From: Henry George versus Henry George
by R.C. RUTHERFORD

CHAPTER III.

Still endeavoring to give galvanic vitality to his fundamental principle that “wages are not drawn from capital, but from the product of the labor for which they are paid”; he presents the case of a whaling vessel (p. 47) thus:

“For instance, on American whaling ships the custom is not to pay fixed wages, but a “lay,” or proportion of the catch, which varies from a sixteenth to a twelfth to the captain, down to a three-hundreth to the cabin boy.[1] Thus when a whale-ship comes into New Bedford or San Francisco after a successful cruise, she carries in her hold the wages of her crew, as well as the profit of her owners, and an equivalent, which will reimburse them for all the stores used up during the voyage. Can anything be clearer than that these wages—this oil and bone which the crew of the whaler have taken—have not been drawn from capital, but are really a part of the produce of their labor? Nor is the fact changed nor obscured in the slightest degree where, as matter of convenience, instead of dividing up between the crew, their proportion of the oil and bone, the value of each man’s share is estimated at the market price, and he is paid for it in money. The money is but the equivalent of the real wages, oil and bone. In no way is there any advance of capital in this payment. The obligation to pay wages does not accrue until the value from which they are to be paid is brought into port. At the moment when the owner takes from his capital money to pay the crew, he adds to his capital oil and bone.”

While the triumphant air with which Mr. George asks: “Can anything be clearer than that these wages have not been drawn from capital,” &c, leaves no doubt that he would have us think the illustration perfectly conclusive to his own mind, it seems to us that he could not have chosen an example more ill-adapted to his purpose, or fatal to his theory.

Let us first ask, “on what meats” have the crew fed “all this while”? And whence came “all the stores used up during the voyage”? Though they “fish with a worm that hath eat of a king” they do not “eat of the fish that hath fed of that worm.” Their food then is “no part of the catch.” Are not the stores used up, “things devoted to productive labor”? Is not the subsistence of the crew, during the voyage, a part of their wages—on the theory that “wages include all the earnings of labor”? Will Mr. George say, that, for every pound of food they take from the hold, they put in ten or a hundred of blubber, or “oil and bone”? And that the latter are more than the “equivalent” of the former? But an “equivalent” is a thing of equal value to another—not the same thing. To be paid in kind is quite a different thing from being paid in an equivalent, as any one who can “tell a hawk from a handsaw” can easily see. Can anything be clearer than that that portion of their wages (their maintenance) is “drawn from capital “? Were not the provisions, when they were bought, “wealth in the course of exchange”? And were they not bought and stored up in the hold of the ship to be “devoted to productive labor”? Were they not capital all this time? And if at any time they lost that property, was it not by virtue of their being “consumed” in the “maintenance of laborers”? Or if they ceased to be capital the moment they were destined to be consumed, were they not then drawn—and withdrawn from capital—”lessening” capital by so much? How rapidly Mr. George is gliding down from his high horse, may be still further seen in a note on pages 52, 53 of his book. It is no perversion of its substance to put it thus: When a cigar-dealer takes a dozen cigars from his stock, where, (by Mr. George’s own concession) they are capital, and “puts them in his pocket for his own use,” he takes them out of “the category of capital,”—Catagory is a good word—in its place, and it sounds well here. But it will not do to conjure by. It does not suffice to show that there is any practical difference between taking a dozen cigars from a catagory and taking them from capital. Either the capital or the catagory must be lessened by the operation. Now, suppose that, instead of taking them out for his own use, he takes them out to pay the man for blacking his boots: are the bootblack’s wages drawn from capital, or only from a catagory? If from capital, suppose that, instead of using them for his own gratification, he puts them back into the catagory by offering them for sale; they are now “in stock” again—and capital, Henry George being judge. Nor have they once lost that character, though used to pay wages, since, from first to last, they have been “in the course of exchange.” Even a bootjack is potential capital. Kept for the owner’s use, it is wealth only. Shied at a cat, it would be capital, (in transitu,) an article “in the course of exchange”; and well exchanged too, if it purchase its owner a night of slumber.—With the absolute triviality of the issue of Mr. George’s travail staring one in the face, it is almost impossible to be serious, or even respectful.

