, according to his habits, is sufficient; -for otherwise, as I have said, this field neither would nor could be -cultivated. And it will be well here to make the general observation -that whenever we find a class of men cultivating the utmost area of -land which their strength permits, and taking for themselves the entire -produce, their condition offers the highest standard of living that -can possibly be general amongst peasant cultivators: from which it -follows that, unless no land is cultivated except the best, the general -standard of living must necessarily require less than the entire -produce which the best land will yield. We assume then that Harry, -with his nine loaves a day, represents the highest standard of living -that is, or that can be, general amongst his class. - -And now let us turn from Harry’s case to the case of Tom and Dick. They -have been accustomed to precisely the same standard of living as he has -been; and they require for their support precisely the same amount of -produce. But each day, after they have all of them fared alike, each -taking the same quantity from his own particular basket, the baskets -of Tom and Dick present a different appearance to that of Harry. There -is in each of the two first a something which is not to be found in -his. There is a surplus. In Dick’s basket there are three extra loaves -remaining; and in Tom’s basket there are six. To what then is the -production of these extra loaves due? Is it due to land, or is it due -to the exertions of Tom and Dick? Mill, as we have seen, would tell us -that this was an unmeaning question; but we shall soon see that it is -not so. - - [Sidenote ◆1 But whatever is beyond this is the product not of - Labour, but of Land;] - -It is perfectly true that it would be an unmeaning question if we -had to do with one of the brothers only—say with Harry, and only -with Harry’s field. Then, no doubt, it would be impossible to say -which produced most—Harry or the furrows tilled by him,—whether Harry -produced two loaves and the furrows seven, or Harry seven and the -furrows two. And as to Harry’s case more must be said than this. Such -a calculation with regard to it would be not only impossible, but -useless; for even if we convinced ourselves that the land produced -seven loaves, and Harry’s exertion only two, all the loaves would -still of necessity go to Harry. In a case like this, therefore, it is -quite sufficient to take account of Human Exertion only. Agricultural -labour, in fact, must be held to produce whatever product is necessary -for the customary maintenance of the labourer. ◆¹ But if this is the -entire product obtained from the worst soil cultivated, it cannot be -the entire product obtained from the best soil; and the moment we have -to deal with a second field,—a field which is of a different quality, -and which, although it is of exactly the same size, and is cultivated -every day with precisely similar labour, yields to that labour a -larger number of loaves,—twelve loaves, or fifteen loaves, instead of -nine,—then our position altogether changes. We are not only able, but -obliged to consider Land as well as Labour, and to discriminate between -their respective products. A calculation which was before as unmeaning -as Mill declares it to be, not only becomes intelligible, but is forced -on us. - - [Sidenote ◆1 As we shall see by comparing the case of the man - tilling the best field with that of the man tilling the - worst.] - -◆¹ For if we start with the generalisation derived from Harry’s case, -or any other case in which the land is of a similar quality that one -man’s labour produces nine loaves daily, and then find that Tom and -Dick, for the same amount of labour, are rewarded respectively by -fifteen loaves or by twelve, we have six extra loaves in one case, -and three in the other, which cannot have been produced by Labour, -and which yet must have been produced by something. They cannot have -been produced by Labour; for the very assumption with which we start -is that the Labour is the same in the last two cases as in the first; -and according to all common-sense and all logical reasoning, the same -cause cannot produce two different results. When results differ, the -cause of the difference must be sought in some cause that varies, not -a cause that remains the same; and the only cause that here varies -is the Land. Accordingly, just as in Harry’s case we are neither able -nor concerned to credit the Land with any special part, or indeed any -part, of the product, but say that all the nine loaves are produced by -Harry’s Labour, so too in the case of Tom and Dick we credit Labour -with a precisely similar number; but all loaves beyond that number -we credit not to their Labour, but to their Land—or, to speak more -accurately, to certain qualities which their Land possesses, and which -are not possessed by Harry’s. In Dick’s case these superior qualities -produce three loaves; in Harry’s case, they produce six. - - [Sidenote ◆1 The men themselves would be the first to understand - this.] - -If any one doubts that such is the case, let him imagine our three -brothers beginning to quarrel amongst themselves, and Tom and Dick -boasting that they were better men than Harry, on the ground that they -always brought home more loaves than he. Every one can see what Harry’s -retort would be, and see also that it is unanswerable. ◆¹ Of course he -would say, “I am as good a man as either of you, and my labour produces -quite as much as yours. Let us only change fields, and you will see -that soon enough. Let Tom take mine, and let me take his, and I then -will bring home fifteen loaves; and he, work as he may, will only -bring home nine. It is your b——y land that produces more than mine, -not you that produce more than I; and if you deny it, stand out you -——s and I’ll fight you.” We may also appeal to one of the commonest -of our common phrases, in which Harry’s supposed contention is every -day reiterated. If a farmer is transferred from a bad farm to a good -one, and the product of his farming is thereby increased, as it will -be, everybody will say, “The good farm _makes_ all the difference.” -This is merely another way of saying, the superior qualities in the -soil _produce_ all the increase, or—to continue our illustration—the -increased number of loaves. - -And all the world is not only asserting this truth every day, but is -also acting on it; for these extra loaves, produced by the qualities -peculiar to superior soils, are neither more nor less than Rent. Rent -is the amount of produce which a given amount of exertion obtains -from rich land, beyond what it obtains from poor land. Such is the -account of rent in which all economists agree; indeed, when once it is -understood, the truth of it is self-evident. Mr. Henry George’s entire -doctrines are built on it; whilst Mill calls it the _pons asinorum_ of -economics. I have added nothing in the above statement of it to what is -stated by all economists, except weight and emphasis to a truth which -they do not so much state as imply, and whose importance they seem to -have overlooked. This truth is like a note on a piano, which they have -all of them sounded lightly amongst other notes. I have sounded it -by itself, and have emphasised it with the loud pedal—the truth that -rent is for all practical purposes not the product of Land and Human -Exertion combined, but the product of Land solely, as separate from -Human Exertion and distinct from it. - - [Sidenote ◆1 The above doctrine of Rent is not a landlord’s - doctrine. It would hold true of a Socialistic State as - well as of any other.] - -◆¹ And here let me pause for a moment to point out a fact which, though -it illustrates the above truth further, I should not mention here if -it were not for the following reason. Rent forms the subject of so -much social and party prejudice that what I have just been urging may -be received by certain readers with suspicion, and regarded as some -special pleading on behalf of landlords. I wish therefore to point -out clearly that the existence of rent and the payment of rent is -not peculiar to our existing system of landlordism. Rent must arise, -under any social arrangement, from all soils which are better than the -poorest soil cultivated: it must be necessarily paid to somebody; and -that somebody must necessarily be the owner. If a peer or a squire is -the owner, it is paid to the peer or squire; if the cultivator is the -owner, the cultivator pays it to himself; if the land were nationalised -and the State were to become the owner, the cultivator would have to -pay it away to the State. - - [Sidenote ◆1 It is easy to see how Rent arises, under any - conditions, from all superior soils.] - -◆¹ In order that the reader may fully realise this, let us go back to -our three brothers, of whom the only two who paid rent at all, paid -it, according to our supposition, to themselves; and let us imagine -that Harry—the brother who pays no rent to anybody, because his field -produces none, has a sweetheart who lives close to Tom’s field, or -who sits and sucks blackberries all day in its hedge; and that Harry -is thus anxious to exchange fields with Tom, in order that he may be -cheered at his work by the smiles of the beloved object. Now if Tom -were to assent to Harry’s wishes without making any conditions, he -would be not only humouring the desire of Harry’s heart, but he would -be making him a present of six loaves daily; and this, we may assume, -he certainly would not do; nor would Harry, if he knew anything of -human nature, expect or even ask him to do so. If Tom, however, were on -good terms with his brother, he might quite conceivably be willing to -meet his wishes, could it be but arranged that he should be no loser -by doing so; and this could be accomplished in one way only—namely, -by arranging that, since Harry would gain six loaves each day by -the exchange, and Tom would lose them, Harry should send these six -loaves every day to Tom; and thus, whilst Harry was a gainer from a -sentimental point of view, the material circumstances of both of them -would remain what they were before. Or we may put the arrangement -in more familiar terms. The loaves in question we have supposed to -be worth fourpence each; so we may assume that instead of actually -sending the loaves, Harry sends his brother two shillings a day, or -twelve shillings a week, or thirty pounds a year. Tom’s field, as we -have said, is twelve acres; therefore, Harry pays him a rent of fifty -shillings an acre. And Tom’s case is the case of every landlord, no -matter whether the landlord is a private person or the State—a peer who -lets his land, a peasant like Tom who cultivates it, or a State which -allows the individual to occupy but not to own it. Rent represents an -advantage which is naturally inherent in certain soils; and whoever -owns this advantage—either the State or the private person—must of -necessity either take the rent, or else make a present of it to certain -favoured individuals. - -It should further be pointed out that this doctrine of Rent, though -putting so strict a limit on the product that can be assigned to -Labour, interferes with no view that the most ardent Socialist or -Radical may entertain with regard to the moral rights of the labourer. -If any one contends that the men who labour on the land, and who pay -away part of the produce as rent to other persons, ought by rights to -retain the whole produce for themselves, he is perfectly at liberty to -do so, for anything that has been urged here. For the real meaning -of such a contention is, not that the labourers do not already keep -everything that is produced by their labour, but that they ought to -own their land instead of hiring it, and so keep everything that is -produced by the land as well. - - [Sidenote ◆1 The doctrine of Rent is the fundamental example of - the reasoning by which to each agent in production a - definite portion of the product is attributed.] - -This doctrine of Rent, then, which I have tried to make absolutely -clear, involves no special pleading on behalf either of landlord or -tenant, of rich or poor. It can be used with equal effect by Tory, -Radical, or Socialist, and it would be as true of a Socialistic State -as it is of any other. I have insisted on it here for one reason only. -◆¹ It illustrates, and is the fundamental example of, the following -great principle—that in all cases where Human Exertion is applied to -Land which yields only enough wealth to maintain the man exerting -himself, practical logic compels us to attribute the entire product to -his exertion, and to take the assumption that his exertion produces -this much as our starting-point. But in all other cases—that is to say -in all cases where the same exertion results in an increased product, -we attribute the increase—we attribute the added product—not to Human -Exertion, which is present equally in both cases, but to some cause -which is present in the second case, and was not present in the first: -that is to say, to some superior quality in the soil. - -And now let us put this in a more general form. When two or more -causes produce a given amount of wealth, and when the same causes with -some other cause added to them produce a greater amount, the excess -of the last amount over the first is produced by the added cause; or -conversely, the added cause produces precisely that proportion of the -total by which the total would be diminished if the added cause were -withdrawn. - -It is on this principle that the whole reasoning in the present book is -based; and having seen how it enables us to discriminate between the -amounts of wealth produced respectively by Human Exertion and Land, let -us go on to see how it will enable us likewise to discriminate what is -produced by Capital. - - - - - CHAPTER III - - _Of the Products of Machinery or Fixed Capital, as distinguished - from the Products of Human Exertion._ - - - [Sidenote ◆1 To understand how much of the gross product is made - by Capital, it will be well to turn from agriculture to - manufactures;] - - [Sidenote ◆2 As Capital plays in manufactures a more obvious part.] - -◆¹ Land, which in economics means everything that the earth produces -and the areas it offers for habitation, is of course in a sense at -the bottom of every industry. But if we wish to understand the case -of Capital, it will be well to turn from agriculture to industry of -another kind; the reason being that the part which Capital plays in -agriculture is not only, comparatively speaking, small, but is also a -part which, when we are first approaching the subject, is comparatively -ill fitted for purposes of illustration. ◆² What is best fitted for -the purpose of illustration is Capital applied to manufactures; and it -is best at first not to consider all such Capital, but to confine our -attention to one particular part of it. I must explain to the reader -exactly what I mean. - - [Sidenote ◆1 Capital, when actually employed, is of two kinds:] - - [Sidenote ◆2 Fixed Capital, such as plant and machinery; and Wage - Capital.] - - [Sidenote ◆3 The Capital embodied in machinery is what, for our - present purpose, we must first consider.] - -◆¹ People constantly speak of Capital as being a sensitive thing—a -movable thing—a thing that is easily driven away—that can be -transferred from one place to another by a mere stroke of the pen. -We all of us know the phrases. But though they express a truth, it -is partial truth only. Capital before it is employed, when it is -lying, let us say, in a bank, to the credit of a Company that has not -yet begun operations—Capital, under such circumstances, is no doubt -altogether movable; for before it is employed it exists as credit only. -◆² But the moment it is employed in manufacture, a very considerable -part of it is converted into things that are very far from movable—into -such things as buildings and heavy machinery; and only a part remains -movable—namely that reserved for wages. For example, M’Culloch -estimates that the average cost of a factory is about _one hundred -pounds_ for every operative to be employed in it; whilst the yearly -wages of each adult male would now on the average, be about _sixty -pounds_. Thus, if a factory is started which will employ _one thousand_ -men, and if the wages of all of them have to be paid out of Capital -for a year, the amount reserved for wages will be _sixty thousand -pounds_, whilst _a hundred thousand pounds_ will have been converted -into plant and buildings. Most people are familiar with the names given -by economists to distinguish the two forms into which employed capital -divides itself. The part which is reserved for, and paid in wages, is -called “Circulating Capital”; that which is embodied in buildings and -machinery is called “Fixed Capital.” Of Circulating Capital—or, as we -may call it, Wage Capital—we will speak presently. ◆³ We will speak -at first of Fixed Capital only; and of this we will take the most -essential part, namely machinery; and for convenience sake we will omit -the accidental part, namely buildings, which render merely the passive -service of shelter. - - [Sidenote ◆1 We shall see that machinery adds to the product of - Labour in the same way that a superior soil adds to it;] - -Now in any operation of manufacturing raw material, or—what means the -same thing—conveying raw material, say water or coal or fish, to the -places where they are to be consumed, certain machines or appliances -are necessary to enable the operation to take place well. Thus fish -or coal could hardly be carried without a basket, whilst water could -certainly not be carried without some vessel, nor in many places raised -from its source without a rope and pail. For all purposes therefore of -practical argument and calculation, appliances of these most simple and -indispensable kinds are merged in Human Exertion, just as is the case -with the poorest kind of Land, and are not credited separately with -any portion of the result. We do not say the man raised so much water, -and the rope and the pail so much. We say the man raised the whole. ◆¹ -But the moment we have to deal with appliances of an improved kind, by -which the result is increased, whilst the labour remains the same, the -case of the appliances becomes analogous to that of superior soils; -and a portion of the result can be assigned to them, distinct from the -result of Labour. - - [Sidenote ◆1 As a certain simple instance will show.] - -◆¹ Let us suppose, for instance, that a village gets all its water -from a cistern, to keep which replenished takes the labour of ten men -constantly raising the water by means of pails and ropes, and then -carrying it to the cistern, up a steep wearisome hill. These men, we -will say, receive each _one pound_ a week, the village thus paying -for its water _five hundred pounds_ a year, the whole of which sum -goes in the remuneration of labour. We will suppose, further, that the -amount of water thus obtained is _a thousand_ gallons daily, each man -raising and carrying _a hundred_ gallons; and that this supply, though -sufficient for the necessities of the villagers, is not sufficient for -their comfort. They would gladly have twice that amount; but they are -not able to pay for it. Such is the situation with which we start. We -have _a thousand_ gallons of water supplied daily by the exertion of -ten men, or _a hundred_ gallons by the exertion of each of them. - -And now let us suppose that the village is suddenly presented with a -pumping-engine, having a handle or handles at which five of these men -can work simultaneously, and by means of which they, working no harder -than formerly, can raise twice the amount of water that was formerly -raised by ten men—namely _two thousand_ gallons daily, instead of _one -thousand_. The villagers, therefore, have now _a thousand_ gallons -daily which they did not have before; and to what is the supply of -this extra quantity due? It is not due to Labour. The Labour involved -can produce no more than formerly; indeed it must produce less; for -its quality is unchanged, and it is halved in quantity. Obviously, -then, the extra _thousand_ gallons are due to the pumping-engine, and -this not in a mere theoretical sense, but in the most practical sense -possible; for this extra supply appears in the cistern as soon as the -engine is present, and would cease to appear if the engine were taken -away. - - [Sidenote ◆1 It may be also observed that the added product will - go to the owner of the machine, just as rent goes to the - owner of the land.] - -◆¹ And here let me pause for a moment, as I did when I was discussing -land, to point out a fact which at the present stage of argument has -no logical place, but which should be realised by the reader, in order -to avoid misconception: namely, the fact that the extra water-supply -which is due to the pumping-engine, will necessarily be the property of -whoever owns the engine, just as rent will be the property of whoever -owns the land that yields it. We supposed just now that the owner of -the engine was the village. We supposed that the engine was presented -to it. Consequently the village owned the whole extra _thousand_ -gallons. It had not to pay for them. But let us suppose instead that -the engine was the property of some stranger. Just as necessarily in -that case the gallons would belong to him; and he could command payment -for them, just as if he had carried them to the cistern himself. We -supposed that the village was able to pay _five hundred pounds_ for -its water; and that it really wanted, for its convenience, twice -as much as it could obtain for that sum expended on human labour. -The owner of the pumping-engine, by allowing the village to use it, -doubles the water-supply, and halves the labour bill. The expenditure -on labour sinks from _five hundred pounds_ to _two hundred and fifty -pounds_; and the owner of the pumping-engine can, it is needless to -say, command the _two hundred and fifty pounds_ which is saved to the -village by its use. In actual life, no doubt, the bargain would be -less simple; because in actual life there would be a number of rival -pumping-engines, whose owners would reduce, by competition, the price -of the extra water; but whatever the price might be, the principle -would remain the same. The price or the value of the water would go to -the owner of the engine; and it would fail to do so only if one thing -happened—if the owner refused to receive it, and, for some reason -or other, made the village a free gift of what the village would be -perfectly willing to buy. In this truth there is nothing that makes for -or against Socialism. The real contention of the Socialist is simply -this—not that labour makes what is actually made by machinery; but that -labourers ought to own the machinery, and for that reason appropriate -what is made by it. A machine or engine, in fact, which is used to -assist labour is, in its quality of a producing agent, just as separate -from the labour with which it co-operates, as a donkey, in its quality -of a carrying agent, is distinct from its master, if the master is -walking along carrying one sack of corn, and guiding the donkey who -walks carrying seven. - - [Sidenote ◆1 A machine, then, as a productive agent, is as - distinct from human labour as are the efforts of an - animal.] - -◆¹ And this brings us back into the line of our main argument; the -comparison just made being a very apt and helpful illustration of it. -Every machine may be looked on as a kind of domestic animal, and each -new machine as an animal of some new species; which animals co-operate -with men in the production of certain products: and the point I am -urging on the reader may accordingly be put thus. When a man, or a -number of men, without one of these animals to assist them, produce a -certain amount of some particular product, and with the assistance of -one of these animals produce a much larger amount, the added quantity -is produced not by the men, but by the animal—or, to drop back again -into the language of fact, by the machine. - - [Sidenote ◆1 The history of the cotton industry is a remarkable - illustration of this.] - -◆¹ I have taken an imaginary case of drawing and pumping water, because -the operation is of an exceedingly simple kind. We will now turn from -the imaginary world to the real, and clench what has been said by an -illustration from the history of our own country—and from that period -which at present we specially have in view—namely the close of the last -century. - -From the year 1795 to the year 1800, the amount of cotton manufactured -in this country was on the average about _thirty-seven million pounds_ -weight annually: ten years before it was only _ten million pounds_; -ten years before that, only _four million pounds_; and during the -previous fifty years it had been less than _two and a half million -pounds_. The amount manufactured, up to the end of this last-named -period, was limited by the fact that spinning was a much slower -process than weaving. It was performed by means of an apparatus known -as “the one-thread wheel.” No other spinning-machine existed; and it -was the opinion of experts, about the year 1770, that it would hardly -be possible in the course of the next thirty years, by collecting and -training to the spinning trade every hand that could be secured for -such a purpose, to raise the annual total to so much as _five million -pounds_. As a matter of fact, however, _five million pounds_ were spun -in the year 1776. In six years’ time, the original product had been -doubled. In ten years, it had been more than quadrupled; in twenty -years, it had increased nearly elevenfold; and in five and twenty -years, it had increased fifteenfold.[27] - - [Sidenote ◆1 For every pound of cotton spun by labour, Arkwright’s - machinery spun fourteen pounds.] - -◆¹ To what, then, was this extraordinary increase due? It was due to -the invention and introduction of new spinning machinery—especially to -the machines invented by Hargreaves and Arkwright, and the successive -application of horse-power, water-power, and lastly of steam-power, to -driving them. Previous to the year 1770, such a thing as a cotton-mill -was unknown. During the ten following years, about forty were erected -in Great Britain; in the six years following there were erected a -hundred more; and from that time forward their number increased -rapidly, till they first absorbed, and then more than absorbed, the -whole population that had previously conducted the industry in their -own homes. As we follow the history of the manufacture into the present -century, a large part of the increasing gross produce is to be set down -to the increase in the employed population; but during the twenty-five -years with which we have just been dealing, the number of hands -employed in spinning had not more than doubled,[28] whilst the amount -of cotton manufactured had increased by fifteen hundred per cent. It -is therefore evident that the increase during this period is due almost -entirely, not to human exertion, but to machinery.[29] - - [Sidenote ◆1 The manufacture of iron offers a similar example.] - -◆¹ And next, with more brevity, let us consider the manufacture of -iron. By and by we shall come back to the subject; so it will be enough -here to mention a single fact connected with it. From about the year -1740, when a careful and comprehensive inquiry into the matter was -made, up to the year 1780, the average produce of each smelting furnace -in the country was _two hundred and ninety-four tons_ of iron annually. -Towards the close of this period machinery had been invented by which a -blast was produced of a strength that had been unknown previously; and -in the year 1788, the average product of each of these same furnaces -was _five hundred and ninety-five tons_, or very nearly double what it -had been previously. An extra _two hundred and fifty tons_ was produced -from each furnace annually: and if we attribute the whole of the former -product to human exertion, _two hundred and fifty tons_ at all events -was the product of the new machinery; since if that had been destroyed, -the product, in proportion to the expenditure of exertion, would at -once have sunk back to what it had been forty-eight years earlier. - - [Sidenote ◆1 The products, then, of Capital embodied in machinery - are easily distinguishable from the products of Labour.] - -◆¹ Here, then, we have before us the two principal manufactures of this -country, as they were during the closing years of the last century; and -we have seen that in each a definite portion of the product was due to -a certain kind of capital, as distinct from human exertion—distinct -from human exertion in precisely the same way, as we have already seen -land to be, when we find it producing rent; and we have seen further -that the products both of this kind of Capital and of Land, are to -be distinguished from those of Human Exertion on precisely similar -principles.[30] - - [Sidenote ◆1 In the next chapter we will consider the products of - Wage Capital.] - -◆¹ Machinery, however,—or fixed capital, of which we have taken -machinery as the type,—is only a part of Capital considered as a whole. -We have still to deal with the part that is reserved for and spent in -wages; and this will introduce us to an entirely new subject—a subject -which as yet I have not so much as hinted at—namely human exertion -considered in an entirely new light. - - - - - CHAPTER IV - - _Of the Products of Circulating Capital, or Wage - Capital, as distinguished from the Products - of Human Exertion._ - - - [Sidenote ◆1 Wage Capital enables men to undertake work which will - not support them till a considerable time has elapsed.] - -◆¹ Circulating Capital, or, as it is better to call it, Wage Capital, -is practically a store of those things which wages are used to buy—that -is to say the common necessaries of subsistence. And the primary -function—the simplest and most obvious function—which such Capital -performs is this: it enables men, by supplying them with the means -of living, to undertake long operations, which when completed will -produce much or be of much use, but which until they are completed will -produce nothing and be of no use, and will consequently supply nothing -themselves to the men whilst actually engaged in them. - - [Sidenote ◆1 A tunnel is a good instance of such work.] - -◆¹ Let us imagine, for instance, a tunnel which pierces a range of -mountains, and facilitates communication between two populous cities. -Five hundred navvies, we will say, have to work five years to make it. -Now if two yards of tunnel were made every day, and if each yard could -be used as soon as made, the tolls of passengers would at once yield -a daily revenue which would provide the navvies with subsistence, as -their work proceeded. But as a matter of fact until the last day’s -work is done, and the end of the fifth year sees the piercing of the -mountain completed, the tunnel is as useless as it was when it was -only just begun, and when it was nothing more than a shallow cavity -in a rock. Five years must elapse before a single toll is paid, and -before the tunnel itself supplies a single human being with the means -of providing bread for even a single day. The possibility then of the -tunnel being made at all, depends on the existence of a five-years’ -supply of necessaries, for which indirectly the tunnel will pay -hereafter, but in producing or providing which, it has had no share -whatever. - - [Sidenote ◆1 But the above-mentioned function of Wage Capital is - not its principal function in the modern world.] - -Wage Capital, in fact, imparts to industry the power of waiting for its -own results. This is its simplest, its most obvious, and its primeval -function. ◆¹ It has been the function of such capital from the days -of the earliest civilisations; and it is, indeed, its fundamental -function still: but in the modern world it is far from being its -principal function. I call its principal functions in the modern world -the functions by which during the past century and a quarter it has -produced results so incomparably, and so increasingly greater, than -were ever produced by it in the whole course of preceding ages. - - [Sidenote ◆1 Its principal function now is to enable a few men - of exceptional powers to assist by these powers the - exertions of the ordinary labourers.] - - [Sidenote ◆2 The modern employer in this respect differs from the - ancient.] - - [Sidenote ◆3 Wage Capital in the modern world is the means by - which exceptional intellect is lent to Labour.] - -◆¹ What this function is must be explained very clearly and carefully. -It is not to enable labourers to wait for the results of their labours. -It is to enable the exceptional knowledge, ingenuity, enterprise, and -productive genius of a few men so to animate, to organise, and direct -the average physical exertions of the many, as to improve, to multiply, -or to hasten the results of that exertion without increasing its -quantity. All civilisations, ancient as well as modern, have involved, -in a certain sense, the direction by the few of the many. The temples -and palaces of early Egypt and Assyria, which excite the wonder of -modern engineers and architects by the size of the blocks of stone used -in their astounding structure, are monuments of a control, absolute and -unlimited and masterly, exercised by a few human minds over millions of -human bodies. But in that control, as exercised in the ancient world, -one element was wanting which is the essence of modern industry. When -the masters of ancient labour wished to multiply commodities, or to -secure an increase of power for accomplishing some single work, the -sole means known to them was to increase the number of labourers; and -when one thousand slaves were insufficient, to reinforce them with -(let us say) four thousand more. The masters of modern labour pursue -a new and essentially opposite course. Instead of seeking in such a -case to secure four thousand new labourers, they seek to endow one -thousand with the industrial power of five. ◆² If Nebuchadnezzar had -set himself to tunnel a mountain, he could have hastened the work only -by flogging more slaves to it. The modern contractor, in co-operation -with the modern inventor, instead of flogging labour, would assist it -with tram-lines, trucks, and boring engines. In other words, whereas -in former ages the aim of the employing class was simply to secure the -service of an increasing quantity of labour, the aim of the employing -class in the present age is to increase the productive power of the -same quantity. The employing class in former ages merely forced the -employed to exert their own industrial faculties, and appropriated what -those faculties produced. The employing class of the present age not -only commands the employed, but it co-operates with them by lending -them faculties which they do not themselves possess. ◆³ It applies to -the guidance of the muscles of the most ordinary worker the profoundest -knowledge of science, all the strength of will, all the spirit of -enterprise, and the exceptional aptitude for affairs, that distinguish -the most gifted and the vigorous characters of the day. And it is the -peculiar modern function of Capital, as spent in Wages, to enable this -result to take place. - - [Sidenote ◆1 Wage Capital does this in a way which the socialistic - definition of Capital altogether ignores.] - -◆¹ Let us consider how it does so. Socialists tell us that Capitalism -in the modern world means merely the appropriation by the few of all -the materials of production, so that the many must either work as -the few bid them, or must starve. But this is a very small part of -what modern Capitalism means, and it is not the essential part, nor -does it even suggest the essential part. The majority of men must -always work or starve. Nature, not modern Capitalism, is responsible -for that necessity. The essential difference which modern Capitalism -has introduced into the situation is this—and it is an enormous -difference—that whereas in former ages the livelihood of a man was -contingent on his working in the best way that the average man knew, -modern Capitalism has made his livelihood contingent on his working in -the best way that exceptional men know. Now this best way, as we shall -see more clearly presently, does not involve the forcing of each man -to work harder, or the exacting from him any more difficult effort. -It involves merely the supplying him with a constant external guide -for even his minutest actions—a guide for every movement of arm and -hand, or a pattern of each of the objects which are the direct result -of these movements; and consequently the one thing which before all -others it requires is constant obedience or conformity to such guides -and patterns. The entire industrial progress of the modern world has -depended, and depends altogether on this constant obedience being -secured; and the possession of Wage Capital by the employing class is -the sole means which is possible in the modern world of securing it. In -the ancient world the case would no doubt have been different. The lash -of the taskmaster, the fear of prison, of death, of torture, were then -available for the stimulation and organisation of Labour. But they are -available no longer. The masses of civilised humanity have taken this -great step—they have risen from the level on which they could be driven -to industrial obedience, to the level on which they must be induced -to it. Obedience of some sort is a social necessity now as ever, and -always must be: but social necessity spoke merely to the fear of the -slave; it speaks to the will and the reason of the free labourer. The -free labourer may be, and must be, in one or other of two positions. -He may work for himself, consuming or selling his own produce; or he -may work for an employer, who pays him wages, and exacts in return for -them not work only, but work performed in a certain prescribed way. -The first position is that of the peasant proprietor or the hand-loom -weaver. The second is that of the employee in a mill or factory. In -both cases, the voice of social necessity, or of society, speaks to -the man’s reason, informing him of the homely fact that he cannot live -unless he labours: but in the first case, the voice of society cries to -him out of the ground, “You will get no food unless you labour in some -way”; and in the second case it cries to him from the mouths of the -wisest and strongest men, “You will get no food unless you consent to -labour in the best way.”