* See the discussion of this subject further on.

That it should be necessary, at this time of day, to set forth such elementary truths as these may [169] well seem strange; but no one who consults that interesting museum of political delusions, "Progress and Poverty," some of the treasures of which I have already brought to light, will doubt the fact, if he bestows proper attention upon the first book of that widely-read work. At page 15 it is thus written:

"The proposition I shall endeavour to prove is: that wages, instead of being drawn from capital, are, in reality, drawn from the product of the labour for which they are paid."

Again at page 18:--

"In every case in which labour is exchanged for commodities, production really precedes enjoyment . . . wages are the earnings--that is to say, the makings--of labour--not the advances of capital."

And the proposition which the author endeavours to disprove is the hitherto generally accepted doctrine

..."that labour is maintained and paid out of existing capital, before the product which const.i.tutes the ultimate object is secured" (p. 16).

The doctrine respecting the relation of capital and wages, which is thus opposed in "Progress and Poverty," is that ill.u.s.trated in the foregoing pages; the truth of which, I conceive, must be plain to any one who has apprehended the very simple arguments by which I have endeavoured to [170] demonstrate it. One conclusion or the other must be hopelessly wrong; and, even at the cost of going once more over some of the ground traversed in this essay and that on "Natural and Political Rights,"* I propose to show that the error lies with "Progress and Poverty"; in which work, so far as political science is concerned, the poverty is, to my eye, much more apparent than the progress.

* Collected Essays, vol. i. pp. 359-382.

To begin at the beginning. The author propounds a definition of wealth: "Nothing which nature supplies to man without his labour is wealth" (p. 28). Wealth consists of "natural substances or products which have been adapted by human labour to human use or gratification, their value depending upon the amount of labour which, upon the average, would be required to produce things of like kind" (p. 27).

The following examples of wealth are given:--

. . . "Buildings, cattle, tools, machinery, agricultural and mineral products, manufactured goods, ships, waggons, furniture, and the like" (p. 27).

I take it that native metals, coal and brick clay, are "mineral products"; and I quite believe that they are properly termed "wealth."

But when a seam of coal crops out at the surface, and lumps of coal are to be had for the picking up; or when native copper lies about in nuggets, or [171] when brick clay forms a superficial stratum, it appears to me that these things are supplied to, nay almost thrust upon, man without his labour. According to the definition, therefore, they are not "wealth." According to the enumeration, however, they are "wealth": a tolerably fair specimen of a contradiction in terms. Or does "Progress and Poverty" really suggest that a coal seam which crops out at the surface is not wealth; but that if somebody breaks off a piece and carries it away, the bestowal of this amount of labour upon that particular lump makes it wealth; while the rest remains "not wealth"? The notion that the value of a thing bears any necessary relation to the amount of labour (average or otherwise) bestowed upon it, is a fallacy which needs no further refutation than it has already received. The average amount of labour bestowed upon warming-pans confers no value upon them in the eyes of a Gold-Coast negro; nor would an Esquimaux give a slice of blubber for the most elaborate of ice-machines.

So much for the doctrine of "Progress and Poverty" touching the nature of wealth. Let us now consider its teachings respecting capital as wealth or a part of wealth. Adam Smith's definition "that part of a man's stock which he expects to yield him a revenue is called his capital" is quoted with approval (p. 32); elsewhere capital is said to be that part of wealth "which [172] is devoted to the aid of production" (p. 28); and yet again it is said to be

. . . "wealth in course of exchange,* understanding exchange to include, not merely the pa.s.sing from hand to hand, but also such trans.m.u.tations as occur when the reproductive or transforming forces of nature are utilised for the increase of wealth" (p. 32).

* The italics are the author's.

But if too much pondering over the possible senses and scope of these definitions should weary the reader, he will be relieved by the following acknowledgment:--

. . . "Nor is the definition of capital I have suggested of any importance" (p. 33).

The author informs us, in fact, that he is "not writing a text-book,"

thereby intimating his opinion that it is less important to be clear and accurate when you are trying to bring about a political revolution than when a merely academic interest attaches to the subject treated.

