From: Henry George versus Henry George
by R.C. RUTHERFORD
The one particular thing that Mr. George has tried to sear into the souls of his readers, as with a hot iron, is the vagary that wages and the product of labor are one and the same thing. Primitively all the product of his labor was his wages, and, in justice, always ought to be. (Pp. 146 and 148.) Having identified wages and the product of labor, he goes still further, and identifies capital with the product of labor. Wages, “the full produce of labor.” (P. 186.) All the capital that is the produce of labor, is thus seen to be wages. Hence, wages, the produce of labor and capital, are one and the same thing. And last, but not least, comes the announcement that labor and capital are the same thing. (P. 147.) The sum of which is, that labor, the product of labor, wages and capital are all one and the same thing, and the terms exactly interchangeable: for two or three things which are equal to the same thing are equal to one another.
Now, bearing in mind the analysis which has annulled (?) the apparent diversities of four separate things, (which Mr. George has been struggling through pages to separate and define,) and resolved them into one, we ask the reader to turn to Mr. Georges “law of wages,” on page 192, and read it with the terms converted, as we have full authority to do:
“Wages depend upon the margin of production, or upon the wages which labor can obtain at the highest point of natural productiveness open to it without payment of rent”
Or, carrying the substitution still further:
“Wages depend upon the margin of production, or upon the wages which wages can obtain” etc., etc.
And then extend the process to the following passages, quoted from page 185—”wages will be fixed by the value or produce of such labor to the laborers themselves.”
Or, by substitution, thus:
“Wages will be fixed by the wages of such wages to wagerers themselves.”
“The principle that men seek to gratify their desires, with the least exertion, will fix wages at the produce of such labor at the point of highest natural productiveness open to it”
Or, the principle of least exertion “will fix wages at the wages of such wages, at the point,” etc., etc.
Thus, taking Mr. George at his own word—taking his own words, just as he trimmed them up and cut them down, and steeped in the ichor of the “new political economy,” we see what a tinkling cymbal they make of his masterpiece of definitions—all in italics—” stuck upon a pole,” so to speak, as if to make sure of the eye of the reader. Sic transit gloria of his high-sounding ” law of wages.”
And yet, we have to thank him for telling us, and plainly, too, what the law of wages is, though he himself does not seem to know it; possibly, because it is a law that can be ” apprehended without being recognized.” (P. 191.) We can “fish it out” from the last passage above quoted. It is in a nut-shell, though the nut is left for us to crack. It is that “supreme law of the human mind,” which impels mankind to get the most possible pay for the least possible work; and, reciprocally—the employer to get the most possible work for the least possible pay. The wayfaring man can understand that; and that is the sum and substance of the whole of Mr. George’s chapter on “Wages and the Law of Wages.” In slightly varying forms he tells us over and over again, that the “law of wages” is the law of least exertion. Indeed, that is the fundamental law of his whole, rickety fabric; yet, a law which he ultimately wholly repudiates—as we shall see hereafter.
“What conceals the absurdity of speaking generally of supply and demand, in reference to labor, is the habit of considering the demand for labor as springing from capital, and as something distinct from labor; but, the analysis to which this idea has been heretofore subjected, has sufficiently shown its fallacy.” (P. 188.)
But, suppose it should turn out that the ne plus ultra of absurdity consists in speaking of capital and labor as the same thing—what then becomes of all this argument founded on the “analysis” of capital and labor into the same thing? We have already shown (p. 143) what a mess, to our mind, this analysis makes of Mr. George’s definition—and that the position is not absurd only, but transcendental nonsense. Even if labor were the sole cause of all the value that is in anything called capital—still it must be distinguished as cause from its effect. A diamond-hunter finds in an hour’s search a diamond that can purchase half a million bushels of wheat. Is the value of that diamond due to the “labor impressed upon matter”? (P. 179.) Is there labor to the value of half a million bushels’ worth of wheat “stored up” in that diamond, “to be released again as needed, as the heat of the sun stored up in coal is released in the furnace”? (P. 179.) Surely, Mr. George will not deny that the diamond is a “tangible thing” capable of ministering to human desire; (p. 171;) of buying bread, meat and lodging-place. There is some difference between the thought of a diamond as having its market value impressed upon it by labor, and its standing as the equivalent of such marketable commodities as it can command. Page 191:
“It is not low wages which will cause the working of lowgrade ore, but the extension of production to the lower point which will diminish wages.”
