Kindergarten Economics

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W. H. Stuart

When "Progress and Poverty" appeared, some fourteen years ago, it was eagerly read by thousands who had previously never given social or economic problems a thought. The study of political economy was, at that time, confined to a few professors of that

science scattered in various colleges and universities throughout the country. Those professors were, and are yet, the paid apologists of a system that enables the few sharp, cunning, able and unscrupulous members of society to live luxuriously on the ignorance and credulity of the great mass of the producers. This system of exploitation is made possible by the division of society into two classes, viz.: those who own and control the means of production —land and capital—and those who, being divorced from the means whereby an independent living could be made, were compelled to sell their labor power under competition with their fellows to the capitalists, the monopolizers of the "means of production."

"Progress and Poverty" was written to prove that the private ownership of land was the sufficient cause for the great and unequal distribution of wealth. AU poverty was traced to that cause. It was argued with great plausibility that the concentration and increase or population merely served to add to the value of the land where such increase and concentration occurred; that the enormous increase in productive power of labor by co operation in production, and by the aid of labor-saving machinery, merely added to the value of land; that those who owned and controlled the land were enabled to absorb in the increase in its value, the "unearned increment," or in increased "rent" for its use, all the advantages of modern productive processes. It was therefore proposed as a "sovereign remedy," that would abolish poverty, that society should confiscate for public purposes the rental value of the land, irrespective and exclusive of improvements. The theory being that when all had equal access to land upon equal terms that an equilibrium of opportunities would be effected, and labor would receive the entire return it was entitled to as its share in production. It must be here noted that the Georgian theory of economics assumes three factors in production, viz.: land, labor and capital. The first factor, land, being a gift of nature and indispensable for human existence, should not be monopolized by a few to the exclusion of the great majority who had equal rights to its use, but should be the common property of society. But as the value of land greatly varied, either through superior fertility or site value, the users of such land should be forced to pay to the community the value of such superior advantage, in the shape of a tax that would equalize all natural opportunities and place all upon an equal footing. Capital is, according to Henry George, another factor in production, and is entitled to a "return" in the shape of " interest." In this regard he is in entire agreement with the current and orthodox schools of economics. He does not, however, base his plea for the "wages of capital" on the "abstinence" theory of N. W. Senior, on the contrary he discredits " abstinence " as a factor in production. He justifies "interest" on a novel and somewhat original ground, viz.: that capital invested in certain things, as sav sheep, cattle, swine, etc., increase in value as a result of the "element of time" and of the " reproductive forces of nature " that are quite separable and distinct from labor, and he contends that capital invested in other ways in which the element of time and the reproductive forces of nature are not factors, should, by the law of equalization, share in this increase. I have in a former number of this Magazine exposed this fallacy of this justification for interest, and I shall not now discuss the subject. I merely now point out that the theory that capital is entitled to a "return" for its " aid in production" is the basis on which the present robbery of labor is everywhere justified and defended.

This brings us to the other factor in production, viz.: Labor. Labor is entitled, according to the Georgian theory, to all it can make on land at the " margin of production " with the individual tools that can be used by the laborer. All above what can be made on land at the margin of production, «. «., on land of no rental value, will be confiscated by the state in the shape of the single tax, and all the advantage of "capital" as an "aid in production" by the use of the modern tools of production would be confiscated by capitalists in the shape of "interest" for their contribution toward the processes of production.

I have challenged single taxers to dispute this proposition. True, Mr. W. E. Brokaw, editor of the national organ of the single taxers, denied the proposition in his " irruption " into the columns of the June Magazr N icand challenged me to prove it. I accepted the challenge and* asked him to open the columns of his paper, the Single Tax Courier, to a discussion, but I have heard nothing further from the valliant Brokaw. While single taxers are everywhere prompt to occupy and use space in the columns of labor papers and magazines for the propogation of their kindergarten ideas of economics, their national organs, neither the Standard or Courier would or will allow a free discussion in their columns. That is to say, no serious argument against their theory will be discussed. iSuch trifling objections against their theory as, that the landlord will be able to shift his increased taxes onto the tenant are answered over and over again in one and two column articles ad nauxeum. By the way, this reminds me that in the same July article Mr. Brokaw charged that I had willfully or ignorantly asserted, that in an editorial in the Standard Mr. George had defended "Old Hutch" in his famous "corners on wheat in Chicago a few years ago. that such men were public benefactors, and the promoting of "corners" a legitimate use for capital. The reader will perhaps recollect that I challenged Mr. Brokaw to reproduce the editorial referred to in the columns of the Courier; offering, if my statement was not substantially correct to pay for the insertion of the editorial at the usual advertising rates, money to be deposited in advance.