[31] - - [Sidenote ◆1 Wage Capital is merely the means by which intellect - impresses itself as Labour;] - -◆¹ In other words, Wage Capital in the modern world promotes that -growth of wealth by which the modern world is distinguished, simply -because Wage Capital is the vehicle by which the exceptional qualities -of the few communicate themselves to the whole industrial community. -The real principle of progress and production is not in the Capital, -but in the qualities of the men who control it; just as the vital -force which goes to make a great picture is not in the brush, but in -the great painter’s hand; or as the skill which pilots a coach and -four through London is not in the reins, but in the hand of the expert -coachman. - - [Sidenote ◆1 As we can see by following the steps by which a - company would introduce some new machine.] - -◆¹ This can easily be seen by turning our attention once again to -machinery, and supposing that a company is floated for the improved -manufacture of something by means of some new invention. The directors -must of course begin with securing a site for the factory; but with -this exception their entire initial expenditure will directly or -indirectly consist in the payment of wages—in purchasing the services -of a certain number of men by whose exertions certain masses of raw -material are to be produced and fashioned into certain definite -forms—that is to say, into the new machinery and a suitable building to -protect it. - - [Sidenote ◆1 The whole success of such a company depends on the - amount of intellect used in the expenditure of the Wage - Capital.] - -◆¹ Now, the powers of these men resemble a mass of fluid metal which -is capable of being run into any variety of mould. If the directors -were bound by no articles of association, and if, at their first -board meeting, before they had entered into any contract for the -machinery, some other invention for the manufacture of some other -commodity were suddenly brought to their notice, and happened to take -their fancy, the men they were on the point of employing to produce -one kind of machinery might, with equal ease, be employed to produce -another. We will assume that the machinery which the men are set to -produce actually is a great improvement on anything of the kind used -hitherto, and ends in adding greatly to the productive powers of the -nation; but, so far as the men are concerned whose exertions are paid -for out of the capital of the company, the machinery might just as -well have been absolutely valueless—a mere aggregation of wheels and -axles, as meaningless as a madman’s dream. What makes their exertions -not only useful instead of useless, but more useful than any exertion -similarly applied had ever been hitherto, is, firstly, the ingenuity -of the inventor of the new machine; secondly, the judgment of the -promoters and directors of the company; and lastly, the confidence in -their judgment felt by the subscribing public. Or, we may suppose -the inventor to have himself supplied the Capital, and to unite in -himself the parts of the directors and the shareholders. In that case -the exertions of the men employed derive their value entirely from the -talent of this one man. The men employed by him, we will say, number -a thousand, and the Wage Capital he owns and administers aids and -increases production only because it is the means by which the one man -induces the thousand to accept him as the steersman of their exertions, -and to allow him to direct their course towards new and remote results -which for them lie hidden behind the horizon of contemporary habit or -ignorance. - - [Sidenote ◆1 The case of Arkwright’s spinning-frame illustrates - this.] - -◆¹ Let us take an actual case—the case of Arkwright’s spinning-frame. -This invention, which was destined to influence the prosperity of so -many millions, was in great danger of being altogether lost, simply -on account of the difficulty experienced by the inventor in securing -sufficient capital to construct and perfect his machine, and, what was -equally necessary, to exhibit it in actual use. After many rebuffs and -disappointments, a sum was at last advanced him by a certain firm of -bankers—the Messrs. Wright of Nottingham; but before the preliminary -experiments had advanced far their courage failed them, they repented -of what they had done, and they passed the inventor on to two other -capitalists whose insight was fortunately keener, and whose characters -were more courageous. These gentlemen, Mr. Need and Mr. Strutt of -Derby, took Arkwright into partnership, and by means of the Capital -which they placed at his disposal, his machine, which till now had -existed only in his own brain and in a few unfinished models, was -before long in operation, and a new industrial era was inaugurated. -Now, to the accomplishment of this result Wage Capital was essential; -but it was essential only as the means of giving effect to the genius -and strong character of certain specially gifted persons—Arkwright -with his marvellous inventive genius, Messrs. Need and Strutt with -their sagacity and spirit and enterprise. If it had not been for the -qualities of these three men, the wages paid to the labourers who made -the machine of Arkwright would have probably been paid indeed to the -very same labourers, but their exertions would have been directed to -producing some different product—some product which added nothing to -the existing powers of the community. - - [Sidenote ◆1 Now machinery is necessarily Wage Capital congealed;] - -◆¹ Machinery, therefore, or Fixed Capital, though it differs as soon -as it is made from Capital employed in wages, is the result of the use -of such Capital, and is indeed but another form of it. And now comes -the point on which I am concerned to insist here: that conversely Wage -Capital, when employed so as to increase the productivity of labour,—in -other words when employed by men with the requisite capacity,—is in -its essence but another form of machinery. Machinery may be called -congealed Wage Capital. Wage Capital may be called fluid machinery. -For the function of both—namely, to increase wealth—is the same, and -they fulfil this function by means of the same virtue residing in them. -It is easy to see the truth of this. The increase of wealth means -the improvement and multiplication of commodities which reward the -exertions of the same number of men. The number and quality of these -commodities are increased by application of Capital, because Capital -enables persons who are exceptionally gifted to control and direct -the exertions of the majority; and Capital, as embodied in machinery, -differs from Capital continuously employed in wages, only because the -former gives us machinery which is inanimate, and the latter, machinery -which is living. For a thousand men so organised as to produce some -given product or result, and to produce it with the greatest precision -or in the least possible time, are to all intents and purposes as much -an invention and a machine as a thousand wheels or rollers adjusted for -a similar purpose. - - [Sidenote ◆1 And therefore all Capital, equally with Wage Capital, - represents the control of Intellect over Labour—or one - kind of Human Exertion over another.] - -◆¹ All Capital, therefore, in all its distinctively modern -applications—all those applications which have caused what is called -industrial progress—is virtually this, and this only: it is the -exceptional capacities of one set of men applied to the average -capacities of another set. We may accordingly include all Capital—fixed -and circulating—under one head, and say of it as a whole what in the -last chapter was said of machinery: that when by its application to -the exertions of a given number of men a larger product results than -resulted from them before it was applied, Capital is to be credited -with producing the amount of the increase; or—to put the same thing in -another way—with the amount of the decrease which would result if its -application were withdrawn. - - [Sidenote ◆1 This aspect of the question will be considered - further in the next chapter.] - -How this is the case with machinery I have already illustrated by -examples. It is less easy to illustrate by examples, but equally easy -to see how it is the case with Capital continuously employed as wages. -It is less easy to select illustrations, because the whole of modern -progress is itself one great, though infinitely complex example of it; -and it will be enough here as we shall recur to the subject presently, -to consider one obvious and very familiar fact. Many new commodities, -and many new methods of production, depend on the invention not of new -machines, but of new processes. The Capital employed in working a new -process is mainly employed as wages, by the administration of which the -actions of the workmen are guided, controlled, and organised. Thus if -fifty men, working independently and selling their own produce, produce -a hundred articles of a certain sort weekly, and another fifty men, -◆¹ working for a wage-paying employer, produce, owing to the way in -which their labour is guided and organised, just double the number of -such articles in the same time, we shall say that the hundred extra -articles are the product of Wage Capital, just as we should say, if the -increased production had been due to the introduction of a machine, -that these extra hundred articles were the product of Fixed Capital. -And in both cases we should mean, as I am now going to insist more -particularly, that they were really the product of the capacities which -each kind of Capital represents. This brings us to the heart of the -whole problem. - - - - - CHAPTER V - - _That the Chief Productive Agent in the modern world - is not Labour, but Ability, or the Faculty which - directs Labour._ - - - [Sidenote ◆1 What was said in the last chapter shows that - productive Human Exertion is of two kinds, and does not - consist only of what is meant by Labour,] - - [Sidenote ◆2 As familiar instances will show us.] - -◆¹ I said in the last chapter that machinery or Fixed Capital was -congealed Wage Capital. But as Wage Capital is metamorphosed into -machinery only owing to the fact that it is at once the instrument and -the guide of Human Exertion, machinery may be called congealed exertion -also. This description of it is but half original; for Socialistic -writers have for a long time called it “congealed Labour.” But between -the two phrases there is a great and fundamental difference, and I -now bring them thus together to show what the difference is. The -first includes the whole meaning of the second, whereas the second -includes only a part of the meaning of the first. Let us take the -finest bronze statue that was ever made, and also the worst, the -feeblest, the most ridiculous. ◆² Both can with equal accuracy be -called congealed Labour; but to call them this is just as useless a -truism as to call them congealed bronze. It describes the point in -which the two statues resemble each other; it tells us nothing of what -is far more important—the points in which the two statues differ. -They differ because, whilst both are congealed Labour, the one is -also congealed imagination of the highest order, the other is also -congealed imagination of the lowest. The excellence of the metal and -of the casting may be the same in both cases. Or again, let us take -a vessel like the _City of Paris_, and let us take also the vessel -that was known as the _Bessemer Steamer_. The _Bessemer Steamer_ was -fitted with a sort of rocking saloon, which, when the vessel rolled, -was expected to remain level. The contrivance was a complete failure. -The hundreds of thousands of pounds spent on it were practically thrown -away, and the structure ended by being sold as old iron. Now these -two vessels were equally congealed Labour, and congealed Labour of -precisely the same quality; for the workmen employed on the _Bessemer -Steamer_ were as skilful as those employed on the _City of Paris_. And -yet the Labour in the one case was congealed into a piece of lumber, -and in the other case it was congealed into one of the most perfect -of those living links by which the lives of two worlds are united. -To call both the vessels, then, congealed Labour, only tells us how -success resembles failure, not how it differs from it. The _City of -Paris_ differs from the _Bessemer Steamer_ because the _City of Paris_ -was congealed judgment, and the _Bessemer Steamer_ was congealed -misjudgment. - -It is therefore evident that in _using_ Capital so as to make Labour -more efficacious, as distinct from _wasting_ Capital so as to make -Labour nugatory, some other human faculties are involved distinct from -the faculty of Labour; and I have employed, except when it would have -been mere pedantry to do so, the term “Human Exertion” instead of the -term “Labour,” because the former includes those other faculties, and -the latter does not; or, if it includes them, it entirely fails to -distinguish them, and merely confounds them with faculties from which -they fundamentally differ. Thus, when I pointed out in the last chapter -that Capital, in so far as it increased the productivity of Labour, -was mental and moral energy as applied to muscular energy, I might have -said with equal propriety, had my argument advanced far enough, that it -was one kind of Human Exertion guiding and controlling another kind. -Here we come to the great central fact which forms the key to the whole -economic problem: the fact that in the production of wealth two kinds -of Human Exertion are involved, and not, as economists have hitherto -told us, one—two kinds of exertion absolutely distinct, and, as we -shall see presently, following different laws. - - [Sidenote ◆1 Economic writers vaguely recognise this fact, but - have never formally expressed it, or made it a part of - their systems.] - - [Sidenote ◆2 They confuse all productive exertion together under - the heading of Labour.] - -◆¹ Economic writers, like the world in general, do indeed recognise, -in an unscientific way, that productive exertion exhibits itself under -many various forms; but their admissions and statements with regard to -this point are entirely confused and stultified by the almost ludicrous -persistence with which they classify all these forms under the single -heading of Labour. Mill, for instance, says that a large part of -profits are really wages of the labour of superintendence. He speaks of -“the labour of the invention of industrial processes,” “the labour of -Watt in contriving the steam-engine,” and even of “the labour of the -savant and the speculative thinker.” ◆² He employs the same word to -describe the effort that invented Arkwright’s spinning-frame, and the -commonest muscular movement of any one of the mechanics who assisted -with hammer or screwdriver to construct it under Arkwright’s direction. -He employs the same word to describe the power that perfected the -electric telegraph, and the power that hangs the wires from pole to -pole, like clothes-lines. He confuses under one heading the functions -of the employer and the employed—of the men who lead in industry, and -of the men who follow. He calls them all labourers, and he calls their -work Labour. - - [Sidenote ◆1 But practically, Labour means muscular or manual - exertion.] - - [Sidenote ◆2 Mental and moral exertion, as applied to production, - must therefore be given another name:] - -Now were the question merely one of literary or philosophical -propriety, this inclusive use of the word Labour might be defensible; -but we have nothing to do here with the niceties of such trivial -criticism. We are concerned not with what a word might be made to mean, -but what it practically does mean; and if we appeal to the ordinary -use of language,—not only its use by the mass of ordinary men, but -its most frequent use by economic writers also,—we shall find that -the word Labour has a meaning which is practically settled; and we -shall find that this meaning is not an inclusive one, but exclusive. -◆¹ We shall find that Labour practically means muscular Labour, or -at all events some form of exertion of which men—common men—are as -universally capable, and that it not only never naturally includes any -other idea, but distinctly and emphatically excludes it. For instance, -when Mill in his _Principles of Political Economy_ devotes one of his -chapters to the future of the “Labouring Classes,” he instinctively -uses the phrase as meaning manual labourers. When, as not unfrequently -happens, some opulent politician says to a popular audience, “I, too, -am a labouring man,” he is either understood to be saying something -which is only true metaphorically, or is jeered at as saying something -which is not true at all. Probably no two men in the United Kingdom -have worked harder or for longer hours than Mr. Gladstone and Lord -Salisbury; yet no one could call Mr. Gladstone a labour member, or -say that Lord Salisbury was an instance of a labouring man being a -peer. The Watts, the Stevensons, the Whitworths, the Bessemers, the -Armstrongs, the Brasseys, are, according to the formal definition of -the economists, one and all of them labourers. But what man is there -who, if, in speaking of a strike, he were to say that he supported or -opposed the claims of Labour, would be understood as meaning the claims -of employers and millionaires like these? It is evident that no one -would understand him in such a sense; and if he used the word _Labour_ -thus, he would be merely trifling with language. The word, for all -practical purposes, has its meaning unequivocally fixed. It does not -mean all Human Exertion; it emphatically means a part of it only. It -means muscular and manual exertion, or exertion of which the ordinary -man is capable, as distinct from industrial exertion of any other -kind; and not only as distinct from it, but as actively opposed to and -struggling with it. Since, then, we have to deal with distinct and -opposing things, it is idle to attempt to discuss them under one and -the same name. ◆² To do so would be like describing the Franco-Prussian -War with only one name for both armies—the soldiers; or like attempting -to explain the composition of water, with only one name for oxygen and -hydrogen—the gas. Accordingly, for the industrial exertion—exertion -moral and mental—which is distinct from Labour and opposed to it, we -must find some separate and some distinctive name; and the name which I -propose to use for this purpose is Ability. - - [Sidenote ◆1 In this book it will be called Ability.] - - [Sidenote ◆2 There is, however, a deeper distinction between the - two than the fact of one being mental and the other - muscular.] - -◆¹ Human Exertion then, as applied to the production of wealth, is of -two distinct kinds: Ability and Labour—the former being essentially -moral or mental exertion, and only incidentally muscular; the latter -being mainly muscular, and only moral or mental in a comparatively -unimportant sense. ◆² This difference between them, however, though -accidentally it is always present, and is what at first strikes the -observation, is not the fundamental difference. The fundamental -difference is of quite another kind. It lies in the following fact: -That Labour is a kind of exertion on the part of the individual, which -begins and ends with each separate task it is employed upon, whilst -Ability is a kind of exertion on the part of the individual which is -capable of affecting simultaneously the labour of an indefinite number -of individuals, and thus hastening or perfecting the accomplishment of -an indefinite number of tasks. - - [Sidenote ◆1 The vital distinction is that the Labour of one man - affects one task only; the Ability of one man may affect - an indefinite number.] - -◆¹ This vital distinction, hitherto so entirely neglected, should be -written in letters of fire on the mind of everybody who wishes to -understand, to improve, or even to discuss intelligibly, the economic -conditions of a country such as ours. Unless it is recognised, and -terms are found to express it, it is impossible to think clearly about -the question; much more is it impossible to argue clearly about it: for -men’s thoughts, even if for moments they are correct and clear, will be -presently tripped up and entangled in the language they are obliged to -use. Thus, we constantly find that when men have declared all wealth -to be due to Labour, more or less consciously including Ability in the -term, they go on to speak of Labour and the labouring classes, more -or less consciously excluding it; and we can hardly open a review or -a newspaper, or listen to a speech on any economic problem, without -finding the labouring classes spoken of as “the producers,” to the -obvious and intentional exclusion of the classes who exercise Ability; -whereas it can be demonstrated, as we shall see in another chapter, -that of the wealth enjoyed by this country to-day, Labour produces -little more than a third. - -Let us go back then to the definitions I have just now given, and -insist on them and enlarge them and explain them, so as to make them -absolutely clear. - - [Sidenote ◆1 Familiar examples will show the truth of this.] - -Labour, I said, is a kind of exertion on the part of the individual, -which begins and ends with each separate task it is employed upon; -whilst Ability is a kind of exertion on the part of the individual -which is capable of affecting simultaneously the labour of an -indefinite number of individuals. ◆¹ Here are some examples. An -English navvy, it is said, will do more work in a day than a French -navvy; he will dig or wheel away more barrow-loads of earth; but -the greater power of the one, if the two work together, has no -tendency to communicate itself to the other. The one, let us say, -will wheel twelve barrow-loads, whilst the other will wheel ten. We -will imagine, then, a gang of ten French navvies, who in a given time -wheel a hundred barrow-loads. One of them dies, and his place is -taken by an Englishman. The Englishman wheels twelve loads instead -of ten; but the rest of the gang continue to wheel ten only. Let us -suppose, however, that the Englishman, instead of being a navvy, is -a little cripple who has this kind of ability—that he can show the -navvies how to attack with their picks each separate ton of earth -in the most efficacious way, and how to run their barrows along the -easiest tracks or gradients. He might quite conceivably enable the -nine Frenchmen to wheel fifteen barrow-loads in the time that they -formerly consumed in wheeling ten; and thus, though the gang contained -one labourer less than formerly, yet owing to the presence of one -man of ability, the efficacy of its exertions would be increased by -fifty per cent. Or again, let us take the case of some machine, whose -efficiency is in proportion to the niceness with which certain of its -parts are finished. The skilled workman whose labour finishes such -parts contributes by doing so to the efficiency of that one machine -only; he does nothing to influence the labour of any other workman, -or facilitate the production of any other machine similar to it. But -the man who, by his inventive ability, makes the machine simpler, or -introduces into it some new principle, so that, without requiring so -much or such skilled labour to construct it, it will, when constructed, -be twice as efficient as before, may, by his ability, affect individual -machines without number, and increase the efficiency of the labour -of many millions of workmen. Such a case as this is specially worth -considering, because it exposes an error to which I shall again refer -hereafter—the error often made by economic writers, of treating Ability -as a species of Skilled Labour. For Skilled Labour is itself so far -from being the same thing as Ability, that it is in some respects more -distinct from it than Labour of more common kinds; for the secret -of it is less capable of being communicated to other labourers. For -instance, one of the most perfect chronometers ever made—namely, that -invented by Mudge in the last century—required for its construction -Labour of such unusual nicety, that though two specimens, made under -the direct supervision of the inventor, went with an accuracy that has -not since been surpassed, the difficulty of reproducing them rendered -the invention valueless. But the great example of this particular truth -is to be found in a certain fact connected with the history of the -steam-engine—a fact which is little known, whose significance has never -been realised, and which I shall mention a little later on. It may thus -be said with regard to the production of wealth generally, that it -will be limited in proportion to the exceptionally skilled labour it -requires, whilst it will be increased in proportion to the exceptional -ability that is applied to it. - - [Sidenote ◆1 We shall now be able to describe Capital accurately - as _Ability_ controlling _Labour_.] - -◆¹ The difference, then, between Ability and Labour must be now -abundantly clear. As a general rule, there is the broad difference -on the surface, that the one is mainly mental and the other mainly -muscular; but to this rule there are many exceptions, and the -difference in question is accidental and superficial. The essential, -the fundamental difference from a practical point of view is, that -whilst Labour is the exertion of a single man applied to a single -task, Ability is the exertion of a single man applied to an indefinite -number of tasks, and an indefinite number of individuals. - - [Sidenote ◆1 It is, of course, understood that this definition - applies only to Capital used so as actually to make - Labour more productive, not to Capital wasted.] - -◆¹ And now let us go back to the subject of Capital. I have said that -Capital is one kind of Human Exertion guiding and controlling another -kind. We can at last express this with more brevity, and say that -Capital is Ability guiding and controlling Labour. This is no mere -rhetorical or metaphorical statement. It is the accurate expression of -what is at once a theoretical truth and an historical fact; and to show -the reader that it is so, let me remove certain objections which may -very possibly suggest themselves. In the first place, it may be said -that Capital belongs constantly to idle and foolish persons, or even -indeed to idiots, to all of whom it yields a revenue. This is true; but -such an objection altogether ignores the fact that though such persons -own the Capital, they do not administer it. An idiot inherits shares in -a great commercial house; but the men who manage the business are not -idiots. They only pay the idiot a certain sum for allowing his Capital -to be made use of by their Ability. It may, however, be said further -that many men, neither idle nor idiotic, had administered Capital -themselves, and had succeeded merely in wasting it. This again is true; -but where Capital is wasted the productive powers of the nation are -not increased by it. It is, however, a broad historical fact that, by -the application of Capital the productive powers of the nation have -been increasing continually for more than a hundred years, and are -increasing still; and this is the fact, or the phenomenon, which we -are engaged in studying. Capital for us, then, means Capital applied -successfully; and when I say that Capital is Ability guiding and -controlling Labour, it is of Capital applied successfully, and not of -Capital wasted, that I must in every case be understood to be speaking; -just as if it were said that a battle was won by British bayonets, the -bayonets meant would be those that the combatants used, not those that -deserters happened to throw away. The fact, indeed, that in certain -hands so much Capital is thrown away and wasted, is nothing but a proof -of what I say, that as a productive agent Capital represents, and -practically _is_, Ability. - - [Sidenote ◆1 Capital is to Ability something like what the brain - is to the mind.] - -It may, however, be said—and the objection is worth noticing—that -Capital is a material thing, and Ability a mental thing; and it may be -asked how, except metaphorically, the one can be said to be the other? -◆¹ An answer may be given by the analogy of the mind and brain. So long -as the mind inhabits and directs a human body, mind and matter are -two sides of the same thing. It is only through the brain that mind -has power over the muscles; and the brain is powerful only because -it is the organ of the mind. Now Ability is to Capital what mind is -to the brain; and, like mind and brain, the two terms may be used -interchangeably. Capital is that through which the Ability of one set -of men acts on the muscles—that is to say, the Labour—of another set, -whether by setting Labour to produce machinery, or by so organising -various multitudes of labourers that each multitude becomes a single -machine in itself, or by settling or devising the uses to which these -machines shall be put. - - [Sidenote ◆1 And this would be as true of Capital in a Socialistic - State as in any other.] - -And it will be well, in case any Socialist should happen to read these -pages, to point out that my insisting on this fact is no piece of -special pleading on behalf of the private capitalist. ◆¹ The whole of -the above argument would apply to Capital, no matter who owned it: -individuals, or the community as a whole. For no matter who owned it, -or who divided the proceeds of it, the entire control of it would -have to be in the hands of Ability. In what, or how many, individuals -Ability may be held to reside; how such individuals are best found, -tested, and brought forward; and how their power over Capital may be -best attained by them—whether as owners, or as borrowers, or as State -officials,—is a totally different question, and is in this place beside -the point. - -At present, it will be enough to sum up what we have seen thus far. The -causes of wealth are not, as is commonly said, three: Land, Labour, and -Capital. This analysis omits the most important cause altogether, and -makes it impossible to explain, or even reason about, the phenomenon -of industrial progress. The causes of wealth are four—Land, Labour, -Capital, and Ability: the two first being the indispensable elements in -the production of any wealth whatsoever; the fourth being the cause of -all progress in production; and the third, as it now exists, being the -creation of the fourth, and the means through; which it operates. These -two last, as we shall see presently, may, except for special purposes, -be treated as only one, and will be best included under the one term -Ability. - -And now let us turn back to the condition of this country at the close -of the last century, and the reader will see why, at the outset of the -above inquiry, I fixed his attention on that particular period. - - - - - CHAPTER VI - - _Of the Addition made during the last Hundred Years - by Ability to the Product of the National Labour. - This Increment the Product of Ability._ - - - [Sidenote ◆1 Let us now turn to the history of production in this - country during the past hundred years;] - -◆¹ I have already said something—but in very general terms—of what, -at the close of the last century, the wealth of this country was. -Let us now consider the subject a little more in detail, though we -need not trouble ourselves with a great many facts and figures. The -comparatively backward state of Ireland makes it easier to deal with -Great Britain only; and the income of Great Britain was then, as I have -said already, about _a hundred and forty million pounds_ annually. -This amount was, as has been said already, also produced by Land, -Capital, and Human Exertion, or, as we are now able to put it, by Land, -Labour, Capital, and Ability; and according to the principles which I -have already carefully explained, had the statistics of industry been -recorded as fully as they are now, we should be able to assign to each -cause a definite proportion of the product. Of what the Land produced, -as distinct from the three other causes, we are indeed able to speak -with sufficient accuracy as it is. It was practically the amount taken -in rent; and the amount taken in rent was about _twenty-five million -pounds_, or something between a fifth and sixth of the total. But the -proportion produced respectively by Labour, Capital, and Ability cannot -be determined with the same ease or exactness. There are, however, -connected with this question, a number of well-known and highly -significant facts, to a few of which I will call the reader’s attention. - - [Sidenote ◆1 And consider the enormous increase both in - agricultural production,] - -◆¹ Between the years 1750 and 1800, the population of Great Britain -increased by barely so much as twenty-five per cent. It rose from about -eight millions to about ten. Now during that period the number of hands -employed in manufactures increased proportionally far faster than the -total population. The cotton-spinners, for instance, increased from -_forty_ to _eighty thousand_.[32] Such being the case, it is of course -evident that the increase of agricultural labourers cannot have been -very great. It can hardly have been, at the utmost, so much as eighteen -per cent.[33] And now let us glance at the history of agricultural -products, as indicated by a few typical facts. In the year 1688, the -number of sheep in Great Britain was estimated at _twelve millions_. -In the year 1774, the number was estimated at almost the same figure; -but between the years 1774 and 1800, this _twelve millions_ had risen -to _twenty millions_. During the same twenty-six years, the number of -cattle had increased in almost the same proportion. That is to say, -live-stock had increased by seventy-five per cent. Between the years -1750 and 1780 there was an average annual increase in agricultural -capital of _seven million three hundred thousand pounds_. But from -the years 1780 and 1800 there was an average annual increase of -_twenty-six million pounds_; whilst between the years 1750 and 1800 -the farmer’s income had very nearly doubled,[34] and the total products -of agriculture had increased sixty per cent. - - [Sidenote ◆1 And in manufactures,] - - [Sidenote ◆2 That had recently taken place at the close of the - last century.] - -◆¹ And now let us turn to manufactures. These, as a whole, had advanced -more slowly; but the advance of certain of them had been yet more -rapid and striking. It will be enough to mention two: the manufacture -of cotton, to which I have called attention already; and an industry -yet more important—the manufacture of iron. ◆² The amount of pig-iron -produced annually in Great Britain during the earlier part of the last -century was not more than _twenty thousand tons_;[35] at the close of -the century it was more than _a hundred and eighty thousand_. What may -have been the increase in the amount of labour employed, cannot be said -with certainty; but it cannot have been comparable to the increase of -the product, which was, as we have just seen, eight hundred per cent; -and it may again be mentioned that one single set of inventions, in the -course of eight years, nearly doubled the product of each individual -smelting furnace.[36] As to the cotton industry, our information is -more complete. The amount of labour was doubled in forty years. The -product was increased fifteen-fold in twenty-five. - - [Sidenote ◆1 We shall see how obviously a part at least of this - increase must have been due to Ability and Capital.] - - [Sidenote ◆2 And that Labour cannot really have produced the - whole.] - -◆¹ My present aim, however, is to make no exact calculation respecting -the extent to which production, taken as a whole, had during the -period in question outstripped the increase of Labour; but merely to -show the reader that the extent was very large; and that, according -to the principles explained already, it was due altogether to the -operation of Capital and Ability—or, to speak more exactly, of Ability -operating through Capital. The truth of this statement with regard -to the increase of manufactures has been shown and illustrated by -the instance of Arkwright and the cotton industry. It will be well -to mention at this point several analogous instances taken from the -history of agriculture. ◆² Elkington, who inaugurated a new system -of drainage, will supply us with one. One still more remarkable is -supplied by Bakewell, who may be said to have played in practical life -a part resembling that which Darwin has played in speculation. He -discovered the method of improving the breeds of sheep and cattle by -a system of selection and crossing that was not before known; and it -was owing to the ability of this one man that “the breed of animals in -England,” as Mr. Lecky points out, “was probably more improved in the -course of a single fifty years than in all the recorded centuries that -preceded it.” The close connection of such improvements with Capital -is the constant theme of Arthur Young, though he was not consciously -anything of a political economist, nor did he attempt to express his -opinion in scientific language. But a still more effective witness is -a distinguished modern Radical, Professor Thorold Rogers, who, though -always ready, and, as many people would say, eager to espouse the -side of Labour as against Capital and Ability,—especially when the -two last belonged to the landed class—is yet compelled to assert as -emphatically as Young himself, that the Ability and the Capital of -this very class were in the last century “the pioneers of agricultural -progress”—a progress which he illustrates by these picturesque -examples: that it raised the average weight of the fatted ox from 400 -lbs. to 1200 lbs., and increased the weight of the average fleece -fourfold. - - [Sidenote ◆1 Therefore it is plain that Labour would not have - created the whole of the national income a hundred years - ago. But for argument’s sake we will concede that it - produced the whole.] - -◆¹ It will therefore be apparent to every reader, that of the income of -Great Britain at the close of the last century, Ability and Capital, as -distinct from Labour, created a considerable part, though we need not -determine what part. Accordingly, since the income of Great Britain, -with a population of _ten millions_, was at that time about _a hundred -and forty million pounds_, or _fourteen pounds_ per head,[37] it is -evident that the Labour of a population of _ten millions_ was quite -incapable, a hundred years ago, of producing by itself as much as -_fourteen pounds_ per head.[38] I will, however, merely for the sake of -argument, and of keeping a calculation I am about to make far within -the limits which strict truth would warrant, make a preposterous -concession to any possible objector. I will concede that Labour by -itself produced the entire value in question, and that Ability, as -distinct from Labour, had nothing at all to do with it. I will concede -that the faculties which produced the machines of Arkwright, which -had already turned steam into an infant Hercules of industry, and -was pouring into this island the wealth of the farthest Indies, were -faculties of the same order as those which were possessed by any -waggoner who had driven the same waggon along the same ruts for a -lifetime. And I will now proceed to the calculation I spoke of. I shall -state it first, and establish its truth afterwards. - - [Sidenote ◆1 The whole income of Great Britain at that time was _a - hundred and forty million pounds_, and the population - _ten millions_. Hence, as will be shown in the next - Book, we get an indication of the utmost that Labour - alone can produce. Now, a population of _ten millions_ - at present produces _three hundred and fifty millions_ - annually.] - -◆¹ It will be seen, from what has just been said, that a hundred -years ago the utmost that Labour could produce in the most advanced -country of Europe was _a hundred and forty million pounds_ annually -for a population of _ten millions_, or—let me repeat—_fourteen pounds_ -per head. The production per head is now _thirty-five pounds_; or, for -each ten millions of population, _three hundred and fifty millions_. -The point on which presently I shall insist at length is this: that -if Labour is to be credited with producing the whole of the smaller -sum, the entire difference between the smaller sum and the larger is -to be credited to Ability operating on industry through Capital. That -is to say, for every _three hundred and fifty millions_ of our present -national income, Labour produces only _a hundred and forty millions_ -whilst Ability and Capital produce _two hundred and ten_. But the -fact may be put yet more clearly than this. Of our present national -income of _thirteen hundred millions_, Labour produces about _five -hundred_, whilst Ability and Capital produce about _eight hundred_. -It could indeed be shown, as I just now indicated, that Labour in -reality produces less than this, and Ability and Capital more; but for -argument’s sake we will let the calculation stand thus, in order that -Labour shall be at all events credited with not less than its due. - - [Sidenote ◆1 And it will accordingly be shown in the next Book - that the whole of this increment is produced by Ability, - and not by Labour.] - -◆¹ And now as to Capital and Ability, and the _eight hundred millions_ -produced by them, what has just been said can be put in a simpler way. -Capital is not only the material means through which Ability acts on -and assists Labour, but it is a material means which Ability has itself -created. So long as Labour alone was the principal productive agent, -those vast accumulations which are distinctive of the modern world were -unknown and impossible. Professor Thorold Rogers has pointed out how -small was the Capital of this country at so late a date as the close of -the seventeenth century. Labour alone was unable to supply a surplus -from which any such accumulation as we now call Capital could be taken. -These became possible only by the increasing action of Ability. They -were taken from the products which Ability added to the products of -Labour, Capital therefore _is_ Ability in a double sense—not only -in the sense that as a productive agent it represents Ability, but -in the sense that Ability has created it. We may therefore for the -present leave Capital entirely out of our discussion, regarding it as -comprehended under the term and the idea of Ability; although when we -come to consider the question of distribution, we shall have to take -account of the distinction between the two. But for the present we are -concerned with the problem of production only; and in dealing with that -part of it which alone is now before us, we have to do only with two, -and not three forces—not with Labour, Ability, and Capital, but with -Labour and Ability only. - -The calculation, therefore, which was put forward just now may be -expressed in yet simpler terms. Of our present national income of -_thirteen hundred millions_, Labour produces _five hundred millions_ -and Ability _eight hundred_. And now comes another point which yet -remains to be mentioned. When we speak of Labour, we mean not an -abstract quality: what we mean is labouring men. Similarly, when we -talk of Ability, we do not mean an abstract quality either: we mean -men who possess and exercise it. But whereas when we talk of Labour -we mean an immense number of men, when we talk of Ability—as I shall -show presently—we mean a number that by comparison is extremely small. -The real fact then on which I am here insisting, and which I shall -now proceed to substantiate and explain further, is that, whilst the -immense majority of the population of this country produce little more -than one-third of the income, a body of men who are comparatively a -mere handful actually produce little less than two-thirds of it. - - - ——————————————————————————————————————————————————————— - - - - - BOOK III - - AN EXPOSURE OF THE CONFUSIONS IMPLIED IN SOCIALISTIC - THOUGHT AS TO THE MAIN AGENT IN MODERN PRODUCTION - - - - - ——————————————————————————————————————————————————————— - - - - - CHAPTER I - - _The Confusion of Thought involved in the Socialistic - Conception of Labour._ - - - [Sidenote ◆1 After what has now been said, every one will admit - that Ability, as distinct from Labour, is as truly a - productive agent as Labour is.] - - [Sidenote ◆2 But Socialists, even if they admit this fact, by - their inaccurate thought and language obscure the - meaning of the fact;] - -◆¹ There is one point which now must be quite plain to every reader, -and on which there is no need to insist further; namely, that Ability -is as truly a productive agent as Labour, and that if Labour produces -any part of contemporary wealth, Ability just as truly produces another -part. This proposition, when put in a general way, will, after what -has been said, not be disputed by anybody; but there are various -arguments which readers of socialistic sympathies will probably invoke -as disproving it in the particular form just given to it. Certain of -these arguments require to be discussed at length; but the rest can be -disposed off quickly, and we will get them out of the way first. ◆² -They are, indeed, not so much arguments as confusions of thought, due -largely to an inaccurate use of language. - -These confusions are practically all comprehended in the common -socialistic formula which declares all production, under modern -conditions, to be what Socialists call “socialised.” By this is meant -that the whole wealth of the community is produced by the joint -action of all the classes of men and of all the faculties employed -in its production; and the formula thus includes, as Socialists will -be careful to tell us, all those faculties which are here described -as Ability. Now such a doctrine, if we consider its superficial -sense merely, is so far from being untrue that it is a truism. But -if we consider what it implies, if we consider the only meaning -which gives it force as a socialistic argument, or indeed invests it -with the character of any argument at all, we shall find it to be a -collection of fallacies for which the truism is only a cloak. For the -implied meaning is not the mere barren statement that the exertions -of all contribute to the joint result, but that the exertions of all -contribute to it in an equal degree; the further implication being that -all therefore should share alike in it. - - [Sidenote ◆1 Making use of the same fallacy as that of Mill, which - has been already criticised.] - -◆¹ This is really Mill’s argument with respect to Land and Labour, put -into different language and applied to Labour and Ability. It says in -effect precisely what was said by Mill, that when two causes are both -necessary to producing a given result, it is absurd to say that the one -produces more or less of it than the other: only here the argument can -be used with greater apparent force. For the Socialists may say that -if the principle which has been explained in this book is admitted, -and if Ability is held to produce all that part of the product which -is over and above what Labour could produce by itself, Labour, by the -same reasoning, could be proved to produce the whole of the product, -since, without the assistance of Labour, Ability could produce nothing. -Accordingly, they will go on to say, this conclusion being absurd, -the reasoning which leads to it must be false, and we must fall back -again on the principle set forth by Mill. Labour and Ability are both -necessary to the result, and being equally necessary must be held to -contribute equally to producing it. - -This argument, as I have said, has great apparent force; but again we -have a plausibility which is altogether upon the surface. If Labour -and Ability were here conceived of as faculties, without regard to -the number of men possessing them, the argument would, whatever its -logical value, coincide broadly with one great practical fact, to which -by and by I shall call the reader’s attention; namely, that Labour -and Ability do in this country divide between them the joint product -in nearly equal portions. But those who make use of the socialistic -formula use it with a meaning very different from the above. When they -say that Ability and Labour contribute equally to producing a given -amount of wealth, they mean not that the men who exercise one faculty -produce collectively as much as the men who exercise the other; for -that might mean that _five hundred men of Ability_ produced as much as -_five hundred thousand labourers_; and that is the very position which -the Socialists desire to combat. They mean something which is the exact -reverse of this: not that one faculty produces as much as the other -faculty, but that one man produces as much as, and no more than another -man, no matter which faculty he exercises in the producing process. -They mean not that the faculty of Labour which an ordinary ploughman -represents, produces as much as the faculty represented by an Arkwright -or by a Stevenson, but that the individual ploughman, by the single -task which he himself performs, adds as much to his country’s wealth as -the creators of the spinning-frame and the locomotive. - - [Sidenote ◆1 Their meaning needs only to be clearly stated to show - its absurdity.] - -◆¹ As soon as we realise that this is what the argument means, its -apparent plausibility turns into a sort of absurdity which common sense -rejects, even before seeing why it does so. We will not, however, be -content with dismissing the argument as absurd: there is an idea at the -back of it which requires and deserves to be examined. It is an idea -which rests upon the fact already alluded to, that though Ability can -make nothing without Labour, Labour can make something without Ability; -and that thus the labourers who work under the direction of an able man -each contribute a kind of exertion more essential to the result than -he does. Each can say to him, “I am something without you. You, on the -contrary, are nothing without me.” Thus there arises a more or less -conscious idea of Labour as a force which, if only properly organised, -will be able at any moment, by refusing to exert itself, to render -Ability helpless, and so bring it to terms and become its master, -instead of being, as now, its servant. - - [Sidenote ◆1 But in it there is, indeed, a plausible view as to - Labour, which must be refuted, not only ridiculed. - According to this view, Labour can always bring Ability - to terms by refusing to exert itself.] - - [Sidenote ◆2 But Labour cannot refuse to exert itself for long, - and never except with the assistance of Capital.] - - [Sidenote ◆3 Nature, not the men of ability, forces the majority - of men to Labour.] - -◆¹ But this idea, which is suggested, and seems to be supported, by the -modern development of labour-organisation and strikes, really ignores -the most fundamental facts of the case. In the first place, it may -be observed that though Ability, regarded as a faculty, is no doubt -helpless unless there is Labour for it to act upon, Ability, if we -take it to mean the men possessing the faculty, is, whatever happens, -in as good a position as Labour; for the average man of ability can -always become a labourer. But the principal point to realise is far -more important than this. We are perfectly right in saying, as was said -just now, that if Labour should refuse to exert itself, Ability could -produce nothing; but it seems completely to escape the notice of those -who use this argument that to refuse to exert itself is what Labour -can never do, except for very short times, and to a quite unimportant -extent; and it can only do thus much when Ability indirectly helps it. -The ideas of the power of Labour which are suggested by the phenomenon -of the strike are, as I shall by and by show more fully, curiously -fallacious. ◆² Men can strike—that is to say, cease to labour—only when -they have some store on which to live when they are idle; and such a -store is nothing but so much Capital. A strike, therefore, represents -the power not of Labour, but of Capital.