The Canon of Human Welfare
We say "human" welfare rather than "social" welfare, in order to make clear the fact that this canon considers the well being of men not only as a social group, but also as individuals. It includes and summarises all that is ethically and socially feasible in the five canons already reviewed. It takes account of equality, inasmuch as it regards all men as persons, as subjects of rights; and of needs, inasmuch as it awards to all the necessary participants in the industrial system at least that amount of remuneration which will meet the elementary demands of decent living and self development. It is governed by efforts and sacrifices, at least in so far as they are reflected in productivity and scarcity; and by productivity and scarcity to whatever extent is necessary in order to produce the maximum net results. It would give to every producer sufficient remuneration to evoke his greatest net contribution to the productive process. Greatest "net" contribution; for a man's absolute maximum product may not always be worth the required price. For example: a man who for a salary of 2500 dollars turns out a product valued at 3000 dollars, should not be given 3000 dollars in order to induce him to bring forth a product worth 3300 dollars. In this case a salary of 2500 dollars evokes the maximum net product, and represents the reward which would be assigned by the canon of human welfare. Once the vital needs of the individual have been safeguarded, the supreme guide of the canon of human welfare is the principle of maximum net results, or the greatest product at the lowest cost.
It is not contended here that this canon ought never to undergo modification or exception. Owing to the exceptional hazards and sacrifices of their occupation, a combination of producers might be justified in exacting larger compensation than would be accorded them by the canon of human welfare on the basis of net results in the present conditions of supply and scarcity. Unusual needs and capacities might also justify a strong group in pursuing the same course. All that is asserted at present is that in conditions of average competition the canon of human welfare is not unjust. And this is all that is necessary as a preliminary to the discussion of just profits.[162]
CHAPTER XVII
JUST PROFITS IN CONDITIONS OF COMPETITION
We have seen that profits are that share of the product of industry which goes to the business man. They comprise that residual portion which he finds in his hands after he has made all expenditures and allowances for wages, salaries, interest at the prevailing rate on both his own and the borrowed capital, and all other proper charges. They constitute his compensation for his labour of direction, and for the risks of his enterprise and capital.
In the opinion of most Socialists, profits are immoral because they are an essential element of an unjust industrial system, and because they are not entirely based upon labour. Under Socialism the organising and directing functions that are now performed by the business man, would be allotted to salaried superintendents and managers. Their compensation would include no payment for the risks of capital, and it would be fixed instead of indeterminate. Hence it would differ considerably from present-day profits.
To the assertion that profits are immoral a sufficient reply at this time is that Socialism has already been shown to be impracticable and inequitable. Consequently the system of private industry is essentially just, and profits, being a necessary element of the system, are essentially legitimate. The question of their morality is one of degree not of kind. It will be considered under two principal heads: the right of the business man to obtain indefinitely large profits; and his right to a certain minimum of profits.