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LABOUR
AND THE
POPULAR WELFARE

LABOUR
AND THE
POPULAR WELFARE

BY
W. H. MALLOCK
AUTHOR OF ‘IS LIFE WORTH LIVING?’ ‘SOCIAL EQUALITY,’ ETC.

SIXTH THOUSAND

LONDON
ADAM AND CHARLES BLACK
1895

PREFACE TO NEW EDITION

In republishing this work at a low price, I wish to reiterate emphatically what is said of it in the opening chapter,—namely, that any clearheaded Radical, as distinct from the New Unionist, the Socialistic dreamer, and the Agitator, will find nothing in it to jar against his sympathies, or to conflict with his opinions, any more than the most strenuous Conservative will. If the word “party” is used in its usual sense, this is a volume absolutely free from any party bias.

It has, however, since its first publication, some nine months ago, been attacked continually, not by Socialistic writers only (whose attack was natural), but by Radicals also, who, apparently quite mistaking the drift of it, have done their best to detect in it flaws, fallacies, and inaccuracies. As any work like the present, whose aim is essentially practical, is worse than useless unless the reader is able to feel confidence in it, let me say a few words as to the degree of confidence which is claimed, after nine months of criticism, for the facts and arguments set forth in the following pages.

Let the reader emphasise in his mind the division between facts and arguments, for they stand on a different footing. In estimating the truth of any general arguments, the final appeal is to the common sense of the reader. The reader is himself the judge of them; and the moment he understands and assents to them, they belong to himself as much as they ever did to the writer. On the other hand, the historical facts, or statistics, by which arguments are illustrated, or on which they are based, claim acceptance on the authority, not of our internal common sense, but of external evidence. Let me speak separately, then, of the arguments of this book, and of the facts quoted in it.

Of the arguments, whether taken individually or as a whole, it will be enough here to say that no hostile critic of these has been able in any way to meet them. The only writers who have affected to do so have, either intentionally or unintentionally, entirely failed to understand them; and when they have seemed to be refuting anything, they have been refuting only their own misconceptions or misrepresentations. It is impossible in a short preface to say more than this; but in order to illustrate the truth of the foregoing statement, a paper published by me in the Fortnightly Review is (by kind permission of Messrs. Chapman and Hall) reprinted as an Appendix to the present volume. That paper consists of an examination of the criticisms made, on behalf of the Fabian Society, by Mr. Bernard Shaw on two previous papers of my own published (also in the Fortnightly Review) under the title of “Fabian Economics,” in which the main arguments of this book were condensed. It is true that many of these arguments are here stated merely in outline, and in a popular rather than in a philosophical form, as is explained more fully in the Preface to the First Edition. But it may be safely asserted that there is hardly a single Socialistic argument used by the Socialistic party in this country to which this present book does not contain a reply, or at all events a clear indication of the grounds on which a reply is to be founded.

With regard to the historical facts, and especially the statistics here brought forward, it is necessary to speak more particularly. The broad historical facts—facts connected with the development of wealth in this country—are incapable of contradiction, and have never been contradicted. Hostile critics have directed their principal attacks against the statistics, endeavouring to show that certain of the figures were inaccurate, and arguing that, this being so, the whole contents of the book were unreliable.

The most minute attack of this kind which has been brought to my notice dealt with certain figures which were no doubt erroneous, and indeed unmeaning; but had the critic examined the volume with more care, he would have seen that every one of these figures was a misprint, and was corrected in a list of errata which accompanied the first edition.

Other critics have confined themselves almost entirely to the figures given by me with regard to two questions—the landed rental of this country, as distinct from the rent of houses; and the growth of the national income during the past hundred years.

With regard to both of these questions it should be distinctly understood that absolute accuracy is impossible; and I have given the statistics in round numbers only. But, for the purpose for which the figures are quoted, approximate accuracy is as useful as absolute accuracy, even were the latter attainable; and every attempt to correct the figures as given in this volume has only served to show how substantially accurate these figures are, and how totally unaffected would be the argument, even were any of the suggested corrections accepted.

The landed rental of the country is given by me as something under a hundred million pounds. It has been asserted that were the ground-rents in towns properly estimated, the true rental would be found to be a hundred and fifty million pounds or a hundred and eighty million pounds. It is no doubt difficult to differentiate in town properties the total rental from the ground rental; but the most recent investigations made into this question, so far as it affects London, will throw light on the question as a whole. The highest estimate of the present ground-rental of London as related to the total rental gives the proportion of the former to the latter as fifteen to forty. Now house rent in London is higher than in any other town in the kingdom; therefore, if we assume the same proportion to obtain in all other towns, we shall be over-estimating the ground-rent of the country as a whole, instead of underestimating it. If we take this extreme calculation—which is obviously too great—it will be found to yield a result as to the total landed rental exceeding only by ten per cent that given in this volume. It will therefore be easily seen that the figures given by me are substantially accurate, and sufficiently accurate for all purposes of political and social argument.

Precisely the same thing is to be said with regard to the figures given as to the growth of the national income and the capitalised value of the country. The estimates of various statisticians will be found to differ from one another by something like ten per cent; but these differences do not in the least affect the essential character and meaning of the great facts in question. Let us take, for instance, two facts stated in this volume—that the capital of the country during the past century has increased in the proportion of two to ten; and the income per head of the country in the proportion of fourteen to thirty-four or thirty-five. We will suppose some critic to prove that these proportions should be three to eleven, or twelve to thirty-three. Now, large as the error thus detected might be from some points of view, it would be absolutely immaterial to the large and general question in connection with which the figures are quoted in this volume.

The enormous increase in our national income and our national capital is doubted or denied by no one. Now let us express the increase in income as a supposed increase in the average height of the rooms inhabited by the population. According, then, to the figures given by me, we might say in this case that at the beginning of the century the average house was seven feet high—only high enough for tall men to stand up in; and that now houses have been so improved that the average height of a living-room is seventeen feet. If any one, dwelling on the fact of such a change as this, were inquiring into its causes, and were basing arguments on its assumed reality, what difference would it make if some opponent were to prove triumphantly that the height of the average room now was not seventeen feet, but sixteen feet six inches, and that four generations ago it had been six feet instead of seven? The difference in the estimates of our national income during the past ninety or a hundred years are not more important for the purpose of any general argument than the difference just supposed with regard to the height of two living-rooms; and readers may rest assured that the round numbers given by me with regard to the growth of the national income and the national capital are so near the admitted and indisputable truth of things, that no possible correction of them would substantially alter any one of the arguments which they are here quoted to illustrate.

September 1894.

PREFACE TO FIRST EDITION

Nearly all the general truths of Economic Science are, directly or indirectly, truths about the character or the actions of human beings. It is, consequently, always well to warn the readers of economic works, that in Political Economy, more than in any other science, every general rule is fringed with exceptions and modifications; and that instances are never far to seek which seem to prove the reverse of what the general rule states, or to make the statement of it appear inaccurate. But such general rules need be none the less true for this; nor for practical purposes any the less safe to reason from. They resemble, in fact, these general truths with regard to the seasons, which we do and must reason from, even in so uncertain a climate as our own. It is, for instance, a truth from which we all reason, that summer is dryer and warmer than winter; and yet there is a frequent occurrence of individual days, which, taken by themselves, contradict it. So, too, those economic definitions, the subjects of which are human actions or faculties, can be entirely accurate only in the majority of cases to which they apply; and these cases will be fringed always by a margin of doubtful ones. But the definitions, for all that, need be none the less practically true. Day and night are fringed with doubtful hours of twilight; but our clear knowledge of how midnight differs from noon is not made less clear by our doubts as to whether a certain hour at sunrise ought to be called an hour of night or morning.

It is especially desirable to prefix this warning to a work as short as the present. In larger and more elaborate works, the writer can particularise the more important exceptions and modifications to which his rules and definitions are subject. But in a short work this task must be left to the common sense of the reader. For popular purposes, however, brevity of statement has one great advantage, namely, that of clearness; and, as the significance of the exceptions cannot be understood without the rules, it is almost essential first to state the rules without obscuring them by the exceptions. There are few readers probably who will not see that the general propositions and principles laid down in the following pages, require, in order to fit them to certain cases, various additions and qualifications. It is necessary only for the reader to bear in mind that these propositions need be none the less broadly and vitally true, because any succinct statement of them is unavoidably incomplete.

CONTENTS

BOOK I

THE DIVISIBLE WEALTH OF THE
UNITED KINGDOM

CHAPTER I

The Welfare of the Home, as the Logical End of Government.

◆1 The subject of this book, but has nothing to do with party politics.

◆¹ I wish this book to be something which, when the subject of it is considered, the reader perhaps will think it cannot possibly be. For its subject—to describe it in the vague language of the day—is the labour question, the social question, the social claims of the masses; and it is these claims and questions as connected with practical politics. Their connection with politics is close at the present moment; in the immediate future it is certain to become much closer; and yet my endeavour will be to treat them in such a way that men of the most opposite parties—the most progressive Radical and the most old-fashioned Tory—may find this book equally in harmony with their sympathies, and equally useful and acceptable from their respective points of view.

◆1 An example of the order of facts it deals with.

◆2 Such facts as these not generally known; but when once ascertained, necessarily the same for all parties:

◆3 And it is equally to the advantage of all parties to understand such facts.

◆¹ But if the reader will consider the matter further, he will see that my endeavour is not necessarily so impracticable as it seems to be. A very little reflection must be enough to show anybody that many of the political problems about which men differ most widely are concerned with an order of truths which, when once they have been examined properly, are the same for all of us; and that a preliminary agreement with regard to them is the only possible basis for any rational disagreement. I will give one example—the land-question. About no political problem is there more disagreement than about this; and yet there are many points in it, about which men may indeed be ignorant, but about which, except for ignorance, there cannot be any controversy. Such for instance is the acreage of the United Kingdom, the number of men by whom the acres are owned, the respective numbers of large and of small properties, together with their respective rentals, and the proportion which the national rent bears to the national income. ◆² The truth about all these points is very easily ascertained; and yet not one man in a hundred of those by whom the land-question is discussed, appears to possess the smallest accurate knowledge of it. A curious instance of this ignorance is to be found in the popular reception accorded some years ago to the theories of Mr. Henry George. If Mr. George’s reasonings were correct as applied to this country, the rental of our titled and untitled aristocracy would be now about eight hundred millions: and few of his admirers quarrelled with this inference. But if they had only consulted official records, and made themselves masters of the real facts of the case, they would have seen at once that this false and ludicrous estimate was wrong by no less a sum than seven hundred and seventy millions; that the eight hundred millions of Mr. George’s fancy were in reality not more than thirty; and that the rent, which according to him was two-thirds of the national income, was not in reality more than two and a quarter per cent of it. Now here is a fact most damaging to the authority of a certain theorist with whom many Radicals are no doubt in sympathy; but it none the less is a fact which any honest Radical is as much concerned to know as is any honest Tory, and which may easily supply the one with as many arguments as the other. ◆³ The Tory may use it against the Radical rhetorician who denounces the landlords as appropriating the whole wealth of the country. The Radical may use it against the Tory who is defending the House of Peers, and may ask why a class whose collective wealth is so small, should be specially privileged to represent the interests of property: whilst those who oppose protection may use it with equal force as showing how the diffusion of property has been affected by free trade.

Here is a fair sample, so far as particular facts are concerned, of the order of truths with which I propose to deal: and if I can deal with them in the way they ought to be dealt with, they will be as interesting—and many will be as amusing—as they are practically useful. It may indeed be said, without the smallest exaggeration, that the salient facts which underlie our social problems of to-day, would, if properly presented, be to the general reader as stimulating and fresh as any novel or book of travels, besides being as little open to any mere party criticism.

◆1 Besides such facts, this book deals with general truths and principles, equally independent of party.

◆¹ But there are other truths, besides particular facts, which I propose to urge on the reader’s attention also. There are general truths, general considerations, and principles: and these too, like the facts, will be found to have this same characteristic—that though many of them are not generally realised, though many of them are often forgotten, and though some of them are supposed to be the possession of this or that party only, they do but require to be fairly and clearly stated, to command the assent of every reflecting mind, and to show themselves as common points from which, like diverging lines, all rational politicians, whatever may be their differences, must start.

◆1 The proposition with which the argument starts is an example of a truth of this kind.

◆¹ The very first principle to which I must call attention, and which forms a key to my object throughout this entire book, will at once be recognised by the reader as being of this kind. The Radical perhaps may regard it as a mere truism; but the most bigoted Tory, on reflection, will not deny that it is true. The great truth or principle of which I speak is as follows.

◆1 The conditions of private happiness are the end of all Government.

◆2 These conditions are principally a question of private income.

◆3 The end of Government is therefore to secure adequate incomes for the greatest possible number.

◆¹ The ultimate end of Government is to secure or provide for the greatest possible number, not indeed happiness, as is often inaccurately said, but the external conditions that make happiness possible. As for happiness, that must come from ourselves, or at all events from sources beyond the control of Governments. But though no external conditions are sufficient to make it come, there are many which are sufficient to drive it or to keep it permanently away; and it is the end of all Government to minimise conditions such as these. Now these conditions, though their details vary in various cases, are essentially alike in all. They are a want of the necessaries, or a want of the decencies of life, or an excessive difficulty in obtaining them, or a recurring impossibility of doing so. ◆² They are conditions in fact which principally, though not entirely, result from an uncertain or an insufficient income. The ultimate duty of a Government is therefore towards the incomes of the governed; ◆³ and the three chief tests of whether a Government is good or bad, are first the number of families in receipt of sufficient incomes, secondly the security with which the receipt of such incomes can be counted on, and lastly the quality of the things which such incomes will command.

◆1 This view not necessarily materialistic, nor unpatriotic:

◆¹ Some people however—perhaps even some Radicals—may be tempted to say that this is putting the case too strongly, and is caricaturing the truth rather than fairly stating it. They may say that it excludes or degrades to subordinate positions all the loftier ends both of individual and of national life, such as moral and mental culture, and the power and greatness of the country: but in reality it does nothing of the kind.

