There is no sharp line separating economics from politics. While the two fields are different in character and scope, they are so interrelated and interwoven that any successful attempt to separate them would leave the inquirer with two segments of a lifeless social cadaver. In the course of this exposition it will become increasingly evident, as the political and economic lines cross and re-cross, that the two fields are inseparable parts of a total body social.

One civilization after another has begun with a predominantly rural economy that has become increasingly urban as it matured. Food gathering, pastoral life and small scale agriculture were rural. Trade, commerce, manufacturing and finance, concentrated populations, increased division of labor, specialization, inter-communication and interdependence produced the trade center, the commercial metropolis and the general purpose city.

Herdsmen and land workers, dependent on gra.s.s and rainfall, lived close to the subsistence margin and were at the mercy of forces they could not control. Traders and money changers, with an eye for business in a growing marketplace made a more ample living. At the same time the more successful among them acc.u.mulated capital which they loaned or invested in stocks of goods, shops, warehouses, caravans, ships. By hiring labor-power they multiplied their own limited physical capacities. By investing in varied enterprises they a.s.sured themselves against possible loss in any one of them. They also multiplied the possibilities of profit.

Trade, finance and commerce, by producing a regular flow of abundant income, brought into existence a new field of occupations and a new cla.s.s--business and the businessmen. Herdsmen and farmers depended for their livelihood on nature, her n.i.g.g.ardliness or generosity. The businessmen required only the presence of a group large enough to purchase goods and services, pay rent and interest, work for wages and leave the profits to the enterpriser. Each profit beyond the subsistence level enabled the businessmen to expand, buying more goods, hiring more labor, making still greater profits.

Communities of businessmen pooled their profits, extended their markets, built fleets, enlarged cities. Through joint action they engaged in plundering expeditions and collected tribute from their victims.

Organized fabrication turned out the goods and services which were marketed for profits. The resulting wealth enabled the successful businessmen to build houses, stock them with consumer goods and art treasures, hire servants, live sumptuously. Productivity, wealth, prosperity filled their honey pot to overflowing.

Honey pots provide the "good things" of life for their owners. They also tempt outsiders. Honey-pot owners fear pilfering by their servants; fear sponging by their relatives, friends, neighbors; fear robbers and kidnappers; fear migrating hordes on the lookout for plunder. Defense is a necessary aspect of each rich household, neighborhood, city, nation, empire, civilization.

The sequence from productivity, through prosperity, wealth acc.u.mulation, abundance and the measures needed to defend and safeguard the acc.u.mulations, leads to an affluent community or society. It also calls into being new and distinctive cla.s.s forces.

I. The business cla.s.s (hucksters and profiteers), a self-seeking, aggressive group of adventurers, promoters and organizers of bourgeois society to whom _profit_ comes first. At one or another stage in the life cycle of every civilization aggressive bourgeois greed for wealth and power makes itself felt. Their role in western civilization has been outstanding. The business cla.s.s through its control of the productive apparatus and the sources of credit has been able to surround itself with subordinates, scientists and other experts, apologists, strong-arm squads (police and military), spies and a.s.sa.s.sins.

II. A middle cla.s.s, made up of business cla.s.s subordinates plus self employed tradesmen, professionals, independent farmers and craftsmen.

III. A cla.s.s of blue collared and white collared producers of goods and services who hold their jobs during good behavior. When not needed or wanted they are pushed into the ranks of the partially or wholly unemployed.

Most civilizations have added to the working force serfs, peons and/or chattel slaves.

IV. A cla.s.s of hangers on--economic parasites--who consume more than they produce. The payment of unearned income to property holders and the creation of monopolies enables this cla.s.s to live on rent, interest and profit in proportion to their ownership. As parasitism increases and multiplies it proves to be a dead weight which eventually drags down any economy that tolerates it.

V. A cla.s.s of dependents, defectives and delinquents, supported by society but contributing little or nothing to its maintenance or its advancement.

Every civilization has maintained a greater or lesser degree of mobility between the cla.s.ses. Mobility makes it possible for those with greater ability and energy to leave the countryside, settle near the market-place and climb the ladder of success. It has also made it possible for policy makers to dump those whose services are no longer needed or wanted by the ruling oligarchy.