[39] The Capital which is -available in the present day for supporting strikes would never have -been in existence but for the past action of Ability; and what is -still more important, a widespread strike would very quickly exhaust -it. Further, a strike, no matter what Capital were at the back of it, -could never be more than partial for even a single day; for there are -many kinds of Labour, such as transport and distribution of food, the -constant performance of which is required by even the humblest lives. -But it is not necessary to dwell on such small matters as these. It -is enough to point to the fact, which does not require proving—the -broad fact that men, taken as a whole, can no more refuse to labour -than they can refuse to breathe. ◆³ What compels them to labour is -not the employing class, but Nature. The employing class—the men of -ability—merely compel them to labour in a special way. - - [Sidenote ◆1 But Nature forces no one to exert Ability; therefore - Ability is, in the long run, in a stronger position than - Labour.] - -But Ability itself stands on an entirely different footing. Whereas -Labour, as a whole, cannot cease to exert itself, Ability can. Indeed, -for long periods of history it has hardly exerted itself at all; whilst -its full industrial power, as we know it now, only began to be felt a -century and a half ago. Labour, in other words, represents a necessary -kind of exertion, which can always be counted on as we count on some -force of Nature: Ability represents a voluntary kind of exertion, -which can only be induced to manifest itself under certain special -circumstances. Accordingly, ◆¹ whilst Labour can make no terms with -Nature, Ability in the long run can always make terms with Labour. It -will thus be seen that the set of arguments founded on the conception -of Labour as stronger than Ability, because more necessary, are -arguments founded on a complete misconception of facts. I speak of them -as arguments; but they hardly deserve the name. Rather they are vague -ideas that float in the minds of many people, and suggest beliefs or -opinions to which they can give no logical basis. At all events, after -what has been said, we may dismiss them from our thoughts, and turn to -another fallacy that lurks in the socialistic formula. - - [Sidenote ◆1 Let us now test the socialistic view by examples:] - - [Sidenote ◆2 By the case of an organist and the man who blows the - bellows;] - - [Sidenote ◆3 Or of a great painter and the man who stretches his - canvas.] - -◆¹ I said of that formula that, the moment its meaning was realised, -it struck the mind as an absurdity, even before the mind knew why. Let -us now apply it to two simple cases, which will show its absurdity in -a yet more striking manner. ◆² There is an old story commonly told of -Handel. The great composer had been playing some magnificent piece -of music on the organ; and as soon as the last vibration of inspired -sound had subsided, he was greeted by the voice of the man who blew -the bellows, saying, “I think that we two played that beautifully.” -“_We!_” exclaimed Handel. “What had you to do with it?” He turned -again to the keys, and struck them, but not a note came. “Ha!” said -the bellows-blower, “what have I to do with it? Admit that I have as -much to do with it as you have, or I will not give you the power to -sound a single chord.” The whole point of this story lies in the fact -that the argument of the bellows-blower, though possessed of a certain -plausibility, is at the same time obviously absurd. But according to -the principles of the Socialists, it is absolutely and entirely true. -It exhibits those principles applied in the most perfect way. ◆³ With -just the same force, it may be said about a great picture by the man -who has woven the canvas, or tacked it to its wooden frame. This man -may, according to the socialistic theory of production, call the -picture the socialised product of the great painter and himself, and, -though no more able to draw than a child of four years old, may put -himself on a level with a Millais or an Alma Tadema. To the production -of the result the canvas is as necessary as the painter. - - [Sidenote ◆1 The socialistic view of production would be true only - were a certain fact of life quite different to what it - is.] - -The nature of the fallacy which leads us to such conclusions as these -is revealed almost instantly by the light such conclusions throw on it. -It consists in ignoring the fact that whilst anybody, not a cripple -or idiot, can blow the bellows of an organ, or stretch the canvas for -a picture, only one man in a million can make music like Handel, or -cover the canvas with pictures like Millais or Alma Tadema. The nature -of the situation will be understood most accurately if we imagine the -bellows-blower at the key-board of the organ, and the canvas-stretcher -with the painter’s brushes. The one, no doubt, could elicit a large -volume of sound; the other could cover the canvas with daubs of -unmeaning colour. These men, then, when they work for the artists of -whom we speak, may very properly be credited with a share in as much -of the result as would have been produced if they had been in the -artists’ places. That is to say, to the production of mere sound the -bellows-blower may be held to contribute as much as the great musician; -and the canvas-stretcher as much as the painter to the mere laying on -of colour. But all the difference between an unmeaning discord and -music, all the difference between an unmeaning daub and a picture, is -due to qualities that are possessed by no one except the musician and -the painter.[40] ◆¹ The socialistic theory of production would be true -only on the supposition that the faculties employed in production were -all equally common, and that everybody is equally capable of exertion -of every grade. Now is this supposition true, or is it not true? A -moment ago I spoke of it, assuming it to be obviously false; and many -people will think it is hardly worth discussion. That, however, is far -from being the case. It is a supposition which, as we have seen, lies -at the very root of Socialism: the question it involves is a broad -question of fact; and it is necessary, by an appeal to fact, to show -that it is as false as I have assumed it to be. - - [Sidenote ◆1 The great feature in modern production is the - progress in the productivity of the same number of men.] - -◆¹ Let me once again, then, state the great proposition which I am -anxious to put beyond the reach of all denial or misconception. A -given number of people, a hundred years ago, produced yearly in this -country _a hundred and forty million pounds_. The same number of -people to-day produce two and a half times as much. Labour, a hundred -years ago, could not have produced more than the total product of the -community—that is to say, _a hundred and forty million pounds_; and, if -it produced that then, it produces no more now. The whole added product -is produced by the action of Ability. The proposition is a double one. -Let us take the two parts in order. - - [Sidenote ◆1 History shows us that Labour is not progressive, - except within very narrow limits that were reached long - ago, or, at all events, by the end of the last century.] - -◆¹ I have already here and there pointed out in passing how certain -special advances in the productive powers of the community were due -demonstrably to Ability, not to Labour; but I have waited till our -argument had arrived at its present stage to insist on the general -truth that, except within very narrow limits, Labour is, in its very -nature, not progressive at all. If we cast our eyes backwards as far -into the remote past as any records or relics of human existence will -carry us, we can indeed discern three steps in industrial progress, -which we may, if we please, attribute to the self-development of -Labour—the use of stone, the use of bronze, and the use of iron. But -these steps followed each other slowly, and at immeasurable intervals; -and though the last was taken in the early morning of history, yet -Labour even then had, in certain respects, reached for thousands -of years an efficiency which it has never since surpassed. In the -lake-dwellings of Switzerland, which belong to the age of stone, -objects have been found which bear witness to a manual skill equal to -that of the most dexterous workmen of to-day. No labour, again, is -more delicate than that of engraving gems; and yet the work of the -finest modern gem-engravers is outdone by that of the ancient Greeks -and Romans. It was even found, when the unburied ship of a Viking was -being reproduced for the International Exhibition at Chicago, that -in point of mere workmanship, with all our modern appliances, it was -impossible to make the copy any better than the original; whilst, if -we institute a comparison with times nearer our own—especially if we -come to the close of the last century—it is hardly necessary to say -that in every operation which depended on training of eye and hand, the -great-grandfathers of the present generation were the equals of their -great-grandsons. - - [Sidenote ◆1 Let us then compare the workers of that period with - their great-grandsons of to-day.] - -◆¹ We will therefore content ourselves with comparing the labourers of -to-day with the labourers of the days of Pitt; and with regard to those -two sets of men, we may safely say this, that in whatever respect the -latter seem able to do more than the former, their seemingly increased -power can be definitely and distinctly traced to some source outside -themselves, from which it has been taken and lent to them—in other -words, to the ability of some one able man, or else to the joint action -of a body of able men. A single illustration is sufficient to prove -this. It consists of a fact to which I have alluded in general terms -already. It is as follows:— - - [Sidenote ◆1 We shall see that in Labour itself there has been - no progress whatsoever. Ability has been the sole - progressive agent.] - -When Watt had perfected his steam-engine in structure, design, and -principle, and was able to make a model which was triumphantly -successful in its working, he encountered an obstacle of which -few people are aware, and which, had it not been overcome, would -have made the development of steam-power, as we know it now, an -utter impossibility. It was indeed, in the opinion of the engineer -Smeaton, fatal to the success of Watt’s steam-engine altogether. -This obstacle was the difficulty of making cylinders, of any useful -size, sufficiently true to keep the pistons steam-tight. Watt, with -indomitable perseverance, endeavoured to train men to the degree of -accuracy required, by setting them to work at cylinders, and at nothing -else; and by inducing fathers to bring up their sons with them in the -workshop, and thus from their earliest youth habituate them to this -single task. By this means, in time, a band of labourers was secured -in whom skill was raised to the highest point of which it is capable. -◆¹ But not even all the skill of those carefully-trained men—men -trained by the greatest mechanical genius of the modern world—was equal -to making cylinders approaching the standard of accuracy which was -necessary to render the steam-engine, as we now know it, a possibility. -But what the Labour of the cleverest labourer could never be brought -to accomplish, was instantly and with ease accomplished by the action -of Ability. Henry Maudslay, by introducing the slide-rest, did at a -single stroke for all the mechanics in the country what Watt, after -years of effort, was unable to do for any of them. The Ability of -Maudslay, congealed in this beautiful instrument, took the tool out of -the hands of Labour at the turning-lathe, and held it to the surface -of the cylinder, whilst Labour looked on and watched. With this iron -“mate” lent to him,—this child of an alien brain,—the average mechanic -was enabled to accomplish wonders which no mechanic in the world by his -own skill could approach. The power of one man descended at once on a -thousand workshops, and sat on each of the labourers like the fire of -an industrial Pentecost; and their own personal efficiency, which was -the slowly-matured product of centuries, was, by a power acting outside -themselves, increased a hundredfold in the course of a few years. - - [Sidenote ◆1 There is, however, a plausible objection to this view - which we must consider.] - -◆¹ Illustrations of this kind might be multiplied without limit; but -nothing could add to the force of the one just given, or show more -clearly how the productivity of Labour is fixed, and the power of -Ability, and of Ability alone, is progressive. There is, however, a -very important argument which objectors may use here with so much -apparent force that, although it is entirely fallacious, it requires to -be considered carefully. - - - - - CHAPTER II - - _That the Ability which at any given period is a - Producing Agent, is a Faculty residing in - and belonging to living Men._ - - -It may amuse the reader to hear this argument stated—forcibly, if not -very fully—by an American Socialist, in an anonymous letter to myself. -I had published an article in _The North American Review_, giving a -short summary of what I have said in the preceding chapters with regard -to the part played by Ability in production; and the letter which I -will now give was sent me as a criticism on this: - - [Sidenote ◆1 The objection is thus put by an American Socialist: - that it is absurd to say that primæval inventors, such - as the inventor of the plough, are still producing - wealth by their ability; and if absurd in this case, - then in all cases.] - - ◆¹ Sir—Your article in the current number of _The North American - Review_ on “Who are the Chief Wealth Producers?” in my judgment is - the crowning absurdity of the various effusions that parade under the - self-assumed title of political economy. In the vulgar parlance of - some newspapers, it is hog-wash. It is utterly senseless, and wholly - absurd and worthless. You propose to publish a book in which you will - elaborate your theory. Well, if the book has a large sale, it will - not be because the author has any ability as a writer on economical - subjects, but rather that the buyers are either dupes or fools. All - the increase in wealth that has resulted by reason of men using - ploughs was produced by the man who invented the plough—eh? The total - amount of the wealth produced by men by reason of their using certain - appliances in the form of tools or machines is produced by the man - who invented the tool or machine—eh? perhaps some one in Egypt - thousands of years ago? Such stuff is not only worthless hog-wash: it - is nauseating, is worthy of the inmate of Bedlam. - - [Sidenote ◆1 To this there are two answers. The first is that the - simpler inventions are probably due, not to Ability at - all, but to the common experience of the average man;] - - [Sidenote ◆2 And, like Labour itself, they have remained unchanged - up till quite recent times.] - - [Sidenote ◆3 But even if invented by Ability, we should still - attribute the wealth now produced by them to Labour;] - -Now the argument implied in this charming letter, so far as it goes, is -sound; and I will put it presently in a more comprehensive form. Its -fault is that it goes a very little way, and does not even approach -the position it is adduced to combat. To say that if one man who lived -thousands of years ago could be shown to be the sole and only inventor -of the plough, then all the increase of wealth that has since been -produced by ploughing ought to be credited to the Ability of this one -man, is practically no doubt as absurd[41] as the writer of the letter -thinks it; and were such the result of the reasoning in this volume, -it would reduce that reasoning to an absurdity. ◆¹ That reasoning, -however, leads to no result of the kind; and it is necessary to explain -to the reader exactly why it fails to do so. It fails to do so because -ploughs, and other implements equally simple, instead of representing -those conditions of production to which alone the reasoning in this -volume applies, represent conditions which are altogether opposed to -them. The plough, or at least such a plough as was in use in ancient -Egypt, is the very type and embodiment of the non-progressive nature of -Labour, as opposed to, and contrasted with, the progressive nature of -Ability. The plough, indeed, in its simplest form, was probably not the -result of Ability at all, but rather of the experience of multitudes -of common men, acting on the intelligence which common men possess; -just as, even more obviously, was the use of a stick to walk with, -or of a flail for thrashing corn. It will perhaps, however, be said -that in that case, according to the definition given by me, the plough -would be the result of Ability all the same, only that it would prove -Ability to be a faculty almost as universal as Labour. And no doubt -it would prove this of Ability of a low kind; indeed, we may admit -that it does prove it. Everybody has a little Ability in him, just as -everybody has a little poetry; but in cases of this kind everything -is a question of degree; and for practical purposes we are compelled -to classify men not according to faculties which, strictly speaking, -they possess, but according to the degree in which they possess them. -Cold, strictly speaking, is merely a low degree of heat; but for all -practical purposes winter is opposed to summer. Similarly, a man who -has just enough poetry in him to be able—as most men can—to scribble -a verse of doggerel, is for all practical purposes opposed to a -Shakespeare or a Dante; and similarly also the man who has just enough -Ability in him to discover the use of a stick, a flail, or a plough, -is for all practical purposes opposed to the men who are capable of -inventing implements of a higher and more complicated order. Nor is the -line which we thus draw drawn arbitrarily. It is a line drawn for us -by the whole industrial history of mankind; ◆² and never was there a -division more striking and more persistent. For the simpler implements -in question, from the first days when they were invented,—“thousands of -years ago,” as my American correspondent says,—remained what they then -were up to the beginning of the modern epoch; and in many countries, -such as India, they remain the same to-day. The simpler industrial -arts, then, and the simpler implements of industry are sharply marked -off from the higher and more complicated by the fact that, whilst -the latter are demonstrably due to individuals, have flourished only -within the area of their influence, and have constituted a sudden and -distinct advance on the former, the former have apparently been due -to the average faculties of mankind, and have remained practically -unchanged from the days of their first discovery. Accordingly, the -distinction between the two being so marked and enormous, the faculties -to which they are respectively due, even if differing only in degree, -yet differ in degree so much that they are for practical purposes -different faculties, and must be called by different names. ◆³ The -simple inventions, then, to which my correspondent refers, together -with the wealth produced by them, are to be credited to Labour, the -non-progressive character of which they embody and represent, and -have nothing to do with that Ability which is the cause of industrial -progress. - -My correspondent’s letter, however, whether he saw it himself or -not, really raises a point far more important than this. For even -if the invention of the plough had been the work of one man only, -if it had involved as much knowledge and genius as the invention of -the steam-engine, and if, but for this one man, ploughs would never -have existed, yet to attribute to the Ability of this one man all the -wealth that has been subsequently produced by ploughing would still be -practically as absurd as my correspondent implies it would be. - - [Sidenote ◆1 Because the commonest labourer, when once he has seen - them, can make and use them.] - -◆¹ Now why is this? The reason why is as follows. Although, according -to such an hypothesis, if a plough had not been made by this one able -man, no ploughs would ever have been made by anybody, yet when such a -simple implement has once been made and used, anybody who has seen it -can make and use others like it; so that the Ability of the inventor of -the plough increases the productivity of every labourer who uses it, -not by co-operating with him, but by actually passing into him. Thus, -so far as this particular operation is concerned, the simplest labourer -becomes endowed with all the powers of the inventor; and the inventor -thenceforward is, in no practical sense, the producer of the increased -product of what he has enabled the labourer to produce, any more than a -father is the producer of what is produced by his son. - - [Sidenote ◆1 But the inventions by which Ability in the modern - world has increased production are the very opposite of - these inventions of earlier days; for they require as - much Ability to use them to the best advantage as they - required to make them.] - -And if the productivity of Labour were increased by inventions alone, -and if all inventions were as simple as the primæval plough—if, when -once seen, anybody were able to make them, and, having once made them, -to use them to the utmost advantage—then, though Ability might still -be the sole cause of every fresh addition to the productive powers -of exertion, these added powers would be all made over to Labour, and -be absorbed and appropriated by it, just as Lear’s kingdom was made -over to his daughters; and whatever increased wealth might be produced -thenceforward through their agency would be the true product of Labour, -which had in itself become more effective. ◆¹ But, as a matter of -fact, this is not the case; and it is not so for two reasons. In the -first place, such implements as the primæval plough differ from the -implements on which modern industry depends, in the complexity alike -of their structure, and of the principles involved in it; so that -without the guidance of Ability of many kinds, Labour alone would -be powerless to reproduce them; and, in the second place, as these -implements multiply, not only is Ability more and more necessary -for their manufacture, but is more and more necessary also for the -use of them when manufactured. One of the principal results of the -modern development of machinery, or of the use, by new processes, of -newly discovered powers of Nature, is the increasing division and -subdivision of Labour; so that the labourers, as I have said before, -by the introduction of this mass of machinery, become themselves the -most complicated machine of all, each labourer being a single minute -wheel, and Ability being the framework which alone keeps them in their -places. It may be said, therefore, that each modern invention or -discovery by which the productivity of human exertion is increased has -upon Labour an effect exactly opposite to that which was produced on -it by such inventions as the primæval plough. Instead of making Labour -more efficacious in itself, they make it less and less efficacious, -unless it is assisted by Ability. - - [Sidenote ◆1 They do not become, as is vulgarly said, common - property. They belong to those who can use them;] - - [Sidenote ◆2 And more and more is living Ability required to - maintain and use the powers left to it by the Ability of - the past.] - -◆¹ And here we have the answer to the real argument which lies at the -bottom of my American correspondent’s letter—an argument which, in -some such words as the following, is to be found repeated in every -Socialistic treatise: “When once an invention is made, it becomes -common property.” So it does in a certain theoretical sense; but only -in the sense in which a knowledge of Chinese becomes common property -in England on the publication of a Chinese grammar. For all practical -purposes, such a statement is about as true as to say that because -anybody can buy a book on military tactics, everybody is possessed of -the genius of the Duke of Wellington. ◆² The real truth is, that to -utilise modern inventions, and to maintain the conditions of industry -which these inventions subserve, as much Ability is required as was -required to invent them; though, as I shall have occasion to point out -later on, the Ability is of a different kind. - - [Sidenote ◆1 We must, then, here note that when Ability is said to - produce so much of the national income, what is meant is - the Ability of men alive at the time,] - -These considerations bring us to another important point, which must -indeed from the beginning have been more or less obvious, but which -must now be stated explicitly. ◆¹ That point is, that when we speak -of Ability as producing at any given time such and such a portion -of the national income, as distinguished from the portion which is -produced by Labour, we are speaking of Ability possessed by living men, -who possess it either in the form of their own superior faculties, -assimilating, utilising, and adding to the inventions and discoveries -of their predecessors; or in the form of inherited Capital, which those -predecessors have produced and left to them. Thus, though dead men -like Arkwright, or Watt, or Stevenson may, in a certain theoretical -sense, be considered as continuing to produce wealth still, they cannot -be considered to do so in any sense that is practical; because they -cannot as individuals put forward any practical claims, or influence -the situation any further by their actions. For all practical purposes, -then, their Ability as a productive force exists only in those living -men who inherit or give effect to its results. Now, of the externalised -or congealed Ability which is inherited in the form of Capital, as -distinguished from the personal Ability by which Capital is utilised, -we need not speak here, though we shall have to do so presently. For -this inherited Capital would not only be useless in production, but -would actually disappear and evaporate like a lump of camphor, if -it were not constantly used, and, in being used, renewed, by that -personal Ability which inherits it, and is inseparable from the living -individual; and, though it will be necessary to consider Capital apart -from this when we come to deal with the problem of distribution, -all that we need consider when we are dealing with the problem of -production is this personal Ability, which alone makes Capital live. - - [Sidenote ◆1 Who are practically the monopolists not only of their - own special powers, but of the complicated discoveries - of their predecessors.] - -◆¹ So far, then, as modern production is concerned, all the results -of past Ability, instead of becoming the common property of Labour, -become on the whole, with allowance for many exceptions, more and more -strictly the monopoly of living Ability; because these results becoming -more and more complicated, Ability becomes more and more essential to -the power of mastering and of using them. As, however, I shall point -out by and by, in more than one connection, the Ability that masters -and uses them differs much in kind from the Ability that originally -produced them: one difference being that, whereas to invent and perfect -some new machine requires Ability of the highest class in, let us -say, one man, and Ability of the second class in a few other men, his -partners; to use this machine to the best advantage, and control and -maintain the industry which its use has inaugurated or developed, may -require perhaps Ability of only the second class in one man, but will -require Ability of the third and fourth class in a large number of men. - - [Sidenote ◆1 And the monopoly of Ability grows stricter at each - fresh stage of progress.] - -◆¹ Ability therefore—the Ability of living men—constantly tends, as the -income of the nation grows, to play a larger part in its production, -or to produce a larger part of it; whilst Labour, though without it -no income could be produced at all, tends to produce a part which -is both relatively and absolutely smaller. We assume, for instance, -that the Labour of this country a hundred years ago was capable of -producing the whole of what was the national income then. If it could -by itself, without any Ability to guide it, have succeeded then, when -production was so much simpler, in just producing the yearly amount -in question,—which, as a matter of fact, it could not have done even -then,—the same amount of Labour, without any Ability to guide it, could -certainly not succeed in producing so much now, when all the conditions -of production have become so much more complicated, and when elaborate -organisation is necessary to make almost any effort effective. - - [Sidenote ◆1 Thus the argument above quoted against the claims of - Ability, when examined, only throws additional light on - their strength.] - -◆¹ Thus the argument, which was fermenting in my American -correspondent’s mind, and which he regarded as reducing the claims of -Ability to “hog-wash,” really affords the means, if examined carefully -and minutely, of establishing yet more firmly the position it was -invoked to shatter, and of making the claims of Ability not only -clearer but more extensive. - - - - - CHAPTER III - - _That Ability is a natural Monopoly, due to the - congenital Peculiarities of a Minority. The - Fallacies of other Views exposed._ - - - [Sidenote ◆1 But the Socialists have yet another fallacy with - which they will attempt to neutralise the force of what - has just been said.] - - [Sidenote ◆2 They will say that Ability is the creation of special - opportunity, and that everybody at birth is potentially - an able man.] - -◆¹ But the socialistic theorist will not even yet have been silenced. -Even if he is constrained to admit the truth of all that has just been -said, we shall find that he still possesses in his arsenal of error -another set of arguments by which he will endeavour to do away with its -force. These are generally presented to us in mere loose rhetorical -forms; but however loosely they may be expressed, they contain a -distinct meaning, which I will endeavour to state as completely and -as clearly as is possible. ◆² Put shortly, it is as follows. Though -Ability and Labour may both be productive faculties, and though it may -be allowed that the one is more productive than the other, it is on the -whole a mere matter of social accident—a matter depending on station, -fortune, and education—which faculty is exercised by this or that -individual. Thus, though it may be allowed that a great painter and the -man who stretches his canvas, or an inventor like Watt and the average -mechanic who works for him, do, by the time that both are mature men, -differ enormously in the comparative efficacy of their faculties, yet -the difference is mainly due to circumstances posterior to their birth; -that the circumstances which developed the higher faculties in one -man might equally well have developed them in the other; and that the -circumstances in question, even if only a few can profit by them, are -really created by the joint action of the many. - - [Sidenote ◆1 This is sometimes expressed in saying that “the great - man is made by his age,” i.e. by the opportunities - others have secured for him.] - - [Sidenote ◆2 But this, though true psychologically, is absolutely - false in the practical sphere of economics.] - -The above contention contains several different propositions, which we -will presently examine one by one. We will, however, take its general -meaning first. One of the chief exponents of this, strange as the -fact may seem, is that vehement anti-Socialist, Mr. Herbert Spencer. -Mr. Spencer disposes of the claims of the man of ability as a force -distinct from the generation at large to which he belongs, by saying -that ◆¹ “Before the great man can remake his society, his society -must make him.” Thus, to take an example from art, the genius of a man -like Shakespeare is explained by reference to the condition of the -civilised world, and of England more especially, during the reign of -Queen Elizabeth. The temper of the human mind caused by centuries of -Catholicism, the stir of the human mind shown in the Reformation or the -Renaissance, and the sense of the new world then being conquered in -America, are all dwelt on as general or social causes which produced -in an individual poet a greatness which has been since unequalled. ◆² -Now this reasoning, if used to combat a certain psychological error, no -doubt expresses a very important truth; but if it is transferred to the -sphere of economics its whole meaning vanishes. It was originally used -in opposition to the now obsolete theory according to which a genius -was a kind of spiritual aerolite, fallen from heaven, and related in -no calculable way to its environment. It was used, for instance, to -prove with regard to Shakespeare that had he lived in another age he -would have thought and written differently, and that he might have been -a worse poet under circumstances less exciting to the imagination. -But when we leave the psychological side of the case, and look at its -practical side, a set of facts is forced on us which are of quite a -different order. We are forced to reflect that though Shakespeare’s -mind may have been what it was because the age acted on it, the age was -acting on all Shakespeare’s contemporaries, and yet it produced one -Shakespeare only. If Queen Elizabeth had been told that it was the age -which produced Shakespeare, and in consequence had ordered that three -or four more Shakespeares should be brought to her, her courtiers, do -what they would, would have been unable to find them; and the reason is -plain. The age acts on, or sets its stamp on, the character of every -single mind that belongs to it; but the effect in each case depends -on the mind acted on; and it is only one mind amongst ordinary minds -innumerable, that this universal action can fashion into a great poet. -And what is true of poetic genius is true of industrial Ability. -The great director of Labour is as rare as a great poet is; and -though Ability of lower degrees is far commoner than Ability of the -highest, yet the fact that it is the age which elicits and conditions -its activities does nothing to make it commoner than it would be -otherwise, nor affects the fact that its possessors are relatively -a small minority. For the psychologist, the action of the age is an -all-important consideration; for the economist, it is a consideration -of no importance at all. - -But it is by no means my intention to dismiss the Socialistic argument -with this simple demonstration of the irrelevance of its general -meaning. I am going to call the attention of the reader to the -particular meanings that are attached to it, and show how absolutely -false these are, by comparing them with historical facts. - - [Sidenote ◆1 Again, Socialists urge that no perfected invention is - the work of a single man, but that many men have always - co-operated to produce it.] - - [Sidenote ◆2 This is true; but the class of men referred to is - that very minority who are the monopolists of Ability. - It is this class only, not the community in general.] - -◆¹ In the first place, then, the claims of the age, or of society as -a whole, to be the author of industrial progress, in opposition to -the claims of a minority, are supported by many writers on the ground -that no invention or discovery is in reality the work of any single -man. Such writers delight to multiply—and they can do so without -difficulty—instances of how the most important machines or processes -have been perfected only after a long lapse of time, by the efforts -of many men following or co-operating with one another. Thus the -electric telegraph, and the use of gas for lighting, were not the -discoveries of those who first introduced them to the public; and -Stevenson described the locomotive as the “invention of no one man, -but of a race of mechanical engineers.” Further, it is frequently -urged that the same discoveries and inventions are arrived at in -different places, by different minds, simultaneously; and this fact -is put forward as a conclusive proof and illustration of how society, -not the individual, is the true discoverer and inventor. ◆² But these -arguments leave out of