Fabian Essays in Socialism

by Unknown

Let us, in the manner of the Political Economist, trace the effects of settling a country by private property with undisturbed law and order. Figure to yourself the vast green plain of a country virgin to the spade, awaiting the advent of man. Imagine then the arrival of the first colonist, the original Adam, developed by centuries of civilization into an Adam Smith, prospecting for an suitable patch of Private Property. Adam is, as Political Economy fundamentally assumes him to be, “on the make”; therefore he drives his spade into, and sets up his stockade around, the most fertile and favorably situated patch he can find. When he has tilled it, Political Economy inspired to prophesy by the spectacle, metaphorically exhibits Adam’s little patch of cultivation as a pool that will yet rise and submerge the whole land. Let us not forget this trope: it is the key to the ever-recurring phrase, “margin of cultivation,” in which, as may now be perceived, there lurks a little unsuspected poetry. And truly the pool soon spreads. Other Adams come, all on the make, and therefore all sure to pre-empt patches as near as may be to that of the first Adam’s, partly because he has chosen the best situation, partly for the pleasure of his society and conversation, and partly because where two men are assembled together there is a two-man power that is far more than double one-man power, being indeed in some instances a quite new force, totally destructive of the idiotic general hypothesis that society is no more than the sum of the units which compose it. These Adams, too, bring their Cains and Abels, who do not murder one another, but merely pre-empt adjacent patches. And so the pool rises, and the margin spreads more and more remote from the centre, until the pool becomes a lake, and the lake an inland sea.

Rent.

But in the course of this inundation the caprices of Nature begin to operate. That specially fertile region upon which Adam pitched is sooner or later all pre-empted; and there is nothing for the new-comer to pre-empt save soil of the second quality. Again, division of labor sets in among Adam’s neighbors; and with it, of course, comes the establishment of a market for the exchange of the products of their divided labor. Now it is not well to be far afield from that market, because distance from it involves extra cost for roads, beasts of burden, time consumed in travelling thither and back again. All this will be saved to Adam at the centre of cultivation, and incurred by the new-comer at the margin of cultivation. Let us estimate the annual value of Adam’s produce at £1,000, and the annual produce of the new-comer’s land on the margin of cultivation at £500, assuming that Adam and the new-comer are equally industrious. Here is a clear advantage of £500 a year to the first comer. This £500 is economic rent. It matters not at all that it is merely a difference of income, and not an overt payment from a tenant to a landlord. The two men labor equally; and yet one gets £500 a year more than the other through the superior fertility of his land and convenience of its situation. The excess due to that fertility is rent; and before long we shall find it recognized as such and paid in the fashion with which we are familiar. For why should not Adam let his patch to the new-comer at a rent of £500 a year? Since the produce will be £1,000, the new-comer will have £500 left for himself, or as much as he could obtain by cultivating a patch of his own at the margin; and it is pleasanter, besides, to be in the centre of society than on the outskirts of it. The new-comer will himself propose the arrangement; and Adam may retire as an idle landlord with a perpetual pension of £500 rent. The excess of fertility in Adam’s land is thenceforth recognized as rent and paid, as it is to-day, regularly by a worker to a drone. A few samples of the way in which this simple and intelligible transaction is stated by our economists may now, I hope, be quoted without any danger of their proving so difficult as they appear in the text-books from which I have copied them.

Stuart Mill[2] says that “the rent of land consists of the excess of its return above the return to the worst land in cultivation.” Fawcett[3] says that “the rent of land represents the pecuniary value of the advantages which such land possesses over the worst land in cultivation.” Professor Marshall[4] says that “the rent of a piece of land is the excess of its produce over the produce of an adjacent piece of land which would not be cultivated at all if rent were paid for it.” Professor Sidgwick[5] cautiously puts it that “the normal rent per acre of any piece” [of land] “is the surplus of the value of its produce over the value of the net produce per acre of the least advantageous land that it is profitable to cultivate.” General Walker[6] declares that “specifically, the rent of any piece of land is determined by the difference between its annual yield and that of the least productive land actually cultivated for the supply of the same market, it being assumed that the quality of the land as a productive agent is, in neither case, impaired or improved by such cultivation.” All these definitions are offered by the authors as elaborations of that given by their master Ricardo,[7] who says, “Rent is that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil.”

The County Family.

Let us return to our ideal country. Adam is retiring from productive industry on £500 a year; and his neighbors are hastening to imitate him as fresh tenants present themselves. The first result is the beginning of a tradition that the oldest families in the country enjoy a superior position to the rest, and that the main advantage of their superior position is that they enjoy incomes without working. Nevertheless, since they still depend on their tenants’ labor for their subsistence, they continue to pay Labor, with a capital L, a certain meed of mouth honor; and the resultant association of prosperity with idleness, and praise with industry, practically destroys morality by setting up that incompatibility between conduct and principle which is the secret of the ingrained cynicism of our own time, and which produces the curious Ricardian phenomenon of the man of business who goes on Sunday to the church with the regularity of the village blacksmith, there to renounce and abjure before his God the line of conduct which he intends to pursue with all his might during the following week.

