THE MONEY PROBLEMChapter I.
THE MONEY QUESTION
It is surely a sad symptom for a science, when, in developing itself according to its own principles, it reaches its object just in time to be contradicted by another ; as for example : when the postulates of political economy are found to be opposed to those of morality, for I suppose morality is a science as well as political economy. What, then, is human knowledge, if all its affirmations destroy each other, and on what shall we rely ? System of Economical Contradictions : PROUDHON.
That which is altogether just shalt thou follow, that thou mayest live and inherit the land.DEUT. XVI . 20.
In proceeding towards any given point, there is always one line which is the shortestthe straight ; so in the conduct of human affairs there is always one course which is bestthe just.ANON.
MODERN civilization, which, as we are taught to believe, transcends that of any period in the worlds history, may be said to be entirely the result of modern scientific thought. Nothing serves to illustrate so well the difference between the civilization of ancient Greece, for instance, and our own, as to compare the mental attitude of the Platonists toward the sciences, with that of the nineteenth century philosophers. By the former, science was studied not for the purpose of adding to the material comforts of life, nor to satisfy the vulgar appetites or wants of man, but to exalt the mind to the contemplation of pure truth and of things which are to be perceived by the intellect alone. To bring science to the aid of manufacture was supposed to degrade what was regarded as a purely intellectual pursuit. Inventions were despised as beneath the dignity of philosophy and fit only for craftsmen. Hence we learn that Archytas, who had framed machines of extraordinary power on mathematical principles, was persuaded by his friend Plato to abandon mechanics as unworthy the attention of a philosopher. So we read that Archimedes considered geometry degraded by being employed in the production of anything useful, and was half ashamed of those inventions that were the wonder of hostile nations.
The high esteem in which science to-day is held is wholly on account of what the ancients termed its vulgar utility. We prize mathematics, not because it leads to the contemplation of the immutable essence of things, but because it enables us to solve problems connected with the industrial arts and the ordinary affairs of life ; so, too, with all other sciences. The age of speculation has given place to the age of practice. What to the ancients was the end of learning, viz., cultivation of the intellect and strengthening of the memory, is to us but a means to an end, and that end is human happiness.
In judging the merits of any science we are accustomed to inquire What is its use ? To what purpose is it applicable ? And our respect for it depends upon its demonstrated utility.
Of modern sciences none stands more discredited than political economy, nor have the claims of any branch of knowledge to rank as science been more persistently opposed. Transcendently important to human life as are the phenomena with which it deals, it is questionable whether any branch of knowledge is less generally understood, or commands in the popular mind so little respect.* Nor shall we be greatly surprised at this if we critically and fearlessly examine its doctrines in the light of existing science.
For many years past the civilized world has been confronted with problems which it is the professed aim of political economy to solve. And what do we find ? Nothing but discord, disagreement and uncertainty among its doctors.2
The diagnoses of its various schools are contradictory. One school tells us the cause of industrial crises is over production ; another under-consumption; another says it is due to the credit system, whilst another holds the tariff responsible. Their prescriptions are found to be similarly antagonistic. One class prescribes greater freedom of trade, another greater restriction. This professor suggests the free coinage of silver, and that one denounces it ; whilst with regard to Trusts, Trade Unions and similar combinations, an equal number of economists may be found supporting opposite, antagonistic views. With such diversity of opinion, we can hardly wonder that the science stands in such bad repute.
Political economy deals with the production and distribution of wealth, and its main object is to discover those laws and principles, guidance by which will tend to the material well-being and prosperity of the human race. Considered as a branch of the science of a statesman or legislator, political economy, says Adam Smith, proposes two distinct objects : First, to supply a plentiful subsistence for the people, or more properly to enable them to provide such a revenue or subsistence for themselves ; secondly, to supply the State or Commonwealth with a revenue sufficient for the public services. It proposes to enrich both the people and the sovereign.
