Not only, then, are the minute details of Labor specialization merged in Productive wholes and delivered in their completeness to ultimate consumers by means of Trade, as we learned in the next preceding Lesson, but, also by means of Trade, the two great divisions of Wealth (Wages and Rent) are assigned respectively to Labor interests and to Land interests in proportions determined by comparisons of Value.
Individual deliveries, in contrast with Distribution into the two basic categories, Wages and Rent, consist in the delivery of Wealth to individuals in proportion to the effective demands of each. Their demands are limitless, for when satisfied with quantity they naturally demand quality. But there is a limit to all effective demands. The limitation on the one hand is the producer’s ability to produce, and on the other the consumer’s ability to obtain in Trade. Ability to produce depends in high degree at any time upon the general productive knowledge of the time. Ability to obtain depends upon the Economic power in Trade of the individual seeking to gratify his wants. If he is isolated from all the rest of mankind, he is outside the Economic circle and can obtain only what he himself directly produces. If he is one of an absolutely free community, he can obtain what others are willing to give him in Trade for the service he renders directly or indirectly to them. If Production be arbitrarily obstructed, whether by impediments to Natural Resources or to Trade, his ability to obtain Wealth is not so much according to what he produces or to the service of any other kind that he renders, but according to his command over the sources of Production and the channels of Trade whereby he may levy tribute or escape it.
As human services naturally tend to exchange at par for equally desirable human services, so do different forms of Wealth, each product of human service, tend to exchange at par for equally desirable forms of Wealth; and as Wealth in the Rent category and Wealth in the Wages category are alike service-products of Labor applied to Land, exchanges of every kind of Wealth tend to be effected on the basis of equality in the expenditure of Labor for their Production.
Let it now be carefully observed and faithfully remembered in this connection, that however various the kind and the amount of Wealth that individuals receive, each variety is but a subdivision of Wealth as a whole, and is therefore either Wages or Rent, those being the two primary divisions of Wealth in Distribution. A “captain of industry” may get a large share of Wealth for his service while a skilled laborer gets a small share for his; but each will take his share from Wages, not from Rent. On the other hand, the owner of a rich mining opportunity may get a large share of Wealth and the owner of a small area of farming land or a village building-lot may get a small share; but each will in that respect get Rent, not Wages. To the extent, however, that the “captain of industry” derives any part of his income from Natural-Resource privileges, that part is Rent; and to the extent that the mine owner or the farm owner or the village lot owner derives any part of his from his service, that part is Wages.
Thus the factor in Production technically termed Land is represented in Distribution by the Wealth element technically termed Rent; whereas the factor in Production technically termed Labor is represented in Distribution by the Wealth element technically termed Wages.
IV. Money
All allocations of Wealth, from the two primary ones—Wages and Rent—to the least of all that are secondary to either of those two, are made through Trade, and in the course of Trade are measured by comparisons of Value, which is the universal regulator of Trade. And as in Production so in Distribution, for Value measurements Money is the more or less stable yardstick and Money terms the spokesmen.
Would we know the Value of Wealth in any of its distributive allotments, we must look for it in terms of Money. Would we know the Value of any of the various kinds and degrees of Labor that have produced it, Money terms offer us the only language we can use or understand. Would we know the Value of any of the various kinds and degrees of Land from which and upon which such Wealth has been produced by Labor—whether identified by the term Rent as in Economics or by such colloquial or business terms as “groundrent,” or “selling price,”—Money is our sole interpreter, defective though it be. Would we place any or all of this information on record, we must do so in terms of Money.
What, then, is Money—this prestidigitateur of both Production and Distribution? Is it coin? Is it a promise to pay? Is it a fiat of Value? Is it a magic signal?
Before considering whether or not it is coin, let us think of how slightly coin is used in Trade. Before suggesting promises to pay, let us reflect upon the variability and questionability of promises. Before falling back upon “fiat,” let us know somewhat of the wisdom and responsibility behind the “fiat.”