Principles of Political Economy

by Arthur Latham Perry

Government, then, is an Agent, and nothing more. Even nationalists will not contend for the divine right of kings. And the duties of every decent government on earth are political in their character. The agents are chosen and dismissed with a direct reference to that kind of action. Politics has a sphere wholly distinct from Economics. The true and only end of politics is the greatest good of the greatest number, so far as that end can be mediated by governmental agents of the people. Individualism as such does indeed sink out of sight under a true Politics, and the inalienable rights of one are maintained for the sake of and in consistency with the greater rights of all. But Economics is all individuals from beginning to end. "It takes two to make a bargain." Only two. Each of the two has his own motive, estimates for himself, gives and takes for himself, and enjoys alone his own gain. All this is involved in the very idea of Property, which is derived from proprius, and which means one's own. How illogical, then, and incongruous, to suppose, that a set of limited human agents briefly trained to purely political action, and liable to be turned out of office by every change in party administration, can be competent at the same time and in addition to perform economical functions for the people!

Notice, too, that governmental agents in all good countries are already overburdened with their mere political duties. Work is behindhand in every portfolio, on every court calendar, and in every legislative body, in Christendom. How absurd it is, therefore, to talk about throwing upon shoulders, already overburdened, additional loads of a different kind, for which shoulders and heads are wholly unfitted!

Why not, then, inquires our nationalist innovator, organize new bureaus to undertake in their behalf the buying and selling of the people? Ah! Who pays the taxes needful for the support of the present political bureaus? And who would have to pay the taxes needful for the support of the new economical bureaus? Besides not having any substantive existence of its own Government has not one cent of money, except what the people voluntarily pay in taxes out of their own personal gains, in order to maintain their own agents to do certain political things for them, which they cannot do as well for themselves directly; and when it comes to the cold question for the people themselves to answer, whether they will organize a new set of hired men to do their trading for them, and pay them for doing this out of aggregate gains certainly to be vastly diminished by the process, our nationalistic leaders will perhaps find out that the people have common sense, whether the said leaders have it or not.

But the damning difficulty with this governmental business association is, after all, in the inevitable lack of motive on the part of the hired men doing the buying and selling. It is an honor to human nature, that hired men never have and never can have the zeal and enterprise of principals and owners to forecast and to perform and to lay up; because it shows that man is a rational animal, made in the image of his Maker, always acting under the pressure of personal motives, and always estimating what is his own more highly than what belongs to another. Business motives act in their fulness only on the individual, whose is the effort and whose is the return. Any policy whatever on the part of Government, which lessens the number and the eagerness of individual operators in favor of great artificial combinations resting in the shadow of the Law, lessens of necessity the gains of exchanges, and the progress of the nation, because it lessens of necessity the press of motive on the many to work and save.

Government, accordingly, is quite too far off in every respect from the business, that is to say, from the buying and selling of the people, to undertake any branch of it when "it becomes necessary to abandon the principle of freedom in the establishment of enterprises." It will then be high time to "abandon" the "enterprises" themselves. If the "principle of freedom" cannot compass the "establishment of enterprises," is it likely that the "principle" of secondary and irresponsible agents can do it? To show the people how to make their bargains, how to buy and sell and save and spend, is a function government is not fitted for, was not established to perform, and never undertook without making a botch of it.

In the Preamble of the Constitution of the United States there is a careful and complete and elegant enumeration of the purposes, which the body of the instrument was designed to attain. These purposes are six. No one of them contains even a hint of any purpose to enter upon the "establishment of enterprises," still less of any necessity "to abandon the principle of freedom." The last of these six purposes is phrased: "and to secure the blessings of liberty to ourselves and our posterity." The liberty to buy and sell freely was precisely that "liberty" of the Colonies which was most threatened and infringed by the British Government, to vindicate that special "liberty" was the chief cause of the American Revolution, and "to secure the blessings" of that and other forms of similar "liberty" was the final purpose of the Constitution of the United States.

It is true indeed that the Constitution empowers Congress, a creature of the People, "to establish Post Offices and Post Roads"; but the purpose of this was political, and not pecuniary; it was to bind all the States together in one Union of intelligence and intercourse; it was to keep the outlying and distant parts in touch with the central and seaboard; it is not in any sense a "business" enterprise; the department of the mails is not now and never has been, for any length of time, self-supporting; and it illustrates through and through in its "Star route frauds" and other contracts, in its appointment and removal of postmasters, and in the sickening dependence of primal Service of the people on partisan and corrupting impulses, many of them inherent evils of the much-vaunted Nationalism.

But besides all these vital and political objections to the assumption on the part of government of any direct industrial functions whatever, there remains two other fundamental objections, of which the first is, that our national government has received no powers to any such end, and is emphatically prohibited in the Constitution itself from exercising them:—"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively or to the people."

(2) The second remaining objection is, that such proposed action of government could have no tendency at all either to enlarge the Wages-portion, or to increase the industrial efficiency of the laborers, or to diminish the number of competitors at any one point of the wages-scale. As a matter of fact, such governmental action would have precisely the opposite effect at each of these three vital points of wages: employers would have less motive to swell the wages-portion, laborers less motive to improve their capacity, and more motive to congregate locally. Suppose, that at some given point in the scale of wages, free and intelligent competition has been had on both sides, and that the average rate of wages as thus determined proves one dollar per day for each laborer. Suppose further, that everybody outside the employers thinks this is quite too little, and that government accordingly issues a decree that wages at that point must be thereafter one dollar and a half per day. That decree can have no tendency at all to enlarge the wages-portion of those particular employers, because that has already been determined for the next industrial cycle by the general productiveness of the cycle last past, and by the last division under free competition between wages and profits; if, therefore, the decree were carried out, as it never practically could be, the result would be that only two-thirds of the laborers previously employed could be employed then at all, and the remaining third would certainly be worse off than before; and besides the Division of Labor being necessarily lessened, production would be less profitable to the employers, and the next wages-portion would certainly be less than the one before, and thus the outcome of the remedy would be worse than the disease. Now let alone the artificial interference of government, and all natural accessions to Capital at that point, all investment of profits in an enlarged business, all saving from expenditure for the sake of further production, tend strongly of their own accord to enlarge the wages-portion, and thus, the number and intelligence of the laborers continuing as before, are sure to raise the rate of wages. Or, if there be no accessions to Capital, or other influence swelling the wages-portion, and the number of laborers be diminished at that point, as by migration to new fields of effort or enlistment in armies, the competition of wages-givers for laborers will be quickened, and the rate of wages will rise. Reversed conditions will of course give reversed results.

2. A second popular remedy for low Wages, not only proposed, but also for a long time brought into practical action, is Labor-Unions in their various forms and with their manifold methods of operation upon employers. It is important to note here and to remember, that the Guilds of the mediæval times, from which the modern Trades-Unions have borrowed something of form and much of nomenclature, were in substance extremely different from their modern imitators. Those were combinations of Masters with their journeymen and apprentices and dependents in order to control the entire manufacture and sale of a certain class of products, from the name of which the Guild usually took its own name, as "Cloth-workers' guild," "Shoemakers' guild," and so on. Whittier, himself a shoemaker in his boyhood, apostrophizes the latter guild in words which more or less describe them all: —