“Can anything be clearer?”—quoth-a. (P. 47.) Why, yes, a good many things,—and this one above all, to wit: That this very “oil and bone,” though caught out of the sea, are drawn from capital, and by a very straight line, too. They have been drawn from provisions “stored up” in the ship; from the ship itself; from every spar and marline-spike, from every fibre of cordage, and every implement necessary to make possible the “labor” of taking those fish from the sea, and the oil and bone from the fish; from, in a word, every dollar advanced in the enterprise, “devoted to the production” of that wealth, from the first inception of ship and outfit till its return. And, if it should go to the bottom with all its treasure of oil and bone, within a mile of port; would not just so much capital have been “advanced” and lost—and capital lessened so much by the disaster? Ask the investors and underwriters!

Furthermore, the oil and bone are capital, even by Mr. George’s test—his own and his adopted tests; for are they not—the oil and bone—” wealth in the course of exchange,” and “stock which the owner expects to yield him revenue”? Even that portion which goes to the crew, when paid in kind, is capital all the same, for they do not “expect” to eat it, but to keep it “in course of exchange,” and derive a “revenue” from it. Or if it cease to be capital when, and because, paid to the crew, then capital is lessened by so much. Is not that drawing from capital? Or is it only a withholding? And if it be only that, is the difference broad enough for a foundation for a new science of Political Economy?

At any rate, if the crew be paid in money saved for that purpose (capital), then even Mr. George must admit that all the oil and bone are capital; for none of it goes directly to the laborer; all of it is up for sale and put “in the course of exchange.” Or, suppose the terms of employment to be, that the crew may choose, at the end of the voyage, whether they will take their pay in cash, or fish or oil and bone. Then, of course, not till the choice is made, can it be told whether that portion of the oil and bone are wages or capital. And as the whaler holds, or changes his mind, the oil and bone are capital or not. On so slender a thread as a fisherman’s will, does the property of capital hang. Is not this a “remitting of the distinction to the mind,” with a vengeance?

But, at last, Mr. George himself, virtually admits that, whether paid in cash or fish, the crew are paid in capital.

“At the moment [mark you, at the moment] when the owner takes from his capital money to pay the crew he adds to his capital oil and bone. (P. 45.)

And the logic is: he has taken no money out of his pocket, because “at the moment” he took out the money, he put oil and bone in! “The money [“his capital”] is but the equivalent of the real wages, the oil and bone.” (P. 58.)

If the money is the equivalent of the oil and bone, the oil and bone are the equivalent of the money; and so both, as Mr. George uses the word “equivalent,” are capital—from either of which the wages may be “drawn” and paid. If there be any difference between “drawing from capital,” and “advance of capital,” Mr. George has the benefit of a term in his conclusion which does not appear in his premises; and his allusions to formal logic warrant the inference that he knows the value of such an argument.

Mr. George says:

“The obligation to pay wages does not accrue until the value for which they are to be paid is brought into port” (P. 48.)

This may be the rule in fishing, but it is not in farming; as I find when I pay a man twenty dollars and board, a month, for sowing wheat and oats, and the winter kills the one, and a drouth the other. I find I am out the “wages,” though the wheat and oats never “come into port.” And, notwithstanding Mr. George, I imagine that the “Boss” fisherman sometimes has that kind of luck.

With regard to the “egg” example on page 48, where Mr. George represents men as employed to gather eggs for money—wages—coin; though they might be employed to be paid “in an equivalent of the eggs gathered”—let us ask: Suppose it should so fall out that, for once, the egg-crop should fail, and the “stipulated wages were paid,” as they would have to be, without their equivalent of gathered eggs; would not that be a draft upon capital? Of course.—And of course it always is in all the other cases supposed by Mr. George. The subtraction from capital is always the substantial fact, whether it be made good “at the moment” or by a subsequent addition, or not at all.