sight entirely the fact that, in the first -place, the whole body of individuals spoken of—such as the race of -engineers who produced the locomotive, or the astronomers in different -countries who are discovering the same new star—form a body which -is infinitesimally small itself; and secondly, that even the body -of persons they represent,—namely, all of those who are engaged in -the same pursuits, and have even so much as attempted any step in -industrial progress,—though numerous in comparison with those who have -actually succeeded in taking one, are merely a handful when compared -with society as a whole, and instead of representing society, offer the -strongest contrast to it. The nature of the assistance which Ability -gives to Ability is an interesting question, but it is nothing to the -point here. To prove that progress is the joint product of Ability and -Ability, does not form a proof, but on the contrary a disproof of the -proposition, that it is the joint product of Ability and Labour—or, in -other words, that it is the product of the age, or the entire community. - - [Sidenote ◆1 Further, Socialists contend that Ability is the - product of education, and that an equal education would - equalise faculties.] - - [Sidenote ◆2 But this wild theory is in absolute opposition to the - most notorious facts;] - -◆¹ The socialistic theorist, however, even if he admits the above -answer, will by no means admit that it is fatal to his own position. He -will still take refuge in the proposition already alluded to, that the -Ability of individuals is the child of opportunity, and that Ability -is rarer than Labour, and able men are a minority, only because, under -existing social circumstances, the opportunities which enable it to -develop itself are comparatively few. And if he is pressed to say -what these opportunities are, he will say that they may be described -generally by the one word education. This argument can be answered in -one way only, namely, an appeal to facts; and it is hard to conceive -of anything which facts more conclusively disprove. Indeed, of much -industrial Ability, it can not only be shown to be false, but it is -also, on the very surface of it, absurd. It is plausible as applied -to Ability of one kind only, namely, that of the inventor or the -discoverer; but this, as we shall see presently, is so far from being -Ability as a whole, that it is not even the most important part of it. -Let us, however, suppose it to be the whole for a moment, and ask how -far the actual facts of life warrant us in regarding it as the child -of opportunity and education. Let us first refer to that general kind -of experience which is recorded in the memory of everybody who has -ever been at a school or college, and which, in the lives of tutors -and masters, is repeated every day. Let a hundred individuals from -childhood be brought up in the same school, let them all be devoted -to the study of the same branch of knowledge, let them enjoy to the -fullest what is called “equality of opportunity,” and it will be found -that not only is there no equality in the amount of knowledge they -acquire, but that there is hardly any resemblance in the uses to which -they will be able to put it. Two youths may have worked together in -one laboratory. One will never do more than understand the discoveries -of others. The other will discover, like Columbus, some new world of -mysteries. ◆² Indeed, equality of opportunity, as all experience shows, -instead of tending to make the power of all men equal, does but serve -to exhibit the extent to which they differ. - - [Sidenote ◆1 As may be seen by a glance at the lives of some of - the most distinguished inventors of the world.] - -◆¹ But particular facts are more forcible than general facts. Let us -consider the men who, as a matter of history, have achieved by their -Ability the greatest discoveries and inventions, and let us see if it -can be said of these men, on the whole, that their Ability has been -due to any exceptional education or opportunity. Speaking generally, -the very reverse is the case. If education means education in the -branch of work or knowledge in which the Ability of the able man is -manifested, the greatest inventors of the present century have had no -advantages of educational opportunity at all. Dr. Smiles observes that -our greatest mechanical inventors did not even have the advantage of -being brought up as engineers. “Watt,” he writes, “was a mathematical -instrument-maker; Arkwright was a barber; Cartwright, the inventor of -the power-loom, was a clergyman; Bell, who afterwards invented the -reaping-machine, was a Scotch minister; Armstrong, the inventor of the -hydraulic engine, was a solicitor; and Wheatstone, inventor of the -electric telegraph, was a maker of musical instruments.” That knowledge -is necessary to mechanical invention is of course a self-evident truth; -and the acquisition of knowledge, however acquired, is education: -education, therefore, was necessary to the exercise of the Ability of -all these men. But the point to observe is, that they had none of them -any special educational opportunity; they were placed at no advantage -as compared with any of their fellows; many of them, indeed, were at -a very marked disadvantage; and though, when opportunity is present, -Ability will no doubt profit by it, the above examples show, and the -whole course of industrial history shows,[42] that Ability is so far -from being the creature of opportunity, that it is, on the contrary, -in most cases the creator of it. - - [Sidenote ◆1 The theory is still further refuted by the fact that - moral Ability is a matter of character and temperament, - rather than of intellect.] - - [Sidenote ◆2 A business started by Ability of intellect is - maintained by Ability of character.] - -◆¹ The mental power, however, which is exercised by the inventor and -discoverer, as I have said, is but one kind of industrial Ability out -of many. Ability—or the faculty by which one man assists the Labour of -an indefinite number of men—consists in what may be called exceptional -gifts of character, quite as much as in exceptional gifts of intellect. -A sagacity, an instinctive quickness in recognising the intellect of -others, a strength of will that sometimes is almost brutal, and will -force a way for a new idea, like a pugilist forcing himself through -a crowd, these are faculties quite as necessary as intellect for -giving effect to what intellect discovers or creates; and they do not -always, or even generally, reside in the same individuals. The genius -which is capable of grappling with ideas and principles, and in the -domain of thought will display the sublimest daring, often goes with -a temperament of such social timidity as to unfit its possessor for -facing and dealing with the world. It is one thing to perfect some -new machine or process, it is another to secure Capital which may -put it into practical operation; and again, if we put the difficulty -of securing Capital out of the question by supposing the inventor -to be a large capitalist himself, there is another difficulty to be -considered, more important far than this—the difficulty dealt with -in the last chapter—namely, the conduct of the business when once -started. Here we come to a number of complicated tasks, in which the -faculty of invention or discovery offers no assistance whatsoever. We -come to tasks which have to do, not with natural principles, but with -men—the thousand tasks of daily and of hourly management. A machine -or process is invented by intellect—there is one step. It is put into -practical operation with the aid of Capital—there is another. When -these two steps are taken, they do not require to be repeated, but the -tasks of management are tasks which never cease; on the contrary, as -has been said already, they tend rather to become ever more numerous -and complicated. ◆² Nor do they consist only of the mere management of -labourers, the selection of foremen and inspectors, and the minutiæ -of industrial discipline. They consist also of what may be called the -policy of the whole business—the quick comprehension of the fluctuating -wants of the consumer, the extent to which these may be led, the -extent to which they must be followed, the constant power of adjusting -the supply of a commodity to the demand. On the importance of these -faculties there is a great deal to be said; but I will only observe -here that it is embodied and exemplified in the fact that successful -inventors and discoverers are nearly always to be found in partnership -with men who are not inventors, but who are critics of inventions, who -understand how to manage and use them, and who supplement the Ability -that consists of gifts of intellect by that other kind of Ability that -consists of gifts of character. - - [Sidenote ◆1 Equality of education and opportunity, instead of - equalising characters, displays their differences.] - - [Sidenote ◆2 Ability, then, is a natural monopoly; because few - people are born with it.] - -Now if, as we have seen, it is entirely contrary to experience to -suppose that inventive Ability is produced by educational opportunity, -much more is it contrary to experience—it is contrary even to common -sense—to suppose that Ability of character can be produced in the same -way. ◆¹ Education, as applied to the rousing and the training of the -intellect, is like a polishing process applied to various stones, which -may give to all of them a certain kind of smoothness, but brings to -light their differences far more than their similarity. Education may -make all of us write equally good grammar, but it will not make all of -us write equally good poetry, any more than cutting and polishing will -turn a pebble into an emerald. And if this is true of education applied -to intellect, of education applied to character it is truer still. -Character consists of such qualities as temperament, strength of will, -imagination, perseverance, courage; ◆² and it is as absurd to expect -that the same course of education will make a hundred boys equally -brave or imaginative, as it is to expect that it will make them equally -tall or heavy, or decorate all of them with hair of the same colour. - - [Sidenote ◆1 And now let us again compare its action with that of - the mass of men surrounding it.] - -Ability, then, is rare as compared with Labour, not because the -opportunities are rare which are favourable or necessary to its -development, but because the minds and characters are rare which can -turn opportunity to account. ◆¹ And now let us turn again to the more -general form of the Socialistic fallacy—the general proposition that -the Age, or Society, or the Human Race is the true inventor, and let us -test this by a new order of facts. - - [Sidenote ◆1 Do able men in any sense represent the tendencies and - intelligence of their average contemporaries? Let - us turn for an answer to the history of the three - chief industrial triumphs of this country: (1) the - iron manufacture, (2) the cotton manufacture, (3) the - steam-engine.] - -I have already alluded to the stress laid by Socialists on the fact -that different individuals in different parts of the world often make -the same discoveries at almost the same time; and I pointed out that -whatever this might teach us, applied only to a small minority of -persons, and had no reference whatever to the great mass of the race. -But Socialists very frequently put their view in a form even more -exaggerated than that which I thus criticised. ◆¹ They use language -which implies that the whole mass of society moves forward together -at the same intellectual pace; and that discoverers and inventors -merely occupy the position of persons who chance to be walking a few -paces in advance of the crowd, and who thus light upon new processes -or machines like so many nuggets lying and glittering on the ground, -which those who follow would have presently discovered for themselves; -or, again, they are represented as persons who are merely the first -to utter some word or exclamation which is already on the lips of -everybody. Let us, then, take the three great elements which go to make -up the industrial prosperity of this country—the manufacture of iron, -the manufacture of cotton, and the development of the steam-engine, -and see how far the history of each of these lends any support to the -theory just mentioned. - - [Sidenote ◆1 The modern development of the iron industry dependent - on the use of coal in place of wood.] - - [Sidenote ◆2 The discovery of how to use coal for this purpose due - to a few individuals, whose labours were either secret, - or bitterly opposed by all who knew of them. Chief - amongst these were] - -We will begin with the manufacture of iron. Ever since man was -acquainted with the use of this metal till a time removed from our own -by a few generations only, ◆¹ its production from the ore was dependent -entirely upon wood, which alone of all fuels—so far as knowledge then -went—had the chemical qualities necessary for the process of smelting. -The iron industry in this country was therefore, till very recently, -confined to wooded districts, such as parts of Sussex and Shropshire; -and so large, during the seventeenth century, was the consumption of -trees and brushwood, that the smelting furnace came to be considered by -many statesmen as the destroyer of wood, rather than as the producer -of metal. ◆² This view, indeed, can hardly be called exaggerated; for -by the beginning of the century following the wood available for the -furnaces was becoming so fast exhausted that the industry had begun -to dwindle; and but for one great discovery it would have soon been -altogether extinguished. This was the method of smelting iron with -coal. Now to what cause was this discovery due? The answer can be given -with the utmost completeness and precision. It was due to the Ability -of a few isolated individuals, whose relation to their contemporaries -and to their age we will now briefly glance at. - - [Sidenote ◆1 Dud Dudley,] - - [Sidenote ◆2 The two Darbys,] - - [Sidenote ◆3 Reynolds and the two Craneges, and others;] - -◆¹ The first of these was a certain Dud Dudley, who procured a patent -in the year 1620 for smelting iron ore “with coal, in furnaces with -bellows”; and his process was so far successful, that at length from a -single furnace he produced for a time seven tons of iron weekly. For -reasons, however, which will be mentioned presently Dudley’s invention -died with himself; and for fifty years after his death the application -of coal to smelting was as much a lost art as it would have been had he -never lived. ◆² Between the years 1718 and 1735 it was again discovered -by a father and son—the Darbys of Coalbrookdale. A further step, -and one of almost equal importance, ◆³ was achieved by two of their -foremen—brothers of the name of Cranege—assisted by Reynolds, who had -married the younger Darby’s daughter, and this was the application of -coal to the process which succeeds smelting, namely, the conversion of -crude iron into bar-iron, or iron that is malleable. Other inventors -might be mentioned by whom these men were assisted, but it will be -quite enough to consider the case of these. As related to the age, as -related to the society round him, the one thing most striking in the -life of each of them is not that he represented that society, but that -he was in opposition to it, and had to fight a way for his inventions -through neglect, ridicule, and persecution. The nation at large was -absolutely ignorant of the very nature of the objects which these men -had in view; whilst the ironmasters of the day, as a body, though not -equally ignorant, disbelieved that the objects were practicable until -they were actually accomplished. It is true that these great inventors -were not alone in their efforts; for where they succeeded, others -attempted and failed: but these failures do but show in a stronger -light how rare and how great were the faculties which success demanded. - - [Sidenote ◆1 The details of whose several lives are signal - illustrations of what has just been said.] - -◆¹ Let us take each case separately. Dudley’s life as an ironmaster was -one long succession of persecution at the hands of his brothers in the -trade. They petitioned the king to put a stop to his manufacture; they -incited mobs to destroy his bellows and his furnaces; they harassed him -with law-suits, ruined him with legal expenses; they succeeded at last -in having him imprisoned for debt; and by thus crippling the inventor, -they at last killed his invention. It is true that meanwhile a few -men—a very few—believed in his ideas, and attempted to work them out -independently; and amongst these was Oliver Cromwell himself. He and -certain partners protected themselves with a patent for the purpose, -and actually bought up the works of the ruined Dudley; but all their -attempts ended in utter failure. Two more adventurers, named Copley -and Proger, were successively granted patents during the reign of -Charles II. for this same purpose, and likewise failed ignominiously. -One man alone in the whole nation had proved himself capable of -accomplishing this new conquest for industry; whilst the nation as a -whole, and the masters of the iron trade in particular, remained as -they were—stationary in their old invincible ignorance. The two Darbys, -the two Craneges, and Reynolds, though not encountering, as Dudley did, -the hostility of their contemporaries, yet achieved their work without -the slightest encouragement or assistance from them. The younger Darby, -solitary as Columbus on his quarter-deck, watched all night by his -furnace as he was bringing his process to perfection. His workmen, like -the sailors of Columbus, obeyed their orders blindly; and in hardly a -brain but his own did there exist the smallest consciousness that one -man was laying, in secret, the foundation of his country’s greatness. -With regard to Reynolds and the Craneges, who imitated, though they did -not perfect, the further use of coal for the production of iron that -is malleable, we have similar evidence that is yet more circumstantial. -Reynolds distinctly declares in a letter written to a friend that the -conception of this process was so entirely original with the Craneges -that it had never for a moment occurred to himself as being possible, -and that they had had to convince him that it was so, against his own -judgment. But when once his conversion was completed, he united his -Ability with theirs; and within a very short time the second great step -in our iron industry had been taken triumphantly by these three unaided -men. - -Were it necessary, and would space permit of it, we might extend this -history further. We might cite the inventions of Huntsman, of Onions, -of Cort, and Neilson, and show how each of these was conceived, was -perfected, and was brought into practical use, whilst the nation as -a whole remained inert, passive, and ignorant, and the experts of -the trade were hostile, and sometimes equally ignorant. Huntsman -perfected his process in a secrecy as carefully guarded as that of a -mediæval necromancer hiding himself from the vigilance of the Church; -whilst James Neilson, the inventor of the hot-blast, had at first to -encounter the united ridicule and hostility of all the shrewdest and -most experienced iron-masters in the kingdom. - - [Sidenote ◆1 The history of the cotton manufacture does so with - equal force;] - -◆¹ The history of the cotton manufacture offers precisely similar -evidence. Almost every one of those great improvements made in it, by -which Ability has multiplied the power of Labour, had to be forced -by the able men on the acceptance of adverse contemporaries. Hay was -driven from the country; Hargreaves from his native town; Arkwright’s -mill, near Chorley, was burnt down by a mob; Peel, who used Arkwright’s -machinery, was at one time in danger of his life. Nor was it only -the hostility of the ignorant that the inventors had to encounter. -They had to conquer Capital before they could conquer Labour; for -the Capitalists at the beginning were hardly more friendly to them -than the labourers. The first Capitalists who assisted Arkwright, and -had Ability enough to discover some promise in his invention, had -not enough Ability to see their way through certain difficulties, -and withdrew their help from him at the most critical moment. The -enterprising men who at last became his partners, and with the aid -of whose Capital his invention became successful, represented their -age just as little as Arkwright did. He and they, indeed, had the same -opportunities as the society round them; but they stand contrasted to -the society by the different use they made of them. - - [Sidenote ◆1 Also the history of the steam-engine, as a very - curious anecdote will show.] - -◆¹ And now, lastly, let us come to the history of the steam-engine. -We need not go over ground we have already trodden, and prove once -more that in this case, as in the others, the age, in the sense of the -majority of the community, had as little to do with the work of the -great inventors as Hannibal had to do with the beheading of Charles I. -It will be enough to insist on the fact that the scientific minority -amongst whom the inventors lived, and who were busied with the same -pursuits, were, as a body, concerned in it just as little. The whole -forward movement, the step after step of discovery by which the -power of steam has become what it now is, was due to individuals—to -a minority of a minority; and this smaller minority was so far from -representing the larger, or from merely marching a few steps ahead of -it, that the large minority always hung back incredulous, till, in -spite of itself, it was converted by the accomplished miracle. One -example is enough to illustrate this. Watt, when he was perfecting -his steam-engine, was in partnership with Dr. Roebuck, who advanced -the money required to patent the invention, and whose energy and -encouragement helped him over many practical difficulties. When the -engine was almost brought to completion, Roebuck found himself so much -embarrassed for money, on account of expense incurred by him in an -entirely different enterprise, that he was forced to sell a large part -of his property; and amongst other things with which he parted was -his interest in Watt’s patent. This he transferred to the celebrated -engineer Boulton; and the patent for that invention which has since -revolutionised the world was valued by Roebuck’s creditors at only one -farthing. - - [Sidenote ◆1 The average man, if cross-examined at the Day of - Judgment, would be forced to give his testimony to the - same effect.] - -◆¹ These facts speak plainly enough for themselves; and the conscience -of most men will add its own witness to what they teach us—which is -this. So far as industrial progress is concerned, the majority of -mankind are passive. They labour as the conditions into which they are -born compel them to labour; but they do nothing, from their cradle to -their grave, so to alter these conditions that their own labour, or -Labour generally, shall produce larger or improved results. The most -progressive race in the world—or in other words the English race—has -progressed as it has done only because it has produced the largest -minority of men fitted to lead, and has been quickest in obeying their -orders; but apart from these men it has had no appreciable tendency to -move. Let the average Englishman ask himself if this is not absolutely -true. Let him imagine himself arraigned before the Deity at the Day -of Judgment, and the Deity saying this to him: “You found when you -entered the world that a man’s labour on the average produced each year -such and such an amount of wealth. Have you done anything to make the -product of the same labour greater? Have you discovered or applied any -new principle to any branch of industry? Have you guided industry into -any new direction? Have the exertions of any other human being been -made more efficacious owing to your powers of invention, of enterprise, -or of management?” There is not one man in a hundred who, if thus -questioned at the Judgment-seat, would be able, on examining every -thought and deed of his life, to give the Judge any answer but, “No. So -far as I am concerned, the powers of Labour, are as I found them.” - - - - - CHAPTER IV - - _The Conclusion arrived at in the preceding Book - restated. The Annual Amount produced by Ability - in the United Kingdom._ - - - [Sidenote ◆1 The more, then, that we examine the question, the - more clearly do we see the magnitude of the work - performed by Ability of the few.] - -◆¹ In spite, then, of the arguments which Socialists have borrowed -from psychology, and with which, by transferring them to the sphere of -economics, and so depriving them of all practical meaning, they have -contrived to confuse the problem of industrial progress, the facts -of the case, when examined from a practical point of view, stand out -hard and clear and unambiguous. Industrial progress is the work not of -society as a whole but of a small part of it, to the entire exclusion -of the larger part; the reason of this being that the faculties to -which this progress is due—the faculties which I have included under -the name of Industrial Ability—are found to exist only in a small -percentage of individuals, and are practically absent from the minds, -characters, and temperaments of the majority of the human race. Ability -is, in fact, a narrow natural monopoly. - - [Sidenote ◆1 But it must not be supposed that Ability is rarer - than it is.] - - [Sidenote ◆2 A rough indication of the number of able men in this - country is found in the incomes earned that are above - the average wages of Labour.] - - [Sidenote ◆3 The highest Ability very rare. Of all grades of - Ability below the highest, there is always a plentiful - supply.] - -◆¹ Ability, however, is of different kinds and grades, some kinds -being far commoner than others; and before summing up what has been -said in this chapter, it will be well to give the reader some more -or less definite idea of the numerical proportion which, judging by -general evidence, the men of Ability bear to the mass of labourers. -Such evidence, not indeed very exact, but still corresponding broadly -to the underlying facts of the case, is to be found in the number of -men paying income-tax on business incomes, as compared with the number -of wage-earners whose incomes escape that tax; in the number of men, -that is, who earn more than _one hundred and fifty pounds_ a year, as -compared with the number of men who do not earn so much. It may seem at -first sight that this division is purely arbitrary; but we shall see, -on consideration, that it is not so. ◆² We shall find that, allowing -for very numerous exceptions, men in this country do as a rule receive -less than _one hundred and fifty pounds_ a year for Labour, and that -when they receive for their exertions a larger income than this they -receive it for the direction of Labour, or for the exercise of some -sort of Ability. Now if we take the males who are over sixteen years -of age, and who are actually engaged in some industrial occupation, we -shall find that those who earn more than _one hundred and fifty pounds_ -a year form of the entire number something like six per cent. We may -therefore say that out of every thousand men there are, on an average, -sixty who are distinctly superior to their fellows, who each add more -to the gross amount of the product by directing Labour, than any one -man does by labouring, and who possesses Ability to a greater or less -extent. ◆³ The commoner kinds of Ability, however, depend as a rule -on the higher kinds, and are efficacious only as working under their -direction; and if we continue our estimate on the basis we have just -adopted, and accept the amount that a man makes in industry as being on -the whole an evidence of the amount of his Ability, we consider that, -all allowance being made for mere luck or speculation, a business -income of _fifty thousand pounds_ means, as a rule, Ability of the -first class, of _fifteen thousand pounds_ Ability of the second, and -_five thousand pounds_ Ability of the third, we shall find that men -possessing these higher degrees of the faculty are, in comparison to -the mass of employed males, very few indeed. We shall find that Ability -of the third class is possessed by but one man out of two thousand; of -the second class by but one man out of four thousand; and of the first -class by but one man out of a hundred thousand. This is, as I have -said, a very rough method of calculation, but it is not a random one; -and there is reason to believe that it affords us an approximation to -truth. At all events, taking it as a whole, it does not err by making -Ability too rare; and we shall be certainly within the mark if, taking -Ability as a whole, and waiving the question of its various classes and -their rarity, we say that of the men in this country actively engaged -in production, the men of Ability constitute one-sixteenth. - - [Sidenote ◆1 We may now repeat the conclusions arrived at in - the last Book, that Ability produces at _least_ - eight-thirteenths of the present income of this country; - and Labour, at the utmost, five-thirteenths.] - -And now we are in a position to repeat with more precision and -confidence the conclusion which we reached at the end of the last -chapter. ◆¹ It was there pointed out that of our present national -income, consisting as it does of about _thirteen hundred million -pounds_, Labour demonstrably produced not more than _five hundred -million pounds_, whilst _eight hundred million pounds_ at least was -demonstrably the product of Ability. In the present chapter, I have -substantiated that proposition: I have exposed the confusions and -fallacies which have been used to obscure its truth; I have shown that -Ability and Labour are two distinct forces, in the sense that whilst -the latter represents a faculty common to all men, the possession of -the former is the natural monopoly of the few; that the labourer and -the man of Ability play such different parts in production that a given -amount of wealth is no more their joint product than a picture is the -joint product of a great painter and a canvas-stretcher; and I have -now pointed to some rough indication of the respective numbers of the -men of Ability and of the labourers. Instead, therefore, of contenting -ourselves with the general statement that Ability makes so much of -the national income, and Labour so much, we may say that ninety-six -per cent of the producing classes produce little more than a third -of our present national income, and that a minority, consisting of -one-sixteenth of these classes, produces little less than two-thirds of -it. - - - ——————————————————————————————————————————————————————— - - - - - BOOK IV - - THE REASONABLE HOPES OF LABOUR — THEIR MAGNITUDE, - AND THEIR BASIS - - - - - ——————————————————————————————————————————————————————— - - - - - CHAPTER I - - _How the Future and Hopes of the Labouring Classes - are bound up with the Prosperity of the Classes - who exercise Ability._ - - - [Sidenote ◆1 The foregoing conclusions not yet complete; but first - let us see the lesson which it teaches us as it stands.] - -◆¹ The conclusion just arrived at is not yet completely stated; for -there are certain further facts to be considered in connection with it -which have indeed already come under our view, but which, in order to -simplify the course of our argument, have been put out of sight in the -two preceding chapters. I shall return to these facts presently; but it -will be well, before doing so, to take the conclusion as it stands in -this simple and broad form, and see, by reference to those principles -which were explained at starting, and in which all classes and parties -agree, what is the broad lesson which it forces on us, underlying all -party differences. - - [Sidenote ◆1 If we sum up all that has been said thus far, it may - seem at first sight that it teaches nothing but the - negative lesson, that we should let Ability have its own - way unchecked.] - -◆¹ I started with pointing out that, so far as politics are concerned, -the aim of all classes is to maintain their existing incomes; and that -the aim of the most numerous class is not only to maintain, but to -increase them. I pointed out further that the income of the individual -is necessarily limited by the amount of the income of the nation; and -that therefore the increase, or at all events the maintenance, of the -existing income of the nation is implied in all hopes of social and -economic progress, and forms the foundation on which all such hopes -are based. I then examined the causes to which the existing income of -the nation is due; and I showed that very nearly two-thirds of it is -due to the exertions of a small body of men who contribute thus to -the productive powers of the community, not primarily because they -possess Capital, but because they possess Ability, of which Capital is -merely the instrument; that it is owing to the exercise of Ability only -that this larger part of the income has gradually made its appearance -during the past hundred years; and that were the exercise of Ability -interfered with, the increment would at once dwindle, and before long -disappear. - -Thus the two chief factors in the production of the national income—in -the production of that wealth which must be produced before it can -be distributed—are not Labour and Capital, which terms, as commonly -used, mean living labourers on the one hand, and dead material on the -other; but they are two distinct bodies of living men—labourers on the -one hand, and on the other men of Ability. The great practical truth, -then, which is to be drawn from the foregoing arguments is this—and it -is to be drawn from them in the interest of all classes alike—that the -action of Ability should never be checked or hampered in such a way as -to diminish its productive efficacy, either by so interfering with its -control of Capital, or by so diminishing its rewards, as to diminish -the vigour with which it exerts itself; but that, on the contrary, all -these social conditions should be jealously maintained and guarded -which tend to stimulate it most, by the nature of the rewards they -offer it, and which secure for it also the most favourable conditions -for its exercise. By such means, and by such means only, is there any -possibility of the national wealth being increased, or even preserved -from disastrous and rapid diminution. - - [Sidenote ◆1 But this is very far from being the whole lesson - taught, or indeed the chief part of it.] - -◆¹ This, however, is but one half of the case; and, taken by itself, -it may seem to have no connection with the problem which forms the -main subject of this volume, namely, the social hopes and interests, -not of Ability, but of Labour. For, taken by itself, the conclusion -which has just been stated may strike the reader at first sight as -amounting merely to this: that the sum total of the national income -will be largest when the most numerous minority of able men produce the -largest possible incomes,—incomes which they themselves consume; and -that, unless they are allowed to consume them, they will soon cease -to produce them. From the labourer’s point of view, such a conclusion -would indeed be a barren one. It might show him that he could not -better himself by attacking the fortunes of the minority; but it would, -on the other hand, fail to show him that he was much interested in -their maintenance, since, if Ability consumes the whole of the annual -wealth which it adds to the wealth annually produced by Labour, the -total might be diminished by the whole of the added portion, and -Labour itself be no worse off than formerly. But when I said just -now that it was to the interest of all classes alike not to diminish -the rewards which Ability may hope for by exerting itself, this was -said with a special qualification. I did not say that it was to the -interest of the labourers to allow Ability to retain the whole of what -it produced, or to abstain themselves from appropriating a certain -portion of it; but what I did say was that any portion appropriated -thus should not be so large, nor appropriated in such a way, as to make -what remains an object of less desire, or the hope of possessing it -less powerful as a stimulus to producing it. This qualification, as the -reader will see presently, gives to the conclusion in question a very -different meaning from that which at first he may very naturally have -attributed to it. - - [Sidenote ◆1 The chief lesson to be learnt is that, whilst Ability - is the chief producer of wealth, Labour may appropriate - a large share of its products.] - -◆¹ For the precise point to which I have been leading up, from the -opening page of the present volume to this, is that a considerable -portion of the wealth produced by Ability may be taken from it and -handed over to Labour, without the vigour of Ability being in the -least diminished by the loss; that such being the case, the one great -aim of Labour is to constantly take from Ability a certain part of its -product; and that this is the sole process by which, so far as money -is concerned, Labour has improved its position during the past hundred -years, or by which it can ever hope to improve it further in the future. - - [Sidenote ◆1 The question is, How much may it appropriate without - paralysing the Ability which produces it?] - -◆¹ The practical question, therefore, for the great mass of the -population resolves itself into this: What is the extent to which -Ability can be mulcted of its products, without diminishing its -efficacy as a productive agent? An able man’s hopes of securing _nine -hundred thousand pounds_ for himself would probably stimulate his -Ability as much as his hopes of securing a _million_. Indeed the fact -that, before he could secure a _million pounds_ for himself, he had to -produce a _hundred thousand_ for other people, might tend to increase -his efforts rather than to relax them. But, on the other hand, if, -before he could secure a _hundred thousand pounds_ for himself, he had -to produce a _million_ for other people, it is doubtful whether either -sum would ever be produced at all. There must therefore be, under any -given set of circumstances, some point somewhere between these two -extremes up to which Labour can appropriate the products of Ability -with permanent advantage to itself, but beyond which it cannot carry -the process, without checking the production of what it desires to -appropriate. But how are we to ascertain where that precise point is? - - [Sidenote ◆1 This is a question which can be answered only by - experience; and we have the experience of a century to - guide us.] - -◆¹ To this question it is altogether impossible to give any answer -based upon _à priori_ reasoning. The very idea of such a thing is -ridiculous; and to attempt it could, at the best, result in nothing -better than some piece of academic ingenuity, having no practical -meaning for man, woman, or child. But what reasoning will not do, -industrial history will. Industrial history will provide us with an -answer of the most striking kind—general, indeed, in its character; -but not, for that reason, any the less decided, or less full of -instruction. For industrial history, in a way which few people realise, -will show us how, during the past hundred years, Labour has actually -succeeded in accomplishing the feat we are considering; how, without -checking the development and the power of Ability, it has been able to -appropriate year by year a certain share of what Ability produces. When -the reader comes to consider this,—which is the great industrial object -lesson of modern times,—when he sees what the share is which Labour -has appropriated so triumphantly, he will see how the conclusions we -have here arrived at, with regard to the causes of production, afford -a foundation for the hopes and claims of Labour, as broad and solid as -that by which they support the rights of Ability. - -Let us turn, then, once more to the fact which I have already so -often dwelt upon, that during the closing years of the last century -the population of Great Britain was about _ten millions_, and the -national income about a _hundred and forty million pounds_. It has been -shown that to reach and maintain that rate of production required the -exertion of an immense amount of Ability, and the use of an immense -Capital which Ability had recently created. But let me repeat what -I have said already: that we will, for the purpose of the present -argument, attribute the production of the whole to average human -Labour. It is obvious that Labour did not produce more, for no more -was produced; and it is also obvious that if, since that time, it -had never been assisted and never controlled by Ability, the same -amount of Labour would produce no more now. We are therefore, let me -repeat, plainly understating the case if we say that British Labour -by itself—in other words, Labour shut out from, and unassisted by the -industrial Ability of the past ninety years—can, at the utmost, produce -annually a _hundred and forty million pounds_ for every _ten millions_ -of the population. - - [Sidenote ◆1 In 1860 Labour took at least twenty-five per cent - more than it produced itself, out of the products of - Ability; and it now takes about forty-five per cent.] - -And now let us turn from what Labour produces to what the labouring -classes[43] have received at different dates within the ninety or -hundred years in question. ◆¹ At the time of which we have just been -speaking, they received about half of what we assume Labour to have -produced. A labouring population of _ten million_ people received -annually about _seventy million pounds_.[44] Two generations later, -the same number of people received in return for their labour about a -_hundred and sixty million pounds_.