But he is not busy about anything so serious as a textbook: no, he "is only attempting to discover the laws which control a great social problem"--a mode of expression which indicates perhaps the high-water mark of intellectual muddlement. I have heard, in my time, of "laws"

which control other "laws"; but this is the first occasion on which "laws" which "control a problem" have come under my notice. Even the disquisitions "of [173] those flabby writers who have burdened the press and darkened counsel by numerous volumes which are dubbed political economy" (p. 28) could hardly furnish their critics with a finer specimen of that which a hero of the "Dunciad," by the one flash of genius recorded of him, called "clotted nonsense."

Doubtless it is a sign of grace that the author of these definitions should attach no importance to any of them; but since, unfortunately, his whole argument turns upon the tacit a.s.sumption that they are important, I may not pa.s.s them over so lightly. The third I give up.

Why anything should be capital when it is "in course of exchange," and not be capital under other circ.u.mstances, pa.s.ses my understanding. We are told that "that part of a farmer's crop held for sale or for seed, or to feed his help, in part payment of wages, would be accounted capital; that held for the care of his family would not be" (p. 31).

But I fail to discover any ground of reason or authority for the doctrine that it is only when a crop is about to be sold or sown, or given as wages, that it may be called capital. On the contrary, whether we consider custom or reason, so much of it as is stored away in ricks and barns during harvest, and remains there to be used in any of these ways months or years afterwards, is customarily and rightly termed capital. Surely, the meaning of the clumsy phrase that capital is "wealth in the [174] course of exchange" must be that it is "wealth capable of being exchanged" against labour or anything else. That, in fact, is the equivalent of the second definition, that capital is "that part of wealth which is devoted to the aid of production."

Obviously, if you possess that for which men will give labour, you can aid production by means of that labour. And, again, it agrees with the first definition (borrowed from Adam Smith) that capital is "that part of a man's stock which he expects to yield him a revenue." For a revenue is both etymologically and in sense a "return." A man gives his labour in sowing grain, or in tending cattle, because he expects a "return"--a "revenue"--in the shape of the increase of the grain or of the herd; and also, in the latter case, in the shape of their labour and manure which "aid the production" of such increase. The grain and cattle of which he is possessed immediately after harvest is his capital; and his revenue for the twelvemonth, until the next harvest, is the surplus of grain and cattle over and above the amount with which he started. This is disposable for any purpose for which he may desire to use it, leaving him just as well off as he was at the beginning of the year. Whether the man keeps the surplus grain for sowing more land, and the surplus cattle for occupying more pasture; whether he exchanges them for other commodities, such as the use of the land (as rent); or labour (as [175] wages); or whether he feeds himself and his family, in no way alters their nature as revenue, or affects the fact that this revenue is merely disposable capital.

That (even apart from etymology) cattle are typical examples of capital cannot be denied ("Progress and Poverty," p. 25); and if we seek for that particular quality of cattle which makes them "capital,"

neither has the author of "Progress and Poverty" supplied, nor is any one else very likely to supply, a better account of the matter than Adam Smith has done. Cattle are "capital" because they are "stock which yields revenue." That is to say, they afford to their owner a supply of that which he desires to possess. And, in this particular case, the "revenue" is not only desirable, but of supreme importance, inasmuch as it is capable of maintaining human life. The herd yields a revenue of food-stuffs as milk and meat; a revenue of skins; a revenue of manure; a revenue of labour; a revenue of exchangeable commodities in the shape of these things, as well as in that of live cattle. In each and all of these capacities cattle are capital; and, conversely, things which possess any or all of these capacities are capital.

Therefore what we find at page 25 of "Progress and Poverty" must be regarded as a welcome lapse into clearness of apprehension:--

"A fertile field, a rich vein of ore, a falling stream which supplies power, may give the possessor advantages [176] equivalent to the possession of capital; but to cla.s.s such things as capital would be to put an end to the distinction between land and capital."