In this connection Mr. George asks a question (p. 48) which it is worth while to answer:

“Does not the coin represent the eggs, by the sale of which it was obtained, and are not these wages [the coin, he means] as much the product of the labor for which they are paid as the eggs would be in the possession of a man who gathered them for himself without the intervention of any employer.” (The italics are ours.)

To the end for which Mr. George has them in hand, we answer unhesitatingly—No! Even in the language of commerce, there is a well-understood and a well-taken distinction. The eggs of the egg-gatherer are the “product” (the direct fruit) of his labor. The “coin” received for them are the “proceeds” of their sale. It can in no proper sense be called the product of the labor of the egg-gatherer.[2] But even admitting that the coin (as wages) is indirectly the product of his labor, it does not help the case of Mr. George. What he has undertaken to show is, that wages are “directly drawn from the product of the labor for which they are paid” (See his fundamental proposition, page 20, and the first four lines on page 22.) In no single instance has he shown this, except in the case of the primitive man who eats his roots as fast as he digs them,—and even here only under an assumed right to call his roots his “wages”; a very questionable right, as we have endeavored to show on pages 49-56. And besides, does not the root-digger, oyster-man and egg-gatherer combine, according to Mr. George, in his naked person, the two-fold character of employer and employed—hiring himself and paying himself in roots, or eggs, or oysters? Is not that an example of the “self-employer,” and of things passing from employer to employed—”wealth in the course of exchange,” after Mr. George’s own definition of capital? (Pp.41; 71.)

It is agreed on all hands that wealth is largely the product of labor; and that capital is that part of wealth, that part of the product of labor, which is devoted to further production. Yet, notwithstanding this obtrusive fact which Mr. George especially magnifies—that capital is the product of labor—he maintains, that there is a prodigious difference between drawing wages from the product of labor after it is called “capital,” and drawing wages from the product of labor before it is called “capital.” And the little word directly makes all “the mighty differ.” “For, upon the assumption,” he says, “that wages are drawn directly from capital, and not from the product of labor, is based “—a catalogue of fallacies, absurdities, contradictions and paradoxes, the very enumeration of which must make, not only the judicious grieve, but the student of Political Economy stand aghast. (P. 21.)

The misapprehension of the relation of the product of labor (which would be capital if it were not turned aside to reward labor, as the “oil and bone”) to the laborer, is the mother of infinite mischief, makes a jargon of the Science of Political Economy, and indefinitely postpones the solution of the problem of squalor and want in the midst of abundance. So Mr. George says.

Now Mr. George will show us how it is, and how we may all, even those of us who have had “no previous reading,” may pluck the heart out of this old-time mystery, by keeping a sharp eye on the chameleon Capital and catch its changes of color. One change is somewhere between the shop-window and the mouth of the consumer. Another, is a case of arrested development. “At the moment” the product of labor is about to become capital, it is diverted to the payment of labor: therefore, wages are not drawn from capital but from the product of labor. The momentous difference, with all its train attendant, turns on the precious moment when, by the timely diversion, the product of labor was prevented from becoming capital. A little later, and all would have been lost! On this slender thread of time—this critical moment—hang all the law and the prophets of politico-economic science for Mr. George. (P. 48.)

For, had the “moment” slipped, “and the product lapsed into capital, and then been used for the payment of labor—as wages— then wages would have been drawn directly from capital; Mr. Georges fundamental proposition disproved, and the whole science left in as hopeless a muddle as it was before Mr. George meddled with it.

Again:

“Wages are drawn from the product of the labor for which they are paid.” (P. 20.)

But, if the labor be without product—as daily happens with aborted ventures—how then? The wages must be paid from preexisting capital, or capital yet to be created, or not paid at all. One instance of this kind, of which a dozen will occur to any reader, is sufficient to show the untenableness of Mr. George s position and dispose of the whole controversy.