[45] They were twenty-five per cent -richer than they possibly could have been if, in 1795, they had seized -on all the property in the kingdom and divided it amongst themselves. -In other words, Labour in 1860, instead of receiving, as it did two -generations previously, half of what we assume it to have produced, -received twenty-five per cent more than it produced. If we turn from -the year 1860 to the present time, we find that the gains of Labour -have gone on increasing; and that each _ten millions_ of the labouring -classes to-day receives in return for its labour _two hundred million -pounds_, or over forty per cent more than it produces. And all these -calculations are based, the reader must remember, on the ridiculously -exaggerated assumption which was made for the sake of argument, that -in the days of Watt and Arkwright, Capital, Genius, and Ability had no -share in production; and that all the wealth of the country, till the -beginning of the present century, was due to the spontaneous efforts of -common Labour alone. - - [Sidenote ◆1 The gains of Labour are put in a yet more striking - light by comparing the present income of Labour with the - total income of the country fifty years ago.] - -◆¹ And now let us look at the matter from a point of view slightly -different, and compare the receipts of Labour not with what we assume -it to have itself produced, but with the total product of the community -at a certain very recent date. - -In 1843, when Queen Victoria had been six or seven years on the throne, -the gross income of the nation was in round numbers _five hundred and -fifteen million pounds_. Of this, _two hundred and thirty-five million -pounds_ went to the labouring classes, and the remainder, _two hundred -and eighty million pounds_, to the classes that paid income-tax. Only -fifty years have elapsed since that time, and, according to the best -authorities, the income of the labouring classes now is certainly not -less than _six hundred and sixty million pounds_.[46] That is to say, -it exceeds, by a _hundred and forty-five million pounds_, the entire -income of the nation fifty years ago. - -An allowance, however, must be made for the increase in the number of -the labourers. That is of course obvious, and we will at once proceed -to make it. But when it is made, the case is hardly less wonderful. -The labouring classes in 1843 numbered _twenty-six millions_; at the -present time they number _thirty-three millions_.[47] That is to say, -they have increased by _seven million_ persons. Now assuming, as we -have done, that Labour by itself produces as much as _fourteen pounds_ -per head of the population, this addition of _seven million_ persons -will account for an addition of _ninety-eight million pounds_ to the -_five hundred and fifteen million pounds_ which was the amount of -the national income fifty years ago. We must therefore, to make our -comparisons accurate, deduct _ninety-eight million pounds_ from the -_hundred and forty-five million pounds_ just mentioned, which will -leave us an addition of _forty-seven million pounds_. We may now say, -without any reservation, that the labouring classes of this country, in -proportion to their number, receive to-day _forty-seven million pounds_ -a year more than the entire income of the country at the beginning of -the reign of Queen Victoria. - - [Sidenote ◆1 Every labourer anxious for his own welfare should - reflect on these facts.] - -◆¹ To any labourer anxious for his own welfare, to any voter or -politician of any kind, who realises that the welfare of the labourers -is the foundation of national stability, and who seeks to discover by -what conditions that welfare can be best secured and promoted, this -fact which I have just stated is one that cannot be considered too -closely, too seriously, or too constantly. - -Let the reader reflect on what it means. - - [Sidenote ◆1 They show him that the existing system has done, and - is doing for him far more than any Socialist ever - promised.] - -Dreams of some possible social revolution, dreams of some division of -property by which most of the riches of the rich should be abstracted -from them and divided amongst the poor—these were not wanting fifty -years ago. ◆¹ But even the most sanguine of the dreamers hardly -ventured to hope that the then riches of the rich could be taken -away from them completely; that a sum equal to the rent of the whole -landed aristocracy, all the interest on Capital, all the profits of -our commerce and manufactures, could be added to what was then the -income of the labouring classes. No forces of revolution were thought -equal to such a change as that. But what have the facts been? What has -happened really? Within fifty years the miracle has taken place, or, -indeed, one greater than that. The same number of labourers and their -families as then formed the whole labouring population of the country -now possess among them every penny of the amount that then formed the -income of the entire nation. They have gained every penny that they -possibly could have gained if every rich man of that period—if duke, -and cotton lord, and railway king, followed by all the host of minor -plutocrats, had been forced to cast all they had into the treasury -of Labour, and give their very last farthing to swell the labourer’s -wages. The labourers have gained this; but that is not all. They have -gained an annual sum of _forty-seven million pounds_ more. And they -have done all this, not only without revolution, but without any -attack on the fundamental principles of property. On the contrary, the -circumstances which have enabled Labour to gain most from the proceeds -of Ability, have been the circumstances which have enabled Ability to -produce most itself. - - [Sidenote ◆1 But before proceeding with this argument, there are - two side points to dispose of.] - -◆¹ Before, however, we pursue these considerations further, it is -necessary that we should deal with two important points which have -perhaps already suggested themselves to the reader as essential to the -problem before us. They are not new points. They have been discussed in -previous chapters; but the time has now arrived to turn to them once -again. - - - - - CHAPTER II - - _Of the Ownership of Capital, as distinct from its - Employment by Ability._ - - - [Sidenote ◆1 In the foregoing argument, all mention of Land has - been omitted, for simplicity’s sake.] - - [Sidenote ◆2 But rent, especially the rent of the large owners, is - so small a part of the national income that the omission - is of no practical importance.] - -The first of the points I have alluded to can be disposed of very -quickly. It relates to Land. In analysing the causes to which our -national income is due, I began with showing that Land produced a -certain definite part of it. ◆¹ For the sake, however, of simplicity, -in the calculation which I went on to make, I ignored Land, and the -fact of its being a productive agent; and treated the whole income as -if produced by Labour, Capital, and Ability. I wish, therefore, now to -point out to the reader that this procedure has had little practical -effect on the calculation in question, and that any error introduced -by it can be easily rectified in a moment. ◆² The entire landed rental -of this country is, as I have already shown, not so much as one -thirteenth of the income; whilst that of the larger landed proprietors -is not so much as one thirty-ninth. Now my sole object in dealing with -the national income at all is to show how far it is susceptible of -redistribution; and it is perfectly certain that no existing political -party would attempt, or even desire, to redistribute the rents of any -class except the large proprietors only. The smaller proprietors,—_nine -hundred and fifty thousand_ in number,—who take between them two-thirds -of the rental, are in little immediate danger of having their rights -attacked. The only rental therefore—namely, that of the larger -proprietors—which can be looked on, even in theory, as the subject of -redistribution, is too insignificant, being less than _thirty million -pounds_, to appreciably affect our calculations when we are dealing -with _thirteen hundred millions_. The theory of Land as an independent -productive agent, and of rent as representing its independent product, -is essential to an understanding of the theory of production generally; -but in this country the actual product of the Land is so small, as -compared with the products of Labour, Capital, and Ability, that for -purposes like the present it is hardly worth considering. Its being -redistributed, or not redistributed, would, as we have seen already, -make to each individual but a difference of three farthings a day. - - [Sidenote ◆1 Capital, as distinct from the Ability that uses it, - has been omitted also.] - - [Sidenote ◆2 We must now again consider it in connection with the - classes which never themselves employ it, but live on - the interest of it.] - - [Sidenote ◆3 What place do these classes hold in the productive - system?] - -◆¹ The second point I alluded to must be considered at greater length. -In dealing with Capital and Ability, I first treated them separately. I -then showed that, regarded as a productive agent, Capital _is_ Ability, -and must be treated as identical with it. But it is necessary, now that -we are dealing with distribution, to disunite them for a moment, and -treat them separately once more. ◆² For even though it be admitted that -Ability, working by means of Capital, produces, as it has been shown to -do, nearly two-thirds of the national income, and though it be admitted -further that a large portion of this product should go to those able -men who are actively engaged in producing it,—the men whose Ability -animates and vivifies Capital,—it may yet be urged that a portion of it -which is very large indeed goes, as a fact, to men who do not exert -themselves at all, or who, at any rate, do not exert themselves in -the production of wealth. These men, it will be said, live not on the -products of Ability, but on the interest of Capital which they have -come accidentally to possess; ◆³ and it will be asked on what grounds -Labour is interested in forbearing to touch the possessions of those -who produce nothing? If it has added to its income, as it has done, -during the past hundred years, why should it not now add to it much -more rapidly, by appropriating what goes to this wholly non-productive -class? - -To this question there are several answers. One is that a leisured -class—a class whose exertions have no commercial value, or no -value commensurate with the cost of its maintenance—is essential -to the development of culture, of knowledge, of art, and of mental -civilisation generally. But this is an answer which we need not dwell -on here; for, whatever its force, it is foreign to our present purpose. -We will confine ourselves solely to the material interests that are -involved, and consider solely how the plunder of a class living on -the interest of Capital would tend to affect the actual production of -wealth. - -It would affect the production of wealth in just the same way as would -a similar treatment of that class on whose active Ability production is -directly dependent; and it would do this for the following reasons. - - [Sidenote ◆1 They are the heirs of Ability, and represent, by - their possession of Capital, the main object with which - that Capital was originally created.] - - [Sidenote ◆2 For Capital is created and saved in order that it may - yield interest, firstly, to the man who himself created - and saved it;] - -◆¹ The greater part of the Capital that has been accumulated in the -modern world is the creation of active Ability, as I have pointed out -already. It has been saved not from the product of Labour, but from -the product which Ability has added to this. It is Ability congealed, -or Ability stored up. And the main motive that has prompted the men -of Ability to create it has not consisted only of the desire of -enjoying the income which they are enabled to produce by its means, -when actually employing it themselves, but the desire also of enjoying -some portion of the income which will be produced by its means if it -is employed by the Ability of others. ◆² In a word, the men who create -and add to our Capital are motived to do so by expectation that the -Capital shall be their own property; that it shall, when they wish -it, yield them a certain income independent of any further exertions -of their own. Were this expectation rendered impossible, were Capital -by any means prevented from yielding interest either to the persons -who made and saved it, or those to whom the makers might bequeath it, -the principal motive for making or saving it would be gone. If a man, -for instance, makes _one thousand pounds_ he can, as matters stand, do -three things with it, any one of which will gratify him. He can spend -it as income, and enjoy the whole of it in that way; he can use it -himself as Capital, and so enjoy the profits; or he can let others use -it as Capital, and so enjoy the interest. But if he were by any means -precluded from receiving interest for it, and desired for any reason -to retire from active business, he could do with his _thousand pounds_ -one of two things only—he could spend it as income, in which case it -would be destroyed; or let others use it as Capital, in which case he -himself could derive no benefit whatever from it, and would, in effect, -be giving it or throwing it away. Were the first course pursued, no -Capital would be saved; were the second course obligatory, no Capital -would be created.[48] - - [Sidenote ◆1 And secondly, to his family and his immediate heirs.] - - [Sidenote ◆2 The bulk of the Capital owned now by those who do not - employ it themselves has come to them from their fathers - or grandfathers who created it;] - - [Sidenote ◆3 As the history of the growth of Capital during the - present century shows.] - - [Sidenote ◆4 A man’s desire to leave money to his family is shown - by history to be as strong a motive as the desire to - enjoy it himself.] - -I have spoken thus far as though in creating Capital a man’s motive -were the hope of enjoying the interest of it himself. ◆¹ But there is -another motive almost equally powerful—in some cases more powerful—and -that is the hope of transferring or transmitting it to his family or to -his children. ◆² Now four-fifths of the Capital of the United Kingdom -has been created within the last eighty years. The total Capital in -1812 amounted to about _two thousand millions_; now it amounts to -almost _ten thousand millions_. Therefore _eight thousand millions_ -of the Capital of this country has been created by the Ability of -the parents and of the grandparents of those who now possess it, -supplemented by the Ability of many who now possess it themselves. The -most rapid increase in it took place between 1840 and 1875. ◆³ If we -regard men of fifty as representing the present generation of those -actively engaged in business, we may say that their grandfathers made -_two thousand millions_ of our existing Capital, their parents _four -thousand millions_, and themselves _two thousand millions_. It will -thus be easily realised how those persons who own Capital which they -leave others to employ, and which personally they have had no hand in -making, are for the most part relatives or representatives of the very -persons who made it, and who made it actuated by the hope that their -relations or representatives should succeed to it. ◆⁴ All history shows -us that one of the most important and unalterable factors in human -action is a certain solidarity of interest between men—even selfish -men—and those nearly connected with them; and just as parents are, by -an almost universal instinct, prompted to rear their children, so are -they prompted to bequeath to them—or, at all events, to one of them—the -greater part of their possessions. We might as well try to legislate -against the instincts of maternity, as against the instinct of bequest. -Therefore, that the ownership of much of the Capital of the country -should be separated from the actual employment of it, is a necessary -result of the forces by which it was called into existence; and in -proportion as such a result was made impossible in the future, the -continued operation of these forces would be checked. - - [Sidenote ◆1 Further, it is impossible to prevent interest being - both offered and taken for the use of Capital.] - -◆¹ But interest depends also on a reason that is yet stronger and more -simple than these. The owner of Capital receives interest for the use -of it, because it is, in the very nature of things, impossible to -prevent its being offered him, and impossible to prevent his taking it. -If a man who possesses _one hundred thousand pounds_, by using it as -Capital makes _ten thousand pounds_ a year, and could, if he had the -use of another _one hundred thousand pounds_, add another _ten thousand -pounds_ to his income, no Government could prevent his making a bargain -with a man who happened to possess the sum required, by which the -latter, in return for lending him that sum, would obtain a part of the -income which the use of it would enable him to produce. - -The most practical aspect of the matter, however, yet remains to be -considered. I have spoken of interest as of a thing with whose nature -we are all familiar. But let us pause and ask, What is it? It is merely -a part of the product which active Ability is enabled to produce by -means of its tool, Capital. It is the part given by the man who uses -the tool to the man who owns it. But the tool, or Capital, is, as we -have seen already, itself the product of the Ability of some man in the -past; so that the payment of interest, whether theoretically just or -no, is a question which concerns theoretically two parties only: the -possessor of living Ability, and the possessor of the results of past -Ability. Thus, whatever view we may happen to take about it, Labour, -in so far as theoretical justice goes, has no concern in the matter, -one way or the other. For if interest is robbery, it is Ability that is -robbed, not Labour. - - [Sidenote ◆1 And whether interest be just or no, it at all events - represents no injustice to Labour.] - - [Sidenote ◆2 For it will modify, though not extinguish, their - desire to appropriate a part of what is paid as - interest.] - -◆¹ It is important to take notice of this truth; for a knowledge of -what is theoretically just, though it can never control classes so -far as to prevent their seizing on whatever they can obtain and keep, -exercises none the less a very strong influence on their views as to -how much of the wealth of other classes is obtainable, and also on -the temper in which, and the entire procedure by which, they will -endeavour to obtain it. ◆² For this reason it is impossible to insist -too strongly on the fact that, as a matter of theoretical justice, -Labour, as such, has no claim whatever on any of the interest paid -for the use of Capital; and that if it succeeds in obtaining any part -of this interest, it will be obtaining what has been made by others, -not what has been made by itself. It is not that such arguments as -these will extinguish the desire of Labour to increase its own wages -at the expense of interest, if possible; for might—the might that can -sustain itself, not the brute force of the moment—will always form in -the long run the practical rule of right; but they will disseminate a -dispassionate view of what the limits of possibility are, and on what -these limits depend. - - [Sidenote ◆1 History shows us that they have been doing this - already,] - -◆¹ And now let us turn to the facts of industrial history, and see -what light they throw on what has just been said. I have pointed out -that if Capital is to be made or used at all, it must necessarily, -for many reasons, be allowed to yield interest to its owners; but the -amount of interest it yields has varied at various times; and, although -to abolish it altogether would be impossible, or, if possible, fatal -to production, it is capable, under certain circumstances, of being -reduced to a minimum, without production being in any degree checked; -and every _pound_ which the man who employs Capital is thus relieved -from paying to the man who owns it constitutes, other things being -equal, a fund which may be appropriated by Labour. To say this is to -make no barren theoretical statement. The fund in question not only -may, under certain circumstances, be appropriated by Labour; but these -circumstances are the natural result of our existing industrial system; -and the fund, as I will now show, has been appropriated by Labour -already, and forms a considerable part of that additional income which -Labour, as we have seen, has secured from the income created by Ability. - - [Sidenote ◆1 to an increasing extent.] - - [Sidenote ◆2 Interest now forms but a small part of the income of - the nation,] - -◆¹ In days preceding the rise of the modern industrial system, the -average rate of interest was as high as ten per cent. As the modern -system developed itself, as Ability more and more was diverted from -war, and concentrated on commerce and industry, and produced by the use -of Capital a larger and more certain product, ◆² the price it paid for -the use of Capital fell, till by the middle of this century it was not -more than five per cent. During the past forty years it has continued -to sink still further, and can hardly be said now to average much more -than three. - - [Sidenote ◆1 In spite of appearances to the contrary;] - -◆¹ This fact is sufficiently well known to investors; but there are -other facts known equally well which tend to confuse popular thought -on the subject, and which accordingly, in a practical work like this, -it is very necessary to place in their true light. For, in spite of -what has been said of the fall in the rate of interest from ten to six, -and to five, and from five to three per cent, it is notorious that -companies, when successful, often pay to-day dividends of from ten to -twenty per cent, or even more; and founders’ shares in companies are -constantly much sought after, which are merely shares in such profits -as result over and above a return of at least ten per cent on the -capital. - - [Sidenote ◆1 As much of what is vulgarly considered interest is - something quite different.] - -But the explanation of this apparent contradiction is simple. Large -profits must not be confounded with high interest. ◆¹ Large profits are -a mixture of three things, as was pointed out by Mill, though he did -not name two of them happily. He said that profits consisted of wages -of superintendence, compensation for risk, and interest on Capital. If, -instead of wages of superintendence, we say the product of Ability, and -instead of compensation for risk, we say the reward of sagacity, which -is itself a form of Ability, we shall have an accurate statement of the -case. A large amount of the Capital in the kingdom is managed by the -men who own it; and when they manage it successfully, the returns are -large. Sometimes a man with a Capital of _a hundred thousand pounds_ -will make as much as _fifteen thousand pounds_ a year; but that does -not mean that his Capital yields fifteen per cent of interest. Let such -a man be left another _hundred thousand pounds_, which he determines -not to put into his own business, but invests in some security held to -be absolutely safe, and he will find that interest on Capital means not -more than three and a half per cent. If he is determined to get a large -return on his Capital, and if he does this by investing it in some -new and speculative enterprise, this result, unless it be the mere -good luck of a gambler, is mainly the result of his own knowledge and -judgment, as the following facts clearly enough show. - -Between the years 1862 and 1885 there were registered in the United -Kingdom about _twenty-five thousand_ joint stock companies, with an -aggregate Capital of about _two thousand nine hundred million pounds_. -Of these companies, by the year 1885, more than _fifteen thousand_ -had failed, and less than _ten thousand_ were still existing. During -the following four years the proportion of failures was smaller; but -a return published in 1889 shows that of all the companies formed -during the past twenty-seven years, considerably more than half had -been wound up judicially. Therefore a man who secures a large return -on money invested in a business not under his own control, does so by -an exercise of sagacity not only beneficial to himself, but in a still -higher degree beneficial to the country generally; for he has helped -to direct human exertion into a profitable and useful channel, whereas -those who are less sagacious do but help it to waste itself.[49] - -Of large returns on Capital, then, only a part is interest; the larger -part being merely another name for what we have shown to be the actual -creation of Ability—either the Ability with which the Capital has -been employed in directing Labour, or the Ability with which some new -method of directing Labour has been selected. There is accordingly no -contradiction in the two statements that Capital may often bring more -than fifteen per cent to the original investors; and yet that interest -on Capital in the present day is not more than three or three and a -half per cent. Here is the explanation of shares rising in value. A man -who at the starting of a business takes _a hundred one pound shares_ -in it, and, when it is well established, gets _twenty pounds_ a year -as a dividend, will be able to sell his shares for something like _six -hundred pounds_; which means that little more than three per cent is -the interest which will be received by the purchaser. - - [Sidenote ◆1 Interest, then, has decreased, and the whole sum thus - saved has gone to the labouring classes.] - -◆¹ Interest, then, or the sum which those who use Capital pay to -those who own it, having decreased, as we have seen it has done, with -the development of our industrial system, it remains to show the -reader where the sum thus saved has gone. It must have gone to one -or other of two classes of people: to the men of Ability, or to the -labourers. If it had gone to the former,—that is, to the employers of -Labour,—their gains now would be greater, in proportion to the Capital -employed by them, than they were fifty years ago; but if their gains -have not become greater, then the sum in question must obviously have -found its way to the labourers. And that such is the case will be made -sufficiently evident by the fact that Mr. Giffen has demonstrated in -the most conclusive way that, if rent and the interest taken by the -classes that pay income-tax had increased as fast as the sum actually -taken by Labour, the sum assessed to income-tax would be _four hundred -million pounds_ greater than it is, and the sum taken by Labour _four -hundred million pounds_ less.[50] In this case the wealthier classes -would be now taking _one thousand and sixty million pounds_, instead -of the _six hundred million pounds_ which they actually do take;[51] -and the labouring classes, instead of taking, as they do, _six hundred -and sixty million pounds_, or, as Mr. Giffen maintains, more, would be -taking only _two hundred and sixty million pounds_.[52] In fact, as Mr. -Giffen declares, “It would not be far short of the mark to say that the -whole of the great improvement of the last fifty years has gone to the -masses.” And the accuracy of this statement is demonstrated in a very -striking way by the fact that had the whole improvement, according to -the contrary hypothesis, gone not to the labourers, but to the classes -that pay income-tax, the remainder, namely, _two hundred and sixty -million pounds_, would correspond, almost exactly, allowing for the -increase of their numbers, with what the labouring classes received at -the close of the last century. - - [Sidenote ◆1 What the social reformer should study is not the - dreams of Socialists, but the forces actually at work, - through which Labour has already gained, and is gaining - so much.] - -◆¹ What, then, the social reformer, what the labourer, and the friend -of Labour, ought to study with a view to improving the condition of -the labouring classes, is not the theories and dreams of those who -imagine that the improvement is to be made only by some reorganisation -of society, but the progress, and the causes of the progress, that -these classes have actually been making, not only under existing -institutions, but through them, because of them, by means of them. - - - - - CHAPTER III - - _Of the Causes owing to which, and the Means by - which Labour participates in the growing - Products of Ability._ - - -Let me repeat in other words what I have just said. The labouring -classes, under the existing condition of things, have acquired more -wealth in a given time than the most sanguine Socialist of fifty -years ago could have promised them; and this increased wealth has -found its way into their pockets owing to causes that are in actual -operation round us. These causes, therefore, should be studied for two -reasons: firstly, in order that we may avoid hindering their operation; -secondly, in order that we may, if possible, accelerate it; and I shall -presently point out, as briefly, but as clearly as I can, what the -general character of these causes is. - - [Sidenote ◆1 It is true that there are notorious facts that may - make the superficial or excitable observer doubt the - reality of this great progress of the labouring classes.] - -◆¹ But before doing this,—before considering the cause of this -progress,—I must for a moment longer dwell and insist upon the reality -of it; because unhappily there are certain notorious facts which -constantly obtrude themselves on the observation of everybody, and -which tend to make many people deny, or at least doubt it. These facts -are as follows. - - [Sidenote ◆1 But when these facts—viz. facts relating to the very - poor—are reduced to their true proportions,] - -Speaking in round numbers, there exists in this country to-day a -population consisting of about _seven hundred thousand_ families, -or _three million_ persons, whose means of subsistence are either -insufficient, or barely sufficient, or precarious, and the conditions -of whose life generally are either hard or degrading, or both. A -considerable portion of them may, without any sentimental exaggeration, -be called miserable; and all of them may be called more or less -unfortunate. There is, further, this observation to be made. People who -are in want of the bare necessaries of life can hardly be worse off -absolutely at one period than another; but if, whilst their own poverty -remains the same, the riches of other classes increase, they do, in -a certain sense, become worse off relatively. The common statement, -therefore, that the poor are getting constantly poorer is, in this -relative sense, true of a certain part of the population; and that -part is now nearly equal in numbers to the entire population of the -country at the time of the Norman Conquest. Such being the case, it is -of course obvious that persons who, for purposes of either benevolence -or agitation, are concerned to discover want, misfortune, and misery, -find it easier to do so now than at any former period. London alone -possesses an unfortunate class which is probably as large as the whole -population of Glasgow; and an endless procession of rags and tatters -might be marched into Hyde Park to demonstrate every Sunday. But if -the unfortunate class in London is as large as the whole population of -Glasgow, we must not forget that the population of London is greater -by nearly a _million_ than the population of all Scotland; ◆¹ and the -truth is that, although the unfortunate class has, with the increase -of population, increased in numbers absolutely, yet relatively, for -at least two centuries, it has continued steadily to decrease. In -illustration of this fact, it may be mentioned that, whereas in 1850 -there were _nine_ paupers to every _two hundred_ inhabitants, in 1882 -there were only _five_; whilst, to turn for a moment to a remoter -period, so as to compare the new industrial system with the old, in -the year 1615, a survey of Sheffield, already a manufacturing centre, -showed that the “begging poor,” who “could not live without the charity -of their neighbours,” actually amounted to one-third of the population, -or _seven hundred and twenty-five_ households out of _two thousand two -hundred and seven_. Further, although, as I observed just now, it is -in a certain sense true to say that, relatively to other classes, the -unfortunate class has been getting poorer, the real tendency of events -is expressed in a much truer way by saying that all other classes have -been getting more and more removed from poverty. - - [Sidenote ◆1 We shall find that they have no such significance, - nor disprove in any way the extraordinary progress of - the vast majority.] - - [Sidenote ◆2 What then are the causes of this progress?] - -◆¹ What the presence, then, and the persistence of this class really -shows us is not that the progress of the labouring classes as a whole -has been less rapid and less remarkable than it has just been said to -be, but that a certain fraction of the population, for some reason or -other, has always remained hitherto outside this general progress; and -the one practical lesson which its existence ought to force on us is -not to doubt the main movement, still less to interfere with it, but to -find some means of drawing these outsiders into it. ◆² This great and -grave problem, however, requires to be treated by itself, and does not -come within the scope of the present volume. Our business is not with -the causes which have shut out one-tenth of the poorer classes from the -growing national wealth, but with those which have so signally operated -in making nine-tenths of them sharers in it. - - [Sidenote ◆1 They are of two kinds: spontaneous tendencies, and - the deliberate and concerted actions of men.] - -We will accordingly return to these, and consider what they are. ◆¹ We -shall find them to be of two kinds: firstly, those which consist of -the natural actions of men, each pursuing his own individual interest; -and secondly, their concerted actions, which represent some general -principle, and are deliberately undertaken for the advantage not of an -individual but of a class. We will begin with considering the former; -as not only are they the most important, but they also altogether -determine and condition the latter, and the latter, indeed, can do -little more than assist them. - - [Sidenote ◆1 We will begin with the spontaneous tendencies—_i.e._ - the natural actions of individuals, each pursuing his - own interest.] - - [Sidenote ◆2 There are two ways of getting rich: (1) by - abstracting from an existing income, or (2) by adding to - it. The rich class of the modern world have, as a whole, - become rich in the second way.] - -◆¹ The natural causes that tend to distribute amongst Labour a large -portion of the wealth produced by Ability will be best understood if we -first consider for a moment the two ways—and the two only ways—in which -a minority can become wealthy. ◆² What these are can be easily realised -thus. Let us imagine a community of eight labouring men, who make each -of them _fifty pounds_ a year, and who represent Labour; and let us -imagine a ninth man,—a man of Ability,—who represents the minority. The -ninth man might, if he were strong enough, rob each of the eight men -of _twenty-five pounds_, compelling them each to live on _twenty-five -pounds_ instead of on _fifty pounds_, and appropriate to himself an -annual _two hundred pounds_. Or he might reach the same result in a -totally different way. He might so direct and assist the Labour of -the eight men, that without any extra effort to themselves they each, -instead of _fifty pounds_ produced _seventy-five pounds_, and if, -under these circumstances, he took _twenty-five pounds_ from each, he -would gain the same sum as before, namely _two hundred pounds_, but, -as I said, in a totally different way. It would represent what he had -added to the original product of the labourers, instead of representing -anything he had taken from it. Now whatever may have been true of rich -classes in former times and under other social conditions, the riches -now enjoyed by the rich class in this country have, with exceptions -which are utterly unimportant, been acquired by the latter of these two -methods, not by the former. They represent an addition to the product -of Labour, not an abstraction from it. This is, of course, clear from -what has been said already; but it is necessary here to specially bear -it in mind. - - [Sidenote ◆1 Let us consider the nature of the process,] - - [Sidenote ◆2 By first representing Labour and Ability in their - simplest imaginable forms; Ability, or the employing - class, being represented as one man.] - -◆¹ Let us then take a community of eight labourers, each producing -commodities worth _fifty pounds_ a year, and each consuming—as he -easily might—the whole of them. These men represent the productive -power of Labour; ◆² and now let us suppose the advent of Ability in -the person of the ninth man, by whose assistance this productive power -is multiplied, and consider more particularly what the ninth man does. -There is one thing which it is quite plain he does not do. He does -not multiply the power of Labour for the sake of merely increasing -the output of those actual products which he finds the labourers -originally producing and consuming, and of appropriating the added -quantity; for the things he would thus acquire would be of no possible -good to him. He would have more boots and trousers than he could wear, -more bread and cheese than he could eat, and spades and implements -which he did not want to use. He would not want them himself, and -the labourers are already supplied with them. They would be no good -to anybody. He does not therefore employ his Ability thus, so as to -increase the output of the products that have been produced hitherto; -but he enables first, we will say, four men, then three, then two, and -lastly one, to produce the same products that were originally produced -by eight; and he thus liberates a continually increasing number, whom -he sets to produce products of new and quite different kinds. - -Let us see how he does this. The eight labourers, when he finds -them, make each _fifty pounds_ a year, or _four hundred pounds_ in -the aggregate; and this represents the normal necessaries of their -existence. He, by the assistance which his Ability renders Labour, -enables at last, after many stages of progress, these same necessaries -to be produced by one single man, who, instead of producing, as -formerly, goods worth _fifty pounds_, finds himself, with the -assistance of Ability, producing goods worth _four hundred pounds_. -There is thus an increase of _three hundred and fifty pounds_, and this -increment the man of Ability takes. - -Meanwhile, seven men are left idle, and with them the man of Ability -makes the following bargain. Out of the _three hundred and fifty -pounds_ worth of necessaries which he possesses, he offers each of -them _fifty pounds_ worth—the amount which originally they each made -for themselves, on condition that they will make other things for him, -or put their time at his disposal. They accordingly make luxuries for -him, or become his personal servants. For the _three hundred and fifty -pounds_ he pays them in the shape of necessaries, they return him -another _three hundred and fifty pounds_ in the shape of commodities or -of service; and this new wealth constitutes the able man’s income. - - [Sidenote ◆1 In this case, there being no competition of - employers, there would be no natural distribution of the - increasing products amongst the labourers.] - -Such, reduced to its simplest elements, is the process on which the -riches of the rich in the modern world depend. ◆¹ It will be seen, -however, that in the case we have just supposed, the labourers, by the -process in question, gain absolutely nothing. Each of them originally -made _fifty pounds_ a year. He now receives the same sum in wages. But -the total product has increased by _three hundred and fifty pounds_, -and of this the labourers acquire no share whatever. Nor, supposing -them to be inexperienced in the art of combination, is there any means -by which they could ever do so. And if our imaginary community were a -complete representation of reality, the same would be the case with the -labourers in real life. - - [Sidenote ◆1 But let us introduce a second man of Ability - competing with the first, and the process of - distribution of the increased product amongst the - labourers begins at once.] - -◆¹ But it must now be pointed out that in one important respect, as a -representation of reality, our community is incomplete. It represents -the main process by which the riches of the rich are produced; but it -offers no parallel to one factor in the real situation, owing to which -the labourers inevitably acquire a share in them. In that community the -rich classes are represented by a single person, who has no conflicting -interests analogous to his own to contend against. But in actual -life, so far as this point is concerned, the condition of the rich is -different altogether. As looked at from without, they are, indeed, a -single body, which may with accuracy be represented as one man; but -as looked at from within, they are a multitude of different bodies, -whose interests, within certain limits, are diametrically opposed to -each other. In order, therefore, to make our illustration complete, -instead of one man of Ability we must imagine two. The first, whose -fortunes we have just followed, and whom, for the sake of distinctness, -we will christen John, has already brought production to the state -that has been just described. He has managed to get seven men out of -eight to produce luxuries for himself,—luxuries, we will say, such -as wine, cigars, and butter,—paying these seven men with the surplus -necessaries which, with his assistance, are produced by the eighth man. -But of these luxuries the seven men keep none; nor can they give any -of them to the eighth man, their fellow. John takes all. But now let -us suppose that a second man of Ability, whom we will christen James, -appears upon the scene, just as anxious as John to direct Labour by -his Ability, and just as capable of making Labour productive. But all -the labourers are at present in the pay of John. James therefore must -set himself to detach them from John’s service; and he accordingly -engages that if they will work for him they shall not only each receive -the necessaries that John gives them, but a share of the other things -that they produce—of the butter, of the cigars, and of the wine—as -well. The moment this occurs, John has to make a similar offer; and -thus the wages of Labour at once begin to rise. When they have been -forced up to a certain point, James and John cease to bid against one -another, and each employs a certain number of labourers, till one or -other of them makes some new discovery which enables the same amount -of some commodity—we will say cigars—as has hitherto been produced by -two men, to be produced by one; and thus a new labourer is set free, -and is available for some new employment. We must assume that James and -John could both employ this man profitably—that is, that they could -set him to produce some new object of desire—let us say strawberries; -and, this being so, there is again a competition for his labour. He -is offered by both employers as much as he has received hitherto, and -as the other labourers receive; and he is offered besides a certain -number of strawberries. Whichever employer ultimately secures his -services, the man has secured some further addition to his income. He -has some share in the increasing wealth of the community; and, as John -and James continue to compete in increasing the production of all other -commodities, some share of each increase will in time go to all the -labourers. - - [Sidenote ◆1 And nothing can stop this process except an increase - of population _in excess of the increase_ in the - productive powers of Ability.] - -◆¹ One thing only could interfere with this process; and that has -been excluded from our supposed community: namely, an increase in its -numbers. And a mere increase in the numbers would in itself not be -enough. It must be an increase which outstrips the discovery of new -ways in which labour may be employed profitably. Let us suppose that -to our original eight labourers, eight new labourers are added, who -if left to themselves could do just what the first eight could do, -namely, produce annual subsistence for themselves to the value of -_fifty pounds_ each. If, under the management of James or John, the -productivity of these men could be multiplied eight-fold, as was the -case with the first eight, James and John would be soon competing for -their services, and the second eight, like the first eight, would share -in the increased product. But if, owing to all the best land being -occupied, and few improvements having been discovered in the methods of -any new industries, the productivity of the new men could be increased -not eight-fold, but only by one-eighth—that is to say, if what each man -produces by his unaided Labour could be raised by Ability from _fifty -pounds_, not to _four hundred pounds_, but to no more than _fifty-six -pounds ten shillings_,—_fifty-six pounds ten shillings_ would be the -utmost these men would get, even if the Ability of James or John got -no remuneration whatever. Meanwhile, however, the first set of workmen -are, as we have seen, receiving much more than this. They are receiving -each, we will say, _one hundred pounds_. The second set, therefore, -naturally envy them their situations, and endeavour to secure these -for themselves by offering their Labour at a considerably lower price. -They offer it at _ninety pounds_, at _seventy pounds_, or even at -_sixty pounds_; for they would be bettering their present situation by -accepting even this last sum. This being the case, the original eight -labourers have necessarily to offer their Labour at reduced terms also; -and thus the wages of Labour are diminished all round. - -Such is the inevitable result under such circumstances, if each -man—employer and employed alike—follows his own interest at the bidding -of common sense. One man is not more selfish than another; indeed, in -a bad sense, nobody is selfish at all; and for the result nobody is -to blame. The average wages of Labour are diminished for this simple -reason, and for no other—that the average product is diminished which -each labourer assists in producing. The community is richer absolutely; -but it is poorer in proportion to its numbers.