According to our hypothesis, the inland sea of cultivation has now spread into the wilderness so far that at its margin the return to a man’s labor for a year is only £500. But as there is always a flood-tide in that sea, caused by the incessant increase of population, the margin will not stop there; it will at last encroach upon every acre of cultivable land, rising to the snow line on the mountains and falling to the coast of the actual salt water sea, but always reaching the barrenest places last of all, because the cultivators are still, as ever, on the make, and will not break bad land when better is to be had. But suppose that now, at last, the uttermost belt of free land is reached, and that upon it the yield to a man’s year’s labor is only £100. Clearly now the rent of Adam’s primeval patch has risen to £900, since that is the excess of its produce over what is by this time all that is to be had rent free. But Adam has yielded up his land for £500 a year to a tenant. It is this tenant accordingly who now lets Adam’s patch for £900 a year to the new-comer, who of course loses nothing by the bargain, since it leaves him the £100 a year with which he must be content anyhow. Accordingly he labors on Adam’s land; raises £1,000 a year from it; keeps £100 and pays £900 to Adam’s tenant, who pays £500 to Adam, keeping £400 for himself, and thus also becoming an idle gentleman, though with a somewhat smaller income than the man of older family. It has, in fact, come to this, that the private property in Adam’s land is divided between three men, the first doing none of the work and getting half the produce; the second doing none of the work and getting two-fifths of the produce; and the third doing all the work and getting only one-tenth of the produce. Incidentally also, the moralist who is sure to have been prating somewhere about private property leading to the encouragement of industry, the establishment of a healthy incentive, and the distribution of wealth according to exertion, is exposed as a futile purblind person, starting a priori from blank ignorance, and proceeding deductively to mere contradiction and patent folly.

All this, however, is a mere trifle compared to the sequel. When the inland sea has risen to its confines—when there is nothing but a strip of sand round the coast between the furrow and the wave—when the very waves themselves are cultivated by fisherfolk—when the pastures and timber forests have touched the snow line—when, in short, the land is all private property, yet every man is a proprietor, though it may be only of a tenant right. He enjoys fixity of tenure at what is called a fair rent; that is, he fares as well as he could on land wholly his own. All the rent is economic rent; the landlord cannot raise it nor the tenant lower it; it is fixed naturally by the difference between the fertility of the land for which it is paid and that of the worst land in the country. Compared with the world as we know it, such a state of things is freedom and happiness.

The Proletariat.

But at this point there appears in the land a man in a strange plight—one who wanders from snow line to sea coast in search of land, and finds none that is not the property of some one else. Private property had forgotten this man. On the roads he is a vagrant; off them he is a trespasser; he is the first disinherited son of Adam, the first proletarian, one in whose seed all the generations of the earth shall yet be blest, but who is himself for the present foodless, homeless, shiftless, superfluous, and everything that turns a man into a tramp or a thrall. Yet he is still a man with brain and muscle, able to devise and execute, able to deal puissantly with land if he only could get access to it. But how to get that access! Necessity is the mother of Invention. It may be that this second Adam, the first father of the great proletariat, has one of those scarce brains which are not the least of Nature’s capricious gifts. If the fertile field yields rent, why not the fertile brain? Here is the first Adam’s patch still yielding its £1,000 a year to the labor of the tenant who, as we have seen, has to pay £900 away in rent. How if the proletarian were boldly to bid £1,000 a year to that man for the property? Apparently the result would be the starvation of the proletarian, since he would have to part with all the produce. But what if the proletarian can contrive—invent—anticipate a new want—turn the land to some hitherto undreamt-of use—wrest £1,500 a year from the soil and site that only yielded £1,000 before? If he can do this, he can pay the full £1,000 rent, and have an income of £500 left for himself. This is his profit—the rent of his ability—the excess of its produce over that of ordinary stupidity. Here then is the opportunity of the cunning proletarian, the hero of that modern Plutarch, Mr. Samuel Smiles. Truly, as Napoleon said, the career is open to the talented. But alas! the social question is no more a question of the fate of the talented than of the idiotic. In due replenishment of the earth there comes another proletarian who is no cleverer than other men, and can do as much, but not more than they. For him there is no rent of ability. How then is he to get a tenant right? Let us see. It is certain that by this time not only will the new devices of the renter of ability have been copied by people incapable of inventing them; but division of labor, the use of tools and money, and the economies of civilization will have greatly increased man’s power of extracting wealth from Nature. All this increase will be so much gain to the holder of a tenant right, since his rent is a fixed payment out of the produce of his holding, and the balance is his own. Therefore an addition to the produce not foreseen by the landlord enriches the tenant. So that it may well be that the produce of land on the margin of cultivation, which, as we have seen, fixes the produce left to the cultivators throughout the whole area, may rise considerably. Suppose the yield to have doubled; then our old friends who paid £900 rent, and kept £100 for themselves, have now, though they still pay £900 rent, £1,100 for themselves, the total produce having risen to £2,000. Now here is an opportunity for our proletarian who is not clever. He can very well offer to cultivate the land subject to a payment of, for instance, £1,600 a year, leaving himself £400 a year. This will enable the last holder of the tenant right to retire as an idle gentleman receiving a net income of £700 a year, and a gross income of £1,600, out of which he pays £900 a year rent to a landlord who again pays to the head landlord £500. But it is to be marked that this £700 a year net is not economic rent. It is not the difference between the best and the worst land. It has nothing to do with the margin of cultivation. It is a payment for the privilege of using land at all—for access to that which is now a close monopoly; and its amount is regulated, not by what the purchaser could do for himself on land of his own at the margin, but simply by the landholder’s eagerness to be idle on the one hand, and the proletarian’s need of subsistence on the other. In current economic terms the price is regulated by supply and demand. As the demand for land intensifies by the advent of fresh proletarians, the price goes up; and the bargains are made more stringent. Tenant rights, instead of being granted in perpetuity, and so securing for ever to the tenant the increase due to unforeseen improvements in production, are granted on leases for finite terms, at the expiration of which the landlord can revise the terms or eject the tenant. The payments rise until the original head rents and quit rents appear insignificant in comparison with the incomes reaped by the intermediate tenant right holders or middlemen. Sooner or later the price of tenant right will rise so high that the actual cultivator will get no more of the produce than suffices him for subsistence. At that point there is an end of sub-letting tenant rights. The land’s absorption of the proletarians as tenants paying more than the economic rent stops.