But, how is this extension to be brought about? Either by relative exhaustion of better mines, or by increase of laborers, equals lower wages. And as the latter takes place sooner than the former, it is oftener the cause of extension; and there is no “inversion of cause and effect”; especially, as it is also true, that reduction of better mines to lower grades, will not cause “extension” to lower, unless there be cheaper labor to make the extension possible. See preceding page 154 for Mr. George’s “law of wages.”
Mr. George has, here as elsewhere, a curious way of stating laws. If it be the law of wages to “depend upon” something, the inference would be, a higher law as the true one; the law of least exertion, perhaps.
The real import of this “law” is, that wages are fixed by the highest product of labor upon free land. But, this looks as if it were not a law of wages at all, but of labor to fix wages by its highest product upon free land.
The final cause of Mr. George’s industry begets the exigencies which prescribe the methods of it. The sum of all the evils of poverty—or, at least, the cause of them—is, with him, private ownership in land. The remedy for all evil is abolition of private ownership in land. The accomplishment of this, is the final cause of Mr. George s book. To this everything must bend. Old words must be wrenched to new uses—stuffed in one place, gutted in another, until they are made to carry precisely such luggage as Mr. George sees fit to pack them withal. Read the “current doctrine” with Mr. George’s definitions, and you make a terrible mess of it. Read Mr. George’s book with the standard definitions, and you make a terrible mess of it. Read Mr. George s book with his own definitions, and that mess is worse than all the rest.
“Capital is wealth in the course of exchange;” (p. 71;) capital ”consists of wealth used for the procurement of more wealth;” (71;) capital enables labor to “apply itself in more effective ways;” (71;) a plane is capital, (40, 41, 42,) and “adds to the productive power of labor;” (161;) but if you borrow a plane, you do not borrow the power (“privilege”) of “applying your labor in a more effective way,” but you borrow the ”concrete result of ten days labor;” (161;) capital enables “labor to avail itself of the reproductive forces of Nature;” (71;) capital increases “the efficiency of the human factor of wealth;” (71;) it does not pay the wages of labor, nor maintain labor; (72;) it does not supply the materials of labor, (71,) though it grows, digs, chops, mines and transports them; capital does not limit industry. (72;) it may limit the form and productiveness of industry; (73;) to limit industry, and to limit the productiveness of industry, are different things; ( 73;) [even though the aim of all industry be production, and even though the productiveness “be limited to zero—still that is not limiting industry!” Capital assists labor: (192:) [But, if it does not assist it—it does not limit it!] “A Government bond is not capital,” (171,) yet capital “is anything to that value [a “steam engine or pile of bricks”] within the circle of exchange;” (161;) a cow is capital, (169,) but a bond is not; [though you can “exchange” a bond for a dozen cows; and though “anything in the course of exchange is capital.”] Any tool (except a “plane”) is capital, because “it adds to the productive power of labor”—”assists labor;” yet no improvement of the tool adds to its [capitals] “reproductive power,” but only adds to the productive power of labor; (161;) “Capital assists labor;” “Capital is the same thing as labor;” (179;) it permits “the division of labor:” (71:) it is but a sub-division of labor;” (183:) “capital is “but a mode of labor:” ( 179:) Capital is labor impressed on matter;” it is “labor stored up in matter:” (179;) “Capital is labor:” (179:) “Capital is produced by labor;” (179;) [that is to say, the product of labor is labor!] “The use of capital in production is, therefore, but a mode of labor. As capital can only be used by being consumed, its use is the expenditure of labor.” (179.) “All articles of wealth are capital so long as they remain in the possession of those who propose not to consume them, but to exchange them, … and cease to be capital when they pass into the possession of those who will consume them, … irrespective of whether their consumption will aid in the production of wealth or not.” (64.) “Unless this distinction is preserved, it is impossible to draw the line between the wealth that is capital, and the wealth that is not capital.” [We see how well Mr. George preserves the distinction!] Labor is human exertion: Capital is human exertion, (acrobatic and otherwise?) and capital is a product of human exertion. The product of labor, is the wages of labor. (44.) Labor, the product of labor, and capital are the same thing. Labor is its own reward—it draws its wages from itself; and as labor and capital are the same thing, labor draws its wages from capital—that is, capital pays labor, notwithstanding Mr. George has repeatedly told us, that the “maintenance and payment of labor do not even temporarily trench on capital, but are directly drawn from the product of labor”—which, (“Angels and ministers of grace defend us!”) is capital. The very act of exchanging “the direct product of his own labor,” (24,) converts it into capital. (Pp. 42 and 71.) “If he digs roots and exchanges them for venison,” the roots and venison (24) are capital—”wealth in the course of exchange.” (Pp. 42 and 71.) Capital does not pay the wages of labor, nor support labor, (71,) for labor [i.e., capital] pays and supports itself. All that stored-up labor [capital,] does for labor is to “assist” storing labor in storing up more labor.—for it neither pays the wages of labor, nor supports it during production;” (71;) yet it is and does both. Moreover, it is wages, capital, and labor (and shall I couple wealth?) all at once! All this is after Mr. Georges promise to be definite, “clear and conclusive.” Take this also. On page 158 Mr. George says: ”Accumulation is the end and aim of abstinence.” On page 161 we are told, that
— “the hope of increase is not the motive, or at least the main motive for accumulation. Children will save their pennies for Christmas; pirates will add to their buried hoards of coin; and men like Stewart or Vanderbilt, having become once possessed of the passion of accumulating, would continue as long as they could to add to their millions, even though accumulation brought no increase.”