The reader will be surprised and pain*'I to learn that the editorial has not been reproduced in the Courier nor have 1 been called upon for a deposit for that purpose. Comment is unnecessary.

But to return to the Bingle tax theory. With the confiscation of economic rent, and the national or municipal ownership oi certain public utilities, which single taxer* term "national monopolies, which they are forced to admit could not be left in the bands of private owners to be regulated t>y by free competition.

Then laissez faire was to be lord of all, and free competition have undisputed sway.

Here is where the socialist critic shows the utter shallowness of the single tax theory. He points out that the revolution is the form of the modern tools of production, from the small hand tools owned and controlled by the individual and isolate'! worker, has had the effect of completely divorcing the laborer from his tools as an independent owner.

The socialist shows that the evolution in the form and nature of the tools of production makes it impossible for the isolate*! and independent worker to any longer control or own them. He points out that while private ownership in the means oi production is allowed that they must, )■>' the nature of the case, become the properly of a small minority of society, who are enabled to use these tools as a means of oppression, to absorb from labor all above the amount necessary in the form of " wages " to maintain the actual producer according to the standard of living then prevailing. The problem presented by the socialists, why a few should be permitted to monopolize all the advantages obtained by the use of labor saving machinery and by the aid of concentrated capital, is a problem that the single tax intellect appears incapable of grasping.

There are no exceptions, from Henry George down to Jose Groe, and even Mr. Borland, who has really made a creditable effort to understand the socialist argument, has failed, for, with the usual single tax inability to master the problem, he inform!us that he " feels confident that with free access to land it would be impossible to monopolize machinery." This kind of an answer is repeated over and over again by single tax speakers and writers. The writers in the Single Tax Courier continually assert that with the freeing of opportunities by the adoption of the single tax, that wealth could be produced abundantly. Under such conditions, we are assured by \V. E. Brokaw, "even savages could produce wealth abundantly." It appears impossible for the single tax intellect to grasp the problem, the result?, probably, of an insufficiency of grey matter in the brain or of an extra convolution to bring it up to the standard. When pressed and asked how, with free access to land, men without capital will be able to compete in production with the capitalists, they will ask, as Mr. Borland does, "why they can not produce for themselves instead of for the capitalists?" It is evident that the problem again eludes them.

Let me state the problem in a manner Bo simple that perhaps the single tax intellect may be able to grasp it. Let us suppose that when this government was formed we had adopted the theory of common ownership of the land under the system proposed by the single tax theory, but that in everything else we demanded private ownership and free competition. Under such conditions of land tenure, with a population of three millions and territory sufficient to support one thousand millions, with private monopolization of unused lands impossible, it is evident that economic rent would be a very trifling tax totally inadequate for public revenue.

At that time every craftsman and workman owned the tools of his trade. They were his individual property by the use of which he made an independent living without being in any way dependent on a "capitalist." The weaver, let us say, owned Ms own hand loom operated'by himself and family and perhaps an apprentice or two. After a while the spinning jenny is invented, followed soon after by the power loom, propelled by steam. Now, one man attending the new machinery can weave as much cloth or cotton in one day as one hundred formerly could. The small hand loom operated by the isolated worker and his family was replaced by the huge factory with the tens of thousands of spindles propelled by a mighty Corliss engine. This factory produces cloth or cotton so cheap that if the old isolated worker was presented with the raw material free he could not sell the product in competition with the capitalist owner of the factory. A thousand isolated hand looms distributed over a large section of country are now concentrated under one roof working for a capitalist who now controls and owns the machinery that employs the thousand men. The old independence

of the laborer is gone; he no longer controls the tools of his trade; if he thinks of abandoning weaving and choosing some other occupation, he finds the same state of things affecting the condition of other workers.

If he tries agriculture or horticulture he finds that small production is impossible as against the capitalistic system, by the aid of immense capital and the use of costly labor-saviDg machinery. Everywhere he turns he finds that his efforts to compete are futile; free land is all around him in plenty, but the capitalist farmer produces at one-third the cost that he does.

