THE MONEY PROBLEM
Chapter III.WEALTH
THE maintenance of human life may be said to depend wholly upon human exertion. The earth, from which man draws his subsistence, furnishes only the raw materials which, though containing the necessary elements of life, are not in a form suitable for consumption. The harvests of wheat, of oats, of potatoes, the various forms of animal and vegetable life which he consumes, are not the spontaneous offerings of nature. Man must dig, plough, sow, plant, prune and reap continuously, in order that he and his species may live ; and this labor is a perpetual legacy entailed upon mankind. So long as man labors, and so long only, can he maintain his right to life. A few days’ cessation from toil would suffice to destroy the world’s inhabitants. Although by means of machinery, labor’s hardships are being continually lessened, no discovery has yet been made by which labor can be wholly dispensed with. From a condition where his entire physical powers were employed in obtaining subsistence, man has gradually raised himself to a point where a portion of society is able to produce sufficient to support, not only themselves, but a large and constantly increasing number of non-producers. In place of labor’s produce being barely sufficient for its own support, it now produces a large and increasing surplus. Nevertheless, the laws of nature prevent us from either hoping or expecting that the need for toil will absolutely cease, for the productions of men are destined to perish. Whether it be his food, wearing apparel, works of art, machines or buildings, all are doomed to decay, disintegration and final destruction. From the moment of their birth their dissolution sets in.
This law of dissolution has therefore entailed upon the human race a perpetual condition of labor. Labor is the supreme condition of life. The original factors in production are man and nature—nature comprising all that exists outside of man, such as land, water, air, sunshine, natural forces, etc. From the cooperation of these two original agents arise all that we eat, drink, wear, use, consume and enjoy. These products of man and nature that go to satisfy wants are termed commodities or wealth, a correct definition of which has been the subject of considerable dispute. The importance of a right conception of wealth cannot be overestimated, since its economic production and equitable distribution is the subject matter of political economy, and without a proper conception the whole science becomes perverted. Wealth is the subject-matter of exchange. It is that which the entire human race is constantly pursuing. It is that which shapes and directs the activities of mankind ; it determines the destinies of nations. Consider what this means.
By placing human beings in the same category as commodities, their pursuit and capture was for ages regarded as a legitimate form of wealth production. By making labor a commodity, slavery in a far more extensive form has been established.1 In the 12th century, conspicuous for its professions of piety, some very peculiar things were included under this term. A contemporary French writer enumerates among articles of merchandise found in the market of Landit, besides shoes, clothing, agricultural implements, etc., “ femmes folles de leurs corps.”
It was the prevalence of false ideas of wealth that brought about the ruin of Spain, and was the cause of endless destructive wars during the 16th, 17th and 18th centuries. With the incalculable evils that the mercantile theory created, which made gold and silver the incarnation of wealth, economists have already familiarized us. In defining the term, writers seem to have labored under considerable difficulty, judging from their writings. “ To be wealthy,” says Mill, “ is to have a large stock of useful articles.” Water is an indispensably useful article. One may acquire an inexhaustible stock of it without adding one iota to his wealth. This definition is evidently indefinite. “Wealth,” says Adam Smith, “consists not in the inconsumable riches of money, but in the consumable goods annually reproduced by the labor of society.” A much more comprehensive definition, but still incomplete. “ To create objects which have any kind of utility, is to create wealth,” says Say. A definition requiring another, viz., that of utility, which is given as follows : “ To this inherent fitness or capacity of certain things to satisfy the various wants of mankind, I shall take leave to affix the name of Utility.” John Ruskin, not a professional economist, but a true philosopher, says, “ There is no wealth but life. Life, including all its powers of love, of joy, and of admiration. That country is the richest which nourishes the greatest number of noble and happy human beings.” Beautiful as this definition is, it does not answer to the description of that which is the subject of exchanges. It is, rather, a description of the end to which the use of wealth should tend. Life is not, economically speaking, wealth, but wealth is that which supports and nourishes life.
