THE EXPENDITURE OF THE WORKING CLASSES[D].
By HENRY HIGGS.
[D] Address by the President to the Economic Science and Statistics Section at the Dover meeting of the British Association for the Advancement of Science.
The prime concern of the economist and of the statistician is the condition of the people. Other matters which engage their attention—particular problems, questions of history, discussions of method, developments of theory—all derive their ultimate importance from their bearing upon this central subject. The statistician measures the changing phenomena of the production, distribution and consumption of wealth, which to a large extent reflect and determine the material condition of the people. The economist analyzes the motives of these phenomena, and endeavors to trace the connection between cause and effect. He is unable to push his analysis far without a firm mastery of the theory of value, the perfecting of which has been the chief stride made by economic science in the nineteenth century. When we read the ‘Wealth of Nations’ we are forced to admit that in sheer sagacity Adam Smith is unsurpassed by any of his successors. It is only when we come to his imperfect and unconnected views upon value that we feel the power of increased knowledge. J. S. Mill supposed in 1848 that the last word had been said on the theory of value. In his third book he writes: “In a state of society in which the industrial system is entirely founded on purchase and sale ... the question of value is fundamental. Almost every speculation respecting the economical interests of a society thus constituted implies some theory of value; the smallest error on this subject infects with corresponding error all our other conclusions, and anything vague or misty in our conception of it creates confusion and uncertainty in everything else.” And he adds: “Happily, there is nothing in the laws of value which remains for the present or any future writer to clear up; the theory of the subject is complete.”
We know now that he was wrong. Thanks in the main to economists still alive, and especially to the mathematical economists, we have at length a theory of value so formally exact that, whatever may be added to it in the future, time can take nothing from it; while it is sufficiently flexible to lend itself as well to a régime of monopoly as to one of competition. Yet our confidence in this instrument of analysis is far from inspiring us with the assurance which has done so much to discredit economics by provoking its professors to dogmatize upon problems with the whole facts of which they were imperfectly acquainted. Given certain conditions of supply and certain conditions of demand, the economist should have no doubt as to the resulting determination of value; but he is more than ever alert to make sure that he has all the material factors of the case before him; that he understands the facts and their mutual relation before he ventures to pronounce an opinion upon any mixed question. He must have the facts before he can analyze them. A small array of syllogisms, which, as Bacon says, “master the assent and not the subject,” are not an adequate equipment for him. He sees more and more the need for careful and industrious investigation, and prominent among the subjects which await his trained observation are the condition of the people and the related subject of the consumption of wealth. Training is, indeed, indispensable. Every social question has its purely economic elements for the skilled economist to unravel, and when this part of his task has been achieved, he is at an advantage in approaching the other parts of it, while his habit of mind helps him to know what to look out for and what to expect.
It is a curious paradox that, busying ourselves as we do with the condition of the people, we are lamentably lacking in precision in our knowledge of the economic life and state of the British people in the present day. Political economy has, however, followed the lines of development of political power. At one time it was, as the Germans say, cameralistic—an affair of the council chamber, a question of the power and resources of the king. Taking a wider but still restricted view of society, it became capitalistic, identifying the economic interests of the community to a too great extent with those of the capitalist class. It has at length become frankly democratic, looking consciously and directly to the prosperity of the people at large.