◆1 For income is necessary for mental as well as physical welfare,

◆2 And the complete welfare of the citizens is what gives meaning to patriotism.

◆¹ In the first place, with regard to moral and mental culture, if these are really desired by the individual citizen, they will be included amongst the things which his income will help him to obtain: and an insufficient income certainly tends to deprive him of them. If he wishes to have books, he must have money to buy books: and if he wishes his children to be educated, there must be money to pay for teaching them. In the second place, with regard to the power and greatness of the country, though for many reasons ◆² we are apt to forget the fact, it is the material welfare of the home, or the maintenance of the domestic income, that really gives to them the whole of their fundamental meaning. Our Empire and our power of defending it have a positive money value, which affects the prosperity of every class in the country: and though this may not be the only ground on which our Empire can be justified, it is the only ground on which, considering what it costs, its maintenance can be justified in the eyes of a critical democracy. Supposing, it could be shown to demonstration that the loss of our Empire and our influence would do no injury to our trade, or make one British household poorer, it is impossible to suppose that the democracy of Great Britain would continue for long, from mere motives of sentiment, to sanction the expense, or submit to the anxiety and the danger, which the maintenance of an Empire like our own constantly and necessarily involves.

◆1 Further, patriotism will only flourish in a country which secures for its citizens the conditions of a happy life.

◆¹ But let us waive this argument, and admit that a sense of our country’s greatness, quite apart from any thought of our own material advantage, enlarges and elevates the mind as nothing else can—that to be proud of our country and proud of ourselves as belonging to it, to feel ourselves partners in the majesty of the great battle-ship, in the menace of Gibraltar stored with its sleeping thunders, or the boastful challenge of the flag that floats in a thousand climates, is a privilege which it is easier to underrate than exaggerate. Let us admit all this. But these large and ennobling sentiments are all of them dependent on the welfare of the home in this way:—they are hardly possible for those whose home conditions are miserable. Give a man comfort in even the humblest cottage, and the glow of patriotism may, and probably will, give an added warmth to that which shines on him from his fireside. But if his children are crying for food, and he is shivering by a cold chimney, he will not find much to excite him in the knowledge that we govern India. Thus, from whatever point of view we regard the matter, the welfare of the home as secured by a sufficient income is seen to be at once the test and the end of Government; and it ceases to be the end of patriotism only when it becomes the foundation of it.

◆1 Cupidity, therefore, or the desire for sufficient income, is a legitimate basis for popular interest in politics;

◆¹ Here, then, is the principle which I assume throughout this volume. And now, I think that, having explained it thus, I may, without offence to either Tory or Radical, venture to condemn, as strongly as its stupidity deserves, the way in which politicians are at present so often attacked for appealing to what is called the cupidity of the poorer classes. Cupidity is in itself the most general and legitimate desire to which any politician or political party can appeal. It is illegitimate only when it is excited by illegitimate methods: and these methods are of two obvious kinds. One is an exaggeration of the advantages which are put before the people as obtainable: the other is the advocacy of a class of measures as means to them, by which not even a part of them could be, in reality, obtained. Everybody must see that a cupidity which is excited thus is one of the most dangerous elements by which the prosperity of a country can be threatened. But a cupidity which is excited in the right way, which is controlled by a knowledge of what wealth really exists, and of the fundamental conditions on which its distribution depends—is merely another name for spirit, energy, and intelligence.

◆1 The aim of this book is to educate popular cupidity.

◆¹ My one aim then, in writing this book, is to educate the cupidity of voters, no matter what their party, by popularising knowledge of this non-controversial kind. And such knowledge will be found, as I have said already, to be composed partly of particular facts, and partly of general truths. We will begin with the consideration of certain particular facts, which must, however, be prefaced by a few general observations.

CHAPTER II

The Conditions involved in the idea of a Legislative Redistribution of Wealth; and the Necessary Limitations of the Results.

◆1 All men ask of a Government either the increase or the maintenance of their incomes.

◆¹ Let me then repeat that we start with assuming cupidity as not only the general foundation, but also as the inevitable, the natural, and the right foundation, of the interest which ordinary men of all classes take in politics. We assume that where the ordinary man, of whatever class or party, votes for a member of Parliament, or supports any political measure, he is primarily actuated by one of two hopes, or both of them—the first being the hope of securing the continuance of his present income, the second being the hope of increasing it. Now, to secure what they have already got is the hope of all classes; but to increase it by legislation is the hope of the poorer only. It is of course perfectly true that the rich as well as the poor are anxious, as a rule, to increase their incomes when they can; but they expect to do so by their own ability and enterprise, and they look to legislation for merely such negative help as may be given by affording their abilities fair play.

◆1 The poor alone look for an increase of income by direct legislative means. They are right in doing this.

◆2 The cupidity which this book chiefly deals with is the cupidity of the poorer classes.

◆¹ But with the poorer classes the case is entirely different. They look to legislation for help of a direct and positive kind, which may tend to increase their incomes, without any new effort of their own: and not only do they do this themselves, but the richer classes sympathise with the desire that makes them do so. It is, for instance, by no means amongst the poorer classes only that the idea of seizing on the land, without compensating the owners, has found favour as a remedy for distress and poverty generally. Owners of every kind of property, except land, have been found to advocate it; whilst as to such vaguer and less startling proposals, as the “restoration of the labourer to the soil,” the limitation of the hours of labour, or the gradual acquirement by the State of many of our larger industries—the persistent way in which these are being kept before the public, is due quite as much to men of means as to poor men. ◆² It is then with the cupidity of the poorer classes that we are chiefly concerned to deal; and the great question before us may briefly be put thus: By what sort of social legislation may the incomes of the poorer classes—or, in other words, the incomes of the great mass of the community—be, in the first place, made more constant; and, in the second place, increased?

◆1 The first question to ask is: What is the maximum amount which it would be theoretically possible for them to obtain? For this is much exaggerated.

◆¹ But before proceeding to this inquiry, there is a preliminary question to be disposed of. What is the maximum increase which any conceivable legislation could conceivably secure for them out of the existing resources of the country? Not only unscrupulous agitators, but many conscientious reformers, speak of the results to be hoped for from a better distribution of riches, in terms so exaggerated as to have no relation to facts; and ideas of the wildest kind are very widely diffused as to the degree of opulence which it would be possible to secure for all. The consequence is that at the present moment popular cupidity has no rational standard. It will therefore be well, before we go further, to reduce these ideas—I do not say to the limits which facts will warrant—but to the limits which facts set on what is theoretically and conceivably possible.

◆1 An ascertainable limit is placed to this amount by circumstances.

◆2 And this amount would be obtainable only under certain conditions,

◆¹ Let me then call attention to the self-evident truth, that the largest income which could possibly be secured for everybody, could not be more than an equal share of the actual gross income enjoyed by the entire nation. Now it happens that we know with substantial accuracy what the gross amount of the income of the nation now is, and I will presently show what is the utmost which each individual could hope for from the most successful attempt at a redistribution of everything. ◆² But the mere pecuniary results of a revolution of this kind are not the only results of which we must take account. There are others which it will be well to glance at before proceeding to our figures.

◆1 One of which would entirely change the existing character of wealth.

◆¹ Though an equal division of wealth would, as we soon shall see, bring a large addition to the income of a considerable majority of the nation, the advantages which the recipients would gain from this addition, would be very different from the advantages which an individual would gain now, from the same annual sum coming to him from invested capital. In other words, if wealth were equally distributed, it would, from the very necessity of the case, lose half the qualities for which it is at present most coveted.

◆1 Were wealth equally distributed, nobody would have an independence.

◆¹ At present wealth suggests before all things what is commonly called “an independence”—something on which a man can live independently of his own exertions. But the moment a whole nation possessed it in equal quantities this power of giving an independence would go from it suddenly and for ever. If a workman who at present makes seventy pounds a year, would receive, by an equal division, an additional forty pounds, it is indeed true that no additional work could be entailed on him. The work which at present gets him seventy pounds, would in that case get him a hundred and ten. But he would never be able, if he preferred leisure to wealth, to forego the seventy pounds and live in idleness on the forty pounds; as he would be able to do now if the additional forty pounds were the interest of a legacy left him by his maiden aunt. Unless he continued to work, as he had worked hitherto, he would lose not only the first sum, but the second.

◆1 Every one would have to work as hard as he does now;

This is self-evident, when we consider what is the essence of such a situation, namely that the position of everybody is identical. For if everybody preferred to be idle, no wealth could be produced at all. However great nominally might be the value of our national property, it is perfectly clear that everybody could not live at leisure in it: and from the very nature of the case, in a nation where all are equal, what cannot be done by all, could not be done by anybody. ◆¹ If, therefore, we estimate the income possible for each individual as an equal fraction of the present income of the nation, it must be remembered that, to produce the total out of which these fractions are to come, everybody would have to work as hard as he does now. And more than that, it would be the concern of all to see that his share of work was not being shirked by anybody. This is at present the concern of the employer only: but under the conditions we are now considering, everybody would be directly interested in becoming his neighbour’s taskmaster.

◆1 And be even more under the dominion of the employer than he is now;

These last considerations lead us to another aspect of the subject, with which every intelligent voter should make himself thoroughly familiar, and which every honest speaker would force on the attention of his hearers. A large number of agitators, who are either ignorant or entirely reckless, but who nevertheless possess considerable gifts of oratory, ◆¹ are constantly endeavouring to associate, in the popular mind, the legitimate hope of obtaining an increased income, with an insane hostility to conditions which alone make such an increase possible. These men[1] are accustomed to declaim against the slavery of the working classes, quite as much as against their inadequate rate of payment. By slavery they mean what they call “enslavement to capital.” Capital means the implements and necessaries of production. These, they argue, are no longer owned by the workmen as they were in former times: and thus the workers are no longer their own masters. They must work under the direction of those who can give them the means of working; and this, they are urged to believe, reduces them to the condition of slaves.

◆1 Nor could any one hope to own the instruments of production used by him.

◆2 Self-contradictions of agitators, who say that capitalism means slavery, and that socialism would make the worker free.

◆3 The industrial discipline of the State would necessarily be much harder than that of the private employer.

Of course, in these representations there is a certain amount of truth: but it is difficult to conceive of anything more stupidly and more wantonly misleading, than the actual meaning which they are employed by the agitators to convey. For that meaning is nothing else than this—◆¹ that under improved conditions, when wealth is better distributed, the so-called slavery will disappear, the workers will be their own masters again, and will each own, as formerly, the implements and the materials of his work. But, as no one knows better than the extreme socialists, and as any intelligent man can see easily for himself, such a course of events is not only not possible, but is the exact reverse of that on which the progress of the workers must depend. ◆² The wildest agitator admits, and the most ignorant agitator knows, that the wealth of the modern world, on the growth of which they insist, and which, for the very reason that its growth has been so enormous, is declared by them to offer so rich a prize to the workers, mainly owes its existence to improved conditions of production. Such persons know also that of these conditions the chief have been the development of machinery, the increased subdivision of employments, and the perfected co-operation of the workers. But the development of machinery necessarily means this—the transformation of (say) each thousand old-fashioned implements into a single vast modern one of a hundred times their aggregate power: and it means that at this single implement a thousand men shall work. The increased subdivision of labour means that no man shall make an entire thing, but merely some small part of it; and perfected co-operation is another name for perfected discipline. It will be thus seen that the conditions which the agitator calls those of slavery are essential to the production of the wealth which is to constitute the workers’ heritage. ◆³ It will be seen that the workers’ hope of bettering their own position is so far from depending on a recovery of any former freedom, that it involves yet further elaboration of industrial discipline; and puts the old ownership of his own tools by the individual farther and further away into the region of dreams and impossibilities: and that no redistribution of wealth would even tend to bring it back again. The weaver of the last century was the owner of his own loom: and a great cotton-mill may now be owned by one capitalist. But a co-operative cotton-mill that was owned by all the workers, in the old sense of the word would not be owned by anybody. Could any one of these thousand or more men say that any part of the mill was his own personal property? Could he treat a single bolt, or a brick, or a wheel, or a door-nail, as he might have treated a loom left to him in his cottage by his father? Obviously not. No part of the mill would be his own private property, any more than a train starting from Euston Station is the property of any shareholder in the London and North-Western Railway. His ownership would mean merely that he was entitled to a share of the profits, and that he had one vote out of a thousand in electing the managers. But however the managers were elected, he would have to obey their orders; and their discipline would be probably stricter than that of any private owner. Much more would this be the case if the dream of the Socialist were fulfilled, and if instead of each factory or business being owned by its own workers, all the workers of the country collectively owned all the businesses—all the machinery, all the raw materials, and all the capital reserved for and spent in wages. For though the capital of the country would be owned by the workers nominally, their use of it would have to be regulated by a controlling body, namely the State. The managers and the taskmasters would all be State officials, and be armed with the powers of the State to enforce discipline. The individual under such an arrangement, might gain in point of income; but if he is foolish enough to adopt the view of the agitator, and regard himself as the slave to capital now, he would be no less a slave to it were all capitals amalgamated, and out of so many million shares he himself were to own one.

◆1 For it must always be remembered that the idea of an equal distribution of wealth necessarily presupposes the State as sole employer and capitalist.

◆¹ It is particularly desirable in this particular place to fix the reader’s attention on this aspect of the question, because it is inseparably associated with the point we are preparing to consider—namely, the pecuniary position in which the individual would be placed by an equal division, were such possible, of the entire national income. For we must bear in mind that not even in thought or theory is an equal division of the national income possible, unless all the products of the labour of every citizen are in the first place taken by the State as sole employer and capitalist, and are then distributed as wages in equal portions. Under no other conditions could equality be more than momentary. If each worker himself sold his own products to the consumer,—which he could not do, because no one produces the whole of anything,—the strong and industrious would soon be richer than the idle; and the man with no children richer than the man with ten. Inequality would have begun again as soon as one day’s work was over. Equality demands, as the Socialists are well aware, that all incomes shall be wages paid by the State; and it implies further, as we shall presently have occasion to observe—that equal wages shall be paid to all individuals, not because they are equally productive, but because they are all equally human. When therefore I speak, as I shall do presently, of what each individual would receive, if wealth were divided equally, I must be understood as meaning that he would receive so much from the State.