Now, when Mr. George will tell us what is the “motive for accumulation,” and how there can be accumulation without increase, or how men can “add to their millions” without increasing them, we may hope to find something besides unmitigated twaddle in the above paragraph. As it stands, it is harder to interpret than Bottoms dream.
Page 183: “The primary division of wealth in distribution is dual, not tripartite.” The two factors of wealth are “natural substances, and powers, and human exertion”—in round terms, Labor and Land. (185.) And the product of the two factors, wealth, is divided between wages and rent. The more rent, the less wages, and e converso. The tug, then, is between wages and rent. Capital and Labor ought to be on the best of terms—indeed, must be, since they are really not only a “little more than kin, and less than kind,” but, actually one and the same thing—standing under two banners indeed, yet as unit against the common foe, according to Mr. George. And surely Labor has little of which to complain, if it gets all it produces, save what goes to rent, or, if with all the capital of the country in its pocket, it suffers Rent to take more than its proper share. Labor is rapidly coming to a sense of its rights. If Capital could only be brought to know itself as Labor and make common cause with itself. Rent would soon be doomed—the dragon Monopoly slain, and the holy calendar graced with our new St. George. But alas! just as we thought this “final analysis” had brought us into port, we find it was only a delusive mirage which has vanished into thin air, and left us still out on the wide, wide sea, without chart or compass, God himself scarce seeming there to be.
He no sooner establishes thee identity of labor and capital, than he forgets or abandons it, and thenceforth goes on to speak of them as separate elements. They were the “same thing,” now they are two again, (199,) and the dual theory of distribution is also forsaken. Three things unite to production—labor, capital, and land; and three parties divide the produce—the laborer, the capitalist, and the landowner.” (199.) We have Mr. George’s authority for it, that the “primary distribution of wealth is dual, not tripartite;” (183;) and also Mr. George’s authority for it, that it is not dual, but tripartite. (199.) Which is the better authority?
“Wages are determined by the margin of cultivation.” (P. 197.)
On page 192 Mr. George gives us his “law of wages,” in these words:
“Wages depend upon the margin of production, or upon the produce which labor can obtain at the highest point of natural productiveness open to it, without payment of rent.”
The only difference between these two propositions is in the diameters of the phraseology. They are both put up in good, mouth-filling words; and what is better, they mean something. They mean, that the rate of wages is fixed by the market value of the produce of labor applied to free land. That is to say: John Jones will not work for Farmer Smith for one dollar’s worth of potatoes a day, if, taking Farmer Smith’s land by natural right, he can, with the same amount of labor, “dig” for himself one dollar and twenty-five cents’ worth of potatoes a day.
“Not so,” says Mr. George, “Jones is not to dispossess Smith, but he is to go upon the next quarter section.”
He goes, and finds the next quarter section also staked out and fenced in. And, upon inquiry, learns that all the quarter sections his side of the Rocky Mountains are fenced in. What is to be done? There are two courses open to him, with a contingent third. He can go back to work for Smith, or he can strike out for free land beyond the Rocky Mountains, or, perhaps, he can exercise his natural right, and pull down some of these obstructive fences. Why not? Why not begin with Farmer Smith’s? Or, why should not the State step in and pull them all down, and let John Jones assert his natural right to go and dig where he pleases? No sooner said than done. Jones sets out to assert his natural right to the soil, but unhappily keeps colliding with other Joneses and Smiths out on the same business, and so on, fill the collisions become quite promiscuous and general. In fact, under the Georgian regime, there would be little else except collision—every man fighting for his natural right to a quarter section with some other man who has the same natural right to the same quarter section.