Thus, then, we have at once a more accurate theory, a livelier sense of caution as to its limitations in practice, and the widest possible field of study. So far as most of us are concerned, we might as well spend our time in verifying the ready reckoner as in tracing and retracing the lines of pure theory. These tools are made for use. Economic science is likely to make the most satisfactory progress if we watch the social forces that surround us, detecting the operation of economic law in all its manifestations, and in observing, coördinating and recording the facts of economic life. It is not enough, to borrow the language of the biologist (part of which he himself borrowed from the old economist), to talk of the struggle for existence, the survival of the fittest and of evolution. We want, above all, his spirit and his method—the careful, minute, systematic observation of life as affected by environment, heredity and habit. Different problems are brought to the front by different circumstances and appeal to different minds; but at all times and to all economists the condition of the people is of chief interest, and the consumption of wealth is so closely connected with it that it might seem superfluous to plead for its study. Yet some such plea is necessary. The arts of production improve apace. The victories of science are rapidly utilized by manufacturers anxious to make a fortune. Even here the descriptive study of the subject is hampered by the trade secrets involved in many processes, and by a feeling that production may safely be left to the unresting intelligence of captains of industry, so that the onlooker is chiefly concerned in this branch of the subject with solicitude for the health and safety of the workmen employed. The departments of distribution and exchange appeal especially to the pride of intellect. The delicate theorems of value in all their branches—wages, rent, interest, profits, the problems of taxation, the alluring study of currency, the mechanism of banking and exchange—have attracted the greatest share of the economist’s attention. On the practical side of distribution the growth of trade unions, the spread of education, the improved standard of living, have increased the bargaining power of the working classes and combined with other causes to effect a gratifying improvement in the distribution of wealth, so that they receive a growing share of the growing national dividend. The practical and the speculative aspects alike of the consumption of wealth have received less consideration. Nobody sees his way to a fortune through the spread of more knowledge of domestic economy in workmen’s homes; and the scientific observer has curbed his curiosity before what might seem an inquisitorial investigation into the question, what becomes of wages? Economists long ago discovered the necessity of distinguishing between money wages and real wages. It is now necessary for us to distinguish between real wages and utilities—not to stop at the fact that so many shillings a week might procure such and such necessaries, comforts, or luxuries, but to ascertain how they are expended. From the first we can deduce what the economic condition of the people might be; from the second we shall know what it is. And when we know what it is we shall see more clearly what with more wisdom it might become. Wealth, after all, is a means to an end. It is not enough to maximize wealth; we must strive to maximize utilities. And we can no more judge of the condition of a people from its receipts alone, than we can judge of the financial condition of a nation from a mere statement of its revenues.
The condition of the people has, of course, improved, and is improving. Public hygiene has made great progress, and houses are better and more sanitary, though for this and other reasons rents have risen. Wages are higher. Commodities are cheaper. Coöperation and the better organization of retail business, giving no credit, have saved some of the profits of middlemen for the benefit of the consumer, while authority fights without ceasing against frauds in weights and measures, and adulteration. Free libraries, museums, picture galleries, parks, public gardens and promenades have multiplied, and it is almost sufficient to observe that no one seems to be too poor to command the use of a bicycle. But with all this progress it is to be feared that housekeeping is no better understood than it was two centuries ago—perhaps not even so well. In the interval it has become enormously simplified. The complete housewife is no longer a brewer, a baker, a dyer, a tailor and a host of other specialists rolled into one. But among the working classes the advent of the factory system has increased the employment of women and girls away from home to such an extent that many of them now marry with a minimum of domestic experience, and are with the best intentions the innocent agents of inefficiency and waste, even in this simplified household.
If we were suddenly swallowed up by the ocean, it appears probable that the foreign student would find it easier to describe from existing documents the life and home of the British craftsman in the middle ages than of his descendant of to-day. In part, no doubt, our fiscal system, with its few taxes upon articles of food and its light pressure on the working classes, is responsible for this neglect. During the Napoleonic war Pitt sent for Arthur Young to ask him what were the ordinary and necessary expenses of a workman’s family, and the question would again become one of practical politics if any large addition were required in the proceeds of indirect taxation. Taxation has the one advantage of providing us with statistics. We know tolerably well the facts in the mass about the consumption of tea and coffee, dried fruits and tobacco, and of alcohol, while the income tax (aided in the near future by returns of the death duties) may give us some idea of the stratification of the wealthier classes. But the details of consumption are still obscure. It has already been suggested that some restraint may arise from the sentiment that individuals are likely to resent what they may regard as a prying into their affairs. But when we travel abroad we are curious to notice, and do notice without giving offence, the dress, the habits and the food of peasants and workmen; and it is difficult to resist the conclusion that we are less observant at home because these common and trivial details appear to us unworthy of attention. In his ‘Principles of Economics’ Professor Marshall says: “Perhaps £100,000,000 annually are spent, even by the working classes, and £400,000,000 by the rest of the population of England, in ways that do little or nothing towards making life nobler or truly happier.” And, again, speaking before the Royal Statistical Society in 1893: “Something like the whole imperial revenue, say 100 millions a year, might be saved if a sufficient number of able women went about the country and induced the other women to manage their households as they did themselves.” These figures show, at any rate, the possibilities of greatness in the economic progress which may result from attention to the humblest details of domestic life.