Here single taxers like Mr. B. C. Stickney ask, why if the employment of machinery is so profitable do not all engage in that enterprise and thus grow rich. The answer is simple: Only a certain amount of machinery is necessary to carry on productive purposes, to make more than is necessary would be both waste of labor and of capital. .Suppose it requires 100 factories with 500 owners, giving employment to 50,000 laborers, to supply the wants for a certain commodity for our population of 05,000,000. The 500 owners and the 100 factories can supply the market and make a profit, but the addition of 100 more factories would be a useless waste of capital, the mere addition to the number of factories would not increase the output of the particular commodity, nor would it give employment to more laborers, nor in the slightest degree raise wages. The competition of the last hundred factories might drive the first hundred out of business, but the proportion of employers to employes would still remain as five to five hundred. If the twro hundred factories consolidated, the rate of employers to employed would raise to 10 as against 500, but the effect of the consolidation would be to decrease the number of workmen required. But as a matter of fact the continual tendency, the result of consolidation and concentration of capital is to diminish the numbervf employers and also the number ot employes, for the weaker capitalists are continually driven to the wall in competition with their stronger and shrewder competitors, while the economy in labor affected by consolidation, and the use of costly and improved labor displacing machinery is continually decreasing the number of workmen required by the capitalists to carry on production. This is what socialists mean when they talk of the "monopoly of machinery," and to say that such monopolization would be impossible under a system that made free access to land possible, exhibits a kindergarten conception of the problem as singular as it is discreditable. By the very nature of the case, the tools of production, under a competitive system, must continue to be owned and operated by a continually diminishing number of capitalists, while the improved methods of production possible by such concentration and consolidation require also a continually diminishing number of employes.

Another reply made by the kindergarten economists when closely pressed is, that when natural opportunities are free to all that men can go to work for themselves instead of for the capitalist. Certainly they can and produce wealth in abundance. If, for instance, every capitalist in the land should fly off to our neighbor Mars taking all his wealth with him, leaving us simply the land, we could in less than a quarter of a century reproduce every form of wealth now existing. But mark you, if we commenced with common ownership of the land, but retained private ownership of the tools of production we would not only reproduce the wealth, we would also reproduce the present unequal distribution of it. For the ownership of the modern tools of production carries with it the ownership of the wage slaves who are compelled by an economic necessity—their absolute divorce from the tools of production—to sell their labor at the bare cost of maintenance and the reproduction of others to take their places when worn out and discarded by their capitalist masters. So, while it is now possible for a body of men to start life for themselves on free land, yet, unless the machinery of production was also owned in common, they would simply, on a small scale, reproduce the present unequal distribution of wealth.

The very raison d'etre of socialism is to restore to the worker the tools of his trade. But as the tools of production have, by an economic evolution, entirely changed their form and shape, as it is no longer possible for them to be owned and operated by the isolated worker, socialism declares that the only possible or conceivable solution of the problem is that the workman must own those tools in common. The thousand weavers with their thousand hand looms can no longer compete with the capitalist owner of the factory employing a thousand workmen, who are thereby forced to accept subsistence wages or starve, but the thousand weavers can again gain possession of the tools of their trade by owning the new tools of production contained in the factory in common and be free men. Then instead of producing wealth for an idle capitalist class, who give them back of the product in the shape of " wages" sufficient to maintain a miserable and precarious existence, they will produce wealth for themselves abundantly. Every improvement in productive processes, either by improved machinery or discoveries in science, will enable the workers to increase both the aggregate and individual amount of wealth, or will enable them to reduce the daily hours of labor, thus giving leisure for cultivating the social, intellectual, moral, and physical qualities and virtues. Every worker who acquires an intelligent grasp of this ijuention is at once a socialist, for he sees at once that through socialism only is the economic emancipation of labor possible or conceivable.

We expect the professors of political economy to defend the present system of exploitation of labor through rent, interest and profits. They are the paid apologist! of their capitalist masters, who mainly support and endow the institutions that give them a living, but why should supposed intelligent workers, the victims of this iniquitous syetem of exploitation and robliery. defend the means by which it is made possible? Why, for instance, should a worker of the supposed intelligence of James Middleton defend "intertst" when "the result of a bargain between equals." He supposes the case of a farmer who needF seed corn, potatoes and wheat, but who has not the money to buy with, so he borrows from a neighbor agreeing to retnrn the seed with an added amount as "interest," or the farmer borrows the money for which he pays interest to the lender and pays for his seed with cash. The answer to this proposition is simple and should not be above the comprehension of even * kindergarten economist. It is this: The interest or increase is not a matter that concerns exclusively the principal parties to the contract. As far as they are concerned it may be equally advantageous; it certainly is to the lender, for he receives for the use of his capital " an income without risk and personal exertion," and so far as he does so is a robber of labor. For mark you, all interest, rent and profits come out of the product of labor, and are added and form » part and are constituents in the price of every commodity, for both interest and rent are paid for in the price of every commodity. Therefore, the farmer who pan interest or rent adds it to the price of the commodities he has for sale, and it is paid for by the ultimate consumer of his products, providing that consumer is a producer; if he is not. a producer he merely shifts the entire cost, both labor, rent anil interest onto the real producer.