Among the driving economic forces in a civilization are hunger, fear, greed, ambition. In practice these forces have proved far more effective than whips and clubs in the hand of slave drivers. They animate the rat-race for pelf, power, "success", which attracts idealism, energy, ability and throws out the carcases of those no longer able to make a contribution to the wealth and power of the oligarchy and its establishment.

Hunters, herdsmen, cultivators, craftsmen, mariners, miners perform services that maintain the solvency of any economy in which they play a leading role. Fast talkers, adventurers, promoters, manipulators, gamblers add little or nothing to the income of the communities in which they operate. Often, however, as gargantuan consumers, they play an important role in building up the deficits which finally wreck an economy.

Acc.u.mulations of wealth in market centers tempts the ambitious and the adventurous to enter the rat-race and grab more than their pro-rata share of the honey. The most obvious way to do this is to secure possession of the honey pot.

Far away, in the tribal past of a civilization, lay a period of scarcity in which the members of the community shared the scarce income or starved. As the tribal wealth increased, the leaders, their families and retainers got more than a fair share of the available goods, services, preferment, privileges. At a very early stage the "ants" stored away what they could spare, while the "gra.s.shoppers" had a "good time".

Investing their stored wealth in land or productive enterprises the "ants" added unearned income to their normal earnings from productive labor.

Because the "ants" held the wealth of the community they were able to exercise authority and determine community policy. One result of their decisions was the creation of t.i.tles to land and stored wealth. A second result was the inst.i.tution of property-custom and later of property-law under which those who owned property enjoyed special privileges which gave them still larger shares of the community wealth and income.

Wealth ownership and the exercise of authority, concentrated in one person or family, created a basic division in the community between those whose livelihood depended on their labor and those whose income was determined by their ownership of property and their exercise of authority. In the course of time this development divided the community into a property-owning, governing minority which was wealthy, and a property-poor majority whose livelihood depended upon the willingness of the property holding minority to use their land and productive implements in operations that turned out goods and services.

Property ownership and income were protected by law. Labor income depended on the bargaining power of the property-less majority. Property income yielded wealth to the property owners. Labor income, under the pressure of compet.i.tion in the labor market, yielded only subsistence.

Thus the community was divided into owners and workers. The owners controlled and spent or invested the income. The workers were provided with the necessaries and a few crumbs of comfort.

Private property and property law supported by state power inst.i.tutionalized a basic division in every civilization. One segment of a civilized community enjoyed wealth and power; other segments produced goods and performed services. The owners were rich; the producers were poor. Riches side by side with poverty are characteristic features of a civilized society.

Exploitation has been the economic backbone of every civilization from earliest times to the present day. Each civilization has exploited and used up its natural resources. In every civilization individuals, groups, cla.s.ses and sometimes castes have exploited or used up fellow humans and fellow creatures to suit their own purposes and advance their own interests.

Abraham Lincoln gave a cla.s.sical definition of human exploitation in a simple sentence: "It is the princ.i.p.al that says you work and toil and earn bread and I will eat it."

Exploitation of nature and of fellow beings by man began long before written history. During periods of civilization, and notably in present-day civilization, exploitation has determined social relationships. It has also become one of the pillars of every civilized community.

Civilized peoples use up natural resources as a matter of course. The more advanced technically have stripped their environments of replaceable and irreplaceable resources. They have also perfected techniques for using the productive power of their fellow creatures. One way to do this is by owning the body. Another way is ownership of land, capital and consumer goods which enable the owner to live without labor on the products resulting from the labor of others.

Owners of property and wealth receive an income because they are owners.

They may be very young or very old, able-bodied or helpless. Their livelihood comes to them not because of anything they do, but because of the property t.i.tles which they own.

The owner of land may collect rent. The owner of capital may collect interest. The owner of an enterprise may collect profits. Each lives by owning.

Workers produce goods and services. They are paid an income proportioned to their production.

Owners of land, capital and consumer goods are paid incomes proportioned to their ownership.

Workers work for a living. Owners live by ownership, chiefly of land and the implements of production.

Owners of property frequently are rich. Workers, by comparison, are poor. The line separating owners from workers also separates riches from poverty.

Income from services rendered, from work, is earned income. Income from property ownership, by contrast, is unearned income.