But we did not need go so far to get a sight at the weak side of Mr. George’s “law.” Pretty as it looks, it is practically nothing. The fallacy of it lies in the undivulged implication, that every working man is by birth and education a root-digger—that men have no other desires than an appetite for roots, nuts and wild berries; that, if land were free, any laborer could organize himself into a “strike,” at the tap of a drum, fling down his lapstone, his burrin or jack-plane, take his finger nails, go onto the next quarter section, and dig and eat roots to the satisfying of his soul. But what is that, but going back to barbarism? Mr. George himself seems to have an inkling that it squints that way, and not altogether regretfully. See his book, pp. 256, 257.
“It is not low wages which will cause the working of low-grade ore, but the extension of production to the lower point, which will diminish wages.” (P. 191.)
Very likely; but, is it not pertinent to ask, how you are going to extend production without the means of extension? You own two mines; one yields a profit with labor at two dollars a day; the other would yield a profit, with labor at one dollar and a half a day. How can you extend production to the lower grade, till you can obtain labor at the cheaper rate? Or, could you “force the wages down” by “extending the production,” if you had the surplus means for paying, for a time, two dollars a day? One cannot see how. It is obvious that you must take your mine to the place where labor is cheaper, (wages lower,) or wait till cheaper labor come to it.
Or, suppose wages were forced down by a fresh influx of laborers—increase of population; (p. 192;) if the poorer mines were not worked, the cheaper laborers would take “the place of the dearer ones in the rich mines, or compel the dearer to accept reduced wages. If a dollar a day will stop the hungry mouths, the strong hands will not let them stay hungry, out of complaisance to other laborers working for one dollar and twenty-five cents a day. It is just as plain that, other things being equal, ten men will do a given job for less pay each than five men, as it is that ten men can do it easier than five.
“Where land is subject to ownership and rent arises, wages will be fixed by what labor can secure from the highest natural opportunities open to it, without the payment of rent” (P. 192.)
But, “where land is subject to ownership” what ”natural opportunities are open to labor without payment of rent”? Suppose there are unappropriated natural opportunities, and labor does not choose to avail itself of them; is labor therefore at an end, and wages canceled altogether for want of “a margin” to fix them? The answer to this question is alone sufficient to show that free, natural opportunities, are not the sole factor in the determination of wages. But, Mr. George will say, that labor will choose on the “principle of least exertion.” But we shall discover before we get through with Mr. George’s book that there are cases too numerous to mention in which the “law of least exertion” don’t count. And very likely this is one of them.
“The most ignorant and stupid of the placer miners of early California, knew that as the placers gave out or were monopolized, wages must fall.” (P. 193.)
Coincident with this “giving out” of the placers, and this “monopoly,” was a vast influx of population, and a great development of capital—though relatively less than the population—largely invested in machinery—the population and machinery both tending to reduce wages; while the immense wealth, seeking investment, and better security, sent down the rate of interest. Unless Mr. George can show that these elements are to be excluded, as inoperative in this example, he will be suspected of claiming too much for the monopoly of land and the “Law of Rent.”
Besides, to get at the bottom of the matter, why came the monopoly about? Simply because the empty hand could not compete with the hand that had a tool in it. The thrifty laborer saved something (whether in California or elsewhere, makes no difference) wherewith to purchase an advantage, an entering-wedge to a whole line of advantages, ultimating in monopoly, perhaps, as against those who spent or gambled as fast as they dug or gained. The advent of the tool, is the sign of capital—whether it be a pick, pan, trough or steamcrusher. The man who can buy the machine and the placer can “fix the wages” of him who cannot buy the machine—-placer or no placer; for with the advantage of his machine (capital) he can afford to pay him, the laborer, more than he can dig, and so, in time get, perhaps, the other placer, too; and then, with a constantly accelerating velocity, another—being now well on the road to monopoly. That is the way it begun and went on between the thrifty and unthrifty; and that is the way it would begin and go on again, were all monopolies crushed out, and the game of life, from the primitive rootdigger to the nineteenth century, to be played over again.
“One man will not work for another for less than his labor will really yield, when he can go upon the next quarter section and take up a farm for himself. ” (P. 194.)