[53] Let us see how -this works out. The original product of the first eight labourers was -_fifty pounds_ a head, or _four hundred pounds_ in the aggregate. This -was raised by the co-operation of Ability to _four hundred pounds_ a -head, or _three thousand two hundred pounds_ in the aggregate. But the -second set of labourers, whatever Ability may do for them, cannot be -made to produce more than _fifty-six pounds ten shillings_ a head, or -an aggregate of _four hundred and fifty-two pounds_; and thus, whereas -eight labourers produced _three thousand two hundred pounds_, sixteen -labourers produce only _three thousand six hundred and fifty-two -pounds_, and the average product is lowered from _four hundred pounds_ -to _two hundred and twenty-eight pounds_.[54] - - [Sidenote ◆1 This natural power, however, can be regulated by - deliberate action, political and other, and made more - beneficial to the labourers;] - - [Sidenote ◆2 Which action takes two chief forms—legislation, and - combinations amongst the labourers. We will discuss both - in the next chapter.] - -Wages naturally decline then, owing to an increase of population, when -relatively to the population wealth declines also; but only then. ◆¹ On -the other hand,—and this is the important point to consider,—so long as -a country, under the existing system of production, continues, like our -own, to grow richer in proportion to the number of labourers, of every -fresh increase in riches the labourers will obtain a share, without any -political action or corporate struggle on their part, merely by means -of a natural and spontaneous process. And we have now seen in a broad -and general way what the character of this process is. It may seem, -however, to many people that a study of it and of its results can teach -no lesson but the lesson of _laisser faire_, which practically means -that the labourers have no interest in politics at all, and that all -social legislation and corporate action of their own is no better than -a waste of trouble, and is very possibly worse. But to think this is -to completely misconceive the matter. Even a study of this process of -natural distribution by itself would be fruitful of suggestions of a -highly practical kind; but if we would understand the actual forces -to which distribution is due, it must, as I have said already, not -be studied by itself, but taken in connection with others by which -its operation has been accelerated. I spoke of these as consisting of -deliberate and concerted actions in contradistinction to individual -and spontaneous actions; ◆² and these, speaking broadly, have been of -two kinds—the one represented by the organisation of Labour in Trade -Unions, the other by certain legislative measures, which, in a vague -and misleading way, are popularly described as “Socialistic.” Let us -proceed to consider these. - - - - - CHAPTER IV - - _Of Socialism and Trade Unionism—the Extent and - Limitation of their Power in increasing the - Income of Labour._ - - - [Sidenote ◆1 Legislation of the kind just alluded to is commonly - called Socialistic:] - - [Sidenote ◆2 But this way of describing it is inaccurate;] - -◆¹ I will speak first of the kind of legislation, popularly called -Socialistic, which certain people now regard with so much hope, and -others with corresponding dread; and I shall show that both of these -extreme views rest on a complete misconception of what this so-called -Socialism is. For what is popularly called Socialism in this country, -so far as it has ever been advocated by any political party, or has -been embodied in any measure passed or even proposed in Parliament, ◆² -does not embody what is really the distinctive principle of Socialism. -Socialism, regarded as a reasoned body of doctrine, rests altogether -on a peculiar theory of production, to which already I have made -frequent reference—a theory according to which the faculties of men -are so equal that one man produces as much wealth as another; or, if -any man produces more, he is so entirely indifferent as to whether -he enjoys what he produces or no, that he would go on producing it -just the same, if he knew that the larger part would at once be taken -away from him. Hence Socialists argue that the existing rewards of -Ability are altogether superfluous, and that the existing system of -production, which rests on their supposed necessity, can be completely -revolutionised and made equally efficacious without them. - - [Sidenote ◆1 As all the so-called Socialistic legislation in this - country rests on the very system of production which - professed Socialists aim at destroying.] - -But whatever may be the opinions of a few dreamers or theorists, or -however in the future these opinions may spread, the fundamental -principle of Socialism, up to the present time, has never been embodied -in any measure or proposal which has been advocated in this country by -any practical party. ◆¹ On the contrary, the proposals and measures -which are most frequently denounced as Socialistic—even one so extreme -as that of free meals for children at Board Schools—all presuppose -the system of production which is existing, and thus rest on the -very foundation which professed Socialists would destroy.[55] They -merely represent so many ways—wise or unwise—of distributing a public -revenue, which consists almost entirely of taxes on an income produced -by the forces of Individualism. - -Now, so far as the matter is a mere question of words, we may call such -proposals or measures Socialistic if we like. On grounds of etymology -we should be perfectly right in doing so; but we shall see that in -that case, with exactly the same propriety, we may apply the word to -the institution of Government itself. The Army, the Navy, and more -obviously still the Police Force, are all Socialistic in this sense of -the word; nor can anything be more completely Socialistic than a public -road or a street. In each case a certain something is supported by a -common fund for the use of all; and every one is entitled to an equal -advantage from it, irrespective of his own deserts, or the amount he -has contributed to its support. - - [Sidenote ◆1 What is called Socialism in this country is a - necessary part of every State;] - - [Sidenote ◆2 And the principle may probably be extended with good - results, if not pushed too far.] - -◆¹ If, then, we agree to call those measures Socialistic to which the -word is popularly applied at present, Socialism, instead of being -opposed to Individualism, is its necessary complement, as we may see -at once by considering the necessity of public roads and a police -force; for the first of these shows us that private property would be -inaccessible without the existence of social property; and the second -that it would be insecure without the existence of social servants. -The good or evil, then, that will result from Socialism, as understood -thus, depends altogether on questions of degree and detail. There is -no question as to whether we shall be Socialistic or no. ◆² We must be -Socialistic; and we always have been, though perhaps without knowing -it, as M. Jourdain talked prose. The only question is as to the precise -limits to which the Socialistic principle can be pushed with advantage -to the greatest number. - - [Sidenote ◆1 That it can easily be pushed too far is obvious.] - -What these limits may be it is impossible to discuss here. Any general -discussion of such a point would be meaningless. Each case or measure -must be discussed on its own merits. But, though it is impossible to -state what the limits are, it is exceedingly easy to show on what -they depend. They depend on two analogous and all-important facts, -one of which I have already explained and dwelt upon, and which -forms, indeed, one of the principal themes of this volume. This is -the fact, that the most powerful of our productive agents, namely -Ability, cannot be robbed, without diminishing its productivity, of -more than a certain proportion of the annual wealth produced by it; -and, as it is from this wealth that most of the Socialistic fund must -be appropriated, Socialistic distribution is limited by the limits of -possible appropriation. The other fact—the counterpart of this—is as -follows. Just as Ability is paralysed by robbing it of more than a -certain portion of its products, Labour may equally be paralysed by -an unwise distribution of them; and thus their continued production -be at last rendered impossible. ◆¹ For instance, quite apart from any -initial difficulty in raising the requisite fund from the wealthier -class of tax-payers, the providing of free meals for children in -Board Schools is open to criticism, on account of the effect which it -might conceivably have upon parents, of diminishing their industry -by diminishing the necessity for its exercise. Whether such would be -the effect really in this particular case, it is beside my purpose -to consider; but few people will doubt that if such a provision were -extended, and if, even for so short a time as a single six months, -free meals were provided for the parents also, half the Labour of -the country would be for the time annihilated. Labour, however, is -as necessary to production as is Ability, even though, under modern -conditions, it does not produce so much; and it is therefore perfectly -evident that there is a limit somewhere, beyond which to relieve the -individual labourer of his responsibilities by paying his expenses out -of a public fund will be, until human nature is entirely changed, to -dry up the sources from which that fund is derived. - - [Sidenote ◆1 The sort of natural limit that there is to its - beneficial effects is shown by the history of our Poor - Laws.] - - [Sidenote ◆2 Such Socialism, whatever good it may do, can never do - much in the way of raising money wages.] - -As I have said already, it is impossible, in any general way, to give -any indication of what this limit is; but the industrial history of -this country supplies a most instructive instance in which it was -notoriously overpassed, and what was meant as a benefit to Labour, -under circumstances of exceptional difficulty, ended by endangering -the prosperity of the whole community. I refer to our Poor Law at the -beginning of this century, the effects of which form one of the most -remarkable object-lessons by which experience has ever illustrated a -special point in economics. ◆¹ That Poor Law, as Professor Marshall -well observes, “arranged that part of the wages [of the labourers] -should be given in the form of poor relief; and that this should be -distributed amongst them in the inverse proportion to their industry, -thrift, and forethought. The traditions and instincts,” he adds, “which -were fostered by that evil experience are even now a great hindrance to -the progress of the working classes.”[56] Now that particular evil on -which Professor Marshall comments,—namely, that the part of the wages -coming through this Socialistic channel were in the inverse proportion -to what had really been produced by the labourer—is inherent in all -Socialistic measures, the principal object of which is to raise or -supplement wages; as is clearly enough confessed by the Socialistic -motto, “To every man according to his needs.” ◆² It may accordingly be -said that, absolutely necessary as the Socialistic principle is, and -much as may be hoped from its extension in many directions, it neither -has been in the past, nor can possibly be in the future, efficacious to -any great extent in increasing the actual income of the labourer.[57] - - [Sidenote ◆1 Trade Unionism in this way can do far more. We will - see first how, and then within what limits.] - -◆¹ Such being the case, then, let us now turn our attention to another -principle of an entirely different kind, which, so far as regards -this object, is incalculably more important, and which has constantly -operated in the past, and may operate in the future, to increase the -labourer’s income, without any corresponding disadvantages. I mean -that principle of organisation amongst the labourers themselves which -is commonly called Trade Unionism; and which directly or indirectly -represents the principal means by which Labour is attempting, -throughout the civilised world, to accelerate and regulate the natural -distribution of wealth. I will first, in the light of the conclusions -we have already arrived at, point out to the reader what, speaking -generally, is the way in which Trade Unionism strengthens the hands -of Labour; and then consider what is the utmost extent to which the -strength which Labour now derives from it may be developed. - - [Sidenote ◆1 The operation of Trade Unionism in raising wages can - be easily seen at a glance by reference to the simple - community which was imagined in the last chapter.] - -◆¹ If the reader has not already forgotten our imaginary community,—our -eight labourers with John and James directing them,—our easiest -course will be to turn again to that. We saw that when the labourers -were employed by John only,—John who found them each making _fifty -pounds_ a year, and enabled them by his Ability each to make _four -hundred pounds_—we saw that the whole of this increase, in the natural -course of things, would be kept by John himself, by whose Ability it -was practically created; for it would not be to John’s advantage to -part with any of it, and the labourers, so long as they all acted -separately, would have no means of extracting any of it from him. It -would be useless for one of them at a time to strike for higher wages. -The striker and the employer would meet on wholly unequal terms; -because the striker, whilst the strike lasted, would be sacrificing the -whole of his income, whilst depriving the employer of only an eighth -part of his. But let us alter the supposition. Let us suppose that -the labourers combine together, and that the whole eight strike for -higher wages simultaneously. The situation is now completely changed; -and the loss that the struggle will entail on both parties is equal. -The employer, like the labourer, will for a time lose all his income. -It is true that if the employer has a reserve fund on which he can -support himself whilst production is suspended, and if the labourer has -no such fund, the employer may still be sure of an immediate victory, -should he be resolved at all costs to resist the labourers’ demand. -But, in any case, the cost of resisting it will be appreciable: it is -a loss which the labourers will be able to inflict on him repeatedly; -and he may see that they would be able, by their strikes, to make him -ultimately lose more than he would by assenting to their demands, or, -at all events, making some concessions to them. It is therefore obvious -that the labourers, in such a case, will be able to extract extra wages -in the inverse proportion to the loss which the employer will sustain -if he concedes them, and in direct proportion to the loss which would -threaten him should he refuse to do so.[58] - - [Sidenote ◆1 Combination amongst labourers puts them at an - advantage as against competing employers, until their - demands grow so unreasonable as to force the employers - to combine.] - -There is, however, much more to be said. With each increase of their -wages which the labourers succeed in gaining, they will be better -equipping themselves for any fresh struggle in the future; for they -will be able to set aside a larger and larger fund on which to support -themselves without working, and thus be in a position to make the -struggle longer, or, in other words, to inflict still greater injury -on the employer. ◆¹ And if such will be the case when there is one -employer only, much more will it be the case when there are two—when -John and James, as we have seen, are forced by the necessities of -competition to grant part of the labourers’ demands, even before they -are formulated. It might thus seem that there is hardly any limit -to the power which a perfected system of Trade Unionism may one day -confer upon the labourers. There are, however, two which we will -consider now, in addition to others at which we will glance presently. -One is the limit with which we are already familiar, and of which in -this connection I shall again speak, namely, the limit of the minimum -reward requisite as a stimulus to Ability. The other is a limit closely -connected with this, which is constituted by the fact that if the -demands of Labour are pushed beyond a certain point against disunited -employers, the employers will combine against Labour, as Labour has -combined against them, and all further concessions will be, at all -costs, unanimously refused. - - [Sidenote ◆1 The ultimate tendency of Trade Unionism is to make - any conflict between the employer and employed like a - conflict between two individuals.] - - [Sidenote ◆2 The limit to which it can raise wages is fixed by the - minimum reward that suffices to make Ability operative.] - -◆¹ Now a situation like this is the ultimate situation which all Trade -Unionism tends to bring about. It tends, by turning the labourers into -a single body on the one hand, and the employers into a single body on -the other, to make the dispute like one between two individuals; and -though for many reasons this result can never be entirely realised,[59] -the limits of the power of Trade Unionism can be best seen by -imagining it. What, then, is the picture we have before us? We have -Labour and Ability in the character of two men confronting each other, -each determined to secure for himself the largest possible portion of -a certain aggregate amount of wealth which they produce together. Now -we will assume, though this is far from being the case, that neither -of them would shrink, for the sake of gaining their object, from -inflicting on the other the utmost injury possible; and we shall see -also, if we make our picture accurate, that Labour is physically the -bigger man of the two. It happens, however, that the very existence -of the wealth for the possession of which they are prepared to fight -is entirely dependent on their peacefully co-operating to produce it; -so that if in the struggle either disabled the other, he would be -destroying the prize which it is the object of his struggle to secure. -Thus the dispute between them, however hostile may be their temper, -must necessarily be of the nature not of a fight, but of a bargain; -and will be settled, like other bargains, by the process of compromise -which Adam Smith calls “the higgling of the market.” ◆² When such a -bargain is struck, there will be a limit on both sides: a maximum limit -to what Ability will consent to give, and a minimum limit to what -Labour will consent to receive. There will be a certain minimum which -Ability must concede in the long run; because if it did not give so -much, it would indirectly lose more: and conversely there is a certain -maximum more than which Labour will never permanently obtain; because -if it did so the stimulus to Ability would be weakened, and the total -product would in consequence be diminished, out of which alone the -increased share which Labour demands can come. - - [Sidenote ◆1 Thus the possible power of Trade Unionism in raising - wages is far more limited than it seems.] - - [Sidenote ◆2 If we judge hastily by the magnitude of modern Labour - combinations, and the extent to which they can terrorise - the community.] - -◆¹ Thus the extent to which Trade Unionism can assist in raising -wages, no matter how wide and how complete its development, is far -more limited than appearances lead many people to suppose. For the -labourers, not only in this country, but all over the world, are -growing yearly more expert in the art of effective combination, and -are increasing their strength by a vast network of alliances; ◆² -and from time to time the whole civilised world is startled at the -powers of resistance and destruction which they show themselves to -have acquired, and which they have called into operation with a view -to enforcing their demands. The gas-strikes and the dock-strikes in -London, and the great railway-strikes, and the strike at Homestead in -America, are cases in point, and are enough to illustrate my meaning. -They impress the imagination with a sense that Labour is becoming -omnipotent. But in all these Labour movements there is one unchanging -feature, which seems never to be realised either by those who take part -in them or by observers, but on which really their entire character -depends, and which makes their actual character entirely different -from what it seems to be. That this feature should have so completely -escaped popular notice is one of the most singular facts in the history -of political blindness, and can be accounted for only by the crude -and imperfect state in which the analysis of the causes of production -has been left hitherto by economists. The feature I allude to is as -follows. - - [Sidenote ◆1 The imperfect state of economic science has allowed a - totally false idea to be formed as to the force which - Trade Unionism represents.] - - [Sidenote ◆2 The force which it represents is not Labour at all, - but a power of combining in order to abstain from - labour.] - - [Sidenote ◆3 And even this power could never be universal, nor - last long; and whilst it lasts it depends on Capital.] - -◆¹ These great developments of Trade Unionism which are commonly called -Labour movements do not really, in any accurate sense, represent -Labour at all. ◆² All that they represent in themselves is a power to -abstain from labouring. In other words, the increased command of the -labourers over the machinery of combination, and even their increased -command of the tactics of industrial warfare, represents no increased -command over the smallest of industrial processes, nor puts them in a -better position, without the aid of Ability, to maintain—still less -to increase by the smallest fraction—the production of that wealth in -which they are anxious to share farther. A strike therefore, however -great or however admirably organised, no more represents any part of -the power of Labour than the mutiny organised amongst the crew of -Columbus, with a view to making him give up his enterprise, represented -the power which achieved the discovery of America. And this is not -true of the average labourers only; it is yet more strikingly true of -the superior men who lead them. From the ranks of the labourers, men -are constantly rising whose abilities for organising resistance are -remarkable, and indeed admirable; but it is probably not too much to -say that no leader who has devoted himself to organising the labourers -for resistance has ever been a man capable, to any appreciable degree, -of giving them help by rendering their labour more productive. Those -who have been most successful in urging their fellows to _ask_ for -more, have been quite incompetent to help them to _make_ more. Thus -these so-called Labour leaders, no matter how considerable may be -many of their intellectual and moral qualities, are indeed leaders of -labourers; but they are no more leaders of Labour than a sergeant who -drilled a volunteer corps of art students could be called the leader -of a rising school of painting; and a strike is no more the expression -of the power of Labour than Byron’s swimming across the Hellespont was -an expression of the power of poetry, or than Burns’s poetry was an -expression of the power of ploughing. A strike is merely an expression -of the fact that the labourers, for good or ill, can acquire, under -certain circumstances, the power to cease from labouring, and can use -this as a weapon not of production, but of warfare. ◆³ The utmost that -the power embodied in Trade Unionism could accomplish would be to bring -about a strike that was universal; and although no doubt it might do -this theoretically, it could never do so much as this practically, for -the simple reason that, as I have already pointed out, Labour could -not be entirely suspended for even a single day. Further, the more -general the suspension was, the shorter would be the time for which it -could be maintained; and to mention yet another point to which I have -referred already, it could be maintained only, for no matter how short -a time, by the assistance of the very thing against which strikes are -ostensibly directed, namely Capital; and not even Capital could make -that time long. Nature, who is the arch-taskmaster, and who knows no -mercy, would soon smash like matchwood a Trade Union of all the world, -and force the labourers to go back to their work, even if no such body -as an employing class existed. - -All the ideas, then, derived from the recent developments of Trade -Unionism, that Labour, through its means, will acquire any greatly -increasing power of commanding an increasing share of the total income -of the community, rests on a total misconception of the power that -Trade Unionism represents, and a total failure to see the conditions -and things that limit it. It is limited firstly by Nature, who makes -a general strike impossible; secondly by Capital, without which any -strike is impossible; and lastly by the fact that the labourers of the -present day already draw part of their wages from the wealth produced -by Ability; that any further increase they must draw from this source -entirely; and that, being thus dependent on the assistance of Ability -now, Trade Unionism, as we have seen, has not the slightest tendency to -make them any the less dependent on it in the future. - -When the reader takes into account all that has just been said, he -will be hardly disposed to quarrel with the following conclusions of -Professor Marshall, who derives them from history quite as much as from -theory, and who expresses himself with regard to Trade Unions thus: -“Their importance,” he says, “is certainly great, and grows rapidly; -but it is apt to be exaggerated: for indeed many of them are little -more than eddies such as have always fluttered over the surface of -progress. And though they are now on a larger and more imposing scale -in this age than before, yet much as ever the main body of the movement -depends on the deep, silent, strong stream of the tendencies of Normal -Distribution and Exchange.” - - [Sidenote ◆1 Trade Unionism, in raising wages, can do little more - than accelerate or regulate a rise that would take place - owing to other causes.] - - [Sidenote ◆2 But none the less it may be of great benefit to the - labourers, and remove many evils which a general rise in - wages has not removed, and could not remove by itself.] - -◆¹ But in the case of Trade Unionism, just as in that of Socialism, -because the extent is limited to which it can raise the labourers’ -income, it does not follow that within these limits its action may -not be of great and increasing benefit. ◆² Thus Mill, whose general -view of the subject coincides broadly with that of Professor Marshall, -points out that though a Union will never be able permanently to raise -wages above the point to which in time they would rise naturally, nor -permanently to keep them above a point to which they would naturally -fall, it can hasten the rise, which might otherwise be long delayed, -and retard the fall, which might otherwise be premature; and the gain -to Labour may thus in the long run be enormous. Unions have done this -for Labour in the past; and with improved and extended organisation, -they may be able to do it yet more effectively in the future; and -they have done, and may continue to do many other things besides—to do -them, and to add to their number. It is beyond my purpose to speak of -these things in detail. In the next chapter, I shall briefly indicate -some of them; but the main points on which I am concerned to insist are -simpler; and the next chapter—the last—will be devoted principally to -these. - - - - - CHAPTER V - - _Of the enormous Encouragement to be derived by - Labour from a true View of the Situation; - and of the Connection between the Interests - of the Labourer and Imperial Politics._ - - - [Sidenote ◆1 Let me again remind the reader of the object of this - book.] - - [Sidenote ◆2 It is to show that the labourer’s income depends on - the general forces of production firstly, and secondly - on those of distribution.] - -◆¹ The object of this work, as I explained in the opening chapter, is -to point out to the great body of the people—that is to say, to the -multitude of average men and women, whose incomes consist of the wages -of ordinary Labour—the conditions which determine the possibility of -these incomes being increased, and so to enable them to distinguish -the true means from the false, which they may themselves adopt with a -view to obtaining this result. ◆² And in order to show them how their -present incomes may be increased, I have devoted myself to showing -the reader how their present incomes have been obtained. I have done -this by fixing his attention on the fact that their present incomes -obviously depend upon two sets of causes: first, the forces that -produce the aggregate income of the country; and secondly, the forces -that distribute a certain portion of this amongst the labourers. And -these last I have examined from two points of view; first exhibiting -their results, and then indicating their nature. Let me briefly -recapitulate what I have said about both subjects. - - [Sidenote ◆1 I have just shown how the normal forces of - distribution are all in favour of the labourer, contrary - to the vulgar view of the matter.] - -◆¹ I have shown that, contrary to the opinion which is too commonly -held, and which is sedulously fostered by the ignorance alike of the -agitator and the sentimentalist, the forces of distribution which -are actually at work around us, which have been at work for the past -hundred years, and which are part and parcel of our modern industrial -system, have been and are constantly securing for Labour a share of -every fresh addition to the total income of the nation; and have, for -at all events the past fifty years, made the average income of the -labouring man grow faster than the incomes of any other members of the -community. They have, in fact, been doing the very thing which the -agitator declared could be done only by resisting them; and they have -not only given Labour all that the agitator has promised it, but they -have actually given it more than the wildest agitator ever suggested to -it. I have shown the reader this; and I have shown him also that the -forces in question are primarily the spontaneous forces—“deep, strong, -and silent,” as Professor Marshall calls them—“of normal distribution -and exchange”; how that these have been, and are seconded by the -deliberate action of men: by extended application of what is called the -Socialistic principle, and to a far greater extent by combinations of -the labourers amongst themselves. - - [Sidenote ◆1 This should encourage, and not discourage, political - action on behalf of the labourers.] - -The practical moral of all this is obvious. As to the normal and -spontaneous forces of distribution, what a study of them inculcates on -the labourer is not any principle of political action, but a general -temper of mind towards the whole existing system. It inculcates general -acquiescence, instead of general revolt. Now temper of mind, being -that from which policies spring, is quite as important as the details -of any of the policies themselves. Still it must be admitted that -were the normal forces of distribution the only forces that had been -at work for the labourer’s benefit, the principal lesson they would -teach him would be the lesson of _laisser aller_. But though these -forces have been the primary, they have not been the only forces; and -the deliberate policies by which men have controlled their operation, -and have applied them, have been equally necessary in producing the -desired results. The normal forces of distribution may be compared -to the waters of the Nile, which would indeed, as the river rises, -naturally fertilise the whole of the adjacent country, but which would -do as much harm as good, and do but half the good they might do, if -it were not for the irrigation works devised by human ingenuity. And -what these works are to the Nile, deliberate measures have been to the -normal forces of distribution. The growing volume of wealth, which is -spreading itself over the fields of Labour, even yet has failed to -reach an unhappy fraction of the community; the tides and currents flow -with intermittent force, which is often destructive, still more often -wasted, rarely husbanded and applied to the best advantage. Had it not -been for the deliberate action of men,—for legislation in favour of the -labourers, and their own combinations amongst themselves,—these evils -which have accompanied their general progress would have been greater. -◆¹ Wise action in the future will undoubtedly make them less; and may, -though it is idle to hope for Utopias in this world, cause the larger -and darker part of them to disappear. - - [Sidenote ◆1 Much is to be done beyond the mere raising of the - labourers’ wages; and Trade Unionism and so-called - Socialism vary much.] - -The lesson, then, to be drawn from what I have urged in the preceding -chapter is, taken as a whole, no lesson of _laisser faire_. Though -neither Socialism nor Trade Unionism may have much, or perhaps any, -efficacy in raising the maximum of the labourer’s actual income,—though -this must depend on forces which are wholly different,—yet Trade -Unionism, and the principle which is called Socialism, may be of -incalculable service in bringing about conditions under which that -income may be earned with greater certainty, and under improved -circumstances, and, above all, be able to command more comforts, -conveniences, and enjoyments. Thus many of these measures which I have -called Socialistic under protest, may be regarded as an interception -of a portion of the labourer’s income, and an expenditure of it on his -account by the State in a way from which he derives far more benefit -than he would, or could have secured if he had had the spending of it -himself; whilst Trade Unionism, though it cannot permanently raise his -wages beyond a maximum determined by other causes, may, as has been -said before, raise them to this earlier than they would have risen -otherwise, and prevent what might otherwise occur—a fall in them before -it was imperative. ◆¹ Trade Unionism, however, has many other functions -besides the raising of wages. It aims—and aims successfully—at -diminishing the pain and friction caused amongst the labourers by the -vicissitudes alike of industry and of life. It has done much in this -direction already; and in the future it may do more. - -The fact then that the normal forces of distribution must, if things -continue their present course, increase the income of the labourer, -even without any action on their own part, though it is calculated -to change the temper in which the labourers approach politics, -is, instead of being calculated to damp their political activity, -calculated to animate it with far more hope and interest than the -wild denunciations and theories of the contemporary agitator, which -those who applaud them do but half believe. It will to the labourer -be far more encouraging to feel that the problem before him is not -how to undermine a vast system which is hostile to him, and which, -though often attacked, has never yet been subverted, but merely to -accommodate more completely to his needs a system which has been, and -is, constantly working in his favour. - - [Sidenote ◆1 Whilst as to mere wages, if the labourers will judge - of the possible near future from the actual near past, - the prospects before them must exceed their wildest - dreams hitherto.] - -◆¹ Let him consider the situation well. Let him realise what that -system has already done for him. In spite of the sufferings which, -owing to various causes, were inflicted on the labouring classes -during the earlier years of the century,—many of them of a kind whose -recurrence improved policy may obviate,—the income of Labour has, on -the aggregate, continued to rise steadily. Let him consider how much. -I have stated this once, let me state it now again. During the first -sixty years of this century the income of the labouring classes rose -to such an extent that in the year 1860 it was equal (all deductions -for the increase of population being made) to the income of all classes -in the year 1800. But there is another fact, far more extraordinary, -to follow; and that is, that a result precisely similar has been -accomplished since in one-half of the time. In 1880 the income of the -labouring classes was (all deductions for the increase of population -being made) more than equal to the income of all classes in the year -1850. Thus the labouring classes in 1860 were in precisely the same -pecuniary position as the working classes in 1800 would have been had -the entire wealth of the kingdom been in their hands; and the working -classes of to-day are in a better pecuniary position than their fathers -would have been could they have plundered and divided between them the -wealth of every rich and middle-class man at the time of the building -of the first Great Exhibition. I repeat what I have said before—that -this represents a progress, which the wildest Socialist would never -have dreamed of promising. - -And now comes what is practically the important deduction from these -facts. What has happened in the near past, will, other things being -equal, happen in the near future. If the same forces that have been -at work since the year 1850 continue to be at work, and if, although -regulated, they are not checked, the labourers of this country will in -another thirty years have nearly doubled the income which they enjoy -at present. Their income will have risen from something under _seven -hundred millions_ to something over _thirteen hundred millions_. The -labourers, in fact, will, so far as money goes, be in precisely the -same position as they would be to-day if, by some unheard-of miracle, -the entire present income of the country were suddenly made over to -them in the form of wages, and the whole of the richer classes were -left starving and