These illustrations may suffice to give some concreteness to the conception of economic justice as the maintenance of social function. They serve also to show that the true resources of the State are larger and more varied than is generally supposed. The true function of taxation is to secure to society the element in wealth that is of social origin, or, more broadly, all that does not owe its origin to the efforts of living individuals. When taxation, based on these principles, is utilized to secure healthy conditions of existence to the mass of the people it is clear that this is no case of robbing Peter to pay Paul. Peter is not robbed. Apart from the tax it is he who would be robbing the State. A tax which enables the State to secure a certain share of social value is not something deducted from that which the taxpayer has an unlimited right to call his own, but rather a repayment of something which was all along due to society.
But why should the proceeds of the tax go to the poor in particular? Granting that Peter is not robbed, why should Paul be paid? Why should not the proceeds be expended on something of common concern to Peter and Paul alike, for Peter is equally a member of the community? Undoubtedly the only just method of dealing with the common funds is to expend them in objects which subserve the common good, and there are many directions in which public expenditure does in fact benefit all classes alike. This, it is worth noting, is true even of some important branches of expenditure which in their direct aim concern the poorer classes. Consider, for example, the value of public sanitation, not merely to the poorer regions which would suffer first if it were withheld, but to the richer as well who, seclude themselves as they may, cannot escape infection. In the old days judge and jury, as well as prisoners, would die of gaol fever. Consider, again, the economic value of education, not only to the worker, but to the employer whom he will serve. But when all this is allowed for it must be admitted that we have throughout contemplated a considerable measure of public expenditure in the elimination of poverty. The prime justification of this expenditure is that the prevention of suffering from the actual lack of adequate physical comforts is an essential element in the common good, an object in which all are bound to concern themselves, which all have the right to demand and the duty to fulfil. Any common life based on the avoidable suffering even of one of those who partake in it is a life not of harmony, but of discord.
But we can go further. We said at the outset that the function of society was to secure to all normal adult members the means of earning by useful work the material necessaries of a healthy and efficient life. We can see now that this is one case and, properly understood, the largest and most far reaching case falling under the general principle of economic justice. This principle lays down that every social function must receive the reward that is sufficient to stimulate and maintain it through the life of the individual. Now, how much this reward may be in any case it is probably impossible to determine otherwise than by specific experiment. But if we grant, in accordance with the idea with which we have been working all along, that it is demanded of all sane adult men and women that they should live as civilized beings, as industrious workers, as good parents, as orderly and efficient citizens, it is, on the other side, the function of the economic organization of society to secure them the material means of living such a life, and the immediate duty of society is to mark the points at which such means fail and to make good the deficiency. Thus the conditions of social efficiency mark the minimum of industrial remuneration, and if they are not secured without the deliberate action of the State they must be secured by means of the deliberate action of the State. If it is the business of good economic organization to secure the equation between function and maintenance, the first and greatest application of this principle is to the primary needs. These fix the minimum standard of remuneration beyond which we require detailed experiment to tell us at what rate increased value of service rendered necessitates corresponding increase of reward.
It may be objected that such a standard is unattainable. There are those, it may be contended, who are not, and never will be, worth a full efficiency wage. Whatever is done to secure them such a remuneration will only involve net loss. Hence it violates our standard of economic justice. It involves payment for a function of more than it is actually worth, and the discrepancy might be so great as to cripple society. It must, of course, be admitted that the population contains a certain percentage of the physically incapable, the mentally defective, and the morally uncontrolled. The treatment of these classes, all must agree, is and must be based on other principles than those of economics. One class requires punitive discipline, another needs life-long care, a third—the mentally and morally sound but physically defective—must depend, to its misfortune, on private and public charity. There is no question here of payment for a function, but of ministering to human suffering. It is, of course, desirable on economic as well as on broader grounds that the ministration should be so conceived as to render its object as nearly as possible independent and self-supporting. But in the main all that is done for these classes of the population is, and must be, a charge on the surplus. The real question that may be raised by a critic is whether the considerable proportion of the working class whose earnings actually fall short, as we should contend, of the minimum, could in point of fact earn that minimum. Their actual value, he may urge, is measured by the wage which they do in fact command in the competitive market, and if their wage falls short of the standard society may make good the deficiency if it will and can, but must not shut its eyes to the fact that in doing so it is performing, not an act of economic justice, but of charity. To this the reply is that the price which naked labour without property can command in bargaining with employers who possess property is no measure at all of the addition which such labour can actually make to wealth. The bargain is unequal, and low remuneration is itself a cause of low efficiency which in turn tends to react unfavourably on remuneration. Conversely, a general improvement in the conditions of life reacts favourably on the productivity of labour. Real wages have risen considerably in the last half century, but the income-tax returns indicate that the wealth of the business and professional man has increased even more rapidly. Up to the efficiency minimum there is, then, every reason to think that a general increase of wages would positively increase the available surplus whether that surplus goes to individuals as profits or to the State as national revenue. The material improvement of working-class conditions will more than pay its way regarded purely as an economic investment on behalf of society.
