Tools, materials, provisions—these, doubtless, Robinson will denominate his Capital; and he will readily discover that the more considerable his capital becomes, the greater command will he obtain over natural agents—that the more he makes such agents co-operate in his labour, the more will he augment his satisfactions in proportion to his efforts.
Let us now vary the hypothesis, and place ourselves in the midst of the social order. Capital is still composed of instruments of labour, materials, and provisions, without which no enterprise of any magnitude can be undertaken, either in a state of isolation, or in a social state. Those who are possessed of capital have been put in possession of it only by their labour, or by their privations; and they would not have undergone that labour (which has no connexion with present wants), they would not have imposed on themselves those privations, but with the view of obtaining ulterior advantages—with the view, for example, of procuring in larger measure the future co-operation of natural agents. On their part, to give away this capital would be to deprive themselves of the special advantage they have in view; it would be to transfer this advantage to others; it would be to render others a service. We cannot, then, without abandoning the most simple principles of reason and justice, fail to see that the owners of capital have a perfect right to refuse to make this transfer unless in exchange for another service, freely bargained for and voluntarily agreed to. No man in the world, I believe, will dispute [p199] the equity of the mutuality of services, for mutuality of services is, in other words, equity. Will it be said that the transaction cannot be free and voluntary, because the man who is in possession of capital is in a position to lay down the law to the man who has none? But how is a bargain to be made? In what way are we to discover the equivalence of services if it be not in the case of an exchange voluntarily effected on both sides? Do you not perceive, moreover, that the man who borrows capital, being free either to borrow it or not, will refuse to do so unless he sees it to be for his advantage, and that the loan cannot make his situation worse? The question he asks himself is evidently this: Will the employment of this capital afford me advantages which are more than sufficient to make up for the conditions which are demanded of me? Or this: Is the effort which I am now obliged to make, in order to obtain a given satisfaction, greater or less than the sum of the efforts which the loan will entail upon me—first of all, in rendering the services which are demanded of me by the lender, and afterwards in procuring the special satisfaction I have in view with the aid of the capital borrowed? If, taking all things into account, there be no advantage to be got, he will not borrow, he will remain as he is, and what injury is done him? He may be mistaken, you will say. Undoubtedly he may. One may be mistaken in all imaginable transactions. Are we then to abandon our liberty? If you go that length, tell us what we are to substitute for free will and free consent. Constraint? for if we give up liberty, what remains but constraint? No, you say—the judgment of a third party. Granted, on these conditions: First, that the decision of this third party, whatever name you give him, shall not be put in force by constraint. Secondly, that he be infallible, for to substitute one fallible man for another would be to no purpose; and the parties whose judgment I should least distrust in such a matter are the parties who are interested in the result. The third and last condition is, that this arbitrator shall not be paid for his services; for it would be a singular way of manifesting his sympathy for the borrower, first of all to take away from him his liberty, and then to lay on his shoulders an additional burden as the recompense of this philanthropical service. But let us leave the question of right, and return to Political Economy.
A Capital which is composed of materials, provisions, and instruments, presents two aspects—Utility and Value. I must have failed in my exposition of the theory of value, if the reader does not understand that the man who transfers capital is paid only for its value, that is to say, for the service rendered in [p200] creating that capital; in other words, for the pains taken by the cédant combined with the pains saved to the recipient. Capital consists of commodities or products. It assumes the name of capital only by reason of its ulterior destination. It is a great mistake to suppose that capital, as such, is a thing having an independent existence. A sack of corn is still a sack of corn, although one man sells it for revenue, and another buys it for capital. Exchange takes place on the invariable principle of value for value, service for service; and the portion of gratuitous utility which enters into the commodity is so much into the bargain. At the same time, the portion which is gratuitous has no value, and value is the only thing regarded in bargains. In this respect, transactions which have reference to capital are in no respect different from others.