◆1 A redistribution of wealth, if it increased the incomes of some, would lessen the labour of nobody.

◆2 The next chapter contains an examination of the amount of income which would theoretically result from an equal distribution in this country.

◆¹ Let us remember then that a redistribution of wealth would have in itself no tendency to alter the existing conditions of the workers in any respect except that of wages only. It would not tend to relieve any man of a single hour of labour, to give him any more freedom in choosing the nature of his work or the method of it, or make him less liable to fines or other punishments for disobedience or unpunctuality. ◆² His only gain, if any, would be a simple gain in money. Let us now proceed to deal with the pounds, shillings, and pence; and see what is the utmost that this gain could come to.

CHAPTER III

The Pecuniary Results to the Individual of an Equal Division, first of the National Income, and secondly of certain parts of it.

◆1 The gross income of the United Kingdom.

◆2 The whole amount attributed to the rich would not be available for distribution.

◆3 A certain deduction must therefore be made from the estimated total.

◆¹ The gross income of the United Kingdom—the aggregate yearly amount received by the entire population—is computed to be in round numbers some thirteen hundred million pounds. But though this estimate may be accepted as true under existing circumstances, we should find it misleading as an estimate of the amount available for distribution. So far as it relates to the income of the poorer classes, it would be indeed still trustworthy; but the income of the richer—which is the total charged with income-tax—we should find to be seriously exaggerated, as considerable sums are included in it which are counted twice over. ◆² For instance, the fee of a great London doctor for attending a patient in the South of France would be about twelve hundred pounds. Let us suppose this to be paid by a patient whose income is twelve thousand pounds. The doctor pays income-tax on his fee; the patient pays income-tax on his entire income; and thus the whole sum charged with income-tax is thirteen thousand two hundred pounds. But if we came to distribute it, we should find that there was twelve thousand pounds only. And there are many other cases of a precisely similar nature. According to the calculations of Professor Leone Levi, the total amount which was counted twice over thus, amounted ten years ago to more than a hundred million pounds.[2] ◆³ In order, therefore, to arrive at the sum which we may assume to be susceptible of distribution, it will be necessary, therefore, to deduct at least as much as this from the sum which was just now mentioned of thirteen hundred million pounds.[3] Accordingly the income of the country, if we estimate it with a view to dividing it, is in round numbers, twelve hundred million pounds.

◆1 This, divided amongst all, would yield thirty-two pounds per head:

◆2 But different sexes and ages would require different amounts,

◆3 The proportions of which are readily ascertainable.

◆¹ And now let us glance at our problem in its crudest and most rudimentary form, and see what would be the share coming to each individual, if these millions were divided equally amongst the entire population. The entire population of the United Kingdom numbers a little over thirty-eight millions; so our division sum is simple. The share of each individual would be about thirty-two pounds. But this sort of equality in distribution would satisfy nobody. It is not worth talking about. For a quarter of the population are children under ten years of age,[4] and nearly two-fifths are under fifteen: and it would be absurd to assign to a baby seeking a pap-bottle, or even to a boy—voracious as boys’ appetites are—the same sum that would be assigned to a full-grown man or woman. ◆² In order to give our distribution even the semblance of rationality, the shares must be graduated according to the requirements of age and sex. The sort of proportion to each other which these graduated shares should bear might possibly be open to some unimportant dispute: but we cannot go far wrong if we take for our guide the amount of food which scientific authorities tell us is required respectively by men, women, and children; together with the average proportion which actually obtains at present, both between their respective wages and the respective costs of their maintenance. ◆³ The result which we arrive at from these sources of information is substantially as follows, and every fresh inquiry confirms it. For every pound which is required or received by a man, fifteen shillings does or should go to a woman, ten shillings to a boy, nine shillings to a girl, and four and sixpence to an infant.[5]

◆1 The problem best approached by taking the family as the unit:

◆2 And then we can arrive at the share of each member.

◆3 The maximum income that an equal distribution would give a bachelor.

◆¹ So much, then, being admitted, we shall make our calculations best by starting with the family as our unit, and coming to the individual afterwards. The average family consists of four and a half persons; and the families in the United Kingdom number eight and a half millions. Twelve hundred millions—the sum we have to divide—would give each family an income of a hundred and forty pounds. From this, however, we should have to deduct taxes; and, since if all classes were equal, all would have to be taxed equally,—the amount due from each family would be considerable. Public expenditure, if the State directed everything, would of necessity be larger than it is at present; but even if we assume that it would remain at its present figure, each family would have to contribute at least sixteen pounds.[6] Therefore sixteen pounds must be deducted from the hundred and forty pounds. Accordingly we have for four and a half persons a net income of a hundred and twenty-six pounds. Now these persons would be found to consist on an average of a man and his wife, a youth, a girl, and a half of a baby,—for when we deal with averages we must execute many judgments like Solomon’s,—and if we distribute the income among them in the proportion I just now indicated, the result we shall arrive at will, in round numbers, be this. ◆² The man will have fifty pounds, the woman thirty-six pounds, the youth twenty-five pounds, the girl twenty-four pounds, and the half of the infant five pounds. And now let us scrutinise the result a little further, and see how it looks in various familiar lights. An equal distribution of the whole wealth of the country would give every adult male about nineteen shillings and sixpence a week, and every adult female about fourteen shillings. These sums would, however, be free of taxes; so in order to compare them with the wages paid at present, we must add to them two shillings and sixpence and two shillings respectively, which will raise them respectively to twenty-two shillings, and to sixteen shillings: ◆³ but a bachelor who is earning the former sum now, or an unmarried woman who is now earning the latter, would neither of them, under any scheme of equal distribution conceivable, come in for a penny of the plunder taken from the rich. They already are receiving all that, on principles of equality, they could claim.

The smallness of this result is likely to startle anybody; but none the less is it true: and it is well to consider it carefully, because the reason why it startles us requires to be particularly noticed. Of the female population of the country that is above fifteen years old, the portion that works for wages is not so much as a half;[7] and of the married women that do so, the portion is much smaller. The remainder work, no doubt, quite as hard as the rest; but they work as wives and mothers; and whatever money they have comes to them through their husbands. Thus when the ordinary man considers the question of income, he regards income as something which belongs exclusively to the man, his wife and his children being things which the man maintains as he pleases. But the moment the principle of equality of distribution is accepted, all such ideas as these have to be rudely changed: for if all of us have a claim to an equal share of wealth, just as the common man’s claim is as good as that of the uncommon man, so the woman’s claim is as good as the claim of either; and whatever her income might be under such conditions, it would be hers in her own right, not in that of anybody else. Accordingly it happens that an equal distribution of wealth, though it would increase the present income of the ordinary working man’s family, might actually, so far as the head of the family was concerned, have the paradoxical result of making him feel that personally he was poorer than before—not richer.[8]

◆1 The highest possible standard of living would be represented by a man and wife without children.

◆¹ The man’s personal share, then, would be twenty-two shillings a week, and the woman’s sixteen shillings; and they could increase their income in no way except by marrying. As many of their expenses would be greatly diminished by being shared, they would by this arrangement both be substantial gainers: but if the principle of equality were properly carried out, they would gain very little further by the appearance of children; for though we must assume that a certain suitable sum would be paid them by the State for the maintenance of each child, that would have to be spent for the child’s benefit. We may, therefore, say that the utmost results which could possibly be secured to the individual by a general confiscation and a general redistribution of wealth, would be represented by the condition of a childless man and wife, with thirty-eight shillings a week, which they could spend entirely on themselves: for all the wealth of the nation that was not absorbed in supplying such incomes to men and women who were childless, would be absorbed in supporting the children of those who had them; thus merely equalising the conditions of large and of small families, and enabling the couple with ten or a dozen children to be personally as well off as the couple with none. Could such a condition of wellbeing be made universal, many of the darkest evils of civilisation would no doubt disappear: but it is well for a man who imagines that the masses of this country are kept by unjust laws out of the possession of some enormous heritage, to see how limited would be the result, if the laws were to give them everything; and to reflect that the largest income that would thus be assigned to any woman, would be less than the income enjoyed at the present moment by multitudes of unmarried girls who work in our Midland mills—girls whose wages amount to seventeen shillings a week, who pay their parents a shilling a day for board, and who spend the remainder, with a most charming taste, on dress.

He will have to reflect also that such a result as has been just described could be produced only by an equality that would be absolutely grotesque in its completeness—by every male being treated as equal to every other male of the same age, and by every female being treated similarly. The prime minister, the commander-in-chief, the most important State official, would thus, if they were unmarried, be poorer than many a factory-girl is at present; whilst if they were married, they and their wives together would have but four shillings a week more than is at present earned by a mason, and six shillings a week less than is earned by an overlooker in a cotton-mill.

◆1 Absolute pecuniary equality, however, is not thought possible by anybody;

◆2 As the salaries asked for Members of Parliament by the Labour Party show.

◆¹ But an equality of this kind, from a practical point of view, is worth considering only as a means of reducing it to an absurdity. Even were it established to-morrow, it could not be maintained for a month, owing to the difficulty that would arise in connection with the question of children: as unless a State official checked the weekly bills of every parent, parents inevitably would save out of their children’s allowances; and those with many children would be very soon founding fortunes. And again it is obvious that different kinds of occupation require from those engaged in them unequal expenditures; so that the inevitable inequality of needs would make pecuniary equality impossible. Indeed every practical man in our own country owns this, however extreme his views; ◆² as is evidenced by the amounts which have been suggested by the leaders of the Labour Party as a fit salary for a paid Member of Parliament. These amounts vary from three hundred pounds a year to four hundred pounds; so that the unmarried Member of Parliament, in the opinion of our most thoroughgoing democrats, deserves an income from six to eight times as great as the utmost income possible for the ordinary unmarried man. And there are many occupations which will, if this be admitted, deserve to be paid on the same or on even a higher scale. We may therefore take it for granted that the most levelling politicians in the country, with whom it is worth while to reason as practical and influential men, would spare those incomes not exceeding four hundred pounds a year, and would probably increase the number of those between that amount and a hundred and fifty pounds. Now the total amount of the incomes between these limits is not far from two hundred million pounds: so if this be deducted from the twelve hundred million pounds which we just now took as the sum to be divided equally, the incomes of the people at large will be less by sixteen per cent than the sums at which they were just now estimated; and the standard of average comfort will be represented by a childless man and wife having thirty-one shillings and eightpence instead of thirty-eight shillings a week.

◆1 General redistribution, then, is not thought possible by any English party;

◆2 But it is still instructive to consider the theoretical results of it.

◆¹ We need not, however, dwell upon such details longer: for there are few people who conceive even a redistribution like this to be possible; and there would probably be fewer still who would run the risk of attempting it, if they realised how limited would be the utmost results of it to themselves. My only reason for dealing with these schemes at all is that, ◆² whilst they are felt to be impossible as soon as they are considered closely, they are yet the schemes which invariably suggest themselves to the mind when first the idea of any great social change is presented to it; and a knowledge of their theoretical results, though it offers no indication of what may actually be attainable, will sober our thoughts, and at the same time stimulate them, by putting a distinct and business-like limit to what is conceivable.

◆1 But there are certain parts of the national income the redistribution of which has been actually advocated, i.e.: (1) the rent of the land; (2) the interest of the National Debt; (3) the sums spent on the Monarchy.

◆2 We will consider what the nation would gain by confiscating the above.

◆3 Absurd ideas as to the amount of the landed rental of the country.

◆¹ And for this reason, before I proceed further, I shall ask the reader to consider a few more theoretical estimates. The popular agitator, and those whose opinions are influenced by him, do not propose to seize upon all property; they content themselves with proposing to appropriate certain parts of it. The parts generally fixed upon are as follows:—First and foremost comes the landed rental[9] of the country—the incomes of the iniquitous landlords. Second comes the interest on the National Debt; third, the profits of the railway companies; and last, the sum that goes to support the Monarchy. All these annual sums have been proposed as subjects of confiscation, though the process may generally be disguised under other names. ◆² Let us take each of these separately, and see what the community at large would gain by the appropriation of each. And we will begin with the income of the landlords; for not only is this the property which is most frequently attacked, but it is the one from the division of which the largest results are expected. ◆³ It is indeed part of the creed of a certain type of politician that, if the income of the landlords could be only divided amongst the people, all poverty would be abolished, and the great problem solved.

◆1 The popular conception of the wealth of the larger landlords.

◆¹ In the minds of most of our extreme reformers, excepting a few Socialists, the income of the landlords figures as something limitless; and the landlords themselves as the representatives of all luxury. It is not difficult to account for this. To any one who studies the aspect of any of our rural landscapes, with a mind at all occupied with the problem of the redistribution of wealth, the things that will strike his eye most and remain uppermost in his mind, are the houses and parks and woods belonging to the large landlords. Small houses and cottages, though he might see a hundred of them in a three-miles’ drive, he would hardly notice; but if in going from York to London he caught glimpses of twelve large castles, he would think that the whole of the Great Northern Railway was lined with them. And from impressions derived thus two beliefs have arisen—first that the word “landlord” is synonymous with “large landlord”; and secondly that large landlords own most of the wealth of the kingdom. But ideas like these, when we come to test them by facts, are found to be ludicrous in their falsehood. If we take the entire rental derived from land, and compare it with the profits derived from trade and capital, we shall find that, so far as mere money is concerned, the land offers the most insignificant, instead of the most important question[10] that could engage us. Of the income of the nation, the entire rental of the land does not amount to more than one-thirteenth; and during the last ten years it has fallen about thirteen per cent. The community could not possibly get more than all of it; and if all of it were divided in the proportions we have already contemplated, it would give each man about twopence a day and each woman about three half-pence.[11]

◆1 The landed aristocracy are not the chief rent-receivers.

◆2 A multitude of small proprietors receive twice as much in rent as the entire landed aristocracy.

◆3 The entire rental of the landed aristocracy is so small that its confiscation would benefit no one.