The definition which finds most favor with economists, and the one generally employed, is that which has “power in exchange,” or “power in purchasing.” The ancient, as well as modern writers, made exchangeability the sole test of wealth. “For that,” says Ulpian, “is wealth which can be bought and sold.” And John Stuart Mill says, “ Everything, therefore, forms a part of wealth which has a power of purchasing.” The sense of making exchangeability the test is apparent. Human life requires for its maintenance and happiness a variety of products, such as food, clothing, shelter, etc., and in order to maintain life a man must acquire these necessaries, and to acquire them he must produce them directly himself or procure them from others. Under economic conditions labor becomes specialized, and each man is compelled to devote himself solely to the production of but one commodity or a special class of commodities. This specialization or division of labor has been one of the greatest factors in the creation of surplus wealth of modern times. Such a division of labor is a system of co-operation by which a producer produces not only for himself, but for other members of society, just as they produce for him. Such a system necessitates, therefore, a plan of distribution or exchange whereby everyone may obtain some of the various products of others in exchange for his own. In order to support himself a man’s produce must be exchangeable, i.e. acceptable to others whose produce he needs. Exchangeability is, therefore, a sine quâ non of wealth, for it is a contradiction in terms to say that a man is possessed of wealth and not the means for supporting life or procuring subsistence. The possessor of gold or gems would be as poor as a beggar without the power of exchanging them.
Wealth, however, has usually been defined and treated from the individual rather than the social point of view, to the confusion and detriment of the science. What under our present inequitable conditions is wealth to the individual, is not necessarily wealth to society. Bonds, taxes, mortgages and judgment notes are a source of wealth to thousands, but not to society. They are rather a source of what Ruskin calls “ Illth,” in contradistinction to wealth. Lotteries have afforded immense revenues to individuals, but none to the world at large. Exchangeability is, therefore, not the sole test of social wealth, although it is, commercially speaking, of individual wealth.2 Under the slave system human beings were made exchangeable, and constituted a large portion of the wealth of their owners. Did the Emancipation Act destroy this wealth ? Yes, so far as their owners were concerned ; no, as regards the nation. On the contrary, society was admittedly the gainer.3 Here, then, we find a destruction of private wealth attended by society’s gain. Again, a definition that includes the factors with their products, is clearly unscientific. This is what the definition of mere exchangeability does. It includes both man and land, the two prime agents of production. To classify man as wealth, is to degrade him to the level of his works, and such a system ends by making him their slave. The buying and selling of labor is traffic in human beings. It is wealth, or, as it is most generally termed, capital, that exploits labor ; in other words, since capital is the product of labor, man’s works have become his master. He is bought and sold by his own productions. This classification has, in fact, inverted the order of things. Wealth, like the Sabbath, is made for man. “ Wealth consists of consumable things,” says Smith. Man is the consumer, not the thing consumed, yet we find capital employing labor, instead of labor employing capital. Again, to categorize land as wealth is unscientific, for wealth consists of definite quantities of things possessing definite qualities, the result of definite human exertions. But land, comprising as it does the soil and all beneath it, is an indefinite, indeterminable quantity of matter of unknown qualities. It is a factor of indeterminable power. Land in its totality comprises the earth ; but the earth stands in no exchange relation to any product. In other words, land is not an economic quantity, and therefore it cannot, scientifically speaking, form a part of wealth. “ Land is the mother and labor the father of wealth,” says Rodbertus. Other considerations shew, too, the impropriety of classifying the factors in production with the products themselves. Wealth is created for use and consumption, and the existence of society depends upon its continued and incessant production and consumption. It is naturally and inevitably perishable. It is born to die. Reproduction can only continue so long as the factors are operative, hence the safety of society and of the entire human race depends upon keeping them at all times in a condition free and fit for use. To class them with wealth is to class them with consumable things, and with things capable of being destroyed, reproduced or substituted by other things. Whilst man reproduces his species, land cannot be increased beyond the boundaries of the globe. Being incapable of destruction and increase, and not a product of labor, land is not, strictly speaking, a part of wealth.