Plausible as this seems, the fallacy appears as soon as we recall the fact, that there can be nothing to hinder a man from going upon the “next quarter section,” till the landowner has bought up “all that joins him.” The world is wide yet, and many a virgin quarter section is waiting the squatter and the plow, merely because men have higher needs than roots and nuts, locusts and wild honey.
There is many a laborer who can, under supervision, (hire,) support himself and family, and still yield a profit, (return for the supervision,) to his employer, who could not or would not dig his bare subsistence out of half-a-dozen free quarter sections.
“The line of rent is the necessary measure of the line of wages.” (P. 193.)
This, of course, on the theory of a dual division of the products of labor, (p. 183,) and of the identity of labor and capital. (P. 179.)
Mr. George is astonished that the “great thinkers” stumbled over the “law of wages” “over and over again, without once recognizing it.” “Yet, if it were a dog it would bite them.”
They saw that, perhaps, as well as Mr. George, and something more, better than he. Possibly it was because they were not “bitten” that they did not have rent-phobia. Indeed, it is quite easy to agree with Mr. George, that it is difficult to resist the impression that some of them, (if not all,) really “apprehended,” and fully comprehended the “law of wages,” and quite as clearly enunciated and “elucidated” it as Mr. George has done.
“If with an increase of production, the laborer gets no more and the capitalist gets no more, it is a necessary inference that the land-owner reaps the whole gain.” (P. 199.)
But, if the capitalist does get more—if, in fact, he unites with the landowner to fleece the laborer and divide the spoil, too literally leaving the laborer “out in the cold and wet”—how is it then? Why, simply a “dual distribution”; not, however, as previously demonstrated, between wages and rent, but between capital and rent, the capitalist and landholder. Mr. George says, however, that “the inference is, that the landowner reaps the whole gain,” and also that “the facts agree with the inference.” (P. 199.) That is, the landowner gets it all—the laborer and the capitalist nothing. Henceforth, the poor, oppressed and impecunious capitalist will have the sympathy of his fellow-sufferer, the ill-fed, ill-clad and ill-housed laborer. “The cause which gives to the landholder is the cause which denies to the laborer and capitalist;” (p. 199;) and one has only to look into the care-worn, gaunt and haggard visages and the wretched hovels of the spoliated capitalist, to see to what a pitiful pass of destitution he has been brought! Under the spell of Mr. George’s new gospel of political economy, behold into what a thing of skin and bone, and “looped raggedness,” this striken starveling, this ”living dead man,” the “bloated bondholder” is transformed! We mistook his person all this while. We took him “for a good and portly man, i’ faith, and a corpulent,” but our “eyes were made the fools of the other senses.” When we see another man whom “sighing and grief have blown up like a bladder,” we shall not be deceived by appearances, but know at once that he is a moneyless, lean and hungry capitalist. To dispel such a delusion, it was worth while to “re-cast a large and most important part of the science of political economy,” as Mr. George boasts to have done. (P. 196.) “Much good dich thy good heart Apemantus!”
“Wherever the value of land is relatively low, wages and interest are relatively high;—whenever land is relatively high, wages and interest are relatively low.”
The real import of this profound deliverance, is this: Whenever the price of putty is higher than the price of cheese, the price of cheese is lower than the price of putty; and whenever the price of cheese is higher than the price of putty, the price of putty is lower than the price of cheese—that is to say, one leg is longer than the other, or else one leg is shorter than the other.
“All production is still the union of the two factors, land and labor.” (P. 200)
No farther back than on the preceding page, we are told, with the emphasis of a special graph, that:
“Three things unite to production—labor, capital and land.”
Labor, capital and land produces, but ravening “rent [p. 201] swallows up the whole gain, and pauperism accompanies progress” engulfing the weary laborer and the starving capitalist in its merciless maw. Right here Mr. George tells us, that “it is unnecessary to allude to facts”—(And we might add—dangerous, too.) Nevertheless, he mentions one, a very large one:
“It is the universal fact, that where the value of land is highest, civilization exhibits the greatest luxury side by side with the most piteous destitution.”
This is, undoubtedly, true, but to give it its proper bearing upon Mr. Georges theory, he should have added, “of the laborer and the capitalist.” The abject destitution of the capitalist is so conspicuous a fact that one may well wonder that Mr. George did not notice it. Or, perhaps he did, and for the very reason of its conspicuousness, thought it “unnecessary to allude to it.” Further on, it will be seen how this fact of side-by-side luxury and destitution are the result of Mr. George’s most cherished human rights.