◆¹ But the more important part of the matter still remains to be noticed. The popular idea is, as I just now said, that we should, in confiscating the rental of the kingdom, be merely robbing a handful of rich men, who would be probably a deserving, and certainly an easy prey. The facts of the case are, however, singularly different. It is true, indeed, if we reckon the land by area, that the large landlords own a preponderating part of it: but if we reckon the land by value, the whole case is reversed; ◆² and we find that classes of men who are supposed by the ordinary agitator to have no fixed interest in the national soil at all, really draw from it a rental twice as great as that of the class which is supposed to absorb the whole. I will give the actual figures,[12] based upon official returns; and in order that the reader may know my exact meaning, let me define the term that I have just used—namely “large landlords”—as meaning owners of more than a thousand acres. No one, according to popular usage, would be called a large landlord, who was not the owner of at least as much as this; indeed the large landlord, as denounced by the ordinary agitator, is generally supposed to be the owner of much more. Out of the aggregate rental, then—that total sum which would, if divided, give each man twopence a day—what goes to the large landlords is now considerably less than twenty-nine million pounds. By far the larger part—namely something like seventy million pounds—is divided amongst nine hundred and fifty thousand owners, of whose stake in the country the agitator seems totally unaware; and in order to give to each man the above daily dividend, it would be necessary to rob all this immense multitude whose rentals are, on an average, seventy-six pounds a year.[13] Supposing, then, this nation of smaller landlords to be spared, ◆³ and our robbery confined to peers and to country gentlemen, the sum to be dealt with would be less than twenty-nine million pounds; and out of the ruin of every park, manor, and castle in the country, each adult male would receive less than three-farthings daily.

◆1 Were the National Debt and the Railways confiscated, the results would likewise be hardly perceptible to the nation as a whole.

◆¹ And now let us turn to the National Debt and to the railways. The entire interest of the one and the entire profits of the other, would, if divided equally amongst the population, give results a little, but only a little, larger than the rental of the large landlords. But here again, if the poorer classes were spared, and the richer investors alone were singled out for attack, the small dividend of perhaps one penny for each man daily, would be diminished to a sum yet more insignificant. How true this is may be seen from the following figures relating to the National Debt. Out of the two hundred and thirty-six thousand persons who held consols in 1880, two hundred and sixteen thousand, or more than nine-tenths of the whole, derived from their investments less than ninety pounds a year; whilst nearly half of the whole derived less than fifteen pounds.

◆1 The Monarchy costs so small a sum, that no one would be the richer for its abolition.

◆¹ And lastly, let us consider the Monarchy, with all its pomp and circumstance, the maintenance of which is constantly represented as a burden seriously pressing on the shoulders of the working-class. I am not arguing that in itself a Monarchy is better than a Republic. I am considering nothing but its cost in money to the nation. Let us see then what its maintenance actually costs each of us, and how much each of us might conceivably gain by its abolition. The total cost of the Monarchy is about six hundred thousand pounds a year; but ingenious Radicals have not infrequently argued that virtually, though indirectly, it costs as much as a million pounds. Let us take then this latter sum, and divide it amongst thirty-eight million people. What does it come to a head? It comes to something less than sixpence halfpenny a year. It costs each individual less to maintain the Queen than it would cost him to drink her health in a couple of pots of porter. The price of these pots is the utmost he could gain by the abolition of the Monarchy. But does any one think that the individual would gain so much—or indeed, gain anything? If he does, he is singularly sanguine. Let him turn to countries that are under a Republican government; and he will find that elected Presidents are apt to cost more than Queens.

◆1 All such schemes of redistribution are illusory, not only on account of the insignificance of their results,

◆2 But also on account of a far deeper reason, on which the whole problem depends.

◆¹ All these schemes, then, for attacking property as it exists, for confiscating and redistributing by some forcible process of legislation the whole or any part of the existing national income, are either obviously impracticable, or their result would be insignificant. Their utmost result indeed would not place any of the workers in so good a position as is at present occupied by many of them. This is evident from what has been seen already. ◆² But there is another reason which renders such schemes illusory—a far more important one than any I have yet touched upon, and of a far more fundamental kind. We will consider this in the next chapter; and we shall find, when we have done so, that it has brought us to the real heart of the question.

CHAPTER IV

The Nature of the National Wealth: first, of the National Capital; second, of the National Income. Neither of these is susceptible of Arbitrary Division.

◆1 A legislative division of the national income is not only disappointing in its theoretical results, but practically impossible,

◆¹ We have just seen how disappointing, to those even who would gain most by it, would be the results of an equal division of the national income of this country, and how intolerable to all would be the general conditions involved in it. In doing this, we have of course adopted, for argument’s sake, an assumption which underlies all popular ideas of such a process; namely, that if a Government were only strong enough and possessed the requisite will, it could deal with the national income in any way that might be desired; or, in other words, that the national income is something that could be divided and distributed, as an enormous heap of sovereigns could, according to the will of any one who had them under his fingers. I am now going to show that this assumption is entirely false, and that even were it desirable theoretically that the national income should be redivided, it is not susceptible of any such arbitrary division.

◆1 As will be shown in this chapter.

◆¹ To those who are unaccustomed to reflecting on economic problems, and who more or less consciously associate the qualities of wealth with those of the money in whose terms its amount is stated, I cannot introduce this important subject better than by calling their attention to the few following facts, which, simple and accessible as they are, are not generally known.

◆1 Wealth is utterly unlike money in its divisible qualities.

◆2 The money of the United Kingdom is an imperceptible fraction of its wealth.

◆¹ The capital value of the wealth of the United Kingdom is estimated at something like ten thousand million pounds; but the entire amount of sovereigns and shillings in the country does not exceed a hundred and forty-four million pounds, nor that of the uncoined bullion, a hundred and twenty-two million pounds. That is to say, for every nominal ten thousand sovereigns there does not exist in reality more than two hundred and twenty-six. Were this sum divided amongst the population equally, it would give every one a share of exactly seven pounds. Again, this country produces every year wealth which we express by calling it thirteen hundred million pounds. ◆² The amount of gold and silver produced annually by the whole world is hardly so much as thirty-eight million pounds. If the whole of this were appropriated by the United Kingdom, it would give annually to each inhabitant only ten new shillings and a single new half-sovereign. The United Kingdom, however, gets annually but a tenth of the world’s money, so its annual share in reality is not so much as four million pounds. Accordingly, that vast volume of wealth which we express by calling it thirteen hundred million pounds, has but four million pounds of fresh money year by year to correspond to it. That is to say, there is only one new sovereign for every new nominal sum of three hundred and twenty-five.

◆1 The nature of wealth, as a whole, is quite misconceived by most people;

◆2 As we see by the metaphors they use to describe it.

◆¹ Wealth as a whole, therefore, is something so totally distinct from money that there is no ground for presuming it to be divisible in the same way. What is wealth, then, in a country like our own? To some people this will seem a superfluous question. They will say that every one knows what wealth is by experience—by the experience of possessing it, or by the experience of wanting it. And in a certain sense this is true, but not in any sense that concerns us here. In precisely the same sense every one knows what health is; but that is very different from knowing on what health depends; and to know the effects of wealth on our own existence is very different from knowing the nature of the thing that causes them. Indeed, as a matter of fact, what wealth really consists of is a thing which very few people are ever at the trouble to realise; and nothing shows that such is the case more clearly than the false and misleading images which are commonly used to represent it. ◆² The most familiar of these are: “a treasure,” “a store,” “a hoard,” or, as the Americans say, “a pile.” Now any one of these images is not only not literally true, but embodies and expresses a mischievous and misleading falsehood. It represents wealth as something which could be carried off and divided—as a kind of plunder which might be seized by a conquering army. But the truth is, that the amount of existing wealth which can be accurately described, or could be possibly treated in this way, is, in a country like ours, a very insignificant portion; and, were social conditions revolutionised to any serious degree, much of that portion would lose its value and cease to be wealth at all.

◆1 Many kinds of wealth that are considered typical would become almost valueless if divided: for instance, a great house and its contents.

◆¹ Let us take, for instance, some palatial house in London, which catches the public gaze as a monument of wealth and splendour; and we will suppose that a mob of five hundred people are incited to plunder it by a leader who informs them that its contents are worth two hundred thousand pounds. Assuming that estimate to be correct, would it mean that of these five hundred people each would get a portion to him worth four hundred pounds? Let us see what would really happen. They would find enough wine, perhaps, to keep them all drunk for a week; enough food to feed thirty of them for a day; and sheets and blankets for possibly thirty beds. But this would not account for many thousands out of the two hundred thousand pounds. The bulk of that sum would be made up—how? A hundred thousand pounds would be probably represented by some hundred and fifty pictures, and the rest by rare furniture, china, and works of art. Now all these things to the pillagers would be absolutely devoid of value; for if such pillage were general there would be nobody left to buy them; and they would in themselves give the pillagers no pleasure. One can imagine the feelings of a man who, expecting four hundred pounds, found himself presented with an unsaleable Sèvres broth-basin, or a picture of a Dutch burgomaster; or of five such men if for their share they were given a buhl cabinet between them. We may be quite certain that the broth-basin would be at once broken in anger; the cabinet would be tossed up for, and probably used as a rabbit-hutch; and the men as a body would endeavour to make up for their disappointment by ducking or lynching the leader who had managed to make such fools of them.

◆1 Wealth, as a whole, even less susceptible of division.

◆¹ And now let us consider the wealth of the kingdom as a whole. Much as the bulk of it differs from the contents of a house of this kind, it would, if seized on in any forcible way, prove even more disappointing and elusive.

◆1 Wealth, as a whole, has two aspects: that of capital, and that of income.

◆2 We will first consider the national capital.

◆¹ We may consider it under two aspects. We may consider it as so much annual income, or else as so much capital. In the last chapter we were considering it as so much income, and presently we shall be doing so again. But as capital may possibly strike the imagination of many as something more tangible and easily seized, and likely to yield, if redistributed, more satisfactory results, ◆² we will see first of what items the estimated capital of this country is composed. To do so will not only be instructive: it will also be curious and amusing.

◆1 This capital consists not of money;

◆¹ As I said just now, its value, expressed in money, is according to the latest authorities about ten thousand million pounds.[14] As actual money, however, forms so minute a portion of this,—the reader will see that it is hardly more than one-fortieth,—we may, for our present purpose, pass it entirely over; and our concern will be solely with the things for which our millions are a mere expression.

◆1 But of three classes of things: the two first comprising things not susceptible of division;

◆¹ It will be found that these things divide themselves into three classes. The first consists of things which, from their very nature, are not susceptible of any forcible division at all; the second consists of things which are susceptible of division only by a process of physically destroying them and pulling them into pieces; and each of these two classes, in point of value, represents, roughly speaking, nearly a quarter of the total. The third class alone, which represents little more than a half, consists of things which, even theoretically, could be divided without being destroyed.

◆1 The third class comprising all those things that could be divided without destroying them; and forming about half of the total.

◆¹ We will consider this third class first, which represents in the estimates of statisticians five thousand seven hundred million pounds. The principal things comprised in it are land, houses, furniture, works of art, clothing, merchandise, provisions, and live-stock; and such commodities in general as change hands over the shopman’s counter, or in the market.[15] Of these items, by far the largest is houses, which make up a quarter of the capital value of the country, or two thousand five hundred million pounds. But more than half this sum stands for houses which are much above the average in size, and which do not form more than an eighth part of the whole; and were they apportioned to a new class of occupants, they would lose at least three-fourths of their present estimated value. So too with regard to furniture and works of art, a large part of their estimated value would, as we have seen already, disappear in distribution likewise: and their estimated value is about a tenth of the whole we are now considering. Land, of course, can, at all events in theory, be divided with far greater advantage; and counts in the estimates as fifteen hundred million pounds—or something under a sixth of the whole. Merchandise, provisions, and movable goods in general can be divided yet more readily; and so one would think could live-stock, though this is hardly so in reality: but of the whole these three last items form little more than a twentieth.

◆1 The results of dividing these would be ridiculous.

◆¹ And now, supposing all these divisible things to be divided, let us see what the capital would look like which would be allotted to each individual. Each individual would find himself possessed of a lodging of some sort, together with clothes and furniture worth about eight pounds. He would have about eight pounds’ worth of provisions and miscellaneous movables, and a ring, a pin, or a brooch, worth about three pounds ten shillings. He would also be the proprietor of one acre of land, which would necessarily in many cases be miles away from his dwelling, whilst as to stocking his acre, he would be met by the following difficulty. He would find himself entitled to the twentieth part of a horse, to two-thirds of a sheep, the fourth part of a cow, and the tenth part of a pig.

◆1 The second class of things, comprising the national capital, could not be divided without destroying them.

◆2 The remaining class of things could not be divided at all.

◆¹ Such then would be the result to the individual of dividing the whole of our capital that could be divided without destroying it. This is, as we said, a little more than half of the total; and now let us turn to the two other quarters; beginning with the things which could be indeed divided, but which would obviously be destroyed in the process. Their estimated value is more than two thousand million pounds: half of which sum is represented by the railways and shipping of the kingdom; six hundred million pounds, by gasworks and the machinery in our factories; and the rest, by roads and streets and public works and buildings. ◆² These, it is obvious, are not suitable for division; and still less divisible are the things in the class that still remains. For of their total value, which amounts to some two thousand five hundred million pounds, more than a thousand million pounds, according to Mr. Giffen, represent the good-will of various professions of business; and the whole of the remainder—nearly fifteen hundred million pounds—represents nothing that is in the United Kingdom at all, but merely legal claims on the part of particular British subjects to a share in the proceeds of enterprise in other countries.

This last class consists of things which are merely rights and advantages secured by law, and dependent on existing social conditions; and it can be easily understood how they would disappear under any attempt to seize them. But the remaining three quarters of our capital consists of material things; and what we have seen with regard to them may strike many people as incredible; for the moment we imagine them violently seized and distributed, they seem to dwindle and shrivel up; and the share of each individual suggests to one’s mind nothing but a series of ludicrous pictures—pictures of men whose heritage in all this unimaginable wealth is an acre of ground, two wheels of a steam-engine, a bedroom, a pearl pin, and the tenth part of a pig.