How happens it, then, that in spite of so many miracles of industry science and art, comfort and culture have not become the inheritance of all ? How happens it that in Paris and London, centres of social wealth, poverty is as hideous as in the days of Cæsar and Agricola ? 3
Look, for instance, at the condition of the wealthiest nation on earth,England. Herethe birthplace of modern political economystatesmen and legislators have been largely guided by its teachings. It is said that the Wealth of Nations revolutionized the opinions of Englands ministers and caused them to enter upon a new policy in accordance with the doctrines propounded by the great English economist. Clubs were formed for the study of economic questions, and statesmen vied with each other in seeking to bring the commercial laws of England in conformity with those of the new science. According to the judgment of one of Englands foremost statesmen and economists, the great work of political economy has been achieved.
The controversies which we now have in political economy, said the Rt. Hon. Robert Lowe, many years ago, although they offer a capital exercise for the logical faculties, are not of the same thrilling importance as those of earlier days. The great work has been done. Let us now look at the results. Bearing in mind that the object of the science is to provide a plentiful revenue or subsistence for the people, and supply the State with a revenue sufficient for the public service, let us take a brief survey of the great work that Robert Lowe said has been done.
In the wealthiest nation in the world, says John Rae, every twentieth inhabitant is a pauper ; one-fifth of the community is insufficiently clad ; the agricultural laborers and large classes of working people in towns are too poorly fed to save them from what are known as starvation diseases ; the great proportion of our population lead a life of monotonous, incessant toil, with no prospect in old age but penury and parochial support ; and one-third, if not indeed one-half, of the families of the country are huddled six in a room, in a way quite incompatible with the elementary claims of decency, health or morality.
Our exports during the past quarter of a century, wrote Professor Fawcett, have advanced from £50,000,000 to more than £250,000,000, and our imports have increased to a still greater amount ; yet, incredible as it may on first consideration appear, it can, I believe, be proved that whilst there has been this unprecedented increase of wealth, the remuneration of labor has in many instances scarcely advanced at all.
Speaking of the industrial condition of Scotlands greatest city, Matthew Arnold said : Who that has seen it can ever forget the hardly human horror, the abjection and uncivilizedness of Glasgow ? Nothing is more certain, wrote Professor Cairnes, than that, taking the whole field of labor, real wages in Great Britain will never rise to the standard of remuneration now prevailing in new countries, a standard which, after all, would form but a sorry consummation as a final goal of improvement for the masses of mankind. . . . The exertion of labor and capital produce 5, 10, 20 or 100 times more than it did 100 years ago. Yet wages have not increased in any such ratio, and it is even questionable whether profits have risen. . . . The large addition to the wealth of the country has gone neither to profit nor to wages, nor yet to the public at large, but to swell a fund ever growing, even while its proprietors sleepthe rent-roll of the owners of the soil.
Here it is apparent that political economy has failed to achieve what its chief apostle designated to be its special mission, nor do we find in turning to other nations with their several schools a much better state of things. Any one, wrote Professor Huxley, in his Social Diseases and Worse Remedies, who is acquainted with the state of the population of all great industrial centres, whether in this or other countries, is aware that amidst a large and increasing body of that population, la misère reigns supreme. I have no pretensions to the character of a philanthropist, and I have a special horror of all sorts of sentimental rhetoric ; I am merely trying to deal with facts, to some extent within my own knowledge, and further evidenced by abundant testimony, as a naturalist ; and I take it to be a mere plain truth that throughout industrial Europe there is not a single large manufacturing city which is free from a vast mass of people whose condition is exactly that described, and from a still greater mass who, living just on the edge of the social swamp, are liable to be precipitated into it by any lack of demand for their produce. And with every addition to the population, the multitude already sunk in the pit, and the number of the host sliding towards it, continually increase.
In the United States, says a well-known author,4 squalor and misery and the vices and crimes that spring from them, everywhere increase as the village grows to the city, and the march of development brings the advantages of the improved methods of production and exchange. It is in the older and richer sections of the Union that pauperism and distress among the working classes are becoming most painfully apparent.
I have been told, says a clergyman5 who witnessed the recent great railroad strike, that the average wages paid by the Pullman Company are $1.87 per day. I doubt it much. It is claimed that the men are not receiving starvation wages. I know many of which this is true, but they are the exception and not the rule. I know a man who has had, after paying $14.50 rent for four small rooms and seventy-one cents for water rent, but seventy-six cents a day left to feed and clothe his wife and children. When we remember that this is an average case, that it is on the basis of full time, then in the name of all that is just and right, I say God help that man if his dependents be many or if sickness invade his home.
