Chapter XVII. General Principles Of Fair Distribution.
Wealth distributed, not welfare.—In considering the principles of fair distribution among all the parties contributing to production of wealth, it is necessary to remember that wealth and not welfare is the subject of thought. A child may have equal right to welfare with his father, but cannot in any sense have equal ownership of wealth. The welfare of a complete imbecile may be the care of the state, but he can in no sense control wealth. Distribution of wealth cannot, therefore, include the subjects of charity, but must be confined to a study of the natural relations between individual owners of wealth or individual contributors to production, which make control of a portion of accumulated wealth essential to individual welfare.
A pound of tea may include in its value the efforts of a hundred different persons. What are the principles upon which those hundred people may be fairly compensated by the actual consumer of the pound of tea? This [pg 234] illustrates the complexity of the whole subject of distribution. No drinker of tea would dare to settle the question of fair distribution arbitrarily. No one would even offer a theory by which a perfect settlement could be reached. Yet when the pound of tea is put upon the pantry shelf, the fifty cents paid for it has already been divided into a hundred unequal portions adjusted by some method of custom to meet the ideas of every helper in the long list. Each has had some portion of the wealth produced, though the distribution may have taken place in different countries, under different laws and customs, through a period of months or years. This distribution involves the whole question of industrial freedom, and rests finally upon the principle of equity as applied to ownership of one's powers and the product of those powers. It also involves, to a certain extent, the decision of what is properly wealth and what is properly a part of universal welfare.
The important questions connected with the subject will not be satisfactorily settled until a reasonable adjustment of all claims is reached by the masses engaged in production. The modern discussions of the interests of laborers are proof that the world is thinking more and more of individual rights in property, and no sweeping assertions as to inequity of property rights help to solve the questions. It is because each individual has a distinct equity in what is produced in part by his efforts that there is need of better adjustment. All reforms, therefore, must be along the line of fair distribution, or fail of their end.
Distribution by exchange.—Ordinary observation [pg 235] shows that distribution is made chiefly in the customary method of exchange. A pound of butter may find its way from the farmer's dairy to the actual consumer in a distant country. In its final value, the consumer compensates the retail dealer for his services in handling it and for advance payments, including every other handler and every other service, down to the boy who drove the cows to pasture. If the system of universal exchanges is free and fair, each has received his fair compensation. In general, then, distribution of wealth is made automatically in the ordinary processes of production, exchange itself being one of the steps by which value to the consumer becomes value also to the producer.
Fair exchange above laws.—Under perfect freedom of exchange, the general law of supply and demand already illustrated is more effective than any laws can be in adjusting wages or profit to efforts in production, and in adjusting interest or rent or both to the capital employed or to other means of production controlled. Any customs or laws which interfere with natural conditions of supply and demand hinder rather than help toward a fair adjustment. In any progressive community such laws will surely fail, for the reason that in making such laws human nature is in conflict with itself. The history of increasing individual welfare in any part of the world gives a story of more ready and free competition in open market for all commodities and all services. In perceiving this we must not overlook the fact that fraud and ignorance, as well as arbitrary power, stand opposed to fair exchanges. Nor must we [pg 236] be satisfied with any condition which involves meeting restrictions with restrictions or force with force. Such conditions must be but temporary.
Actual and nominal compensation.—In considering compensation for any services, it is necessary to distinguish carefully between the actual compensation in welfare and the nominal compensation in money. A farmer in Nebraska may get a larger return for his labor with corn at 15 cents a bushel than he could in Massachusetts with corn at 40 cents a bushel. Just so a wage-earner, receiving $1.50 a day in Ohio, might lose in welfare by exchanging work with his neighbor in New Mexico, who gets $2.50 a day. This means that $1.50 in Ohio may buy more comfort than $2.50 can buy in New Mexico. This is very important in comparing the wages of different classes of workmen in the same country, as well as the wages of similar workmen in different countries. It has an important bearing, too, upon relative profits and interest. The actual compensation in welfare is the natural basis for adjustment in all distribution, and the law of supply and demand rests directly upon this.
Wages, profits, interest and rent take the product.—It is common to consider distribution as made in the forms of wages for labor given without risk as to the product, profits to the one whose labor is associated with risk of loss as well as gain, interest to the one who furnishes capital in any form and waits for his compensation, and rent to the landlord, or owner of estate, whose property is used for a definite time and returned. It is evident that any advantage received in any of these [pg 237] ways, at any time, must come from the actual available goods in store suitable for division and consumption. The farmer cannot pay his hired hand with his farm, though he may be able to do so with his products. The farmer himself cannot realize his profits until he has the proceeds of his work in the shape of consumable goods. So, at any particular time, the total of products fit for consumption makes the source from which all distribution must come. Debts and credits can have no consideration in the total, for the reason that they exactly offset each other. A general conflict of interested persons as to wages, profits, interest or rent comes from the difficulty of sharing in the actual goods at hand. The relation of each to the whole depends upon circumstances to be discussed in future chapters. It is certain that the larger proportion of daily production goes to the mass of the people who consume their share from day to day. It is estimated that fully 80 per cent of such wealth is used up by those who contribute no use of capital to the productive force. It seems probable also that this ratio is increasing rather than diminishing, but no statistics are sufficient to show the exact facts.
Cheap standards of living.—In the natural competition of laborers with each other, the general standard of living—physical, intellectual and moral—have an important bearing. The Chinaman in this country competes with the American upon a wholly different plane of living. His habitual needs being less, he is willing to work for wages that will not tempt the native American. If he can do the same work, living as he [pg 238] does, he necessarily becomes a cheaper force in production, and the American must find a better field for his energies or go without employment. Under ordinary circumstances, the introduction of laborers able to live more cheaply acts upon the better class of laborers exactly like the introduction of labor-saving machinery. It first brings hardship from direct competition, but the cheapening of products brings enlarged demands and so gives new impetus to production, requiring the very skill which the better class of laborers alone can furnish.
Thus the employment of Chinamen upon railroad embankments made places for native laborers as section bosses and engineers. The Huns and Italians that underbid the Irish miners in Pennsylvania have destroyed the “Molly McGuires” by making the same men responsible for larger enterprises. Yet the standards of living, which show a constant improvement, indicate a truer freedom of competition and a clearer recognition of individual wants and abilities. No one can watch the development of any country without realizing that its thrift, enterprise and progressive welfare depend largely upon increasing wants. Men who live best produce most and enjoy most.