◆1 Capital has no value at all, except when vivified by use;

◆¹ The explanation, however, of this result is to be found in the recognition of an exceedingly simple fact: that the capital of a country is of hardly any value at all, and is, as capital, of no value at all, when regarded merely as an aggregate of material things, and not as material things made living by their connection with life. The land, which is worth fifteen hundred million pounds, depends for its value on the application of human labour to it, and the profitable application of labour depends on skill and intelligence. The value of the houses depends on our means of living in them—depends not on themselves, but on the way in which they are inhabited. What are railways or steamships, regarded as dead matter, or all the machinery belonging to all the manufacturing companies? Nothing. They are no more wealth than a decomposing corpse is a man. They become wealth only when life fills them with movement by a power which, like all vital processes, is one of infinite complexity: when multitudes are massed in this or in that spot, or diffused sparsely over this or that district; when trains move at appropriate seasons, and coal finds its way from the mine to the engine-furnace. The only parts of the capital in existence at any given moment, which deserve the name of capital as mere material things, are the stores of food, fuel, and clothing existing in granaries, shops, and elsewhere; and not only is the value of these proportionately small, but, if not renewed constantly, they would in a few weeks be exhausted.

◆1 And it obviously cannot be used if it is equally distributed.

◆2 Income is all that could conceivably be thus divided.

◆¹ It is plain then that, under the complicated system of production to which the wealth of the modern world is due, an equal division of the capital of a country like our own is not the way to secure an equal division of wealth. ◆² The only thing that could conceivably be divided is income. If, however, it is true that capital is, as we have seen it is, in its very nature living, and ceases to be itself the moment that life goes out of it, still more emphatically must the same thing be said of income, for the sake of producing which capital is alone accumulated. Agitators talk of the national income as if it were a dead tree which a statesman like Mr. Gladstone could cut into chips and distribute. It is not like a dead tree; it is like the living column of a fountain, of which every particle is in constant movement, and of which the substance is never for two minutes the same.

◆1 The national income consists of money no more than the national capital does.

◆2 It consists of other things, or rights to other things;

◆3 Namely, of perishable goods, durable goods, and services.

◆¹ Let us examine the details of this income, and the truth of what has been said will be apparent. The total amount, as we have seen, is estimated at thirteen hundred million pounds; it is not, however, made up of sovereigns, but of things of which sovereigns are nothing more than the measure. ◆² The true income of the nation and the true income of the individual consist alike of things which are actually consumed or enjoyed; or of legal rights to such things which are accumulated for future exercise. Of these last, which, in other words, are savings, and are estimated to amount to a hundred and thirty million pounds annually, we need not speak here, except to deduct them from the total spent. The total is thus reduced to eleven hundred and seventy million pounds—or to things actually consumed or enjoyed, which are valued at that figure. Now what are these things? That is our present question. ◆³ By far the larger part of them comes under the following heads: Food, Clothing, Lodging, Fuel and Lighting, the attendance of Servants, the Defence of the Country and Empire, and the Maintenance of Law and Order. These together represent about eight hundred million pounds. Of the remaining three hundred and seventy million pounds, about a third is represented by the transport of goods and travelling; and not much more than a quarter of the total income, or about two hundred and seventy million pounds, by new furniture, pictures, books, plate, and other miscellaneous articles. The furniture produced annually counts for something like forty million pounds; and the new plate for not more than five hundred thousand pounds.

And now let us examine these things from certain different points of view, and see how in each case they group themselves into different classes.

In the first place, they may be classified thus: into things that are wealth because they are consumed, things that are wealth because they are owned, and things that are wealth because they are used or occupied. Under the first heading come food, clothing, lighting, and fuel; under the second, movable chattels; and under the third, the occupation of houses,[16] the services of domestics, the carrying of letters by the Post Office, transport and travelling, and the defences and administration of the country. In other words, the first class consists of new perishable goods, the second of new durable goods, and the third not of goods at all, but of services and uses. The relative amounts of value of the three will be shown with sufficient accuracy by the following rough estimates.

Of a total of eleven hundred and seventy million pounds, perishable goods count for five hundred and twenty million pounds, durable goods and chattels for two hundred and fifty million pounds, and services and uses for four hundred million pounds. Thus, less than a quarter of what we call the national income consists of material things which we can keep and collect about us; little less than half consists of material things which are only produced to perish, and perish almost as fast as they are made; and more than a third consists of actions and services which are not material at all, and pass away and renew themselves even faster than food and fuel.

◆1 A large part of the national income consists of things that are imported.

◆2 Most of our food is imported.

◆¹ This is how the national income appears, as seen from one point of view. Let us change our ground, and see how it appears to us from another. We shall see the uses and the services—to the value of four hundred million pounds—still grouped apart as before. But the remaining elements, representing nearly eight hundred million pounds, and consisting of durable and perishable material things, we shall see dividing itself in an entirely new way—into material things made at home, and material things imported. We shall see that the imported things come to very nearly half;[17] and we shall see further that amongst these imported things food forms incomparably the largest item. But the significance of this fact is not fully apparent till we consider what is the total amount of food consumed by us; and when we do that, we shall see that, exclusive of alcoholic drinks, actually more than half come to us from other countries.[18] The reader perhaps may think that this imported portion consists largely of luxuries, which, on occasion, we could do without. If he does think so, let him confine his attention to those articles which are most necessary, and most universally consumed—namely bread, meat, tea, coffee, and sugar—◆² and he will see that our imports are to our home produce as ninety to seventy-three. If we strike out the last three, our position is still more startling;[19] and most startling if we confine ourselves to the prime necessary—bread. The imported wheat is to the home-grown wheat as twenty-six to twelve: that is to say, of the population of this kingdom twenty-six millions subsist on wheat that is imported, and only twelve millions on wheat that is grown at home; or, to put the matter in a slightly different way, we all subsist on imported wheat for eight months of the year.

◆1 Thus the national income is a product of infinite complexity.

◆¹ And now let the reader reflect on what all this means. It means that of the material part of the national income half consists, not of goods which we ourselves produce, but of foreign goods which are exchanged for them; and are exchanged for them only because, by means of the most far-reaching knowledge, and the most delicate adaptation of skill, we are able to produce goods fitted to the wants and tastes of distant nations and communities, many of which are to most of us hardly even known by name. On every workman’s breakfast-table is a meeting of all the continents and of all the zones; and they are united there by a thousand processes that never pause for a moment, and thoughts and energies that never for a moment sleep.

◆1 Its amount also varies owing to infinitely complicated causes,

◆¹ A consideration of these facts will be enough to bring home to anybody the accuracy of the simile of which I made use just now, when I compared the income of the nation to the column thrown up by a fountain. He will see how, like such a column, it is a constant stream of particles, taking its motion from a variety of complicated forces, and how it is a phenomenon of force quite as much as a phenomenon of matter. He will see that it is a living thing, not a dead thing: and that it can no more be distributed by any mechanical division of it, than the labour of a man can be distributed by cutting his limbs to pieces.

This simile of the fountain, though accurate, is, like most similes, incomplete. It will, however, serve to introduce us to one peculiarity more by which our national income is distinguished, and which has an even greater significance than any we have yet dealt with.

In figuring the national income as the water thrown up by a fountain, we of course suppose its estimated amount or value to be represented by the volume of the water and the height to which it is thrown. What I am anxious now to impress on the attention of the reader is that the height and volume of our national fountain of riches are never quite the same from one year to another; whilst we need not extend our view beyond the limits of one generation to see that they have varied in the most astonishing manner. The height and volume of the fountain are now very nearly double what they were when Mr. Gladstone was in Lord Aberdeen’s Ministry.[20]

◆1 Which are quite independent of the growth of population;

◆¹ Some readers will perhaps be tempted to say that in this there is nothing wonderful, for it is due to the increase of population. But the increase of population has nothing to do with the matter. It cannot have anything to do with what I am now stating. For when I say that within a certain period the income of the nation has doubled itself, I mean that it has doubled itself in proportion to the population; so that, no matter how many more millions of people there may be in the country now than there were at the beginning of the period in question, there is annually produced for each million of people now nearly twice the income that was produced for each million of people then. Or in other words, an equal division now would give each man nearly double the amount that it would have given him when Mr. Gladstone was beginning to be middle-aged.

◆1 As we may see by comparing the income of this country with the income of others.

◆¹ But we must not be content with comparing our national income with itself. Let us compare it also with the incomes of other countries; and let it in all cases be understood that the comparison is between the income as related to the respective populations, and not between the absolute totals. We will begin with France. It is estimated that, within the last hundred and ten years, the income of France has, relatively to the population, increased more than fourfold. A division of the income in 1780 would have given six pounds a head to everybody: a similar division now would give everybody twenty-seven pounds. And yet the income of France, after all this rapid growth, is to-day twenty-one per cent less than that of the United Kingdom. Other comparisons we shall find even more striking. Relatively to the respective populations, the income of the United Kingdom exceeds that of Norway in the proportion of thirty-four to twenty; that of Switzerland, in the proportion of thirty-four to nineteen; that of Italy, in the proportion of thirty-four to twelve; and that of Russia, in the proportion of thirty-four to eleven. The comparison with Italy and Russia brings to light a remarkable fact. Were all the property of the upper classes in those countries confiscated, and the entire incomes distributed in equal shares, the share of each Russian would be fifty per cent less, and of each Italian forty per cent less than what each inhabitant of the United Kingdom would receive from a division of the income of its wage-earning classes only.

We find, therefore, that if we take equal populations of men,—populations, let us say, of a million men each,—either belonging to the same nation at different dates, or to different civilised nations at the same date, that the incomes produced by no two of them reach to the same amount; but that, on the contrary, the differences between the largest income and the others range from twenty to two hundred per cent.

◆1 The causes of these differences in income are not differences of race,

◆¹ Now what is the reason of this? Perhaps it will be said that differences of race are the reason. That may explain a little, but it will not explain much; for these differences between the incomes produced by equal bodies of men are not observable only when men are of different races; but the most striking examples,—namely, those afforded by our own country and France—are differences between the incomes produced by the same race during different decades—by the same race, and by many of the same individuals.

◆1 Nor of soil or climate,

◆¹ Perhaps then it will be said that they are due to differences of soil and climate. But again, that will not explain the differences, at various dates, between the incomes of the same countries; and though it may explain a little, it will not explain much, of the differences at the same date between the incomes of different countries. The soil and climate, for instance, of the United Kingdom, are not in themselves more suited for agriculture than the soil and climate of France and Belgium; and yet for each individual actually engaged in agriculture, this country produces in value twenty-five per cent more than France, and forty per cent more than Belgium. I may add that it produces forty-six per cent more than Germany, sixty-six per cent more than Austria, and sixty per cent more than Italy.[21]

◆1 Nor of hours of labour,

◆¹ Perhaps then a third explanation will be suggested. These differences will be said to be due to differences in the hours of labour. But a moment’s consideration will show that that has nothing to do with the problem; for when a million people in this country produced half what they produce to-day, they had fewer holidays, and they worked longer hours. Now that they have doubled the annual produce, they take practically four weeks less in producing it.[22] Again, the hours of labour for the manufacturing classes are in Switzerland twenty-six per cent longer at the present time than in this country; and yet the annual product, in proportion to the number of operatives, is twenty-eight per cent less.[23]

Agriculture gives us examples of the same discrepancy between the labour expended and the value of the result obtained. In France, the agricultural population is three times what it is in this country, but the value of the agricultural produce is not so much as double.[24]

◆1 But are causes of some other kind which lie below the surface,

Plainly, therefore, the growth of a nation’s income, under modern conditions, does not depend on an increased expenditure of labour. There might, indeed, seem some ground for leaping to the contrary conclusion—that it grows in proportion as the hours of labour are limited: but whatever incidental truth there may be in that contention, it does not explain the main facts we are dealing with; for some of the most rapid changes in the incomes of nations we find have occurred during periods when the hours of labour remained unaltered; and we find at the present moment that countries in which the hours of labour are the same, differ even more, in point of income, from one another than they differ from countries in which the hours of labour are different. ◆¹ Whatever, therefore, the causes of such differences may be, they are not simple and superficial causes like these.

◆1 And which requires to be carefully searched for.

I have alluded to the incomes of foreign countries only for the sake of throwing more light on the income of our own. Let us again turn to that. Half of that income, as we have seen, consists to-day of an annual product new since the time when men still in their prime were children; and this mysterious addition to our wealth has rapidly and silently developed itself, without one person in a thousand being aware of its extent, or realising the operation of any new forces that might account for it. Let people of middle age look back to their own childhood; and the England of that time, in aspects and modes of life, will not seem to them very different from what it seems now. Let them turn over a book of John Leech’s sketches, which appeared in Punch about the time of the first Exhibition; and, putting aside a few changes in feminine fashion, they will see a faithful representation of the life that still surrounds them. The street, the drawing-room, the hunting-field, the railway-station—nothing will be obsolete, nothing out-of-date. Nothing will suggest that since these sketches were made any perceptible change has come over the conditions of our civilisation. And yet, somehow or other, some changes have taken place, owing to which our income has nearly doubled itself. ◆¹ In other words, the existence of one-half of our wealth is due to causes, the nature, the presence, and the operation of which, are hidden so completely beneath the surface of life as to escape altogether the eye of ordinary observation, and reveal themselves only to careful and deliberate search.

◆1 For, unless we understand the causes which have made our national income grow, we may, by interfering with them unknowingly, make our income decrease:

◆¹ The practical moral of all this is obvious: that just as our income has doubled itself without our being aware of the causes, and almost without our being aware of the fact, so unless we learn what the causes are, and are consequently able to secure for them fair play, or, at all events, to avoid interfering with their operation, we may lose what we have gained even more quickly than we have gained it, and annihilate the larger part of what we are desirous to distribute. We have seen that the national income is a living thing; and, as is the case with other living things, the principles of its growth reside in parts of the body which are themselves not sensitive to pain, but which may for the moment be deranged and injured with impunity, and will betray their injury only by results which arise afterwards, and which may not be perceived till it is too late to remedy them.