penniless. This is no fanciful calculation. It is -simply a plain statement of what must happen, and will happen, if only -the forces of production continue to operate for another thirty years -as they have been operating steadily for the past hundred. Is not this -enough to stimulate the labourer’s hopes, and convince him that for him -the true industrial policy is one that will adjust his own relations -with the existing system better, and regulate better the flow of the -wealth which it promises to bring him, rather than a policy whose aim -is to subvert that system altogether, and in especial to paralyse the -force from which it derives its efficacy? - - [Sidenote ◆1 But the one point to remember is that all their - prosperity depends on the continued action of Ability, - and the best conditions being secured for its operation,] - -◆¹ And this brings me back to that main, that fundamental truth which -it is the special object of this volume to elucidate. The force which -has been at the bottom of all the labourers’ progress during the past, -and on the continued action of which depends all these hopes for their -future—that force is not Labour but Ability; it is a force possessed -and exercised not by the many but by the few. The income which Labour -receives already is largely in excess of what Labour itself produces. -Were Ability crippled, or discouraged from exerting itself, the entire -income of the nation would dwindle down to an amount which would not -yield Labour so much as it takes now; whilst any advance, no matter how -small, on what Labour takes now must come from an increasing product, -which Ability only can produce. - - [Sidenote ◆1 Labour must remember that Ability is a living force - which cannot be appropriated as Capital might be; but - that it must be encouraged and propitiated.] - -◆¹ Hitherto this truth, though more or less apparent to economic -writers and thoughtful persons generally, has been apparent to them -only by fits and starts, and has never been assigned any definite -or logical place in their theories of production, or has ever been -expressed clearly; and, owing to this cause, not only has it been -entirely absent from the theories of the public generally, but its -place has been usurped by a meaningless and absurd falsehood. In place -of the living force Ability, residing in living men, popular thought, -misled by a singular oversight of the economists, has substituted -Capital—a thing which, apart from Ability, assists production as -little as a dead or unborn donkey; and hence has arisen that dangerous -and ridiculous illusion—sometimes plainly expressed, often only -half-conscious—to the effect that if the labourers could only seize -upon Capital they would be masters of the entire productive power of -the country. The defenders of the existing system have been as guilty -of this error as its antagonists; and the attack and defence have -been conducted on equally false grounds. Thus in a recent strike, -the final threat of the employers—men who had created almost the -whole of their enormous business—was that, if the strikers insisted -upon certain demands, the Capital involved in the business would be -removed to another country; and a well-known journal, professing to be -devoted to the interest of Labour, conceived that it had disposed of -this threat triumphantly by saying that, of the Capital a large part -was not portable, and that the employers might go if they chose, and -leave this behind. A great musician, who conceived himself to have been -ill-treated in London, might just as well have threatened that he would -remove his concert-room to St. Petersburg, when the principal meaning -of his threat would be that he would remove _himself_; and the journal -referred to might just as well have said, had the business in question -been the production of a great picture, “The painter may go if he -likes—what matter? We can keep his brushes.” - -The real parties, then, to the industrial disputes of the modern -world are not active labourers on one side, and idle, perhaps idiotic -owners of so much dead material on the other side: but they are, on -the one side, the vast majority of men, possessed of average powers -of production, and able to produce by them a comparatively small -amount; and, on the other, a minority whose powers of production are -exceptional, who, if we take the product of the average labourer as a -unit, are able to multiply this to an almost indefinite extent, and who -thus create an increasing store of Capital to be used by themselves, or -transmitted to their representatives, and an increasing income to be -divided between these and the labourers. In other words, the dispute is -between the many who desire to increase their incomes, and the few by -whose exceptional powers it is alone possible to increase them. Such -has been the situation hitherto; it is such at the present moment; and -the whole tendency of industrial progress is not to change, but to -accentuate it. As the productivity of Human Exertion increases, the -part played by Ability becomes more and more important. More and more -do the average men become dependent on the exceptional men. So long as -the nation at large remembers this, no reforms need be dreaded. If the -nation forgets this, it will be in danger every day of increasing, by -its reforms, the very evils it wishes to obviate, and postponing or -making impossible the advantages it wishes to secure. - - [Sidenote ◆1 In this view there is nothing derogatory to Labour.] - - [Sidenote ◆2 Ability does not _improve_ the products of Labour, - but multiplies them.] - -◆¹ And now let me pause to point out to the reader that to insist thus -on the subordinate position of Labour as a productive agent is to -insist on nothing that need wound the self-love of the labourers. In -asserting that a man who can produce wealth only by Labour is inferior -to a man who can produce ten times the amount by Ability, we assert -his inferiority in the business of production only. In other respects -he may be the better, even the greater man of the two. Shakespeare or -Turner or Beethoven, if employed as producers of commodities, would -probably have been no better than the ordinary hands in a factory, and -far inferior to many a vulgar manufacturer. Again,—and it is still -more important to notice this,—if we confine our attention to single -commodities, many commodities produced by Labour[60] alone are better -and more beautiful than any similar ones produced by Labour under the -direction of Ability. ◆² Of some the reverse is true—notably those -whose utility depends on their mechanical precision; but of others, in -which beauty or even durability is of importance, such as fine stuffs -or carpets, fine paper and printing, carved furniture, and many kinds -of metal work, it is universally admitted that the handicraftsman, -working under his own direction, was long ago able to produce results -which Labour, directed by Ability, has never been able to improve -upon, and is rarely able to equal. What Ability does is not to improve -such commodities, but to multiply them, and thus convert them from -rare luxuries into generally accessible comforts. A paraffin lamp, for -instance, cast or stamped in metal, and manufactured by the thousand, -might not be able to compare for beauty with a lamp of wrought iron, -made by the skill and taste of some single unaided craftsman; but -whereas the latter would probably cost several guineas, and be in reach -only of the more opulent classes, the former would probably cost about -half a crown, and, giving precisely as much light as the other, would -find its way into every cottage home, and take the place of a tallow -dip or of darkness. Now since what the labouring classes demand in -order to improve their position is not _better_ commodities than can be -produced by hand, but _more_ commodities than can be produced by hand, -Ability is a more important factor in the case than Labour; but none -the less, from an artistic and moral point of view, the highest kind -of Labour may stand higher than many of the most productive kinds of -Ability. - - [Sidenote ◆1 Ability, in yielding up part of its proceeds to - Labour, is discharging a moral debt.] - -◆¹ Nor, again, do we ascribe to Labour any undignified position in -insisting that much of its present income, and any possible increase -of it, is and must be taken from the wealth produced by Ability. For -even were there nothing more to be said than this, Labour is in a -position, or we assume it will be, to command from Ability whatever -sum may be in question, and can be neither despised nor blamed for -making the best bargain for itself that is possible. But its position -can be justified on far higher grounds than these. In the first place, -Labour, by submitting itself to the guidance of Ability,—no matter -whether the submission was voluntary, which it was not, or gradual, -unconscious, and involuntary, which it was,—surrendered many conditions -of life which were in themselves desirable, and has a moral claim on -Ability to be compensated for having done so; whilst Ability, for its -part, owes a moral debt to Labour, not upon this ground only, but on -another also—one which thus far has never been recognised nor insisted -on, but out of which arises a yet deeper and stronger obligation. I -have shown that of the present annual wealth of the nation Ability -creates very nearly two-thirds. But it may truly be said to have -created far more than this. It may be said to have created not only -two-thirds of the income, but also to have created two-thirds of the -inhabitants. If the minority of this country, in pursuit of their own -advantage, had not exercised their Ability and increased production as -they have done, it is not too much to say that of our country’s present -inhabitants _twenty-four millions_ would never have been in existence. -Those, then, who either contributed to this result themselves, or -inherit the Capital produced by those who did so, are burdened by the -responsibility of having called these multitudes into life; and thus -when the wages of Labour are augmented out of the proceeds of Ability, -Ability is not robbed, nor does Labour accept a largess, but a duty is -discharged which, if recognised for what it is, and performed in the -spirit proper to it, will have the effect of really uniting classes, -instead of that which is now so often aimed at—of confusing them. - - [Sidenote ◆1 But Labour must not forget that it owes a debt to - Ability;] - - [Sidenote ◆2 And that this debt will grow heavier as the national - wealth increases.] - -◆¹ The labourers, on the other hand, must remember this: that having -been called into existence, no matter by what means, and presumably -wishing to live rather than be starved to death, they do not labour -because the men of Ability make them, but—as I have before pointed -out—because imperious Nature makes them; ◆² and that the tendency of -Ability is in the long run to stand as a mediator between them and -Nature, and whilst increasing the products of their Labour, to diminish -its duration and severity. - -There are two further points which yet remain to be noticed. - -I have hitherto spoken of the increase of wealth and wages, as if that -were the main object on which the labourers should concentrate their -attention, and which bound up their interests so indissolubly with -those of Ability. But it must also be pointed out that were Ability -unduly hampered, and its efficacy enfeebled either by a diminution of -its rewards, or by interference with its action, the question would -soon arise, not of how to increase wages, but of how to prevent their -falling. This point I have indeed alluded to already; but I wish now -to exhibit it in a new light. As I mentioned in an earlier chapter, of -the inhabitants of this country, who are something like _thirty-eight -millions_ in number, _twenty-six millions_ live on imported corn, -and about _thirteen millions_ live on imported meat; or, to put it -in another way, we all of us—the whole population—live on imported -meat for nearly _five months_ of the year, and on imported corn for -_eight months_; and were these foreign food supplies interfered with, -there are possibilities in this country of suffering, of famine, and -of horror for all classes of society, to which the entire history of -mankind offers us no parallel. This country, more than any country in -the world, is an artificial fabric that has been built up by Ability, -half of its present wealth being,—let me repeat once more,—the -marvellous product of the past fifty years; and the constant action -of Ability is just as necessary to prevent this from dwindling as -it is to achieve its increase. But in order that Ability may exert -itself, something more is needed than mere freedom from industrial -interference, or security for its natural rewards; and that is the -maintenance of the national or international position which this -country has secured for itself amongst the other countries of the world. - - [Sidenote ◆1 And this brings us round to what is commonly called - Politics; which have, as this book will show, a far - closer interest for the labourer than is commonly - thought.] - -◆¹ And this brings us to that class of questions which, in ordinary -language, are called questions of policy, and amongst which foreign -policy holds a chief place. Successful foreign policy means the -maintenance or the achievement of those conditions that are most -favourable to the industries of our own nation; and this means the -conditions that are most favourable to the homes of our own people. It -is too commonly supposed that the greatness and the ascendancy of our -Empire minister to nothing but a certain natural pride; and natural -pride, in its turn, is supposed by some to be an immoral and inhuman -sentiment peculiar to the upper classes. No one will be quicker to -resent this last ludicrous supposition than the great masses of the -British people; but, all the same, they are apt to think the former -supposition correct,—to regard the mere glory of the country as the -principal result of our Empire; and such being the case, they are, on -occasion, apt to be persuaded that glory can be bought at too dear -a price, in money, struggle, or merely international friction. At -all events, they are constantly tempted to regard foreign politics -as something entirely unconnected with their own immediate, their -domestic, their personal, their daily interests. - -I am going to enter here on no debatable matter, nor discuss the value -of this or that special possession, or this or that policy. It is -enough to point out that, to a very great extent, on the political -future of this country depends the magnitude of its income, and on the -magnitude of its income depends the income of the working classes—the -warmth of the hearth, the supply of food on the breakfast-table, of -every labourer’s home,—and that when popular support is asked for some -foreign war, the sole immediate aim of which seems the defence of some -remote frontier, or the maintenance of British prestige, it may well be -that our soldiers will be really fighting for the safety and welfare -of their children and wives at home—fighting to keep away from British -and Irish doors not the foreign plunderer and the ravisher, but enemies -still more pitiless—the want, the hunger, and the cold that spare -neither age nor sex, and against which all prayers are unavailing. - - - - - APPENDIX - - -_Early in this year [1894] I published in the_ Fortnightly Review _two -articles under the title of “Fabian Economics.” These articles were -not written or published until some months after the first publication -of the present volume. I wrote them then, because then, for the first -time, I happened to see a volume from which previously I had seen some -extracts only—a volume entitled_ Fabian Essays, _in which the doctrines -of contemporary English Socialism are set forth; and my aim was to -apply the general arguments embodied in_ Labour and the Popular Welfare -_to the position of the Socialists, as definitely stated by themselves. -One of the Fabian Essayists—Mr. Bernard Shaw—came forward in the_ -Fortnightly Review _to attach my arguments, with what success will be -shown by the subjoined reply to him, which was originally published in -the same Review, under the title of “A Socialist in a Corner.” A few -paragraphs which would be here superfluous are omitted._ - - - A SOCIALIST IN A CORNER - - _Fortnightly Review, May 1894_ - -Magazine controversy on complicated and serious subjects, though it -can never be exhaustive, may yet be of great use, if it calls the -attention of the public to the main points at issue, if it helps men -to judge for themselves of the character and weight of the arguments -which are capable of being employed on one side and the other; and, -above all, if by elucidating the points on which opponents agree, the -area of actual dispute be narrowed down and defined. For this reason it -seems to me not useless to examine briefly the answer which, on behalf -of a body of Socialists, Mr. Shaw has made to the criticisms which, -in this Review and elsewhere, I have recently directed against the -entire Socialistic position—and particularly against that position as -expounded by himself and his colleagues. - -Not only Mr. Shaw, but the other Fabian writers, are persons, at -all events, of sufficient intelligence, sufficient knowledge, and -sufficient literary skill, to render the way in which they put the -case for Socialism a valuable indication of what the strength of that -case is. It was for this reason that I thought _Fabian Essays_ worth -criticising; and for this reason I think Mr. Shaw’s answer worth -criticising also. It is an indication not only of how Mr. Shaw can -argue as an individual, but of what arguments are available in defence -of the position which he occupies; and Mr. Shaw has taken trouble -himself to make this view still more plausible, by the hints he gives -that in the composition of his answer he has sought the advice and -counsel of his faithful colleagues; so that his pages represent the -wisdom of many, though presumably the wit of one. - -I propose, then, to show, in as few words as possible, that Mr. Shaw -has not only proved himself incapable of shaking a single one of the -various arguments advanced by me, but that whilst flattering himself -that, in his own phrase, he has been taking his opponent’s scalp, the -scalp which he holds, and has really taken, is his own. His criticism -divides itself into two main parts. One is an admission of the truth -of one of the fundamental propositions on which I insisted. The second -is a complete evasion of another, and the substitution for it of an -ineptitude which is entirely of Mr. Shaw’s invention, and which he -finds it so easy and so exciting to demolish, that he sets it up as -often as he knocks it down, for the pleasure of displaying his prowess -over again. - -Here, then, are three propositions to be dealt with: First, the -primary proposition on which I insisted, and the truth of which Mr. -Shaw admits; secondly, a proposition on which Mr. Shaw declares that -I insisted, but which is really an invention of his own; and thirdly, -a proposition on which I did insist actually, but which Mr. Shaw -never even states, much less attempts to meet. This third proposition -I shall briefly state once again when I have dealt with the two -others, and show how Fabian philosophy—indeed the philosophy of all -Socialism—completely fails to meet it. - -To begin, then, with the first. My primary object has been to exhibit -the absolute falsehood of the Socialistic doctrine that _all wealth -is due to labour_, and to replace this by a demonstration that under -modern conditions of production, labour is not only not the sole -producer of wealth, but does not even produce the principal part of -it. The principal producing agent, I have pointed out, is what I have -called Industrial Ability—or the faculty which, whilst exercised by -a few, directs the labour of the many; and if this truth is once -accepted, it completely cuts away from Socialism the whole of its -existing foundations, and renders absolutely meaningless the whole of -its popular rhetoric. For the most powerful argumentative appeal which -Socialism can make to the majority is merely some amplification of the -statement, which is no doubt plausible, and is advanced by Socialists -as an axiom, that the exertions of the majority—or, in other words, -Labour—has produced all wealth, and that therefore the majority not -only ought to possess it, but will be able to possess it by the simple -process of retaining it. But the moment the productive functions of -industrial ability are made clear, the doctrine which seemed an axiom -is reduced to an absurdity; and what might before have seemed a paradox -becomes a simple and intelligible truth—the doctrine, namely, that a -comparatively few persons, with certain exceptional gifts, are capable -of producing more wealth than all the rest of the community; and that -whoever may produce the wealth which the rich classes possess, it is -at all events not produced by the multitude, and might, under changed -conditions, be no longer produced at all. - -Now this doctrine of Ability Mr. Shaw accepts, and completely -surrenders and throws overboard the Socialistic doctrine of Labour. He -does indeed endeavour to make the surrender seem less complete than it -is, partly by irrelevant comments on some minor points,[61] and partly -by insisting on certain qualifications which are perfectly true, and to -which I have myself often elsewhere alluded, but which, as I shall show -presently, are, on his own admission, of small practical importance, -and do not appreciably affect the main position. For instance Mr. -Shaw argues that it is not always the most able man who, in any given -business, is to be found directing it. This also is no doubt true. -It merely means, however, that of industrial ability the same thing -may be said, which has so truly been said of Government—that it is -always _in_, or _passing into_, the hands of the most powerful section -of the community. Businesses conducted by men of inferior Ability -are gradually superseded by businesses conducted by men of superior -Ability. Men’s actual positions may be a few years behind or before -their capacities, but for all practical purposes they coincide with -them and the utmost that Mr. Shaw’s contention could prove would be -that some members of a minority are in places which should be occupied -by other members of a minority; not that the majority could take the -places of either. - -But I merely mention these points in passing, and waste no pains in -insisting on them or pressing them home, because their practical -insignificance is admitted by Mr. Shaw himself. The great body of -men—of men selected at random, even if they should enjoy the advantages -of superior position and education—“could not,” he says, “invent a -wheelbarrow, much less a locomotive.” He amplifies this admission -by quoting the case of an acquaintance of his, whose exceptional -Ability secured him _four thousand pounds_ a year, because without the -assistance of that Ability his employer would have lost more than this -sum. “Other men,” he proceeds, “have an eye for contracts, or what not, -or are born captains of industry, in which case they go into business -on their own account, and make ten, twenty, or two hundred per cent, -_where you or I should lose five_.... All these people are _rentiers_ -of Ability.” Again he quotes with emphatic approval a passage from an -American writer, whom he praises as a skilled economist; and using this -passage as a text, endorses its meaning in these words of his own. -“The able man, the actual organiser and employer, alone is able to find -a use for mere manual deftness, or for that brute strength, and heavy -bank balance, which any fool may possess.” “The capitalist and the -labourer run helplessly to the able man.” “He is the only party in the -transaction capable of the slightest initiative in production.” - -I need not add anything to these admissions. They constitute, as I -say, a complete surrender of the Socialistic doctrine of Labour, and -an emphatic admission of the primary proposition I advanced as to the -productive function of Ability. It is enough then to say, that so far -as the question of Labour is concerned, Mr. Shaw throws over completely -all the doctrines of the Gotha programme, the Erfurt programme, of Karl -Marx and his disciples, of Mr. Hyndman and his Social Democrats—in fact -the cardinal doctrine of Socialism as hitherto preached everywhere. - -Having disposed then of the point as to which Mr. Shaw agrees with -me, I will pass on to the point on which he supposes me to disagree -with him; and this is the point to which he devotes the larger part -of his article. Everything else is thrown in as a sort of by-play. -This point is as follows. Speaking roughly, and adopting the following -figures, not because I consider them accurate, but merely because they -agree with Mr. Shaw’s, and are for the present purpose as good as any -others, above _seven hundred million pounds_ of the national income go -to the non-labouring classes. Mr. Shaw, as I gather, would set down -about _two hundred million pounds_ of this as the earnings or profits -of Ability; whilst he contends that the remainder is the product -neither of Ability nor Labour, but of capital or land. It represents -the assistance which land and capital give to the two other productive -agents; and it goes to those who possess this land and capital, -simply on account of the rights which they possess as passive owners. -This sum, which Mr. Shaw estimates at about _five hundred million -pounds_,[62] ought, he contends, still to go to the owners—in fact, it -must always go to its owners; but the owners should be changed. They -should be the whole nation instead of a small class. - -Now Mr. Shaw says that my great mistake has relation to these _five -hundred million pounds_. He says that, having argued rightly enough -that _two hundred million pounds_ or so are the genuine product or -rent of actual and indispensable Ability, I have committed the absurd -mistake of confusing with this rent of ability, the rent of land, of -houses, and above all, the interest on capital. “Mr. Mallock,” he -says, “is an inconsiderate amateur, who does not know the difference -between profits and earnings on the one hand, and rent and interest on -the other.” And he summarises my views on the subject by saying, that -I “see in every railway shareholder the inventor of the locomotive or -the steam-engine,” and that I gravely maintain that the _three hundred -thousand pounds_ a year which may form the income of one or two great -urban landlords is produced by the exercise of some abnormal ability on -their parts. This supposed doctrine of mine forms the main subject of -Mr. Shaw’s attack. He is exuberantly witty on the subject. He turns -the doctrine this way and that, distorting its features into all sorts -of expressions, laughing afresh each time he does so. He calls me his -“brother” and his “son”; he quotes nursery rhymes at me. He alludes to -my own income and the income of the Duke of Westminster, and intimates -a desire to know whether the Duke being, so he says, many hundred -times as rich as myself, I am many hundred times as big a fool as the -Duke. In fact, he has recourse to every argumentative device which his -private sense of humour and his excellent taste suggest. - -The immediate answer to all this is very simple—namely, that I never -gave utterance to any such absurdity as Mr. Shaw attributes to me, -but that, on the contrary, I have insisted with the utmost emphasis -on this very distinction between profits and earnings, and rent and -interest, which he assures his readers I do not even perceive. Mr. -Shaw, therefore, has devoted most of his time to trampling only on a -misconception of his own. This is the immediate answer to him; but -there is a further answer to come, relating to the conclusions I -drew from nature of rent and interest, after I had pointed out their -contrast to the direct receipts of Ability. Let me show the truth of -the immediate answer first. - -I do not think that in my two recent articles in this Review there is -a single sentence that to any clear-headed man could form an excuse -for such a misconception as Mr. Shaw’s, whereas there are pages which -ought to have made it impossible. Indeed, a notice in the _Spectator_ -disposes of Mr. Shaw by saying that he evades the real point raised -by me, not meeting what I did say, and combating what I did not say. -But, as I started with observing, magazine articles can rarely be -exhaustive, and I will assume that some incompleteness or carelessness -of expression on my part might have afforded, had these articles stood -alone, some excuse for their critic. Mr. Shaw, however, is at pains -to impress us that he has read other writings of mine on the same -subject. He even remembers, after an interval of more than ten years, -some letters I wrote to the _St. James’s Gazette_. It might, therefore, -have been not unreasonable to expect that he would have referred to -my recent volume, _Labour and the Popular Welfare_, which I expressly -referred to in my two articles, and in which I said I had stated my -position more fully. As an answer to Mr. Shaw I will quote from that -volume now. - -The first Book deals with certain statistics as to production in this -country, and the growth of the national income as related to the -population. In the second Book I deal with the cause of this growth. -I point out that the causes of production are not three, as generally -stated—viz. Land, Labour, and Capital; but four—viz. Land, Labour, -Capital, and Ability; and that the fourth is the sole source of that -_increase_ in production which is the distinguishing feature of -modern industrial progress. In thus treating Capital as distinct from -Ability, I point out—taking a pumping-engine as an example—that capital -creates a product which necessarily goes to its owner, _quâ_ owner, -whether the owner is an individual or the State. I then proceed to -show that fixed capital—_e.g._ an engine—is the result of circulating -capital fossilised; and that circulating capital is productive only -in proportion as it is under the control of Ability. For this reason -I said that whilst it is _in process of being utilised_, Capital is -connected with Ability as the brain is connected with the mind, it -being the material means through which Ability controls Labour; and -that thus from _a certain point of view_ the two are inseparable. I -need not insist on this truth, because Mr. Shaw admits it. But Mr. -Shaw will find a subsequent chapter (Book IV. chap. ii.) bearing the -title, _Of the Ownership of Capital as distinct from its Employment by -Ability_. From that chapter I quote the following passage:— - - “In dealing with Capital and Ability, I first treated them - separately, I then showed that, regarded as a productive agent, - Capital _is_ Ability, and must be treated as identical with it. But - it is necessary, now we are dealing with distribution, to dissociate - them for a moment and treat them separately once more. For even - though it be admitted that Ability, working by means of Capital, - produces, as it has been shown to do, nearly two-thirds of the - national income,[63] and though it may be admitted further that - a large portion of this product should go to the able men who are - actively engaged in producing it—the men whose Ability animates and - vivifies Capital—it may be argued that a portion of it, which is very - large indeed, goes as a fact to men who do not exert themselves at - all, or who, at any rate, do not exert themselves in the production - of wealth. These men, it will be said, live not on the products - of Ability, but on the interest of Capital, which they have come - accidentally to possess; and it will be asked on what ground Labour - is interested in forbearing to touch the possessions of those who - produce nothing?... Why should it not appropriate what goes to this - wholly non-productive class.” - -If Mr. Shaw or his readers are still in doubt as to the extent to which -his criticism of myself is wide of the mark—if he still thinks that he -is fighting any mistake but his own, when he attacks me as though I -confused interest with the direct earnings of Ability, let me add one -passage more out of the same chapter:— - - “Large profits must not be confounded with high interest. Large - profits are a mixture of three things, as was pointed out by Mill, - though he did not name two of them happily. He said that profits - consisted of wages of superintendence, compensation for risk, and - interest on Capital. If, instead of wages of superintendence we say - the product of Ability, and instead of compensation for risk we say - the reward of sagacity, which is itself a form of Ability, we shall - have an accurate statement of the case.” - -Again, two pages earlier Mr. Shaw will find this:— - - “Interest is capable, under certain circumstances, of being reduced - to a minimum without production being in any degree checked; and - every pound which the man who employs Capital is thus relieved from - paying to the man who owns it constitutes, _other things being - equal_, a fund which may be appropriated by Labour.” - -These quotations will be enough to show how the bulk of Mr. Shaw’s -criticisms, which he thinks are directed against myself, are criticisms -of an absurd error and confusion of thought, which I have myself done -my utmost to expose, in order that I might put the real facts of the -case more clearly. - -Let me now briefly restate what I have actually said about these facts. -Let me restate the points which Mr. Shaw hardly ventures even to -glance at. I have said that Capital and Ability, as actually engaged -in production, are united like mind and brain. There is, however, as I -observed also, this difference. So far as this life is concerned, at -all events, brain and mind are inseparable. The organ and the function -cannot be divided. But in the case of Ability and Capital they can be. -The mind of one man has often to borrow from another man the matter -through which alone it is able to operate in production. Thus though -Ability and Capital, when viewed from the standpoint of Labour, are one -thing, when viewed from the standpoint of their different processes -they are two; and Capital is seen to produce a part of the product, as -distinguished from the Ability whose tool and organ it is. Mr. Shaw -says that the capital of the country at the present time produces _five -hundred million pounds_ annually, and, for argument’s sake, I accept -this figure. Thus far, then, Mr. Shaw and I agree. But what I have -urged Mr. Shaw to consider, and what he does not venture even to think -of, is the following question:—How did the capital of this country come -into existence? - -Even the soil of this country, as we know it now, is an artificial -product. It did not exist in its present state two hundred years ago. -Still it was there. But of the capital of the country, as it exists -to-day, by far the larger part did not exist at all. Let us merely -go back two generations—to the times of our own grandfathers; and we -shall find that of the _ten thousand million pounds_ at which our -present capital is estimated, _eight thousand million pounds_ have been -produced during the last eighty years. That is to say, four-fifths of -our capital was non-existent at a time when the grandfathers of many -of us were already grown men. How, then, was this capital produced? -The ordinary Socialist will say that it was produced by Labour—that -it is, as (I think) Lassalle called it, “fossil Labour.” Mr. Shaw, -however, judging by what we have seen of his opinions, will agree with -me that though a small part of it may be fossil Labour, by far the -larger part is fossil Ability. It is, in fact, savings from the growing -annual wealth which has been produced during the period in question -by the activity of able men. But these able men did not produce -it by accident. They produced it under the stimulus of some very -strong motive. What was this motive? Mr. Shaw’s Socialistic friends -and predecessors have been spouting and shouting an answer to this -question for the past sixty years. They have been telling us that the -main motive of the employing class was “greed.” Unlike most of their -statements, this is entirely true. Nor, although the sound of it is -offensive, is there anything offensive in its meaning. It means that -in saving capital and in producing the surplus out of which they were -able to save it, the motive of the producers was the desire to live on -the interest of it when it was saved; and that if it had not been for -the desire, the hope, the expectation of getting this interest, the -capital most certainly would never have been produced at all, or, at -all events, only a very minute fraction of it. - -I asked in one of my articles in this Review whether Mr. Shaw thought -that a man who received ten thousand a year as the product of his -exceptional ability would value this sum as much if he were forbidden -by the State to invest a penny of it—if the State, in fact, were an -organised conspiracy to prevent his investing it so as to make an -independent provision for his family, or for himself at any moment -when he might wish to stop working—as he values it now when the State -is organised so as to make his investments secure? And the sole -indication in the whole of Mr. Shaw’s paper that he has ever realised -the existence of the question here indicated is to be found in a casual -sentence, in which he says that to think that the complete confiscation -of all the capital created by the two past generations, and the avowed -intention on the part of the State to confiscate all the capital that -is now being created by the present—to think, in other words, that the -annihilation of the strongest and fiercest hope that has ever nerved -exceptional men to make exceptional industrial exertion, would in the -smallest degree damp the energies of any able man—“is an extremely -unhistoric apprehension,” and one as to which he “doubts whether the -public will take the alarm.” And having said this, he endeavours to -justify himself by an appeal to history. He asks if the men who built -the Pyramids did not work just as hard “though they knew that Pharaoh -was at the head of an organised conspiracy to take away the Pyramids -from them as soon as they were made?” - -This remarkable historical reference is the sole answer Mr. Shaw -attempts to make to the real point raised by me. If it is necessary -seriously to answer it, let me refer Mr. Shaw to _Labour and -the Popular Welfare_, pp. 124, 125, where his childish piece of -reasoning—actually illustrated there by the example of Ancient Egypt—is -anticipated and disposed of. As I there pointed out, these great -buildings of the ancient world were the products not of Ability as it -exists in the modern world, but of Labour; the difference between the -two (so far as this point is concerned) being this:—that the labour an -average man can perform is a known quantity, and wherever a dominant -race enslaves an inferior one, the taskmasters of the former can -coerce the latter into performing a required amount of service. But -the existence of exceptional ability cannot be known or even suspected -by others till the able individual voluntarily shows and exerts it. He -cannot be driven; he must be induced and tempted. And not only is there -no means of making him exert his talents, except by allowing these -talents to secure for himself an exceptional reward; but in the absence -of any such reward to fire his imagination and his passion, he will -probably not be conscious of his own Ability himself. Pharaoh could -flog the stupidest Israelite into laying so many bricks, but he could -not have flogged Moses himself into a Brassey, a Bessemer, or an Edison. - -This, however, is a point with which it is impossible to deal in a few -sentences or a few pages. The great question of human motive, closely -allied as it is with the question of family affection, the pleasures -of social intercourse, the excitements and prizes of social rivalry, -of love, of ambition, and all the philosophy of taste and manners—this -great question of motive can be only touched upon here. But a few more -words may be said to show the naïve ignorance of human nature and of -the world betrayed by the Fabian champion. - -Mr. Shaw, in order to prove how fully he understands the question of -Ability, quotes the case of a friend of his, who, by his Ability, -makes _four thousand pounds_ a year. This, says Mr. Shaw, is just as -it should be: but if a man, like his friend, should save _one hundred -thousand pounds_, and desire to leave this to his son, invested for -him at 3½ per cent, so that the son may receive an income whether he -has any of his father’s ability or no—this, says Mr. Shaw, is what -Socialism will not permit. The son must earn all he gets; and if he -happens to have no exceptional ability, which may probably be the case, -he will have to put up with the mere wages of manual labour. He will -have to live on some _eighty pounds_ a year instead of _four thousand -pounds_. And Mr. Shaw says, that to introduce this arrangement into -our social system will have no appreciable effect on the men who are -now making, by their ability, their _four thousand pounds_ a year. Let -us suggest to him the following reflections. What good, in that case, -would the _four thousand pounds_ a year be to the father, unless he -were to eat and drink nearly the whole of it himself? For it would -be absurd and cruel in him to bring up his children in luxury if the -moment he died they would have to become scavengers. Wealth is mainly -valuable, and sought for, not for the sake of the pleasures of sense -which it secures for a man’s individual nervous system, but for the -sake of the _entourage_—of the world—which it creates around him, which -it peoples with companions for him brought up and refined in a certain -way, and in which alone his mere personal pleasures can be fully -enjoyed. Capitalism, as Mr. Shaw truly observes, produces many personal -inequalities, which without it could not exist. He fails to understand -that it is precisely the prospect of producing such