This is a description of what exists in Americas so-called model town. It is, says the same gentleman, a civilized relic of old-world serfdom. To-day we behold the lamentable and logical outcome of the whole system.
During the recent great coal miners strike throughout this country the following press despatch appeared in all the newspapers : I have never seen such a discouraged set of men as the miners of this neighborhood have been since the last reduction was made. They know it matters not how steady they work, they cannot make enough money to keep a small-sized family in the necessary food, and they have concluded that if they have to starve, they prefer doing it at once and not by degrees.
Here in the two wealthiest and most civilized nations, we find labor leading a miserable existence, in a chronic state of warfare against capital, and periodically striking for living wages. Under the regime of institutions considered necessary by this so-called science, society presents us with the two extremes of vast wealth and wretched poverty side by side ; of the wealth-producer doomed to a poor existence, and the non-producer born to a life of luxury. With such results drawn from experience, what other judgment can we pronounce upon a system which works out so differently from what is desired, than that of being false and unscientific ? What faith can we place in a science the object of which is to enrich both the people and the sovereign, that fails so completely in its main object ?
But the question arises, Have the principles of political economy had free play in any industrial community where poverty still exists ? Have those nations in which poverty progresses with wealth been governed by its precepts ? The patient who neglects to follow his physicians advice cannot justly hold him responsible for failure to regain health. So far as England and the United States are concerned there can be little doubt that in all essentials the laws of each nation have been, in the main, favorable to the workings of its respective schoolschools which, while differing in matters pertaining to foreign trade, agree in almost every other branch. There can be no question that the production of wealth during the past century has been enormously in excess of any, within a similar period, that the world has ever known. But with the production of wealth, economics has had comparatively little to do. This growth of production has been due to invention, discovery, and the physical sciences. It is with the distribution of wealth the science is chiefly employed, and it is in this particular where it has failed. In each country we find wealth distributed amongst the various factors, in rent, interest and wages, according to the laws governing these respective institutions. We find supply and demand governing the prices of all commodities, even the factors themselves. Exchange is carried on by the methods and rules approved by leading economists. Money is regarded by merchants in the same light as the highest authority on finance regards it, and gold has becomethanks to economists and legislatorsthe universal basis for currency. The doctrines of Malthus are found to work like a charm, and the man for whom capital has no employment, finds no plate set for him at natures banquet. In our dealings with each other we have imbibed the supreme principle of political economyselfishness, and the three cardinal virtues, abstention, deception and avarice are universally practised.
So closely has the fundamental law of this scienceto gratify ones desires with the least expenditure of energybeen followed, that a considerable percentage of the race have devised schemes for living without the expenditure of any energy at allon their part. We have acquired not only the art of buying in the cheapest, and selling in the dearest markets, but modern ingenuity has discovered a plan for controlling the markets themselves, thus making goods cheap or dear at pleasure.
In conformity with economic teachings we have abolished the duty of alms-givinga system which served to mitigate to a considerable extent the miseries to which the laboring classes were exposed during medixval timesand have enacted tramp and vagrancy laws, thus making poverty a crime. We have learned to treat labor absolutely as a commodity and have made it entirely subservient to the laws of supply and demand, notwithstanding our high pretensions regarding the immorality of slavery. In short, our modern commercial and industrial system seems to conform entirely to the principles and teachings of orthodox economists. So far, then, it is fair to say that the principles of political economy have had reasonably free play in the countries we have been considering, and therefore we are warranted in passing judgment upon the system which bears such fruit. But it will be contended that though conditions are bad, they are better than they were and are continually improving ; that although labor is admittedly in a dim-eyed, narrow-chested condition, it is slowly but surely gaining in health and happiness.