By classifying the agents of production with produce, they become the subjects of exchange, and, therefore, of private property. The right of private property is the right to use and to prevent others from using. The Roman law defined property as the right to use and abuse one’s own, within the limits of the law : “ jus utendi et abutendi re sua, quatenus juris ratio patitur.” The power to withhold or limit one of the factors of production from society by individuals, is a continual menace and danger to its stability. It permits the individual to divert land to user opposed to social welfare. Under such a system future production is an uncertain quantity, since the extent of the agents devoted to production depends upon the caprice or pleasure of individuals, and by limitin the amount of productive land the number of human producers becomes also limited.
It should also be noticed that land, being as necessary an agent as man, there is no good economical reason why, if one is properly the subject of exchange, the other should not be. If as Mill says, “Moral considerations have nothing to do with political economy,” man is as properly an article of merchandise as land. Slavery is quite as justifiable as private ownership of the soil. Wealth, then, as we saw in a previous chapter, consists of those things of human production, the use of which tend to social weal. It is a contradiction in terms to classify that as economic wealth which tends to society’s destruction. Exchangeability does not determine this. Hence the need of a definition of wealth in its absolute or positive sense—in terms of social welfare. That is the highest form of wealth, the use of which fulfils, to the highest degree, the end for which it is created, viz., the prosperity and happiness of society. These definitions exclude both labor and land from the category of wealth.
It is impossible to specify every commodity that answers to the above definition. Human experience alone can determine, in many instances, what is beneficial to society and what is not. This, however, is no discredit to the definition, for the object of the science is to act as a guide, and furnish a standard, by following which society will grow happier and more prosperous, until the economic goal of civilization—viz., the abolition of poverty—shall have been achieved.
The mere transference of wealth from the pocket of one individual to that of another, for instance, is not wealth-production. Hence gambling, pocketpicking and taxation are not systems for creating wealth. So far I have endeavored to show the need of a definition of wealth that harmonizes at all times with what must rightly be considered the true aim of the science, viz., human well-being.
Having determined what wealth is, in its original and true meaning, we must now discuss it from the standpoint of exchange. The branch of political economy known as the science of exchange deals solely with quantities, and we shall find that the terms it employs are all quantitative terms ; hence it becomes, strictly speaking, a mathematical science. In practice, exchangeability is made the sole test of wealth. This excludes all things which nature provides in abundance, and which require no human effort to obtain, such as air, sunshine, water, etc. The term commodities comprises all those things which are properly classed as wealth, a single one or unit of which is a commodity. A commodity presents itself as a definite quantity of something possessing definite qualities. If it be a material thing it is so many pounds, tons, gallons, yards, or bushels of a substance. It is a measurable thing. The qualities of things are primarily what make them desirable by administering to our comforts ; such as the strength of iron, conductivity of copper, transparency of glass, combustibility of coal, etc. It is the quality of a thing that makes it useful. Now all commodities are useful things, but all useful things are not exchangeable, hence all useful things are not commodities. In this sense, therefore, utility alone, i.e. ability or capacity to satisfy certain wants, does not make a commodity exchangeable. A product must first be useful to be exchangeable, but something else is necessary to ensure its exchangeability. This something else, we shall hereafter see, is scarcity or limitation of supply, as compared with the demand, whether limited by nature or artificially. Since the qualities of things are primarily what make them useful, utility is principally confined to the qualitative aspect of things. It is true that when supplied in excessive or minute quantities, certain things which would otherwise be useful, become useless, still our choice of a thing is determined first by its quality. The names by which commodities are known designate their qualities. Thus gold, wheat, wine, wool, are terms that at once convey to us qualitative ideas, and therefore utilities. In speaking of commodities in a general way, we distinguish between them by such qualitative names as above. In speaking of exchangeble commodities, however, we always define them quantitatively, such as one ton of iron, one bushel of wheat, one quart of wine, etc. It is with quantities that the science of exchange deals ; it is not concerned with the qualities of things. It is the exchange relationship of commodities that economics seeks to investigate, and this relationship we shall find is purely a relation of quantities. Quantities are expressed numerically, and hence are commensurable. I shall skew hereafter, at greater length, that the relationship of exchangeable commodities finds expression in numbers, and numbers only. To sum up then commodities, when considered objectively, are regarded as definite quantities of things having different qualities ; but economics deals with them only in their quantitative aspect. Considered subjectively, exchangeable commodities are useful things. As useful things they present themselves principally in their qualitative aspects ; and as exchangeable things, we deal with them from their quantitative standpoint.