Take another illustration : A merchant is engaged in business ; he pays $i,00O per annum in salaries, a like sum as rent, and a similar Bum as "interest" for "accommodations" at his local bank. His bargain with the bank is certainly " between equals." He is, in the shape of a profit monger, an active exploitator of labor. In order to exploit labor efficiently he requires a certain amount of capital, and not having sufficient of his own, he agrees with the passive owner of capital—the banker, to let him share in the "swag" in the shape of "interest." It is entirely a "bargain between equals." But the $15,000 paid out qy the merchant as salaries, rent, and interest are added to the cost of the commodities which he sells, and are paid for by the consumer, they form a tax that like all other taxes are paid for directly by the actual producer and consumer, and only indirectly by the merchant.

Mr. Middleton s further defence of interest aa based on "natural law" flowing out of the action of the "reproductive forces of nature" and the "element of time," is a shallow and superficial fallacy which I have exposed in a previous number of this Magazine, and which was also excellently answered by Mr. Geo. C. Ward in the September Magazine.

Here I would like to say a word of caution to those who like Mr. Ward anticipate the great advantage to labor that would ensue by the reduction of interest to say two per cent. I am heartily in favor of the nationalization of money and of banking. It must be remembered, however, that interest on money, or "contract intereat," as economists term it, is a secondary and derivative form of interest and not "interest proper" at all. Interest proper must first be extracted from labor before a dollar of "loan interest" or "rent" can be paid. The difference between the labor cost of commodities, i. <:., "wages," and the ultimate cost of the commodity to the consumer constitutes the fund out of which is paid all interest, rent, profits and taxes, and all the cost of supporting a useless dass of middlemen and parasites. If the original exploiters, who, by the way, are not always the chief beneficiaries, are relieved from a part of the tribute they are now compelled to pay the land owner or the passive owner of capital, it by no means follows that the wages of labor would be raised and labor being abundant, the lessened cost of commodities would lessen the cost of subsistence, and under the pressure of free competition, and the "iron law" of wages, "wages" would decrease to correspond to the decrease in the cost of commodities, as the same standard of living could be maintained on the decreased wages. So that it must be understood:that temporary palliatives, while they may be defended as steps toward an economics ideal, can of themselves work no permanent benefit to labor while private ownership of the tools of production, and the competive system are retained.

A word, in conclusion, with Mr. Stickney, who speaks of a "capitalist" as distinguished from a monopolist. This is " kindergarten economics par (.icelleiur. He says a capitalist is merely the possessor of

wealth that has been produced by human exertion. If he had added " of others," the definition would have been exact. This defines a monopolist as a man who by virtue of his control over something that others must use, is alile to obtain their services, or their wealth, or both, without rendering a fair return, or, as in the case of a land owner, without rendering any return whatever.

I assure Mr. Stickney this is the exact definition of a "capitalist" who is merely the possessor of wealth produced by othnrs. "A capitalist is (not) therefore broadly distinguished from a monopolist." On the contrary, they are identical. A capitalist, as suchj no more produces capital than a land owner produces land. They are both, equally, the exploiters of labor. Mr. Stickney diagnoses correctly the trend of economic conditions when he says that "when the time comes that nobody but a great capitalist can make a living, there will be no more capitalists of any sort." Quite true, indeed. "Capitalists implies the existence of wage slaves who support in idleness the capitalists. But in view of the fact that the national wealth is now owned and controlled by less than three per cent, of the population, does not Mr. Stickney think we are making rapid strides towards a condition of things where the great middle class, the small exploiters, profitmongers and useless middlemen will De wiped out and society divided into two classes, say five per cent, plutocrats and ninety-five per cent, proletarians, men without property, wage staves. The dernier ressort of the single taxer when forced to acknowledge that even under a single tax regime industry can not be prosecuted successfully by a man without capital, is, that with equal access to natural resources, that labor can produce all it is really entitled to claim. If the kindergarten economists are pointed to the success of the bonanza farm in reducing the cost of production, it is replied that the small farmer outnumbers the bonanza farmers, and that under fair conditions the small farmers will always outnumber the bonanza farmers. This is, of course, kindergarten logic. At one time the hand looms outnumbered the power looms thousands to one. What is the proportion now? A few years ago it was possible to predict the failure of capitalist methods in agriculture. The Standard and kindergarten economists continually declared that large production in agriculture would never be profitable; that it was a form of industry that could never fall into the hands of the capitalists; that it was the one "haven of refuge" that the independent worker could always resort to when dissatisfied with the wages offered by his capitalist employer. But facts discredit single tax economics and logic. Capitalist methods are as successful in agriculture and horticulture as in other industries. The bonanza farm, like the power loom, is here to stay, and the capitalist system is as sure to dominate, in time (and a short time at that), one form of industry as fully as the other. " Kindergarten economics and "economists" will never solve the problem. The future is in the hands of the socialists. We must substitute for private ownership of the means of production, for free competition and consequent wage slavery, and production for profit, production for use, under a system of fraternal cooperation and common ownership of the sources of wealth and culture—in a word, the co-operative commonwealth.