For instance, we are told by an optimistic economist, Mr, W.H. Mallock, that the poorer classes as a body have advanced and are advancing enormously.6 Another writer informs us that the pauper of to-day enjoys comforts and privileges unknown to even the nobility of a few centuries ago. Against the statements of Mr. Mallock, however, we have that of Prof. Thorold Rogers : I have protested against that complaisant optimism which concludes because the health of the upper classes has been greatly improved, because that of the working classes has been bettered, and appliances unknown before have become familiar and cheap, that therefore the country in which these improvements have been effected must be considered to have made for all its people regular and continuous progress. And again, relatively speaking, the working man of to-day is not so well off as he was in the 15th century. He adds, the freedom of the few was bought by the servitude of the many.7
We have also the statements of both Professors Fawcett and Cairnes before quoted. We have likewise the evidence gained from experience in all new countries of the inevitable growth of poverty with the progress of wealth. But outside of any opinion, the fact remains that after a centurys unprecedented growth of wealth, the one human factor in production still remains as a class, within sight of starvation, and unable to face, unaided, what are known as hard times.
If we look within the realm of the science itself, we find it affording far greater cause for wonder and amazement than food for instruction. Starting originally with the intention of discovering laws by which the greatest amount of wealth can be produced and enjoyed by society, it concludes by showing how wealth can best be conserved by controlling and limiting the production of human beings. The problems which were originally propounded have become inverted. Acquisition of the means of wealth-production is set forth as the end of social existence. Instead of wealth being produced for the benefit of mankind, the right to life, by the majority of beings, is regarded solely from the standpoint of their ability to create wealth, whilst often this right is denied. Listen to the following passage from Malthus : A man who is born into a world already occupied, his family unable to support him, and society not requiring his labor, such a man, I say, has not the least right to claim any nourishment whatever ; he is really one too many on the earth. At the great banquet of nature there is no plate laid for him. Nature commands him to take himself away, and she will not be slow to put her order into execution.
The least intelligent person can hardly fail to perceive that under those laws which economists declare essential to social progress, nine-tenths of the people are the servants or slaves of the other tenth, whilst the whole of society is dominated by and subordinated to the things it produces.
Although labor is the starting point in production, writes Prof. Jevons,8 and the interests of the laborer the very subject of the science, yet economists do not progress far before they suddenly turn around and treat labor as a commodity which is bought up by capitalists. Labor becomes itself the object of the laws of supply and demand, instead of those laws acting in the distribution of the products of labor. Economists have invented, too, a very simple theory to determine the rate at which capital can buy up labor. The average rate of wages, they say, is found by dividing the whole amount of capital appropriated to the payment of wages, by the number of the laborers paid ; and they wish us to believe that this settles the question.
In the branch known as exchange we find the same remarkable inversion of the natural order of things. The mechanism for distributing wealth has become the highest form of wealth. Money, instead of remaining the medium or tool of exchange, has become its ultimate object, and commodities, although produced for consumption, are regarded mainly from the standpoint of their ability to produce that which should function solely as a means for exchanging them. In place of finance serving industry we find industry the slave of finance. Universally good harvests and general increase in production and manufactures are regarded with dismay by producers as leading to overproduction and consequent starvation, whilst a wholesale destruction of wealth by fire, flood or war is hailed as a boon to the masses.9 In fact, regarded from a rational standpoint, the whole commercial and industrial world appears to be standing upon its head.
Whilst recognizing wealth as essential to social life, orthodox political economy demonstrates that the conditions favorable to its growth do not conduce to social health. The laws that lead to wealth production lead to starvation. Over-production and want go hand in hand. The self-same laws that govern distribution of the means of existence, are continually urging man towards destruction. Life and death are inextricably mixed up in all its prescriptions.
The original problem was How can wealth be controlled to serve the best interests of society ? To-day the problem is How can nine-tenths of society be controlled to serve the interests of existing wealth ?
Viewing it from an ethical standpoint we shall find still further grounds for astonishment. Political economy generally, says Professor Smart, is based on the analysis of economic conduct.10 Yet we find economic conduct to be utterly irreconcilable with any standard of right conduct. Not only so, but economists have not hesitated to proclaim economics and ethics as irreconcilable. Moral considerations have nothing to do with political economy, says John Stuart Mill. The economic want is not necessarily a rational or a healthy want, says Prof. Smart.
Prof. Cairnes writes : I am unaware of any rule of justice applicable to the problem of distributing the products of industry ; and any attempt to give effect to what are considered the dictates of justice, which should involve as a means towards that end, a disturbance of the fundamental assumptions on which economic reasoning is based, more especially those of the right of private property and the freedom of individual industry, would, in my opinion, putting all other than material considerations aside, be inevitably followed by the destruction or indefinite curtailment of the fund itself, from which the remuneration of all classes is derived. He adds, As to the amount of truth or morality which these several maxims of political economy embody, I am not concerned here to enquire. My business with them has reference exclusively to their efficacy as rules for regulating the production and distribution of wealth.