This consideration opens up some admirable views with reference to the social order, but which I cannot do more than indicate here. Man, in a state of isolation, is possessed of capital only when he has brought together materials, provisions, and tools. The same thing does not hold true of man in the social state. It is enough for the latter to have rendered services, and to have thus the power of drawing upon society, by means of the mechanism of exchange, for equivalent services. I mean by the mechanism of exchange, money, bills, bank-notes, and even bankers themselves. Whoever has rendered a service, and has not yet received the corresponding satisfaction, is the bearer of a warrant, either possessed of value, as money, or fiduciary, like bank-notes, which warrant gives him the power of receiving back from society, when he will, where he will, and in what form he will, an equivalent service. This impairs neither in principle, nor in effect, nor in an equitable point of view, the great law which I seek to elucidate, that services are exchanged for services. It is still the embryo barter, which has been developed, enlarged, and rendered more complex, but without losing its identity.
The bearer of such a warrant as I have just described may then demand back from society, at pleasure, either an immediate satisfaction, or an object which, in another aspect, may be regarded as capital. The person who lends or transfers has nothing to do with that. He satisfies himself as to the equivalence of the services—that is all.
Again, he may transfer this warrant to another, to use it as he pleases, under the double condition of restitution, and of a service, at a fixed date. If we go to the bottom of the matter, we shall find that in this case the person who lends or transfers capital [p201] deprives himself, in favour of the cessionary or recipient, either of an immediate satisfaction, which he defers for some years, or of an instrument of labour which would have increased his power of production, procured him the co-operation of natural agents, and augmented, to his profit, the proportion of satisfactions to efforts. He strips himself of these advantages, in order to invest another with them. This is undoubtedly to render a service, and in equity this service is entitled to a return. Mere restitution at the year’s end cannot be considered as the remuneration of this special service. Observe that the transaction here is not a sale, where the delivery of the thing sold is immediate, and the return or remuneration is immediate also. What we have to do with here is delay. And this delay is in itself a special service, seeing that it imposes a sacrifice on the person who accords it, and confers an advantage on the person who asks for it. There must, then, be remuneration, or we must give up that supreme law of society, service for service. This remuneration is variously denominated, according to circumstances—hire, rent, yearly income—but its generic name is Interest.[51]
Every service then is, or may become, a Capital, an admirable phenomenon due to the mechanism of exchange. If workmen are to commence the construction of a railway ten years hence, we could not at the present moment store up in kind the corn which is to feed them, the stuff which is to clothe them, and the barrows and implements of which they will have need during that protracted operation. But we can save up and transmit to them the value of these things. For this purpose it is enough that we render present services to society, and obtain for these services the warrants, in money or credits of which I have spoken, which can be converted into corn or cloth ten years hence. It is not even necessary that we should leave these warrants dormant and unproductive in the interval. There are merchants, bankers, and others in society who, for the use of our services or their results, render us the service of imposing upon themselves these privations in our place.
And it is still more remarkable that we can effect an inverse operation, however impossible at first sight this may appear. We can convert into instruments of labour, into railways, into houses, a capital which as yet has no existence—thus making available at once services which will not be actually rendered till the twentieth century. There are bankers who are ready to make present advances on the faith that workmen and railway travellers of the [p202] third and fourth generation will provide for their payment, and these drafts upon the future are transmitted from hand to hand, without remaining for a moment unproductive. I confess I do not believe that the numerous inventors of artificial societies ever imagined anything at once so simple and so complex, so ingenious and so equitable, as this. They would at once abandon their insipid and stupid utopias if they but knew the fine harmonies of the social mechanism which has been instituted by God. It was a king of Aragon who bethought him what advice he should have given to Providence on the construction of the celestial mechanism, had he been called to the counsels of Omniscience. Newton never conceived so impious a thought.
We thus see that all transmissions of services from one point of time or of space to another repose upon this datum, that to accord delay is to render service; in other words, they repose on the legitimacy of Interest. The man who, in our days, has wished to suppress interest, does not see that he would bring back exchange to its embryo form,—barter, present barter,—without reference either to the future or the past. He does not see that, imagining himself the most advanced, he is in reality the most retrograde of men, since he would reconstruct society on its most primitive model. He desires, he says, mutuality of services. But he begins by taking away the character of services exactly from that kind of services which unite, tie together, and solidarize all places and all times. In spite of the practical audacity of his socialist aphorisms, he has paid an involuntary homage to the present order of things. He has but one reform, which is negative. It consists in suppressing in society the most powerful and marvellous part of its machinery.
I have explained in another place the legitimacy and perpetuity of Interest. I shall content myself at present with reminding the reader—