◆1 And this is the danger of reckless social legislation.

◆¹ Here lies the danger of reckless social legislation, and even of the reckless formation of vague public opinion; for public opinion, in a democratic country like ours, is legislation in its nebular stage: and hence the only way to avert this danger is, first to do what we have just now been doing,—to consider the amount and character of the wealth with which we have to deal,—and secondly, to examine the causes to which the production of this wealth has been due, and on which the maintenance of its continued production must depend.

◆1 We will therefore, in the following Book, examine what these causes are.

◆¹ Let the social reformer lay the following reflections to his heart. Some of the more ardent and hopeful of the leaders of the Labour Party to-day imagine that considerable changes in the distribution of the national income may be brought about by the close of the present century. In other words, they prophesy that the Government will seven years hence do certain things with that year’s national income. But the national income of that year is not yet in existence; and what grounds have those sanguine persons for thinking that when it is produced it will be as large, or even half as large, as the national income is to-day? What grounds have they for believing that, if the working-classes then take everything, they will be as rich as they are now when they take only a part? The only ground on which such a belief can be justified is the implied belief that the same conditions and forces which have swelled the national income to its present vast amount, will still continue in undisturbed operation.

We will now proceed to consider what these conditions and forces are.

BOOK II

THE CHIEF FACTOR IN THE PRODUCTION OF THE NATIONAL INCOME

CHAPTER I

Of the various Factors in Production, and how to distinguish the Amount produced by each.

The inquiry on which we are entering really comprises two. I will explain how.

Although, as we have seen, of the yearly income of the nation a part only consists of material things, yet the remainder depends upon these, and its amount is necessarily in proportion to them. Accordingly, when we are dealing with the question of how the income is produced, we may represent the whole of it as a great heap of commodities, which every year disappears, and is every year replaced by a new one. Here then we have a heap of commodities on one side, and on the other the subjects of our inquiry—namely, the conditions and forces which produce that heap.

◆1 Land, Capital, and Human Exertion are the three factors in production; but at present we may omit Capital.

Now, as to what these conditions and forces are, there is a familiar answer ready for us—◆¹ Land, Labour, and Capital; and, with a certain reservation, we may take this to be true. But as Capital is itself the result of Land and Labour, we need not, for the moment, treat Capital separately; but we may say that the heap is produced by Land and Labour simply. I use this formula, however, only for the purpose of amending it. It will be better, for reasons with which I shall deal presently, instead of the term Labour to use the term Human Exertion. And further, we must remember this—the heap of commodities we have in view is no mere abstraction, but represents the income of this country at some definite date; so that when we are talking of the forces and conditions that have produced it, we mean not only Human Exertion and Land, but Human Exertion of a certain definite amount applied to Land of a definite extent and quality.

◆1 The first point we notice is that the exertion of the same number of men applied to the same land does not always produce the same amount of wealth.

◆2 This must be due to some varying element in the Human Exertion in question.

◆3 Let us compare production in this country 100 years ago with production now.

◆¹ Now, as I pointed out in the last Book, one of the most remarkable things about our national production of commodities, is that the yearly exertion of the same number of men, applied to land of the same extent and quality, has been far from producing always a heap of the same size. On the contrary, the heap which it produces to-day is twice as large as that which it produced in the days of our fathers; and nearly three times as large as that which it produced in the days of our grandfathers. Here then is the reason why the inquiry that is before us is twofold. For we have at first to take some one of such heaps singly—on several accounts it will be convenient to take the smallest, namely that produced about a hundred years ago—and to analyse the parts which Land and Human Exertion played respectively in the production of it. Then, having seen how Land and Human Exertion produced in the days of our grandfathers a heap of this special size, we must proceed to inquire why three generations later the same land and the exertions of a similar number of men produce a heap which is nearly three times as large. For the difference of result cannot be due to nothing. ◆² It must be due to some difference in one of the two causes—to the presence in this cause of some varying element: and it is precisely here—here in this varying element—that the main interest of our inquiry centres. For if it is owing to a variation in this element that our productive powers have nearly trebled themselves in the course of three generations, nearly two-thirds of the income which the nation enjoys at present depends on the present condition of this element being maintained, and not being suffered—as it very easily might be—to again become what it was three generations back. ◆³ Let us begin then with taking the amount of commodities produced in this country at the end of the last century, which is at once the most convenient and the most natural period to select; for production was then entering on its present stage of development, and its course from then till now is more or less familiar to us all.

We will start therefore with the fact that, about a hundred years ago, our national income, if divided equally amongst the inhabitants of the kingdom, would have yielded to each inhabitant a share of about fourteen pounds; so that if we confine ourselves to Great Britain, the population of which was then about ten millions, we have a national income of a hundred and forty million pounds, or a heap of commodities produced every year to an amount that is indicated by that money value. Let us take then any one of the closing years of the last century, and consider for a moment the causes at work in this island to which the production of such a heap of commodities was due.

In general language, these causes have been described already as Human Exertion of a certain definite amount applied to Land of a certain definite extent and quality; but it will now be well to restore to its traditional place the accumulated result of past exertion—namely Capital, and to think of it as a separate cause, according to the usual practice. For everybody knows that at the close of the last century, many sorts of machinery, and stores of all sorts of necessaries, were made and accumulated to assist and maintain Labour; and it is of such things that Capital principally consists. The Capital of Great Britain was at that time about sixteen hundred million pounds.[25] We will accordingly say that about a hundred years ago, the Land of this island, the Capital of this island, and the Exertions of a population of ten million people produced together, every twelve months, a heap of commodities worth a hundred and forty million pounds. We need not, however, dwell, till later, on these details. For the present our national production at this particular period may be taken to represent the production of wealth generally.

◆1 How much in each case did Land, Capital, and Human Exertion produce respectively?

◆¹ Now the question, let it be remembered, with which we are concerned ultimately, is how wealth, as produced in the modern world, may be distributed. Accordingly, since the distribution of it presupposes its production, and since we are agreed generally as to what the causes of its production are,—namely, Land, Capital, and Human Exertion,—our next great step is to inquire what proportion of the product is to be set down as due to each of these causes separately; for it is by this means only that we can see how and to what extent our social arrangements may be changed, without our production being diminished. And I cannot introduce the subject in a better way than by quoting the following passage from John Stuart Mill, in which he declares such an inquiry to be both meaningless and impossible to answer; for that it can be answered, and that it is full of meaning, and that to ask and answer it is a practical and fundamental necessity, will be made all the plainer by the absurdity of Mill’s denial.

◆1 Mill declares this question to be meaningless;

◆2 But his argument is answered, and is refuted both by practical life and by his own writings.

◆¹ “Some writers,” he says, “have raised the question whether Nature (or, in the language of economics, Land) gives more assistance to Labour in one kind of industry or another, and have said that in some occupations Labour does most; in others, Nature most. In this, however, there seems much confusion of ideas. The part which Nature has in any work of man is indefinite and immeasurable. It is impossible to decide that in any one thing Nature does more than in any other. One cannot even say that Labour does less. Less Labour may be required; but if that which is required is absolutely indispensable, the result is just as much the product of Labour as of Nature. When two conditions are equally necessary for producing the effect at all, it is unmeaning to say that so much of it is produced by one and so much by the other. It is like attempting to decide which half of a pair of scissors has most to do with the act of cutting; or, which of the factors—five or six—has most to do with the production of thirty.” So writes Mill in the first chapter of his Principles of Political Economy; and if what he says is true with regard to Land and Labour (or, as we are calling it, Human Exertion), it is equally true with regard to Human Exertion and Capital; for without Human Exertion, Capital could produce nothing, and without Capital modern industry would be impossible: and thus, according to Mill’s argument, we cannot assign to either of them a specific portion of the product. ◆² But Mill’s argument is altogether unsound; and the actual facts of life, and a large part of Mill’s own book, little as he perceived that it was so, are virtually a complete refutation of it.

To understand this, the reader need only reflect on those three principal and familiar parts into which the annual income of every civilised nation is divided, not only in actual practice, but theoretically by Mill himself—namely Rent, Interest, and Wages.[26] For these—what are they? The answer is very simple. They are portions of the income which correspond, at all events in theory, to the amounts produced respectively by Land, Capital, and Human Exertion; and which are on that account distributed amongst three sets of men—those who own the Land, those who own the Capital, and those who have contributed the Exertion. There are many causes which in practice may prevent the correspondence being complete; but that the general way in which the income is actually distributed is based on the amount produced by these three things respectively,—Land, Capital, and Human Exertion,—is a fact which no one can doubt who has once taken the trouble to consider it. It is thus perfectly clear that, contrary to what Mill says, though two or more agencies may be equally indispensable to the production of any wealth at all, it is not only not “unmeaning to say that so much is produced by one and so much by the other,” but it is possible to make the calculation with practical certainty and precision; and I will now proceed to explain the principles on which it is made.

CHAPTER II

How the Product of Land is to be distinguished from the Product of Human Exertion.

The question before us will be most easily understood if we begin with once again waiving any consideration of Capital, and if we deal only with what Mill, in the passage just quoted, calls “Nature and Labour”—or, in other words, with Land and Human Exertion. We will also, for simplicity’s sake, confine ourselves to one use of land—its primary and most important use, namely its use in agriculture or food-production.

◆1 Rent is the proportion of the produce produced not by Human Exertion, but by the Land itself;

◆¹ Now a British tenant-farmer who lives solely by his farming obviously derives his whole income from the produce of the soil he occupies; but the whole of this produce does not go to himself. Part is paid away in the form of rent to his landlord, and part in the form of wages to his labourers. We may however suppose, without altering the situation, that he has no labourers under him—that he is his own labourer as well as his own manager, and that the whole of the produce that is not set aside as rent goes to himself as the wages of his own exertion. The point on which I am going to insist is this—that whilst the exertion has produced the product that is taken as wages, the soil—or to speak more accurately—a certain quality in the soil has just as truly produced the produce that goes in rent—in fact that “Nature and Labour, though equally necessary for producing the effect at all,” each produce respectively a certain definite part of it.

◆1 As will be shown in this chapter by reference to the universally accepted theory of Rent.

◆¹ In order to prove this it will be enough to make really clear to the reader the explanation of rent which is given by all economists—an explanation in which men of the most opposite schools agree—men like Ricardo, and men like Mr. Henry George; and of which Mill himself is one of the most illustrious exponents. I shall myself attempt to add nothing new to it, except a greater simplicity of statement and illustration, and a special stress on a certain part of its meaning, the importance of which has been hitherto disregarded.

Now, as we are going to take the industry of agriculture for our example, we shall mean by rent a portion of the agricultural products derived from Human Exertion applied to a given tract of soil. Of such products let us take corn, and use it, for simplicity’s sake, as representing all the rest; and that being settled, let us go yet a step further; and, for simplicity’s sake also, let us represent corn by bread; and imagine that loaves develop themselves in the soil like potatoes, and, when the ground is properly tilled, are dug up ready for consumption. We shall figure rent therefore as a certain number of loaves that are dug up from a given tract of soil. Now everybody knows that all soils are not equally good. That there is good land and that there is poor land is a fact quite familiar even to people who have never spent a single day in the country. And this means, if we continue the above supposition, that different fields of precisely the same size, cultivated by similar men and with the same expenditure of exertion, will yield to their respective cultivators different numbers of loaves.

◆1 We will illustrate this by the case of three men of equal power tilling three fields of unequal fertility.

◆¹ Let us take an example. Tom, Dick, and Harry, we will say, are three brothers, who have each inherited a field of twelve acres. They are all equally strong, and equally industrious: we may suppose, in fact, that they all came into the world together, and are as like one another as three Enfield rifles. Each works in his field for the same time every day, digs up as many loaves as he can, and every evening brings them home in a basket. But when they come to compare the number that has been dug up by each, Tom always finds that he has fifteen loaves, Dick that he has twelve, and Harry that he has only nine; the reason being that in the field owned by Harry fewer loaves develop themselves than in the fields owned by Tom and Dick. Harry digs up fewer, because there are fewer to dig up. Let us consider Harry’s case first.

◆1 Labour must be held to produce so much as is absolutely necessary for its own support.

◆¹ Each of the loaves is, we will say, worth fourpence; therefore Harry, with his nine loaves, makes three shillings a day, or eighteen shillings a week. This is just enough to support him, according to the ideas and habits of his class. If his field were such that it yielded him fewer loaves, or if he had to give even one of the loaves away, the field would be useless; it would not be cultivated at all, either by him, or by anybody, nor could it be; for the entire produce, which would then go to the cultivator, would not be enough to induce, or perhaps even to make him able, to cultivate it. But, as matters stand, so long as the entire produce does go to him, and to no one else, we must take it for granted that his exertion and his field between them yield him a livelihood which, according to his habits, is sufficient; for otherwise, as I have said, this field neither would nor could be cultivated. And it will be well here to make the general observation that whenever we find a class of men cultivating the utmost area of land which their strength permits, and taking for themselves the entire produce, their condition offers the highest standard of living that can possibly be general amongst peasant cultivators: from which it follows that, unless no land is cultivated except the best, the general standard of living must necessarily require less than the entire produce which the best land will yield. We assume then that Harry, with his nine loaves a day, represents the highest standard of living that is, or that can be, general amongst his class.

And now let us turn from Harry’s case to the case of Tom and Dick. They have been accustomed to precisely the same standard of living as he has been; and they require for their support precisely the same amount of produce. But each day, after they have all of them fared alike, each taking the same quantity from his own particular basket, the baskets of Tom and Dick present a different appearance to that of Harry. There is in each of the two first a something which is not to be found in his. There is a surplus. In Dick’s basket there are three extra loaves remaining; and in Tom’s basket there are six. To what then is the production of these extra loaves due? Is it due to land, or is it due to the exertions of Tom and Dick? Mill, as we have seen, would tell us that this was an unmeaning question; but we shall soon see that it is not so.