So might the navigator say, As to the correctness or incorrectness of the ships compass I am not concerned to enquire. My business is simply to sail the ship.
So the metaphysician might say, As to the truth or correctness of my premises, I am not concerned to enquire. My business with them is simply to arrive at logical conclusions.
To my mind there is something amazing in these statements of Mill and Cairnes. How they could believe they were building a science governing human actionsfor the production and distribution of wealth is entirely regulated by human actionswithout any regard to that science which governs right conduct, is to me inexplicable.
With Proudhon we may remark : It is surely a sad symptom for a science, when, in developing itself according to its own principles it reaches its object just in time to be contradicted by another.
We now pass to a consideration of the premises upon which the science is built. Economists assert that wealth is the resultant of three factors : land, labor and capital. Allowing, for a moment, the assertion, we must recognize that this classification places all human exertion under one heading, viz. : labor. Hence there is but one human factor in production ; and since, in order to maintain and properly develop them, the factors must be properly nourished and replenished from wealth produced, in the absence of anything to the contrary, reason would suggest that all wealh should be divided among them in proportion to their needs ; i.e. the land should be properly fertilized and irrigated, capital replenished and the balance should go to labor. This would seem to harmonize with the principles of ethics. To parody a political adage we may justly say to the factors belong the spoils.
But what do economists say ? The products of industry, say they, are divided into three parts. One part goes for use of land and is termed rent another to labor and is called wages ; and another to capital and is known as interest. Instead of rent going to the land, then, it goes as payment for use to a landlord and interest is similarly paid to a capitalist. But to what purpose are these portions of wealth, which are paid to landlords and capitalists, applied ? To fertilizing land and repairing capital ? Not necessarily. The main disposition of this wealth is used to support the landlords and capitalists themselves, rather than maintain the factors that they represent. With this question, however, economists do not bother themselves. There is here, evidently, some gross error, something entirely misleading and wholly unscientific. Beginning with three factors in production, one of which is human, economists end by distributing wealth among three factors, all of which are human. As factors in production, landlords and capitalists do not appear. On what basis, then, do they appear as factors in distribution ? Rent, they say, is for the use of land. Now the natural payment to land for its use is labor. There is no just reason to exact payment for use unless the thing is used. To use land is to work upon it,to labor. Without such labor there can be no return, for nature gives only to labor ; hence, the payment nature demands is labor. To use is to employ, and to say that land is an agent in production, and the use of land an agent, is one and the same thing. In other words, land as a factor necessarily means its use, and the natural payment for use is labor. Labor is, in fact, natures rent. To pay rent to a landlord, therefore, means a double tribute. But land is natures product, and her rent there is not the slightest possibility of evading. What part, then, does the landlord furnish ? Where is his quid pro quo ? To these questions political economy gives but evasive answers ; and yet, if it be a science it must answer them, and answer satisfactorily.
Again, interest we are told is the reward for abstinence.11 Now although the term reward is sometimes used as meaning natural result, it is more often used to signify a gift, donation or present, i.e. something given to a person which does not naturally result from his labor or services. The reward of labor is the term as used more often in the first sense, whilst a reward for bravery is used in the second. In which sense, then, is the term interestthe reward for abstinenceused ? Let us see.
If I abstain from the practice of certain vices I escape the pain and misery that I should otherwise suffer. This is the reward or natural result of abstinence. If, on the other hand, I abstain from eating and drinking for a long time, I become weak and faint, and if abstinence is continued sufficiently long, I shall die. This is also the reward, or rather the penalty of abstinence. Now by abstaining from the consumption or use of a thing, I can do no more than preserve it for a certain length of time, whereas by using or consuming it I deprive myself of its future use. Things do not grow, nor enlarge, nor develop by mere abstinence. You cannot have your cake and eat it. Of course not ; and if you dont eat it, you have your cakeproviding the mice do not get at it during the nightbut not a cake and a half.12 On the contrary, things deteriorate without use. Iron will rust, wood decay, stone perish, cloth become moth-eaten, food will rot, metals oxidize, in fact all of man and natures products undergo dissolution sooner or later. There is no such thing as unchangeableness in wealth. The natural result of abstinence is seldom more than temporary preservation of a thing we abstain from using or consuming ; and in very many cases things are preserved longer by use than by withholding them from use, such as factories, houses, machinery, etc. In some cases use improves the condition of things. A machine will become more efficient after employment, owing to the reduction of friction. A horse improves with judicious exercise. A steamship is not considered as safe when first built as after several voyages.