This conclusion is strengthened if we consider narrowly what elements of cost the "living wage" ought in principle to cover. We are apt to assume uncritically that the wages earned by the labour of an adult man ought to suffice for the maintenance of an average family, providing for all risks. It ought, we think, to cover not only the food and clothing of wife and children, but the risks of sickness, accident, and unemployment. It ought to provide for education and lay by for old age. If it fails we are apt to think that the wage earner is not self supporting. Now, it is certainly open to doubt whether the actual addition to wealth made by an unskilled labourer denuded of all inherited property would equal the cost represented by the sum of these items. But here our further principle comes into play. He ought not to be denuded of all inherited property. As a citizen he should have a certain share in the social inheritance. This share should be his support in the times of misfortune, of sickness, and of worklessness, whether due to economic disorganization or to invalidity and old age. His children's share, again, is the State-provided education. These shares are charges on the social surplus. It does not, if fiscal arrangements are what they should be, infringe upon the income of other individuals, and the man who without further aid than the universally available share in the social inheritance which is to fall to him as a citizen pays his way through life is to be justly regarded as self-supporting.
The central point of Liberal economics, then, is the equation of social service and reward. This is the principle that every function of social value requires such remuneration as serves to stimulate and maintain its effective performance; that every one who performs such a function has the right, in the strict ethical sense of that term, to such remuneration and to no more; that the residue of existing wealth should be at the disposal of the community for social purposes. Further, it is the right, in the same sense, of every person capable of performing some useful social function that he should have the opportunity of so doing, and it is his right that the remuneration that he receives for it should be his property, i. e. that it should stand at his free disposal enabling him to direct his personal concerns according to his own preferences. These are rights in the sense that they are conditions of the welfare of its members which a well-ordered State will seek by every means to fulfil. But it is not suggested that the way of such fulfilment is plain, or that it could be achieved at a stroke by a revolutionary change in the tenure of property or the system of industry. It is, indeed, implied that the State is vested with a certain overlordship over property in general and a supervisory power over industry in general, and this principle of economic sovereignty may be set side by side with that of economic justice as a no less fundamental conception of economic Liberalism. For here, as elsewhere, liberty implies control. But the manner in which the State is to exercise its controlling power is to be learnt by experience and even in large measure by cautious experiment. We have sought to determine the principle which should guide its action, the ends at which it is to aim. The systematic study of the means lies rather within the province of economics; and the teaching of history seems to be that progress is more continuous and secure when men are content to deal with problems piecemeal than when they seek to destroy root and branch in order to erect a complete system which has captured the imagination.
It is evident that these conceptions embody many of the ideas that go to make up the framework of Socialist teaching, though they also emphasize elements of individual right and personal independence, of which Socialism at times appears oblivious. The distinction that I would claim for economic Liberalism is that it seeks to do justice to the social and individual factors in industry alike, as opposed to an abstract Socialism which emphasizes the one side and an abstract Individualism which leans its whole weight on the other. By keeping to the conception of harmony as our clue we constantly define the rights of the individual in terms of the common good, and think of the common good in terms of the welfare of all the individuals who constitute a society. Thus in economics we avoid the confusion of liberty with competition, and see no virtue in the right of a man to get the better of others. At the same time we are not led to minimize the share of personal initiative, talent, or energy in production, but are free to contend for their claim to adequate recognition. A Socialist who is convinced of the logical coherence and practical applicability of his system may dismiss such endeavours to harmonize divergent claims as a half-hearted and illogical series of compromises. It is equally possible that a Socialist who conceives Socialism as consisting in essence in the co-operative organization of industry by consumers, and is convinced that the full solution of industrial problems lies in that direction, should in proportion as he considers the psychological factors in production and investigates the means of realizing his ideal, find himself working back along the path to a point where he will meet the men who are grappling with the problems of the day on the principles here suggested, and will find himself able to move forward in practice in the front ranks of economic Liberalism. If this is so, the growing co-operation of political Liberalism and Labour, which in the last few years has replaced the antagonism of the 'nineties, is no mere accident of temporary political convenience, but has its roots deep in the necessities of Democracy.
FOOTNOTE:
[12] It is true that so long as it remains possible for a certain order of ability to earn £50,000 a year, the community will not obtain its services for £5,000. But if things should be so altered by taxation and economic reorganization that £5,000 became in practice the highest limit attainable, and remained attainable even for the ablest only by effort, there is no reason to doubt that that effort would be forthcoming. It is not the absolute amount of remuneration, but the increment of remuneration in proportion to the output of industrial or commercial capacity, which serves as the needed stimulus to energy.