Just so. But the fatal truth is that these things are capital; and that there really is no fundamental distinction between land and capital. Is it denied that a fertile field, a rich vein of ore, or a falling stream, may form part of a man's stock, and that, if they do, they are capable of yielding revenue? Will not somebody pay a share of the produce in kind, or in money, for the privilege of cultivating the first royalties for that of working the second; and a like equivalent for that of erecting a mill on the third? In what sense, then, are these things less "capital" than the buildings and tools which on page 27 of "Progress and Poverty" are admitted to be capital? Is it not plain that if these things confer "advantages equivalent to the possession of capital," and if the "advantage" of capital is nothing but the yielding of revenue, then the denial that they are capital is merely a roundabout way of self-contradiction?

All this confused talk about capital, however, is lucidity itself compared with the exposition of the remarkable thesis, "Wages not drawn from capital, but produced by labour," which occupies the third chapter of "Progress and Poverty."

"If, for instance, I devote my labour to gathering birds' eggs or picking wild berries, the eggs or berries I thus [177] get are my wages. Surely no one will contend that, in such a case, wages are drawn from capital. There is no capital in the case" (p. 34).

Nevertheless, those who have followed what has been said in the first part of this essay surely neither will, nor can, have any hesitation about substantially adopting the challenged contention, though they may possibly have qualms as to the propriety of the use of the term "wages."* They will have no difficulty in apprehending the fact that birds' eggs and berries are stores of foodstuffs, or vital capital; that the man who devotes his labour to getting them does so at the expense of his personal vital capital; and that, if the eggs and the berries are "wages" for his work, they are so because they enable him to restore to his organism the vital capital which he has consumed in doing the work of collection. So that there is really a great deal of "capital in the case."

* Not merely on the grounds stated below, but on the strength of Mr. George's own definition. Does the gatherer of eggs, or berries, produce them by his labour? If so, what do the hens and the bushes do?

Our author proceeds:--

"An absolutely naked man, thrown on an island where no human being has before trod, may gather birds' eggs or pick berries" (p. 34).

No doubt. But those who have followed my argument thus far will be aware that a man's vital capital does not reside in his clothes; and, therefore, [178] they will probably fail, as completely as I do, to discover the relevancy of the statement.

Again:--

. . . Or, if I take a piece of leather and work it up into a pair of shoes, the shoes are my wages--the reward of my exertion. Surely they are not drawn from capital--either my capital or anybody else's capital--but are brought into existence by the labour of which they became the wages; and, in obtaining this pair of shoes as the wages of my labour, capital is not even momentarily lessened one iota. For if we call in the idea of capital, my capital at the beginning consists of the piece of leather, the thread, &c. (p. 34).

It takes away one's breath to have such a concatenation of fallacies administered in the s.p.a.ce of half a paragraph. It does not seem to have occurred to our economical reformer to imagine whence his "capital at the beginning," the "leather, thread, &c." came. I venture to suppose that leather to have been originally cattle-skin; and since calves and oxen are not flayed alive, the existence of the leather implies the lessening of that form of capital by a very considerable iota. It is, therefore, as sure as anything can be that, in the long run, the shoes are drawn from that which is capital par excellence; to wit, cattle. It is further beyond doubt that the operation of tanning must involve loss of capital in the shape of bark, to say nothing of other losses; and that the use of the awls and knives of the shoemaker involves loss of capital in the shape of the store of [179] iron; further, the shoemaker has been enabled to do his work not only by the vital capital expended during the time occupied in making the pair of shoes, but by that expended from the time of his birth, up to the time that he earned wages that would keep him alive.

"Progress and Poverty" continues:--

. . . As my labour goes on, value is steadily added until, when my labour results in the finished shoes, I have my capital plus the difference in value between the material and the shoes. In obtaining this additional value--my wages--how is capital, at any time, drawn upon? (p, 34).

In return we may inquire, how can any one propound such a question?

Capital is drawn upon all the time. Not only when the shoes are commenced, but while they are being made, and until they are either used by the shoemaker himself or are purchased by somebody else; that is, exchanged for a portion of another man's capital. In fact (supposing that the shoemaker does not want shoes himself), it is the existence of vital capital in the possession of another person and the willingness of that person to part with more or less of it in exchange for the shoes--it is these two conditions, alone, which prevent the shoemaker from having consumed his capital unproductively, just as much as if he had spent his time in chopping up the leather into minute fragments.