The result then is this : Unemployed wealth in some cases gradually deteriorates, and in others perishes utterly and instanter. In no case does mere abstinence create increase.
Consideration of political economy from all sides, shews us that it is unscientific. It does not accomplish what it professes, it fails to solve the problems with which it deals, it refuses to harmonize with established science, it is incoherent, illogical, irrational. When we consider how different are the results of the operations of many of its teachings from those predicted, we shall see that it has, on the whole, not even reached the stage of undeveloped science, i.e. qualitative prevision. In fact, political economy, as taught and practised, is simply in the elementary stage of empiricism. Whilst there must necessarily be serious incompleteness in all sciences in their formative stages, still we can hardly conceive that system to be scientific which, in proportion as it is developed, becomes more and more opposed to some other branch already established. The question then arises, is political economy incapable of development into an exact science ? Admitting as we must do, the comparative worthlessness of the present incoherent ensemble of theories to which the name of political economy has been officially given for more than a century, must we despair of raising it to the utility of the physical sciences ? I think not. I purpose demonstrating the cause of past failure, and showing the utter futility of endeavouring to build a science on the lines prescribed by economists. I shall also endeavour to point out what, in my judgment, is the right road to success.
Let us at the outset clearly understand what political economy is, and what it deals with. Its object will then be apparent.
The term economy comes from the Greek, oikos, a house, and nomos, the law. Hence economy, the law regulating the householda term which to the Greeks signified all the goods in possession of the family. Political comes from polis, the state. Political economy, therefore, signifies the law or laws governing the goods in the possession of the state or of society ; or as we would now say, the laws governing social wealth. The term wealth is of Saxon origin, and means literally weal or well-being. Political economy deals then with the production and distribution of those things that tend to social weal or well-being. It will now become evident that a true science of economics must necessarily be a moral science, and any system of wealth production and distribution that is contrary to the principles of justice cannot be a system of social economy at all, but one of extravagance and wastefulness.
Moral conduct is that line of human action, conformity to which tends to promote the life, happiness and well-being of society and its members. And as we have seen, economics deals with the production and distribution of those material things that tend to the life, happiness and well-being of society and its members. Hence the same test that is applied to ethical teachings must be applied to the teachings of Political Economy.
Do they tend to the maintenance of a complete social life for the time being ? And do they tend to the prolongation of social life to its full extent ? To answer yes or no to either of these questions is implicitly to pronounce these teachings true or false.13 To say that moral considerations have nothing to do with economics is to imply that economic conduct is not necessarily moral conduct. Then it may be immoral conduct. And to say that immoral conduct is conducive to the economic production and distribution of wealth is to say that immoral conduct tends to promote human happiness, which is contrary to the definition.
Consideration of the conditions favorable to the growth of wealth will further demonstrate the fact that economics is necessarily a moral science, for the growth of wealth is dependent upon maintaining the efficiency of the factors of production, and the degree of efficiency is proportional to the degree of equity shown in distributing the products of industry. In communities where a mans property is insecure, or where the fruits of his toil are taken entirely from him, where labor goes unrewarded, where the land does not receive its due return of nitrogenous matter, where capital is subjected to raids, wealth does not increase, but nations continue in a low state of living. As Spencer has shown, it is where the regime of status is superseded by the regime of contract, where militancy gives place to industry, where men reap and can retain the fruits of their labor, that wealth becomes most abundant, and this condition is most favorable to the growth of morals.