◆1 But whatever is beyond this is the product not of Labour, but of Land;

It is perfectly true that it would be an unmeaning question if we had to do with one of the brothers only—say with Harry, and only with Harry’s field. Then, no doubt, it would be impossible to say which produced most—Harry or the furrows tilled by him,—whether Harry produced two loaves and the furrows seven, or Harry seven and the furrows two. And as to Harry’s case more must be said than this. Such a calculation with regard to it would be not only impossible, but useless; for even if we convinced ourselves that the land produced seven loaves, and Harry’s exertion only two, all the loaves would still of necessity go to Harry. In a case like this, therefore, it is quite sufficient to take account of Human Exertion only. Agricultural labour, in fact, must be held to produce whatever product is necessary for the customary maintenance of the labourer. ◆¹ But if this is the entire product obtained from the worst soil cultivated, it cannot be the entire product obtained from the best soil; and the moment we have to deal with a second field,—a field which is of a different quality, and which, although it is of exactly the same size, and is cultivated every day with precisely similar labour, yields to that labour a larger number of loaves,—twelve loaves, or fifteen loaves, instead of nine,—then our position altogether changes. We are not only able, but obliged to consider Land as well as Labour, and to discriminate between their respective products. A calculation which was before as unmeaning as Mill declares it to be, not only becomes intelligible, but is forced on us.

◆1 As we shall see by comparing the case of the man tilling the best field with that of the man tilling the worst.

◆¹ For if we start with the generalisation derived from Harry’s case, or any other case in which the land is of a similar quality that one man’s labour produces nine loaves daily, and then find that Tom and Dick, for the same amount of labour, are rewarded respectively by fifteen loaves or by twelve, we have six extra loaves in one case, and three in the other, which cannot have been produced by Labour, and which yet must have been produced by something. They cannot have been produced by Labour; for the very assumption with which we start is that the Labour is the same in the last two cases as in the first; and according to all common-sense and all logical reasoning, the same cause cannot produce two different results. When results differ, the cause of the difference must be sought in some cause that varies, not a cause that remains the same; and the only cause that here varies is the Land. Accordingly, just as in Harry’s case we are neither able nor concerned to credit the Land with any special part, or indeed any part, of the product, but say that all the nine loaves are produced by Harry’s Labour, so too in the case of Tom and Dick we credit Labour with a precisely similar number; but all loaves beyond that number we credit not to their Labour, but to their Land—or, to speak more accurately, to certain qualities which their Land possesses, and which are not possessed by Harry’s. In Dick’s case these superior qualities produce three loaves; in Harry’s case, they produce six.

◆1 The men themselves would be the first to understand this.

If any one doubts that such is the case, let him imagine our three brothers beginning to quarrel amongst themselves, and Tom and Dick boasting that they were better men than Harry, on the ground that they always brought home more loaves than he. Every one can see what Harry’s retort would be, and see also that it is unanswerable. ◆¹ Of course he would say, “I am as good a man as either of you, and my labour produces quite as much as yours. Let us only change fields, and you will see that soon enough. Let Tom take mine, and let me take his, and I then will bring home fifteen loaves; and he, work as he may, will only bring home nine. It is your b——y land that produces more than mine, not you that produce more than I; and if you deny it, stand out you ——s and I’ll fight you.” We may also appeal to one of the commonest of our common phrases, in which Harry’s supposed contention is every day reiterated. If a farmer is transferred from a bad farm to a good one, and the product of his farming is thereby increased, as it will be, everybody will say, “The good farm makes all the difference.” This is merely another way of saying, the superior qualities in the soil produce all the increase, or—to continue our illustration—the increased number of loaves.

And all the world is not only asserting this truth every day, but is also acting on it; for these extra loaves, produced by the qualities peculiar to superior soils, are neither more nor less than Rent. Rent is the amount of produce which a given amount of exertion obtains from rich land, beyond what it obtains from poor land. Such is the account of rent in which all economists agree; indeed, when once it is understood, the truth of it is self-evident. Mr. Henry George’s entire doctrines are built on it; whilst Mill calls it the pons asinorum of economics. I have added nothing in the above statement of it to what is stated by all economists, except weight and emphasis to a truth which they do not so much state as imply, and whose importance they seem to have overlooked. This truth is like a note on a piano, which they have all of them sounded lightly amongst other notes. I have sounded it by itself, and have emphasised it with the loud pedal—the truth that rent is for all practical purposes not the product of Land and Human Exertion combined, but the product of Land solely, as separate from Human Exertion and distinct from it.

◆1 The above doctrine of Rent is not a landlord’s doctrine. It would hold true of a Socialistic State as well as of any other.

◆¹ And here let me pause for a moment to point out a fact which, though it illustrates the above truth further, I should not mention here if it were not for the following reason. Rent forms the subject of so much social and party prejudice that what I have just been urging may be received by certain readers with suspicion, and regarded as some special pleading on behalf of landlords. I wish therefore to point out clearly that the existence of rent and the payment of rent is not peculiar to our existing system of landlordism. Rent must arise, under any social arrangement, from all soils which are better than the poorest soil cultivated: it must be necessarily paid to somebody; and that somebody must necessarily be the owner. If a peer or a squire is the owner, it is paid to the peer or squire; if the cultivator is the owner, the cultivator pays it to himself; if the land were nationalised and the State were to become the owner, the cultivator would have to pay it away to the State.

◆1 It is easy to see how Rent arises, under any conditions, from all superior soils.

◆¹ In order that the reader may fully realise this, let us go back to our three brothers, of whom the only two who paid rent at all, paid it, according to our supposition, to themselves; and let us imagine that Harry—the brother who pays no rent to anybody, because his field produces none, has a sweetheart who lives close to Tom’s field, or who sits and sucks blackberries all day in its hedge; and that Harry is thus anxious to exchange fields with Tom, in order that he may be cheered at his work by the smiles of the beloved object. Now if Tom were to assent to Harry’s wishes without making any conditions, he would be not only humouring the desire of Harry’s heart, but he would be making him a present of six loaves daily; and this, we may assume, he certainly would not do; nor would Harry, if he knew anything of human nature, expect or even ask him to do so. If Tom, however, were on good terms with his brother, he might quite conceivably be willing to meet his wishes, could it be but arranged that he should be no loser by doing so; and this could be accomplished in one way only—namely, by arranging that, since Harry would gain six loaves each day by the exchange, and Tom would lose them, Harry should send these six loaves every day to Tom; and thus, whilst Harry was a gainer from a sentimental point of view, the material circumstances of both of them would remain what they were before. Or we may put the arrangement in more familiar terms. The loaves in question we have supposed to be worth fourpence each; so we may assume that instead of actually sending the loaves, Harry sends his brother two shillings a day, or twelve shillings a week, or thirty pounds a year. Tom’s field, as we have said, is twelve acres; therefore, Harry pays him a rent of fifty shillings an acre. And Tom’s case is the case of every landlord, no matter whether the landlord is a private person or the State—a peer who lets his land, a peasant like Tom who cultivates it, or a State which allows the individual to occupy but not to own it. Rent represents an advantage which is naturally inherent in certain soils; and whoever owns this advantage—either the State or the private person—must of necessity either take the rent, or else make a present of it to certain favoured individuals.

It should further be pointed out that this doctrine of Rent, though putting so strict a limit on the product that can be assigned to Labour, interferes with no view that the most ardent Socialist or Radical may entertain with regard to the moral rights of the labourer. If any one contends that the men who labour on the land, and who pay away part of the produce as rent to other persons, ought by rights to retain the whole produce for themselves, he is perfectly at liberty to do so, for anything that has been urged here. For the real meaning of such a contention is, not that the labourers do not already keep everything that is produced by their labour, but that they ought to own their land instead of hiring it, and so keep everything that is produced by the land as well.

◆1 The doctrine of Rent is the fundamental example of the reasoning by which to each agent in production a definite portion of the product is attributed.

This doctrine of Rent, then, which I have tried to make absolutely clear, involves no special pleading on behalf either of landlord or tenant, of rich or poor. It can be used with equal effect by Tory, Radical, or Socialist, and it would be as true of a Socialistic State as it is of any other. I have insisted on it here for one reason only. ◆¹ It illustrates, and is the fundamental example of, the following great principle—that in all cases where Human Exertion is applied to Land which yields only enough wealth to maintain the man exerting himself, practical logic compels us to attribute the entire product to his exertion, and to take the assumption that his exertion produces this much as our starting-point. But in all other cases—that is to say in all cases where the same exertion results in an increased product, we attribute the increase—we attribute the added product—not to Human Exertion, which is present equally in both cases, but to some cause which is present in the second case, and was not present in the first: that is to say, to some superior quality in the soil.

And now let us put this in a more general form. When two or more causes produce a given amount of wealth, and when the same causes with some other cause added to them produce a greater amount, the excess of the last amount over the first is produced by the added cause; or conversely, the added cause produces precisely that proportion of the total by which the total would be diminished if the added cause were withdrawn.

It is on this principle that the whole reasoning in the present book is based; and having seen how it enables us to discriminate between the amounts of wealth produced respectively by Human Exertion and Land, let us go on to see how it will enable us likewise to discriminate what is produced by Capital.

CHAPTER III

Of the Products of Machinery or Fixed Capital, as distinguished from the Products of Human Exertion.

◆1 To understand how much of the gross product is made by Capital, it will be well to turn from agriculture to manufactures;

◆2 As Capital plays in manufactures a more obvious part.

◆¹ Land, which in economics means everything that the earth produces and the areas it offers for habitation, is of course in a sense at the bottom of every industry. But if we wish to understand the case of Capital, it will be well to turn from agriculture to industry of another kind; the reason being that the part which Capital plays in agriculture is not only, comparatively speaking, small, but is also a part which, when we are first approaching the subject, is comparatively ill fitted for purposes of illustration. ◆² What is best fitted for the purpose of illustration is Capital applied to manufactures; and it is best at first not to consider all such Capital, but to confine our attention to one particular part of it. I must explain to the reader exactly what I mean.

◆1 Capital, when actually employed, is of two kinds:

◆2 Fixed Capital, such as plant and machinery; and Wage Capital.

◆3 The Capital embodied in machinery is what, for our present purpose, we must first consider.

◆¹ People constantly speak of Capital as being a sensitive thing—a movable thing—a thing that is easily driven away—that can be transferred from one place to another by a mere stroke of the pen. We all of us know the phrases. But though they express a truth, it is partial truth only. Capital before it is employed, when it is lying, let us say, in a bank, to the credit of a Company that has not yet begun operations—Capital, under such circumstances, is no doubt altogether movable; for before it is employed it exists as credit only. ◆² But the moment it is employed in manufacture, a very considerable part of it is converted into things that are very far from movable—into such things as buildings and heavy machinery; and only a part remains movable—namely that reserved for wages. For example, M’Culloch estimates that the average cost of a factory is about one hundred pounds for every operative to be employed in it; whilst the yearly wages of each adult male would now on the average, be about sixty pounds. Thus, if a factory is started which will employ one thousand men, and if the wages of all of them have to be paid out of Capital for a year, the amount reserved for wages will be sixty thousand pounds, whilst a hundred thousand pounds will have been converted into plant and buildings. Most people are familiar with the names given by economists to distinguish the two forms into which employed capital divides itself. The part which is reserved for, and paid in wages, is called “Circulating Capital”; that which is embodied in buildings and machinery is called “Fixed Capital.” Of Circulating Capital—or, as we may call it, Wage Capital—we will speak presently. ◆³ We will speak at first of Fixed Capital only; and of this we will take the most essential part, namely machinery; and for convenience sake we will omit the accidental part, namely buildings, which render merely the passive service of shelter.

◆1 We shall see that machinery adds to the product of Labour in the same way that a superior soil adds to it;

Now in any operation of manufacturing raw material, or—what means the same thing—conveying raw material, say water or coal or fish, to the places where they are to be consumed, certain machines or appliances are necessary to enable the operation to take place well. Thus fish or coal could hardly be carried without a basket, whilst water could certainly not be carried without some vessel, nor in many places raised from its source without a rope and pail. For all purposes therefore of practical argument and calculation, appliances of these most simple and indispensable kinds are merged in Human Exertion, just as is the case with the poorest kind of Land, and are not credited separately with any portion of the result. We do not say the man raised so much water, and the rope and the pail so much. We say the man raised the whole. ◆¹ But the moment we have to deal with appliances of an improved kind, by which the result is increased, whilst the labour remains the same, the case of the appliances becomes analogous to that of superior soils; and a portion of the result can be assigned to them, distinct from the result of Labour.

◆1 As a certain simple instance will show.

◆¹ Let us suppose, for instance, that a village gets all its water from a cistern, to keep which replenished takes the labour of ten men constantly raising the water by means of pails and ropes, and then carrying it to the cistern, up a steep wearisome hill. These men, we will say, receive each one pound a week, the village thus paying for its water five hundred pounds a year, the whole of which sum goes in the remuneration of labour. We will suppose, further, that the amount of water thus obtained is a thousand gallons daily, each man raising and carrying a hundred gallons; and that this supply, though sufficient for the necessities of the villagers, is not sufficient for their comfort. They would gladly have twice that amount; but they are not able to pay for it. Such is the situation with which we start. We have a thousand gallons of water supplied daily by the exertion of ten men, or a hundred gallons by the exertion of each of them.

And now let us suppose that the village is suddenly presented with a pumping-engine, having a handle or handles at which five of these men can work simultaneously, and by means of which they, working no harder than formerly, can raise twice the amount of water that was formerly raised by ten men—namely two thousand gallons daily, instead of one thousand. The villagers, therefore, have now a thousand gallons daily which they did not have before; and to what is the supply of this extra quantity due? It is not due to Labour. The Labour involved can produce no more than formerly; indeed it must produce less; for its quality is unchanged, and it is halved in quantity. Obviously, then, the extra thousand gallons are due to the pumping-engine, and this not in a mere theoretical sense, but in the most practical sense possible; for this extra supply appears in the cistern as soon as the engine is present, and would cease to appear if the engine were taken away.

◆1 It may be also observed that the added product will go to the owner of the machine, just as rent goes to the owner of the land.