inequalities that -constitutes the main motive that urges able men to create Capital. - -More than ten years ago I published a book called _Social Equality_, -devoted to the exposition of these truths. I cannot dwell upon them -now. In that book history is appealed to, and biography is appealed to; -and the special case of literary and artistic production, of which Mr. -Shaw makes so much, is considered in a chapter devoted to the subject, -and Mr. Shaw’s precise arguments are disposed of in anticipation. But -to a great extent the true doctrine of motive is one which cannot be -established by mere formal argument. It must to a great extent be left -to the verdict of the jury of general common sense, the judgment of men -of experience and knowledge of the world—that knowledge which, of all -others, Mr. Shaw and his friends appear to be most lacking in. - -It will be enough, then, to turn from Mr. Shaw himself to ordinary -sensible men, especially to the men of exceptional energy, capacity, -shrewdness, strong will, and productive genius—the men who are making -fortunes, or who have just made them, and without whose efforts all -modern industry would be paralysed, and to tell such men that the -sole answer of Fabianism to my attack on the Socialistic position is -summed up in the following astounding statement:—That the complete -confiscation of all the invested money in this country, and all the -incomes derived from it—from the many thousands a year going to the -great organiser of industry to the hundred a year belonging to the -small retired tradesman—would have no effect whatever on the hopes and -efforts of those who are now devoting their Ability to making money to -invest (see Mr. Shaw’s article). Well—_Bos locutus est_: there is the -quintessence of Mr. Shaw’s knowledge of human nature and of the world, -and though it would be interesting and instructive to analyse the error -of his view, no analysis could make its absurdity seem more complete -than it will seem without analysis, to every practical man. - - - - - FOOTNOTES - - -[1] Writers also from whom better things might have been expected make -use of the same foolish language. “The proletarian, in accepting the -highest bid, sells himself openly into bondage” (_Fabian Essays_, p. -12). - -[2] According to Professor Leone Levi, the actual sum would be _one -hundred and thirteen million pounds_: but in dealing with estimates -such as these, in which absolute accuracy is impossible, it is better, -as well as more convenient, to use round numbers. More than nine-tenths -of this sum belongs to the income of the classes that pay income-tax. -Of the working-class income, not more than two per cent is counted -twice over, according to Professor Leone Levi. - -[3] There is a general agreement amongst statisticians with regard to -these figures. _Cf._ Messrs Giffen, Mulhall, and Leone Levi _passim_. - -[4] Out of any _thousand_ inhabitants, _two hundred and fifty-eight_ -are under ten years of age; and _three hundred and sixty-six_ out of -every _thousand_ are under fifteen. - -[5] Statistics in support of the above result might be indefinitely -multiplied, both from European countries and America. So far as food is -concerned, scientific authorities tell us that if _twenty_ represents -the amount required by a man, a woman will require _fifteen_, and a -child _eleven_; but the total expenditures necessary are somewhat -different in proportion. - -[6] The total imperial taxation in the United Kingdom is about _two -pounds eight shillings_ per head; and the total local taxation is about -_one pound four shillings_. Thus the two together come to _three pounds -twelve shillings_ per head, which for every family of four and a half -persons gives a total of _sixteen pounds four shillings_. - -[7] The number of females over fifteen years of age is about _twelve -millions_. Those who work for wages number less than _five millions_. - -[8] Mr. Giffen’s latest estimates show that not more than twenty-three -per cent of the wage-earners in this country earn less than _twenty -shillings_ a week; whilst seventy-seven per cent earn this sum -and upwards. Thirty-five per cent earn from _twenty shillings_ to -_twenty-five shillings_; and forty-one per cent earn more than -_twenty-five shillings_. See evidence given by Mr. Giffen before the -Labour Commission, 7th December 1892. - -[9] The reader must observe that I speak of the _rent_ of the land, -not of the land itself, as the subject of the above calculation. I -forbear to touch the question of any mere change in the occupancy or -administration of the land, or even of any scheme of nationalising the -land by purchasing it at its market price from the owners; for by none -of these would the present owners be robbed pecuniarily, nor would the -nation pecuniarily gain, except in so far as new conditions of tenure -made agriculture more productive. All such schemes are subjects of -legitimate controversy, or, in other words, are party questions; and -I therefore abstain from touching them. I deal in the text with facts -about which there can be no controversy. - -[10] It is also every year becoming more unimportant, in diametrical -contradiction of the theories of Mr. H. George. This was pointed out -some twelve years ago by Professor Leone Levi, who showed that whereas -in 1814 the incomes of the landlord and farmer were fifty-six per cent -of the total assessed to income-tax, in 1851 they were thirty-seven per -cent, and in 1880 only twenty-four per cent. They are now only sixteen -per cent. - -[11] See Local Government Board valuation of 1878. - -[12] Recent falls in rent make it impossible to give the figures with -actual precision; but the returns in the New Doomsday Book, taken -together with subsequent official information, enable us to arrive at -the substantial facts of the case. In 1878 the rental of the owners -of more than _a thousand_ acres was _twenty-nine million pounds_. -The rental of the rural owners of smaller estates was _thirty-two -million pounds_; and the rental of small urban and suburban owners was -_thirty-six million pounds_. The suburban properties averaged _three -and a half_ acres, the average rent being _thirteen pounds_ per acre. - -[13] According to the Local Government Report of 1878, the rental of -all the properties over _five hundred_ acres averaged _thirty-six -shillings_ an acre; that of properties between _fifty_ and _a hundred_ -acres, _forty-eight shillings_ an acre; and that of properties between -_ten_ and _fifty_ acres, _a hundred and sixteen shillings_ an acre. In -Scotland, the rental of properties over _five hundred_ acres averaged -_nine shillings_ an acre: that of properties between _ten_ and _fifty_ -acres, _four hundred and thirteen shillings_. With regard to the value -of properties under _ten_ acres, the following Scotch statistics are -interesting. Four-fifths of the ground rental of Edinburgh is taken -by owners of less than one acre, the rental of such owners being on -an average _ninety-nine pounds_. Three-fourths of the ground rental -of Glasgow is taken by owners of similar plots of ground; only there -the rental of such owners is _a hundred and seventy-one pounds_. In -the municipal borough of Kilmarnock, land owned in plots of less than -an acre lets per acre at _thirty-two pounds_. The land of the few men -who own larger plots lets for not more than _twenty pounds_. Each -one of the _eleven thousand_ men who own collectively four-fifths of -Edinburgh, has in point of money as much stake in the soil as though he -were the owner in Sutherland of _two thousand_ acres: and each one of -the _ten thousand_ men who own collectively three-fourths of Glasgow, -has as much stake in the soil as though he were the owner in Sutherland -of _three thousand four hundred_ acres. - -[14] This is Mr. Giffen’s estimate. Mr. Mulhall, who has made -independent calculations, does not differ from Mr. Giffen by more than -five per cent. - -[15] General merchandise is estimated by Mr. Mulhall at _three hundred -and forty-three million pounds_. For every _hundred_ inhabitants in the -year 1877 there were _five_ horses, _twenty-eight_ cows, _seventy-six_ -sheep, and _ten_ pigs. In 1881 there were in Great Britain _five -million four hundred and seventy-five thousand_ houses. The rent of -eighty-seven per cent of these was under _thirty pounds_ a year, -and the rental of more than a half averaged only _ten pounds_. The -total house-rental of Great Britain in that year was _one hundred -and fourteen million pounds_; and the aggregate total of houses over -_thirty pounds_ annual value was _sixty million pounds_; though in -point of number these houses were only thirteen per cent of the whole. - -[16] This classification of houses may perhaps be objected to; but -from the above point of view it is correct. Houses represent an annual -income of _one hundred and thirty-five million pounds_. Not more -than _thirty-five million pounds_ are spent annually in building new -houses; whilst the whole are counted as representing a new _one hundred -million pounds_ every year. It is plain, therefore, that if we estimate -the entire annual value as above, the sum in question stands not for -the houses, but for the use of them. Even more clearly does the same -reasoning apply to railways and shipping. Whether we send goods by -these or are conveyed by them ourselves, all that we get from them is -the mere service of transport. On transport and travelling by railway -about _seventy million pounds_ are spent annually: by ship about -_thirty million pounds_; by trams about _two million pounds_. - -[17] The total annual imports are about _four hundred and twenty -million pounds_. The amount retained for home consumption is about -_three hundred and sixty-five million pounds_. - -[18] The approximate value of the food consumed annually in the United -Kingdom (exclusive of alcoholic drinks) is _two hundred and ninety -million pounds_. The total value of food imported is over _one hundred -and fifty million pounds_. - -[19] The number of persons fed on home-grown meat was _twenty-three -millions one hundred thousand_. The number fed on imported meat was -_fourteen millions seven hundred thousand_. In other words, the number -of persons who subsist on imported meat now is about equal to the -entire population of the United Kingdom in 1801. - -[20] From the year 1843 to 1851, the annual income of the nation -averaged _five hundred and fifteen million pounds_, according to the -calculations of Messrs. Leone Levi, Dudley Baxter, Mulhall, and Giffen. - -[21] The actual figures are as follows:—In 1887 the estimates of the -value of agricultural products per each individual actually engaged -in agriculture were: United Kingdom, _ninety-eight pounds_; France, -_seventy-one pounds_; Belgium, _fifty-six pounds_; Germany, _fifty-two -pounds_; Austria, _thirty-one pounds_; Italy, _thirty-seven pounds_. - -[22] It is understating the case to say that the British operative -to-day works one hundred and eighty-nine hours less annually than -his predecessor of forty or fifty years ago, and one hundred and -eighty-nine hours = three weeks of nine hours a day. To this must be -added at least a week of additional holidays. - -[23] The hours of labour in Switzerland are, on an average, sixty-six a -week. - -[24] The agricultural population in France is about _eighteen -millions_; in this country, about _six millions_. The produce of France -is worth about _four hundred and fourteen million pounds_; of this -country, _two hundred and twenty-six million pounds_. - -[25] According to Eden it was about _seventeen hundred million pounds_ -at the beginning of the present century. Twenty-five years previously -it was, according to Young’s estimate, _eleven hundred million pounds_. - -[26] I have not mentioned Profits. They consist, says Mill, of Interest -on Capital and Wages of Superintendence; to which he adds compensation -for risk—a most important item, but not requiring to be included here. - -[27] From 1716 to 1770 the cotton manufactured in this country annually -averaged under _two and a half million pounds_ weight. From 1771 to -1775 it was _four million seven hundred thousand pounds_. From 1781 -to 1785 it was _eleven million pounds_. From 1791 to 1795 it was -_twenty-six million pounds_; and from 1795 to 1800 it was _thirty-seven -million pounds_. - -[28] Pitt estimated that the hands employed in spinning increased from -forty thousand to eighty thousand between the years 1760 and 1790. - -[29] Were any confirmation of this conclusion needed, it is afforded -us by the fact that in 1786 a spinner received _ten shillings_ a pound -for spinning cotton of a certain quality: in 1795 he had received only -_eightpence_, or a fifteenth part of ten shillings; and yet in the -course of a similar day’s labour, he made more money than he had been -able to do under the former scale of payment. The price of spinning -No. 100 was _ten shillings_ per pound in 1786; in 1793, _two shillings -and sixpence_. The subsequent drop to _eightpence_ coincided with the -application of machinery to the working of the mule. - -[30] Were this work a treatise on political economy, rather than a work -on practical politics, in which only the simplest and most fundamental -economic principles are insisted on, I should have here introduced a -chapter on the special and peculiar part which fixed capital, other -than machinery, plays in agriculture. I have not done so, however, for -fear of interrupting the thread of the main argument; but it will be -useful to call the reader’s attention to the subject in a note. - -It was explained in the last chapter that rent (to speak with strict -accuracy) is not to be described as the product of superior soils, -but rather as the product of the qualities which make such soils -superior—qualities which are present in them and which in poorer -soils are absent. Now in speaking of rent, we assumed these superior -qualities to be natural. As a matter of fact, however, in highly -cultivated countries, many of them are artificial. They have been added -to the soil by human exertion—for instance by the process of draining; -or they have been actually placed in the soil, as by the process of -manuring. In this way land and capital merge and melt into one another, -and illustrate each other’s functions as productive agents. It is -impossible to imagine a more complete and beautiful example of the -relation between the two. At this point the rent of Capital and the -rent of Land become indistinguishable. - -[31] In a state where the employing class were physically the masters -of the employed, Wage Capital would be unnecessary for the employer. A -system of forced labour might take its place. - -[32] This was Pitt’s computation. _See_ Lecky, _History of England -during the Eighteenth Century_, vol. vi. chap. xxiii. - -[33] The amount of land, formerly waste, that was added to the -cultivable area during the last century, was in England and Wales not -more than sixteen per cent of the total. - -[34] The rental of Great Britain in 1750 was about _thirteen million -five hundred thousand pounds_, and in 1800 about _twenty-nine million -six hundred thousand pounds_. According to the estimates of Arthur -Young, the farmer’s income somewhat more. The wages of Agricultural -Labour had not risen proportionately. - -[35] See _Encyclopædia Britannica_, first and earlier editions. - -[36] See _Encyclopædia Britannica_, first and earlier editions. The -product of each smelting furnace in use in 1780 was _two hundred -and ninety-four tons_ annually. In 1788, these same furnaces were -producing, by the aid of new inventions, _five hundred and ninety-four -tons_. - -[37] According to Arthur Young’s estimates, the earnings of an -agricultural family, consisting of seven persons all capable of work, -would be about _fifty-one pounds_ annually. This gives a little over -_seven pounds_ a head; but when the children and others not capable -of work are taken into account the average is considerably lower. The -wages, however, of the artisan class being higher, the average amount -per head taken by the whole working population would be about _seven -pounds_. - -[38] About £1 12s. per head would have to be set down to land, were -the land question being dealt with. But for the purpose of the above -discussion, land may be ignored, as it does not affect the problem. - -[39] This fact has been commented on with much force by Mr. Gourlay in -a paper contributed by him to the _National Review_. - -[40] The matter may also be put in this way. There are _ninety-nine -labourers_ engaged on a certain work at which there is room for _a -hundred_. The _ninety-nine men_ produce every week value to the amount -of _ninety-nine pounds_. There are two candidates for the hundredth -place: one a labourer, John; and one, a man of ability, James. If -John takes the vacant place, we have _a hundred men_ producing _a -hundred pounds_. If James takes the vacant place, the productivity -of labour by his action is (we will say) doubled, and we have _a -hundred men_ producing _a hundred and ninety-eight pounds_. No amount -of theory based on the fact that James could do nothing without the -_ninety-nine labourers_ can obscure or do away with the practical truth -and importance of the fact that the exertion of James will produce -_ninety-eight pounds_ more than the exertion of John; and any person -with whom the decision rested, which of these two men should take the -hundredth place, would base their decision on this fact. - -[41] I say _practically_ as absurd, meaning absurd and practically -meaningless in an economic argument. There are many points of view from -which it would be philosophically true. - -[42] The examples given above might be multiplied indefinitely. -Maudslay was brought up as a “powder-boy” at Woolwich. The inventors of -the planing machine, Clements and Fox, were brought up, the one as a -slater, the other as a domestic servant. Neilson, the inventor of the -hot-blast, was a millwright. Roberts, the inventor of the self-acting -mule and the slotting-machine, was a quarryman. The illustrious Bramah -began life as a common farm-boy. - -[43] By labouring classes is meant all those families having incomes of -less than a _hundred and fifty pounds_ a year. The substantial accuracy -of this rough classification has already been pointed out. No doubt -they include many persons who are not manual labourers; but against -this must be set the fact that, according to the latest evidence, there -are at least a _hundred and eighty thousand_ skilled manual labourers -who earn more than a _hundred and fifty pounds_. And, at all events, -whether the classes in question are manual labourers or not, they -are, with very manifest exceptions, wage-earners—that is to say, for -whatever money they receive they give work which is estimated at at -least the same money value. A schoolmaster, for instance, who receives -a _hundred and forty pounds_ a year gives in return teaching which -is valued at the same sum. School teaching is wealth just as much as -a schoolhouse; it figures in all estimates as part of the national -income; and therefore the schoolmaster is a producer just as much as -the school builder. - -[44] This corresponds with Arthur Young’s estimate of wages for about -the same period. - -[45] Statisticians estimate that in 1860 the working classes of the -United Kingdom received in wages _four hundred million pounds_; the -population then being about twice what it was at the close of the -last century. In order to arrive at the receipts of British Labour, -the receipts of Irish Labour must be deducted from this total. The -latter are proportionately much lower than the former, and could not -have reached the sum of _eighty million pounds_. But assuming them to -have reached that, and deducting _eighty million pounds_ from _four -hundred million pounds_, there is left for British Labour _three -hundred and twenty million pounds_, to be divided, roughly speaking, -amongst _twenty million_ people; which for each _ten millions_ yields a -_hundred and sixty million pounds_. - -[46] According to the latest estimates, it exceeds _seven hundred -million pounds_. - -[47] The entire population has risen from about _twenty-seven million -five hundred thousand_ to _thirty-eight millions_. But a large part of -this increase has taken place amongst the classes who pay income-tax, -and are expressly excluded from the above calculations. These classes -have risen from _one million five hundred thousand_ to _five millions_. - -[48] These considerations are so obvious, and have been so constantly -dwelt upon by all economic writers, other than avowed Socialists, -that it is quite unnecessary here to insist on these further. Even -the Socialists themselves have recognised how much force there is in -them, and have consequently been at pains to meet them by the following -curious doctrine. They maintain that a man who makes or inherits a -certain sum has a perfect right to possess it, to hoard it, or squander -it on himself; but no right to any payment for the use made of it by -others. They argue that if he puts it into a business he is simply -having it preserved for him; for the larger part of the Capital at any -time existing would dwindle and disappear if it were not renewed by -being used. Let him put it into a business, say the Socialists, and -draw it out as he wants it. Few things can show more clearly than this -suggested arrangement the visionary character of the Socialistic mind; -for it needs but little thought to show that such an arrangement would -defeat its own objects and be altogether impracticable. The sole ground -on which the Socialists recommend it, in preference to the arrangement -which prevails at present, is that the interest which the owners of -the Capital are forbidden to receive themselves would by some means -or other be taken by the State instead and distributed amongst the -labourers as an addition to their wages, and would thus be the means -of supplying them with extra comforts. Now the interest if so applied -would, it is needless to say, be not saved but consumed. But the owners -of the Capital, who are thus deprived of their interest, are to have -the privilege, according to the arrangement we are considering, of -consuming their Capital in lieu of the interest that has been taken -from them. Accordingly, whereas the interest is all that is consumed -now, under this arrangement the Capital would be consumed as well. The -tendency, in fact, of the arrangement would be neither more nor less -than this: to increase the consumption of the nation at the expense of -its savings, until at last all the savings had disappeared. It would be -impracticable also for many other reasons, to discuss which here would -simply be waste of time. It is enough to observe that the fact of its -having been suggested is only a tribute to the insuperable nature of -the difficulty it was designed to meet. - -[49] The part played in national progress by the mere business -sagacity of investors, amounts practically to a constant criticism of -inventions, discoveries, schemes, and enterprises of all kinds, and the -selection of those that are valuable from amongst a mass of what is -valueless and chimerical. - -[50] See Mr. Giffen’s Inaugural Address of the Fiftieth Session of the -Statistical Society. - -[51] The gross amount assessed to income-tax in 1891 was nearly _seven -hundred million pounds_; now more than _a hundred million pounds_ was -exempt, as belonging to persons with incomes of less than _a hundred -and fifty pounds_ a year. Mr. Giffen maintains (see his evidence given -before the Royal Commission on Labour, 7th December 1892) that there -is an immense middle-class income not included amongst the wages of -the labouring class. This, according to the classification adopted -above, which divides the population into those with incomes above, and -those with incomes below _a hundred and fifty pounds_, would raise the -collective incomes of the latter to over _seven hundred million pounds_. - -[52] See Mr. Giffen’s Address, as above. - -[53] If the number of employers does not increase, it is true that -they, unlike the employed, will be richer in proportion to their -numbers; but they will be poorer in proportion to the number of men -employed by them. - -[54] Thus the old theory of the wage-fund, which has so often been -attacked of late, has after all this great residuary truth, namely, -that the amount of wealth that is spent and taken in wages is limited -by the total amount of wealth produced _in proportion to the number_ -of labourers who assist in its production. That theory, however, as -commonly understood, is no doubt erroneous, though not for the reasons -commonly advanced by its critics. The theory of a wage-fund as commonly -understood means this—that if there were eight labourers and a capital -of _four hundred pounds_, which would be spent in wages and replaced -within a year, and if this were distributed in equal shares of _fifty -pounds_, it would be impossible to increase the share of one labourer -without diminishing that of the others; or to employ more labourers -without doing the same thing. But the truth is that if means were -discovered by which the productivity of any one labourer could be -doubled during the first six months, the whole _fifty pounds_ destined -for his whole year’s subsistence might be paid to him during the first -six months, and the fund would meanwhile have been created with which -to pay him a similar sum for the next six months—the employer gaining -in the same proportion as the labourer. So, too, with regard to an -additional number of labourers—if ability could employ their labour to -sufficient advantage, part of the sum destined to support the original -labourer for the second six months of the year might be advanced to -them, and before the second six months’ wages became due there might be -enough to pay an increased wage to all. - -[55] This is true even of productive or distributive industries carried -out by the State. The real Socialistic principle of production has -never been applied by the State, or by any municipal authority; nor -has any practical party so much as suggested that it should be. The -manager of a State factory has just the same motive to save that an -ordinary employer has: he can invest his money, and get interest -on it. A State or a municipal business differs only from a private -Capitalist’s business either in making no profits, as is the case in -the building of ships of war; or of securing the services of Ability -at a somewhat cheaper rate, and, in consequence, generally diminishing -its efficacy. Of State business carried on at a profit, the Post Office -offers the best example; and it is the example universally fixed on -by contemporary English Socialists. It is an example, however, which -disproves everything that they think it proves; and shows the necessary -limitations of the principle involved, instead of the possibility of -its extension. For, in the first place, the object aimed at—_i.e._ the -delivery of letters—is one of exceptional simplicity. In the second -place, all practical men agree that, could the postal service be -carried out by private and competing firms, it would (at all events -in towns) be carried out much better; only the advantages gained in -this special and exceptional case from the entire service being under -a single management, outweigh the disadvantages. And lastly, the -business, as it stands, is a State business in the most superficial -sense only. The railways and the steamers that carry the letters are -all the creations of private enterprise, in which the principle of -competition, and the motive force of the natural rewards of Ability, -have had free play. Indeed the Post Office, as we now know it, if we -can call it Socialistic at all, represents only a superficial layer of -State Socialism resting on individualism, and only made possible by its -developments. Real State Socialism would be merely the Capitalistic -system minus the rewards of that Ability by which alone Capital is made -productive. - -[56] _Principles of Economics_, by Alfred Marshall, book iv. chap. vii. - -[57] Though I have aimed at excluding from this volume all -controversial matter, I may here hazard the opinion that the -Socialistic principle is most properly applied to providing the -labourers, not with things that they would buy if they were able to do -so, but things that naturally they would not buy. Things procurable -by money may be divided into three classes—things that are necessary, -things that are superfluous, and things that are beneficial. Clothing -is an example of the first class, finery of the second, and education -of the third. If a man receives food from the State, otherwise than as -a reward for a given amount of labour, his motive to labour will be -lessened. If a factory girl, irrespective of her industry, was supplied -by the State with fashionable hats and jackets, her motive to labour -would be lessened also; for clothing and finery are amongst the special -objects to procure which labour is undertaken. But desire to be able to -pay for education does not constitute, for most men and women, a strong -motive to labour; and therefore education may be supplied by the State, -without the efficacy of their labour being interfered with. - -[58] In our imaginary community we have at first eight labourers, who -produce _fifty pounds_ a year a-piece = _four hundred pounds_. Then -we have eight labourers + one able man, who produce _four hundred -pounds_ a year for each labourer = _three thousand two hundred pounds_. -Of this the able man takes _two thousand eight hundred pounds_. Now, -suppose the labourers strike for double wages, and succeed in getting -them, their total wages are _eight hundred pounds_ a year instead of -_four hundred pounds_; and the employer’s income is _two thousand four -hundred pounds_ instead of _two thousand eight hundred pounds_. The -labourers gain a hundred per cent; the employer loses little more than -fourteen per cent. The labourers therefore have a stronger motive in -demanding than the employer has in resisting. But let us suppose that, -the total income of the community remaining unchanged, the labourers -have succeeded in obtaining _one thousand eight hundred pounds_, thus -leaving the employer _one thousand four hundred pounds_. The situation -will now be changed. The labourers could not possibly now gain an -increase of a hundred per cent, for the entire income available would -not supply this; but let us suppose they strike for an increase of -_two hundred pounds_. If they gained that, their income would be _two -thousand pounds_, and that of the employer _one thousand two hundred -pounds_; but the former situation would be reversed. The employer now -would lose more than the labourer would gain. The labourers would gain, -in round numbers, only eleven per cent; and the employer would lose -fourteen per cent. Therefore the employer would have a stronger motive -in resisting than the labourers in demanding. - -[59] The possibility of such a result would depend upon two -assumptions, which are not in accordance with reality, and for which -allowance must be made. The first is the assumption that the labouring -population is stationary; the second is that Ability can increase the -productivity of Labour equally in all industries. In reality, however, -as was noticed in the last chapter, the number of labourers increases -constantly, and the improvements in different industries are very -unequal; and, owing to these two causes, it often happens that the -total value produced in some industries by Labour and Ability together -is not so great as is the share that is taken by Labour in others. -Thus the labourers employed in the inferior industries could by no -possibility raise their wages to the amount received by the labourers -employed in the superior ones. Their effort accordingly would be to -obtain employment in the latter, and to do so by accepting wages -higher indeed than what they receive at present, but lower than those -received by the men whose positions they wish to take. Thus, under such -circumstances, a union of industrial interests ceases to be any longer -possible. By an irresistible and automatic process, there is produced -an antagonism between them; and the labourers who enjoy the higher -wages will do what is actually done by our Trade Unions: they will form -a separate combination to protect their own interests, not only against -the employers, but even more directly against other labourers. At a -certain stage of their demands, the labourers may be able to combine -more readily and more closely than the employers; but when a certain -stage has been passed, the case will be the reverse. The employers will -be forced more and more into unanimous action, whilst the labourers, -by their diverging interests, are divided into groups whose action is -mutually hostile. - -[60] The reader must always bear in mind the definition given of -Labour, as that kind of industrial exertion which is applied to one -task at a time only, and while so applied begins and ends with that -task; as distinguished from Ability, which influences simultaneously an -indefinite number of tasks. - -[61] Mr. Shaw, for instance, is at much pains to point out that Ability -is not one definite thing, as the power of jumping is, and makes -himself merry by asking if Wellington’s Ability could be compared -with Cobden’s, or Napoleon’s with Beethoven’s. This is all beside the -mark. I have been careful to define the sense in which I used the -word Ability—to define it with the utmost exactness. I have said that -I use it as meaning productive Ability—industrial Ability. That is -to say, those faculties by which men, not labouring themselves, are -capable of directing to the best advantage the labour of others, with -a view to the production of economic commodities. In the Middle Ages I -said that another kind of Ability was more important—_i.e._ Military -Ability, instead of Economic; and the historical importance of this -fact, which Mr. Shaw says I discovered only after I had written my -first article on Fabian Economics, I insisted on, at much greater -length, years ago, when criticising Karl Marx’s “Theory of Value,” in -this [the Fortnightly] Review. Again, let Mr. Shaw turn to _Labour and -the Popular Welfare_, p. 328, and he will find what he says put more -clearly by myself than by him. - -[62] It is interesting to see the analysis which Mr. Shaw gives of the -elements which make up the _five hundred million pounds_ (see page 482 -of his article). It shows a curious want of sense of proportion, and -reads much like a statement that a young man’s bankruptcy was due to -the _one hundred thousand pounds_ he has spent on the turf, the _fifty -thousand pounds_ he had spent on building a house, the _fifty pounds_ -he has spent on a fur coat, and the sixpence he gave last Saturday to -the porter at Paddington Station. But there is in it a more serious -error than this. Mr. Shaw says, and rightly, that a large part of the -millions to which he alludes consists of payments to artists and other -professional men (_e.g._ doctors), by very rich commonplace people -competing for their services. But he entirely mistakes the meaning of -this fact. I have pointed it out carefully in _Labour and the Popular -Welfare_ (Book I. chap. iii.) and have illustrated it by one of the -exact cases Mr. Shaw has in view, viz. that of a doctor who gets a fee -of _one thousand two hundred pounds_ from “a very rich commonplace -person.” I pointed out that in the estimates, from which Mr. Shaw gets -his figures of _five hundred million pounds_, all such payments are -counted twice over. The “very rich commonplace person” and the doctor -both pay income-tax on and are regarded as possessing the same _one -thousand two hundred pounds_. As matters stand this is right enough, -for the patient receives either in good or fancied good an equivalent -for his fee in the doctor’s services; but if the sum in question were -to be divided up and distributed, there would for distribution be one -_one thousand two hundred pounds_ only. By reference to calculations -of Professor Leone Levi, with whom I corresponded on these matters, I -drew the conclusion that the sum thus counted twice over was about _one -hundred million pounds_ annually ten years ago. This would knock off -twenty per cent at once from Mr. Shaw’s _five hundred million pounds_; -and I may again mention Mr. Giffen’s emphatic warning that, if we are -thinking of any general redistribution, another _two hundred million -pounds_ would have to be deducted from the sums which persons like Mr. -Shaw imagine await their seizure. - -[63] The case may also be put in another way. Interest is the product -of capital _quâ_ capital, as opposed to the product of ability as -distinct from capital. But the bulk of modern capital is historically -the creation of ability, which has miraculously multiplied the few -loaves and fishes existing at the close of the last century. Interest -may therefore be called the secondary or indirect product of ability, -whilst earnings and profits may be called the direct product of -ability. Any one who is living on interest at the present moment is -almost sure to be living, not on his own ability, but on the products -of the ability of some member of his own family who has added to the -national wealth within the past two generations. Suppose a man who -died in 1830 left a fortune of _two hundred thousand pounds_, which he -made, as Salt did, by the invention and production of some new textile -fabric; and suppose that this fortune is now in the hands of a foolish -and feeble grandson, who enjoys _eight thousand pounds_ a year. This -is evidently not the product of the grandson’s ability; but it is the -product of the ability of the grandfather. The truth of this may be -easily seen by altering the supposition thus—by supposing that the -original maker of the fortune, instead of dying in 1830, is alive now, -but as imbecile as we supposed his grandson to be. He has, we will say, -long retired from business, and lives on the interest of the capital -he made when his faculties were in their vigour. Would any one say -that he is not living on his own ability? The only difference is—and -it is a difference which, from many points of view, is of the greatest -importance—that formerly he was living on the direct product of his -ability, and he is now living on its indirect product. - - - THE END - - - _Printed by_ R. & R. CLARK, _Edinburgh_. - - - ——————————————————————————————————————————————————————— - - - PRINCIPLES OF - POLITICAL ECONOMY - - By J. SHIELD NICHOLSON, M.A., D.Sc. - - PROFESSOR OF POLITICAL ECONOMY IN THE UNIVERSITY OF EDINBURGH, - SOME TIME EXAMINER IN THE UNIVERSITIES OF CAMBRIDGE, - LONDON, AND VICTORIA - - In 2 Vols. demy 8vo. - - Vol. I. price 15s. - - - _ALSO BY THE SAME AUTHOR_ - - MONEY AND ESSAYS ON PRESENT - MONETARY PROBLEMS - - Second Edition, Revised and Enlarged. - - In crown 8vo, price 7s. 6d. - - - HISTORICAL PROGRESS - AND - IDEAL SOCIALISM - - In crown 8vo, price 1s. 6d. - - —————————— - - LONDON: A. & C. BLACK, SOHO SQUARE. - - - ——————————————————————————————————————————————————————— - - - A - - HISTORY OF SOCIALISM - - BY - - THOMAS KIRKUP - - In crown 8vo, 300 pages, price 6s. - - -“So fair, so learned, and so well written, that we have nothing but -praise for its author.”—_Athenæum._ - -“No better book for the purpose has come under our notice than Mr. -Kirkup’s new work, ‘A History of Socialism.’”—_The World._ - -“This bold and luminous outline displays an uncommon grasp of the -underlying principles of a movement which is rapidly beginning to play -a great part in modern society.”—_Standard._ - -“A very valuable and useful epitome.”—_Glasgow Herald._ - -“It is a work of true value and present importance.”—_Evening News and -Post._ - -“Well written, clear, tolerant, intelligible to all cultivated -people.”—_Daily Chronicle._ - -“Should be on the shelves of every public library and every -workingmen’s club.”—_Pall Mall Gazette._ - -“The tone of this able and opportune volume is at once sympathetic, -independent, and fearless.”—_Leeds Mercury._ - -“Well worthy to remain the standard text-book on Socialism.”—_British -Weekly._ - -“Marked by great candour and much independence of thought, as well as -by a wide knowledge of his subject.”—_Newcastle Leader._ - -“Practically indispensable to any one who wishes to acquire an adequate -grasp of the leading phases of historic socialism.”—_Freeman’s Journal._ - -“Sound, original work.”—_Aberdeen Free Press._ - -“Nothing could be more timely than Mr. Kirkup’s very able and lucid -though concise ‘History of Socialism.’”—_Literary World._ - -“Apropos of Socialism, I do not know where you will find a more -brilliant account or a more lucid criticism of this on-coming movement -than in Mr. Thomas Kirkup’s ‘History of Socialism.’”—_Truth._ - - —————————— - - LONDON: A. & C. BLACK, SOHO SQUARE. - - - —————————————————— End of Book —————————————————— - - - Transcriber’s Note (continued) - -Minor typographical errors have been corrected in this transcription. - -Other errors and unusual or variable spelling and hyphenation have been -left unchanged except as noted below. - - The four references to (Henry) Maudsley have the surname corrected - to Maudslay. - - Page 79 — “labour-party” changed to “Labour Party” (leaders of the - Labour Party to-day) - - Page 118 — “Hargraves” changed to “Hargreaves” (Hargreaves and - Arkwright) - - Page 200 — “monoply” changed to “monopoly” (the monopoly of Ability) - - Page 337 — “originially” changed to “originally” (which was originally - published) - - Page 243 — “transction” changed to “transaction” (party in the - transaction) - - Page 344 — “Leoni” changed to “Leone” in footnote (Professor Leone - Levi) - -Footnotes have been re-indexed using numbers and placed after the -Appendix. - - - -*** END OF THE PROJECT GUTENBERG EBOOK LABOUR AND THE POPULAR WELFARE *** - -Updated editions will replace the previous one--the old editions will -be renamed. - -Creating the works from print editions not protected by U.S. copyright -law means that no one owns a United States copyright in these works, -so the Foundation (and you!) can copy and distribute it in the -United States without permission and without paying copyright -royalties. 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