In fact the recognition of the right of property is originally recognition of the relation between effort and benefit.14
The law of nature which implies the survival of the fittest, that individuals of most worth shall have the greatest benefits, and inferior individuals shall receive smaller benefits or suffer greater evils, is the law to which a scientific system of economics must necessarily conform. Now the ethical interpretation of this law is, that each individual ought to be subject to the effects of his own nature and resulting conduct,15 and the economical and ethical teachings are summed up in the Christian declaration, If any man will not work, neither shall he eat. And this is the law of justice.16
That benefits received should be proportional to merits, is as essential to a sound economic system of wealth distribution as to the development of species.
Although economists professedly ignore the moral aspect of economic questions, and notwithstanding that when considered as a whole the present system is opposed to morality, yet, in one or two of its branches, theoretically speaking, ethics plays an important part. Representation of an exchange transaction, for instance, recognizes the principle of equity. A simple exchange is represented by the sign of equality, thus
Commodity A = Commodity B.
As J.B. Say remarks : In all fair traffic, there occurs a mutual exchange of two things, which are worth one the other at the time and place of exchange. Again, the economic importance of the moral qualities is unquestionably great. The moral qualities of the laborers, says J.S. Mill, are fully as important to the efficiency and worth of their labor, as the intellectual.17
Speaking of other branches, Herbert Spencer writes : While one of the settled conclusions of political economy is that wages and prices cannot be artificially regulated with advantage, it is also an obvious inference from the law of equal freedom that regulation of them is not morally permissible. On other questions, such as the hurtfulness and tamperings with banking, the futility of endeavours to benefit one occupation at the expense of others, political economy reaches conclusions which ethics independently deduces.
To the peculiar nature of its phenomena and its relation to human life, we may attribute in a great measure the present chaotic condition of the science.18
For the greater part of the worlds history, of which we have knowledge, the commonest method of distributing wealth was for the strong to forcibly seize that belonging to the weak. This was the system that the ancient states of Greece and Rome practised, with such appalling results. As long as slavery existed, as long as the right of might alone was recognized, so long was it impossible to start with premises based upon existing conditions with any assurance of establishing a science of economy. Now it is from the customs and privileges recognized by an age when slavery was legitimized, when brute force was supreme, and mankind in a state of savagery, that orthodox economy takes its assumptions. Take, for instance, the system of landownership. The course of nature, says Spencer, red in tooth and claw, has been, on a higher plane, the course of civilization. Through blood and iron small clusters of men have been consolidated into larger ones until nations have been formed. This process, carried on everywhere and always by brute force, has resulted in a history of wrongs upon wrongs ; savage tribes have been welded together by savage means. We could not if we tried trace back the acts of unscrupulous violence committed during these thousands of years ; and could we trace them back we could not rectify their evil results. Landownership was established during this process. ... The remote forefathers of living Englishmen were robbers who stole the lands of men who were themselves robbers, who behaved in like manner to the robbers who preceded them.19
But while we may be powerless to rectify these evil results of the past reign of blood and iron, it is not necessary to make them the basis of a science of economy, nor to regard land-ownership as a permanent and indestructible institution. This is the falseness of the present science. It asserts that what ought to be, is ; or, as Prof. Cairnes puts it, political economy is a more or less handsome apology for the present order of things.
Here we see the need ofand what in my judgment is the first requisite before we can hope to establish economics as an exact sciencean ideal standard, an absolute economic standard, analogous to that recognized by ethics. Before we can determine whether this or that measure is economically right or wrong, before we can know in what direction our efforts for a better economic system are to be turned, we must have a standard by which we may judge.
The science of ethics recognizes an ideal standard of right conduct which cannot under present conditions be fully realized.20 So with other sciences, ideal conceptions or assumptions are considered not only allowable but absolutely essential. Political economy, however, is remarkable by an absence of any analogous conceptions. Attempts to create an ideal standard have been ridiculed and dubbed with the euphemistic term Utopia; and yet it is from analogous ideals that other sciences have passed from empiricism to rationalism. Even Jurisprudence, that compilation of the rubrics of legal and official spoliation, has its ultimate ideal standard from which laws have been from time to time referred.
The vast importance of such a standard will be found in solving problems that heretofore have been regarded as insolvable, in explaining phenomena and clearing away the mysteries and ambiguities with which the problems of life have been enveloped, as well as in furnishing a guide for social progress, and for the material and moral welfare and happiness of mankind.