Thus, the examination of the very case selected [180] by the advocate of the doctrine that labour bestowed upon manufacture, without any intervention of capital, can produce wages, proves to be a delusion of the first magnitude; even though it be supported by the dictum of Adam Smith which is quoted in its favour (p. 34)--

. . . "The produce of labour const.i.tutes the natural recompense or wages of labour. In that original state of things which precedes both the appropriation of land and the acc.u.mulation of stock, the whole produce of labour belongs to the labourer. He has neither landlord nor master to share with him" ("Wealth of Nations," ch. viii).

But the whole of this pa.s.sage exhibits the influence of the French Physiocrats by whom Adam Smith was inspired, at their worst; that is to say, when they most completely forsook the ground of experience for a priori speculation. The confident reference to "that original state of things" is quite in the manner of the Essai sur l'Inegalie. Now, the state of men before the "appropriation of land" and the "acc.u.mulation of stock" must surely have been that of purely savage hunters. As, by the supposition, n.o.body would have possessed land, certainly no man could have had a landlord; and, if there was no acc.u.mulation of stock in a transferable form, as surely there could be no master, in the sense of hirer. But hirer and hire (that is, wages) are correlative terms, like mother and child. As "child" implies "mother," so does "hire" or "wages" imply a [181] "hirer" or "wage-giver." Therefore, when a man in "the original state of things" gathered fruit or killed game for his own sustenance, the fruit or the game could be called his "wages" only in a figurative sense; as one sees if the term "hire,"

which has a more limited connotation, is subst.i.tuted for "wage." If not, it must be a.s.sumed that the savage hired himself to get his own dinner; whereby we are led to the tolerably absurd conclusion that, as in the "state of nature" he was his own employer, the "master" and the labourer, in that model age, appropriated the produce in equal shares!

And if this should be not enough, it has already been seen that, in the hunting state, man is not even an accessory of production of vital capital; he merely consumes what nature produces.

According to the author of "Progress and Poverty" political economists have been deluded by a "fallacy which has entangled some of the most acute minds in a web of their own spinning."

"It is in the use of the term capital in two senses. In the primary proposition that capital is necessary to the exertion of productive labour, the term "capital" is understood as including all food, clothing, shelter, &c.; whereas in the deductions finally drawn from it, the term is used in its common and legitimate meaning of wealth devoted, not to the immediate gratification of desire, but to the procurement of more wealth--of wealth in the hands of employers as distinguished from labourers" (p. 40).

[182] I am by no means concerned to defend the political economists who are thus charged with blundering; but I shall be surprised to learn that any have carried the art of self-entanglement to the degree of perfection exhibited by this pa.s.sage. Who has ever imagined that wealth which, in the hands of an employer, is capital, ceases to be capital if it is in the hands of a labourer? Suppose a workman to be paid thirty shillings on Sat.u.r.day evening for six days' labour, that thirty shillings comes out of the employer's capital, and receives the name of "wages" simply because it is exchanged for labour. In the workman's pocket, as he goes home, it is a part of his capital, in exactly the same sense as, half an hour before, it was part of the employer's capital; he is a capitalist just as much as if he were a Rothschild. Suppose him to be a single man, whose cooking and household matters are attended to by the people of the house in which he has a room; then the rent which he pays them out of this capital is, in part, wages for their labour, and he is, so far, an employer.

If he saves one shilling out of his thirty, he has, to that extent, added to his capital when the next Sat.u.r.day comes round. And if he puts his saved shillings week by week into the Savings Bank, the difference between him and the most bloated of bankers is simply one of degree.

At page 42, we are confidently told that [183] "labourers by receiving wages" cannot lessen "even temporarily" the "capital of the employer,"

while at page 44 it is admitted that in certain cases the capitalist "pays out capital in wages." One would think that the "paying out" of capital is hardly possible without at least a "temporary" diminution of the capital from which payment is made. But "Progress and Poverty"

changes all that by a little verbal legerdemain:--