1 “ Rome abolished slavery, America abolished it and we did it, but only the words were abolished, not the thing. Slavery means, the freeing themselves, by some, of the necessity of labor, for the satisfaction of their needs and the throwing of this labor upon others by means of physical force ; and where there is a man who does not labor because another is compelled to work for him, there slavery is. And where, as in all European societies, men by force exploit the labor of thousands of men and regard it as their prerogative ; while the latter submit to force and regard it as their duty, there we have slavery in terrible proportions. Slavery exists. Our moujiks have long known that with the rouble it is possible to deal more painful blows than with the stick ; only the political economists cannot see it.”—“ Essay on Money,” by Count LEO TOLSTOI.
2 No writer has done so much to expose the weakness of this definition of wealth, and the gross absurdities to which it may logically lead, as Macleod, although this exposure is evidently unperceived by him. He actually shows that by this definition, debts—mere promises-to-pay, rights of action-at-law,—form part of a nation’s wealth. Whence it follows that successful blackmailing which results in “ promises-to-pay,” is a form of wealth production, and those laws that create taxation, and so create rights of action by the State against its citizens, create wealth. And since the science of economics is to guide mankind in the production and exchange of wealth, blackmailing and taxation should, from the economic point of view, be encouraged ! ! See his “ Theory of Credit,” Vol. I, chap. I, especially where he endeavours to prove that wealth can be produced from nothing ! ! (page 50.)
3 It is generally conceded that the abolition of slavery has greatly benefited the South by compelling the white population to personally engage in production and in labor that formerly was left to the colored race. Slavery is not and cannot be an economic system of wealth production for any society, for it keeps out of production the most intelligent, and places industry in the hands of those who have no interest in it,—who labor not to improve the method of production, but from compulsion. At the same time it can scarcely be doubted that by abolishing personal slavery, and establishing the wage system, a large portion of the laboring people are in a worse condition than they would be as actual slaves. By replacing in the category of wealth persons with their labor, capitalists achieve all they want without the expense and responsibility that slavery involves. When men’s persons are owned, their well-being, health and strength are a matter of solicitude on the part of their owners. Not so under wage slavery. It is only their labor that counts. If their labor is poor by reason of sickness or ill health it makes no difference to their employer. He pays only for what he gets and can replace the sick with healthy men at any time. Count Tolstoi, comparing the present condition of the Russian peasants with their condition of serfdom, says : “ Before the serfs were emancipated, I could force Vanka to do any kind of a job ; and if Vanka refused I sent him to the local judge, who whipped him till he became tractable. At the same time, if I forced Vanka to overwork himself, if I did not give him land and food, the matter was reported to the authorities, and I had to answer the charge. Now the people are free ; but I can force Vanka and Petrushka and Sidorka to do any kind of a job for me, and if one refuses, I give him no money to pay his taxes, and they whip him till he submits ; moreover, I can force Germans, Frenchmen, Chinese to work for me, punishing them for disobedience by withholding the money which they need to lease land or buy bread ; if I force them to work without food, above their strength, if I kill them with work, nobody will say a word to me ; and if, in addition, I am well read in politico-economic books, I may be firmly assured that all men are free, and that money does not conduce to slavery ! ”—“ Essay on Money,” TOLSTOI.