The relation between earned and unearned income is not confined to one generation. Under laws pa.s.sed by the owners and their retainers the owners of private property may give or bequeath this property to their descendants. In the course of time a community is divided between workers who are poor and owners who are rich. Since the rich need not work in order to live, they and those a.s.sociated with them may live on the unearned income derived from property ownership. In a word, they may become parasitic.

Parasitism may lead to social decay. Generation after generation, the owners and their dependants may live in comfort or even in luxury while those who work and their dependents may lack simple necessities. This is the confrontation of riches and poverty which has played so large a role in every civilization.

Through the ages, in one civilization after another, the glaring contrast between riches and poverty has appeared, dividing the community and laying the foundation for cla.s.s struggle and cla.s.s war, both of which decrease social efficiency, intensify cla.s.s antagonism.

In the early stages of any culture cycle, barter is replaced by a money economy. Money is a medium of exchange, usually issued by a public authority and used in daily transactions, to pay tribute or taxes and to meet other general expenses. In its earlier forms it is made of relatively scarce materials that are in general demand, limited in supply and easily divisible into smaller units. Gold, silver and other metals meet these requirements and have been used as money through the ages.

Cash money and promises to pay speed up wholesale and retail exchanges in the market place. They fill the bill in normal times. But there are emergencies and other exceptions. One of the commonest of the emergencies is war.

In a previous chapter we pointed out that war is a characteristic feature of a civilization that has pa.s.sed the top-point of its expansion and begun to decline. Then the chickens come home to roost. Civil war, colonial wars and wars between imperial rivals follow each other, creating emergencies in which demand for certain strategic goods and services rises steeply, with no corresponding increase in supply. Prices increase. The common defense requires immediate purchase of supplies.

The public treasury is exhausted. The government borrows from money lenders (bankers). It also prints paper money and puts it in circulation.

If the credit of the government is good, if the emergency is of short duration, matters right themselves and the economy survives without serious derangements. But war-emergency disrupts and sometimes destroys an economy. This outcome often results from military defeat.

Another exception to normal economic transactions is buying on credit--buying today and paying tomorrow. The temporary gap between purchase and payment is filled by credit--a promise of the purchaser to pay later and the confidence of the seller that the bill will be paid.

Such credit transactions are covered by notes, bonds and mortgages made out by the buyer and accepted by the seller. Until the debt is settled, the borrower pays the seller interest at an agreed rate. Bankers enter the picture, providing capital and collecting interest on their loans.

Where credit is abundant and relatively cheap, borrowers spend beyond their incomes, hoping to pay later when the loan falls due. Borrowing and over-spending are among human frailties. They are also forms of risk-taking or gambling. Who knows whether the banker who promises to pay on demand will be alive and doing business next week when his promise to pay is presented for settlement? When the promise to pay is issued by a government which decides the value of currency, and accepted by that government as payment for taxes and other obligations, it is more readily acceptable than paper issued and guaranteed by an individual money lender or banker.

Each civilization has had a background of simple use economy--food gathering, animal husbandry, agriculture--in which most of the people produced what they needed and consumed what they produced. Such an economy employs money rarely.

In a money economy those who have cash use it to pay their bills or settle their accounts.

Those who buy on credit pay interest to money lenders. The money lenders, later the bankers, make their profits by helping others to spend beyond their own means. The money-lender also accepted loans from others, promising to pay them back at a later date, and giving the lender a piece of paper, specifying the amount of the loan. The paper promise to pay became a bank-note, pa.s.sed from hand to hand. It had no intrinsic value, but as the money lender promised to pay cash for the note on demand, it was accepted in payment of debts or for the purchase of commodities.

When a shirt-maker turns out a product and exchanges it for a pair of shoes made by a shoemaker there are no overhead costs. Each producer adds to his wardrobe an item that makes his life more satisfactory.

Examples of simple barter are seldom found in market economies.

Civilized society a.s.sembles quant.i.ties and varieties of goods and services in the market place, invites consumers to choose among the wares and provides money to make transactions quick and easy. Civilized society supplements money with credit on the principle: buy and use today; pay tomorrow. Civilization goes beyond these bare essentials of merchandizing by furnishing transportation and communication, making long term loans at interest, writing insurance, developing the techniques of accounting and management. Customers who visit the market have basic human needs--the necessities of life. Beyond these necessaries, there are conveniences, comforts, luxuries. The markets of civilization cover the entire range of human needs and human wants from necessaries to luxuries.