To sum up then. Consideration of the present so-called science of Political Economy demonstrates that its results are not those originally aimed at ; in its development its problems have become inverted ; it has not arrived at the state of qualitative prevision ; it is illogical and ambiguous ; and lastly, it is out of harmony with the science of ethics. The cause of this is its fundamental assumptions, which recognize as permanent and as absolutely necessary certain institutions established under the reign of blood and iron.
No true science of Political Economy is possible based upon injustice. It is necessarily a moral science, hence its principles and premises must be just. In championing private interests economists have entirely missed the goal towards which the science should naturally tend, viz., the well-being of society. Political Economy is not a science for enriching individuals at the expense of society. To rebuild scientifically, the first requisite is the establishment of a system evolved, not from the reign of blood and iron, but from fundamental truths derived from experience and observation, and guided by the reasoning faculties. For as Herbert Spencer says : No scientific establishment of relative truths is possible until the absolute truths have been formulated independently.21 Only in this way can economics evolve from empiricism to rationalism, by knowledge of what ought to be, and this presupposes an ideal standard.
Our present system, as I have shown, starts on a false basis by dividing society into classes whose interests are antagonistic. A true system will make society a unit in production and a unit in distribution.
In short, Political Economy should teach mankind how to produce incessantly, with the least possible amount of labor for each product, the greatest possible variety and quantity of wealth, and to distribute it in such a way as to realize for each individual the greatest amount of physical, moral and intellectual well-being, and for the race the highest perfection and glory.
* After enumerating certain reforms that political economy has effected, Walter Bagehot says : Notwithstanding these triumphs, the position of our political economy is not altogether satisfactory. It lies rather dead in the public mind. Not only it does not excite the same interest, but there is not exactly the same confidence in it. Younger men either do not study it, or do not feel that it comes home to them, and that it matches with their living ideas. They ask often, hardly knowing it, will this science, as it claims to be, harmonize with what we now know to be science, or bear to be tried as we now try science ? And they are not sure of the answer.
2 Every country, says S. Laing, has a political economy of its own.
3 This question, asked by Proudhon more than half a century ago, is still unanswered.
4 Henry George, in Progress and Poverty.
5 Rev. Mr. Cawardine, Methodist minister at Pullman, Ill.
6 Property and Progress.
7 Work and Wages.
8 Theory of Political Economy.
9 Since writing the above, I have cut the following from the Philadelphia Inquirer, Aug. 6th, 1894 : The reports of serious damage to the corn crop have advanced the price of that grain five cents a bushel, making an advance of eight cents in two weeks. The grain is now seven cents a bushel higher than at this time last year ; and yet it does not appear that the crop will be any less in 1894 than it was in 1893. The higher price at which the grain is now quoted thus means prosperity to a very large and important consuming element in the population.
10 Introduction to The Theory of Value.
11 The claim to remuneration, founded on the possession of food available for the maintenance of laborers, is of another kindremuneration for abstinence, not for labor. If a person has a store of food, he has it in his power to consume it himself in idleness, or in feeding others to attend on him, or to fight for him, or to sing or dance for him. If, instead of these things, he gives it to productive laborers to support them during their work, he can, and naturally will, claim a remuneration from the produce. He will not be content with simple repayment ; if he receives merely that, he is merely in the same situation as at first, and has derived no advantage from delaying to apply his savings to his own benefit or pleasure. He will look for some equivalent for this forbearance. Principles of Political Economy, Book I, chap. I : JOHN STUART MILL.
[The absurdity of this statement is exposed by economists them selves. For wealth becomes capital only by employment. Wealth must be used and consumed in order to become productive. It is use, not abstinence, that is productive.AUTHOR.]
13 See Data of Ethics. Spencer, chap. 6, § 31.
14 Justice. Spencer.
15 Herbert Spencer, Justice.
17 Principles of Political Economy, Book I, chap. 7.
18 Professor Jevons makes the confession that one hundred years after the first publication of the Wealth of Nations, we find the state of the science to be almost chaotic.
19 Appendix to justice.
20 See chapter on Absolute this in Data of Ethics.Spencer.
21 Data of Ethics. Chapter on Absolute Ethics.Spencer.