Labour and the Popular Welfare

by W. H. Mallock

I have spoken thus far as though in creating Capital a man’s motive were the hope of enjoying the interest of it himself. ◆¹ But there is another motive almost equally powerful—in some cases more powerful—and that is the hope of transferring or transmitting it to his family or to his children. ◆² Now four-fifths of the Capital of the United Kingdom has been created within the last eighty years. The total Capital in 1812 amounted to about two thousand millions; now it amounts to almost ten thousand millions. Therefore eight thousand millions of the Capital of this country has been created by the Ability of the parents and of the grandparents of those who now possess it, supplemented by the Ability of many who now possess it themselves. The most rapid increase in it took place between 1840 and 1875. ◆³ If we regard men of fifty as representing the present generation of those actively engaged in business, we may say that their grandfathers made two thousand millions of our existing Capital, their parents four thousand millions, and themselves two thousand millions. It will thus be easily realised how those persons who own Capital which they leave others to employ, and which personally they have had no hand in making, are for the most part relatives or representatives of the very persons who made it, and who made it actuated by the hope that their relations or representatives should succeed to it. ◆⁴ All history shows us that one of the most important and unalterable factors in human action is a certain solidarity of interest between men—even selfish men—and those nearly connected with them; and just as parents are, by an almost universal instinct, prompted to rear their children, so are they prompted to bequeath to them—or, at all events, to one of them—the greater part of their possessions. We might as well try to legislate against the instincts of maternity, as against the instinct of bequest. Therefore, that the ownership of much of the Capital of the country should be separated from the actual employment of it, is a necessary result of the forces by which it was called into existence; and in proportion as such a result was made impossible in the future, the continued operation of these forces would be checked.

◆1 Further, it is impossible to prevent interest being both offered and taken for the use of Capital.

◆¹ But interest depends also on a reason that is yet stronger and more simple than these. The owner of Capital receives interest for the use of it, because it is, in the very nature of things, impossible to prevent its being offered him, and impossible to prevent his taking it. If a man who possesses one hundred thousand pounds, by using it as Capital makes ten thousand pounds a year, and could, if he had the use of another one hundred thousand pounds, add another ten thousand pounds to his income, no Government could prevent his making a bargain with a man who happened to possess the sum required, by which the latter, in return for lending him that sum, would obtain a part of the income which the use of it would enable him to produce.

The most practical aspect of the matter, however, yet remains to be considered. I have spoken of interest as of a thing with whose nature we are all familiar. But let us pause and ask, What is it? It is merely a part of the product which active Ability is enabled to produce by means of its tool, Capital. It is the part given by the man who uses the tool to the man who owns it. But the tool, or Capital, is, as we have seen already, itself the product of the Ability of some man in the past; so that the payment of interest, whether theoretically just or no, is a question which concerns theoretically two parties only: the possessor of living Ability, and the possessor of the results of past Ability. Thus, whatever view we may happen to take about it, Labour, in so far as theoretical justice goes, has no concern in the matter, one way or the other. For if interest is robbery, it is Ability that is robbed, not Labour.

◆1 And whether interest be just or no, it at all events represents no injustice to Labour.

◆2 For it will modify, though not extinguish, their desire to appropriate a part of what is paid as interest.

◆¹ It is important to take notice of this truth; for a knowledge of what is theoretically just, though it can never control classes so far as to prevent their seizing on whatever they can obtain and keep, exercises none the less a very strong influence on their views as to how much of the wealth of other classes is obtainable, and also on the temper in which, and the entire procedure by which, they will endeavour to obtain it. ◆² For this reason it is impossible to insist too strongly on the fact that, as a matter of theoretical justice, Labour, as such, has no claim whatever on any of the interest paid for the use of Capital; and that if it succeeds in obtaining any part of this interest, it will be obtaining what has been made by others, not what has been made by itself. It is not that such arguments as these will extinguish the desire of Labour to increase its own wages at the expense of interest, if possible; for might—the might that can sustain itself, not the brute force of the moment—will always form in the long run the practical rule of right; but they will disseminate a dispassionate view of what the limits of possibility are, and on what these limits depend.

◆1 History shows us that they have been doing this already,

◆¹ And now let us turn to the facts of industrial history, and see what light they throw on what has just been said. I have pointed out that if Capital is to be made or used at all, it must necessarily, for many reasons, be allowed to yield interest to its owners; but the amount of interest it yields has varied at various times; and, although to abolish it altogether would be impossible, or, if possible, fatal to production, it is capable, under certain circumstances, of being reduced to a minimum, without production being in any degree checked; and every pound which the man who employs Capital is thus relieved from paying to the man who owns it constitutes, other things being equal, a fund which may be appropriated by Labour. To say this is to make no barren theoretical statement. The fund in question not only may, under certain circumstances, be appropriated by Labour; but these circumstances are the natural result of our existing industrial system; and the fund, as I will now show, has been appropriated by Labour already, and forms a considerable part of that additional income which Labour, as we have seen, has secured from the income created by Ability.

◆1 to an increasing extent.