◆¹ And here let me pause for a moment, as I did when I was discussing land, to point out a fact which at the present stage of argument has no logical place, but which should be realised by the reader, in order to avoid misconception: namely, the fact that the extra water-supply which is due to the pumping-engine, will necessarily be the property of whoever owns the engine, just as rent will be the property of whoever owns the land that yields it. We supposed just now that the owner of the engine was the village. We supposed that the engine was presented to it. Consequently the village owned the whole extra thousand gallons. It had not to pay for them. But let us suppose instead that the engine was the property of some stranger. Just as necessarily in that case the gallons would belong to him; and he could command payment for them, just as if he had carried them to the cistern himself. We supposed that the village was able to pay five hundred pounds for its water; and that it really wanted, for its convenience, twice as much as it could obtain for that sum expended on human labour. The owner of the pumping-engine, by allowing the village to use it, doubles the water-supply, and halves the labour bill. The expenditure on labour sinks from five hundred pounds to two hundred and fifty pounds; and the owner of the pumping-engine can, it is needless to say, command the two hundred and fifty pounds which is saved to the village by its use. In actual life, no doubt, the bargain would be less simple; because in actual life there would be a number of rival pumping-engines, whose owners would reduce, by competition, the price of the extra water; but whatever the price might be, the principle would remain the same. The price or the value of the water would go to the owner of the engine; and it would fail to do so only if one thing happened—if the owner refused to receive it, and, for some reason or other, made the village a free gift of what the village would be perfectly willing to buy. In this truth there is nothing that makes for or against Socialism. The real contention of the Socialist is simply this—not that labour makes what is actually made by machinery; but that labourers ought to own the machinery, and for that reason appropriate what is made by it. A machine or engine, in fact, which is used to assist labour is, in its quality of a producing agent, just as separate from the labour with which it co-operates, as a donkey, in its quality of a carrying agent, is distinct from its master, if the master is walking along carrying one sack of corn, and guiding the donkey who walks carrying seven.

◆1 A machine, then, as a productive agent, is as distinct from human labour as are the efforts of an animal.

◆¹ And this brings us back into the line of our main argument; the comparison just made being a very apt and helpful illustration of it. Every machine may be looked on as a kind of domestic animal, and each new machine as an animal of some new species; which animals co-operate with men in the production of certain products: and the point I am urging on the reader may accordingly be put thus. When a man, or a number of men, without one of these animals to assist them, produce a certain amount of some particular product, and with the assistance of one of these animals produce a much larger amount, the added quantity is produced not by the men, but by the animal—or, to drop back again into the language of fact, by the machine.

◆1 The history of the cotton industry is a remarkable illustration of this.

◆¹ I have taken an imaginary case of drawing and pumping water, because the operation is of an exceedingly simple kind. We will now turn from the imaginary world to the real, and clench what has been said by an illustration from the history of our own country—and from that period which at present we specially have in view—namely the close of the last century.

From the year 1795 to the year 1800, the amount of cotton manufactured in this country was on the average about thirty-seven million pounds weight annually: ten years before it was only ten million pounds; ten years before that, only four million pounds; and during the previous fifty years it had been less than two and a half million pounds. The amount manufactured, up to the end of this last-named period, was limited by the fact that spinning was a much slower process than weaving. It was performed by means of an apparatus known as “the one-thread wheel.” No other spinning-machine existed; and it was the opinion of experts, about the year 1770, that it would hardly be possible in the course of the next thirty years, by collecting and training to the spinning trade every hand that could be secured for such a purpose, to raise the annual total to so much as five million pounds. As a matter of fact, however, five million pounds were spun in the year 1776. In six years’ time, the original product had been doubled. In ten years, it had been more than quadrupled; in twenty years, it had increased nearly elevenfold; and in five and twenty years, it had increased fifteenfold.[27]

◆1 For every pound of cotton spun by labour, Arkwright’s machinery spun fourteen pounds.

◆¹ To what, then, was this extraordinary increase due? It was due to the invention and introduction of new spinning machinery—especially to the machines invented by Hargreaves and Arkwright, and the successive application of horse-power, water-power, and lastly of steam-power, to driving them. Previous to the year 1770, such a thing as a cotton-mill was unknown. During the ten following years, about forty were erected in Great Britain; in the six years following there were erected a hundred more; and from that time forward their number increased rapidly, till they first absorbed, and then more than absorbed, the whole population that had previously conducted the industry in their own homes. As we follow the history of the manufacture into the present century, a large part of the increasing gross produce is to be set down to the increase in the employed population; but during the twenty-five years with which we have just been dealing, the number of hands employed in spinning had not more than doubled,[28] whilst the amount of cotton manufactured had increased by fifteen hundred per cent. It is therefore evident that the increase during this period is due almost entirely, not to human exertion, but to machinery.[29]

◆1 The manufacture of iron offers a similar example.

◆¹ And next, with more brevity, let us consider the manufacture of iron. By and by we shall come back to the subject; so it will be enough here to mention a single fact connected with it. From about the year 1740, when a careful and comprehensive inquiry into the matter was made, up to the year 1780, the average produce of each smelting furnace in the country was two hundred and ninety-four tons of iron annually. Towards the close of this period machinery had been invented by which a blast was produced of a strength that had been unknown previously; and in the year 1788, the average product of each of these same furnaces was five hundred and ninety-five tons, or very nearly double what it had been previously. An extra two hundred and fifty tons was produced from each furnace annually: and if we attribute the whole of the former product to human exertion, two hundred and fifty tons at all events was the product of the new machinery; since if that had been destroyed, the product, in proportion to the expenditure of exertion, would at once have sunk back to what it had been forty-eight years earlier.

◆1 The products, then, of Capital embodied in machinery are easily distinguishable from the products of Labour.

◆¹ Here, then, we have before us the two principal manufactures of this country, as they were during the closing years of the last century; and we have seen that in each a definite portion of the product was due to a certain kind of capital, as distinct from human exertion—distinct from human exertion in precisely the same way, as we have already seen land to be, when we find it producing rent; and we have seen further that the products both of this kind of Capital and of Land, are to be distinguished from those of Human Exertion on precisely similar principles.[30]

◆1 In the next chapter we will consider the products of Wage Capital.

◆¹ Machinery, however,—or fixed capital, of which we have taken machinery as the type,—is only a part of Capital considered as a whole. We have still to deal with the part that is reserved for and spent in wages; and this will introduce us to an entirely new subject—a subject which as yet I have not so much as hinted at—namely human exertion considered in an entirely new light.

CHAPTER IV

Of the Products of Circulating Capital, or Wage Capital, as distinguished from the Products of Human Exertion.

◆1 Wage Capital enables men to undertake work which will not support them till a considerable time has elapsed.

◆¹ Circulating Capital, or, as it is better to call it, Wage Capital, is practically a store of those things which wages are used to buy—that is to say the common necessaries of subsistence. And the primary function—the simplest and most obvious function—which such Capital performs is this: it enables men, by supplying them with the means of living, to undertake long operations, which when completed will produce much or be of much use, but which until they are completed will produce nothing and be of no use, and will consequently supply nothing themselves to the men whilst actually engaged in them.

◆1 A tunnel is a good instance of such work.

◆¹ Let us imagine, for instance, a tunnel which pierces a range of mountains, and facilitates communication between two populous cities. Five hundred navvies, we will say, have to work five years to make it. Now if two yards of tunnel were made every day, and if each yard could be used as soon as made, the tolls of passengers would at once yield a daily revenue which would provide the navvies with subsistence, as their work proceeded. But as a matter of fact until the last day’s work is done, and the end of the fifth year sees the piercing of the mountain completed, the tunnel is as useless as it was when it was only just begun, and when it was nothing more than a shallow cavity in a rock. Five years must elapse before a single toll is paid, and before the tunnel itself supplies a single human being with the means of providing bread for even a single day. The possibility then of the tunnel being made at all, depends on the existence of a five-years’ supply of necessaries, for which indirectly the tunnel will pay hereafter, but in producing or providing which, it has had no share whatever.

◆1 But the above-mentioned function of Wage Capital is not its principal function in the modern world.

Wage Capital, in fact, imparts to industry the power of waiting for its own results. This is its simplest, its most obvious, and its primeval function. ◆¹ It has been the function of such capital from the days of the earliest civilisations; and it is, indeed, its fundamental function still: but in the modern world it is far from being its principal function. I call its principal functions in the modern world the functions by which during the past century and a quarter it has produced results so incomparably, and so increasingly greater, than were ever produced by it in the whole course of preceding ages.

◆1 Its principal function now is to enable a few men of exceptional powers to assist by these powers the exertions of the ordinary labourers.

◆2 The modern employer in this respect differs from the ancient.

◆3 Wage Capital in the modern world is the means by which exceptional intellect is lent to Labour.

◆¹ What this function is must be explained very clearly and carefully. It is not to enable labourers to wait for the results of their labours. It is to enable the exceptional knowledge, ingenuity, enterprise, and productive genius of a few men so to animate, to organise, and direct the average physical exertions of the many, as to improve, to multiply, or to hasten the results of that exertion without increasing its quantity. All civilisations, ancient as well as modern, have involved, in a certain sense, the direction by the few of the many. The temples and palaces of early Egypt and Assyria, which excite the wonder of modern engineers and architects by the size of the blocks of stone used in their astounding structure, are monuments of a control, absolute and unlimited and masterly, exercised by a few human minds over millions of human bodies. But in that control, as exercised in the ancient world, one element was wanting which is the essence of modern industry. When the masters of ancient labour wished to multiply commodities, or to secure an increase of power for accomplishing some single work, the sole means known to them was to increase the number of labourers; and when one thousand slaves were insufficient, to reinforce them with (let us say) four thousand more. The masters of modern labour pursue a new and essentially opposite course. Instead of seeking in such a case to secure four thousand new labourers, they seek to endow one thousand with the industrial power of five. ◆² If Nebuchadnezzar had set himself to tunnel a mountain, he could have hastened the work only by flogging more slaves to it. The modern contractor, in co-operation with the modern inventor, instead of flogging labour, would assist it with tram-lines, trucks, and boring engines. In other words, whereas in former ages the aim of the employing class was simply to secure the service of an increasing quantity of labour, the aim of the employing class in the present age is to increase the productive power of the same quantity. The employing class in former ages merely forced the employed to exert their own industrial faculties, and appropriated what those faculties produced. The employing class of the present age not only commands the employed, but it co-operates with them by lending them faculties which they do not themselves possess. ◆³ It applies to the guidance of the muscles of the most ordinary worker the profoundest knowledge of science, all the strength of will, all the spirit of enterprise, and the exceptional aptitude for affairs, that distinguish the most gifted and the vigorous characters of the day. And it is the peculiar modern function of Capital, as spent in Wages, to enable this result to take place.

◆1 Wage Capital does this in a way which the socialistic definition of Capital altogether ignores.

◆¹ Let us consider how it does so. Socialists tell us that Capitalism in the modern world means merely the appropriation by the few of all the materials of production, so that the many must either work as the few bid them, or must starve. But this is a very small part of what modern Capitalism means, and it is not the essential part, nor does it even suggest the essential part. The majority of men must always work or starve. Nature, not modern Capitalism, is responsible for that necessity. The essential difference which modern Capitalism has introduced into the situation is this—and it is an enormous difference—that whereas in former ages the livelihood of a man was contingent on his working in the best way that the average man knew, modern Capitalism has made his livelihood contingent on his working in the best way that exceptional men know. Now this best way, as we shall see more clearly presently, does not involve the forcing of each man to work harder, or the exacting from him any more difficult effort. It involves merely the supplying him with a constant external guide for even his minutest actions—a guide for every movement of arm and hand, or a pattern of each of the objects which are the direct result of these movements; and consequently the one thing which before all others it requires is constant obedience or conformity to such guides and patterns. The entire industrial progress of the modern world has depended, and depends altogether on this constant obedience being secured; and the possession of Wage Capital by the employing class is the sole means which is possible in the modern world of securing it. In the ancient world the case would no doubt have been different. The lash of the taskmaster, the fear of prison, of death, of torture, were then available for the stimulation and organisation of Labour. But they are available no longer. The masses of civilised humanity have taken this great step—they have risen from the level on which they could be driven to industrial obedience, to the level on which they must be induced to it. Obedience of some sort is a social necessity now as ever, and always must be: but social necessity spoke merely to the fear of the slave; it speaks to the will and the reason of the free labourer. The free labourer may be, and must be, in one or other of two positions. He may work for himself, consuming or selling his own produce; or he may work for an employer, who pays him wages, and exacts in return for them not work only, but work performed in a certain prescribed way. The first position is that of the peasant proprietor or the hand-loom weaver. The second is that of the employee in a mill or factory. In both cases, the voice of social necessity, or of society, speaks to the man’s reason, informing him of the homely fact that he cannot live unless he labours: but in the first case, the voice of society cries to him out of the ground, “You will get no food unless you labour in some way”; and in the second case it cries to him from the mouths of the wisest and strongest men, “You will get no food unless you consent to labour in the best way.”[31]

◆1 Wage Capital is merely the means by which intellect impresses itself as Labour;

◆¹ In other words, Wage Capital in the modern world promotes that growth of wealth by which the modern world is distinguished, simply because Wage Capital is the vehicle by which the exceptional qualities of the few communicate themselves to the whole industrial community. The real principle of progress and production is not in the Capital, but in the qualities of the men who control it; just as the vital force which goes to make a great picture is not in the brush, but in the great painter’s hand; or as the skill which pilots a coach and four through London is not in the reins, but in the hand of the expert coachman.

◆1 As we can see by following the steps by which a company would introduce some new machine.

◆¹ This can easily be seen by turning our attention once again to machinery, and supposing that a company is floated for the improved manufacture of something by means of some new invention. The directors must of course begin with securing a site for the factory; but with this exception their entire initial expenditure will directly or indirectly consist in the payment of wages—in purchasing the services of a certain number of men by whose exertions certain masses of raw material are to be produced and fashioned into certain definite forms—that is to say, into the new machinery and a suitable building to protect it.

◆1 The whole success of such a company depends on the amount of intellect used in the expenditure of the Wage Capital.