A sample brick of Mr. George’s logic, and “candor,” may be seen on pages 49-52, in the attorney-like manner in which he attempts to wriggle out of the dilemma in which he clearly sees he has involved himself; and where he finally rests his case on “the essential point,” that the payment of wages is made “after the performance of the work” That is the reason why wages are not drawn from capital—because “the employer always gets the capital created by the laborer before he pays out capital in the wages.” (P. 52.) (Note how his own language betrays him!)

Whether paid out of capital “created by the labor” or by some labor, or no labor, is immaterial The “essential point” now is, that Mr. George here blunders into a complete surrender of the whole case,—or else is driven to it by the stress of his own argument, extorting the admission that wages are drawn from capital at all. How or when “created,” “produced,” or in what measure “lessened” or “increased,” are as purely outside issues to the case before us, as would be the question, whether the capital itself consisted of cash, garden -truck or a cargo of warming pans.

Both the magnitude of the question and the brilliancy of Mr. Georges logical achievement may be thus illustrated: A employs B to make cider, agreeing to pay old for new, one gallon for three. After the new cider is made by B, the old is drawn and paid over by A. Question: Is B paid from the new cider he has just made or from the old cider made before?

Answer, in substance, by Mr. George: (p. 52:)

“As the cider paid in the wages is thus exchanged for cider brought into being by the labor, how can it be said that the cider (wages) paid is drawn from the old barrel, or advanced by the old barrel?”

This may be a very difficult question to decide, but the “momentousness” of it, as a foundation for the science of Political Economy, does not appear.

Turn to this page, 52, of Mr. Georges book, and note the manner in which the word “lessened” is made to take the place of the “drawn from,” with which the discussion starts. Mr. George set out to show that the cider-makers wages were not paid from the old cider at all, but wholly from the new—the direct product of his labor. Next, that no cider was drawn from the old barrel, though the old cider is used for payment of the wages. Now, the body and soul of the conclusion is, that the total of the cider is not “lessened” because the new barrel is filled before the old one is tapped. And this “momentous” issue of the mighty argument, so lustily trumpeted, so pregnant with promise, shows its diminished head, at last, at the bunghole of a cider-barrel.

One of Mr. George’s proofs that the cider paid out was not drawn from the old barrel, is that there is more than enough of the new to replace it. That is, it is impossible to draw from the spigot and pour in. at the bung at the same time—provided no more goes out at the spigot than in at the bung. You may subtract five from ten and leave five if you stop there. But you cannot take five from ten and “after” that add six, because “the result shows” that eleven is more than ten. So a man who pays wages does not pay from capital, because the result shows, “if he is doing a remunerative business,” an increase of capital—a surplus quart of cider—or if not in his, an increase somewhere, which is all the same to Mr. George. (P. 53.)

“If he is doing a remunerative business, which must in the average be the case,” says Mr. George. But suppose he suddenly discovers that his business is in a state of collapse, and finds himself “out” to the tune of several thousand dollars. Is his loss from his capital? If not, what? Ask him. Or convince him that it is not, and he will thank you infinitely, or show himself as short in gratitude as in pocket.

Mr. George says, substantially, (p. 53.) when an employer pays his hands, money, Saturday night, after a week’s work,

—”there was no more advance of capital than if he had hired his hands to dig clams, and paid them with a part of the clams they dug. Their wages were as truly the produce of their labor as are the wages of the primitive man, when he obtained an oyster by knocking it with a stone from the rocks.”

It requires only a slight infusion of poetic imagination to view this through Mr. George’s glasses: You see, “the primitive man,” as employer, hires himself as laborer, to knock oysters from the rocks and pays himself in oysters for his services. And yet we are only out of the fryingpan into the fire, for are not the oysters “wealth in the course of exchange”—oysters for labor, or so many clams for so much work? He sells his labor to himself and pays himself in clams. Mr. George can not say that the thing with which the self-employer pays himself, is not capital because it is not “wealth in the course of exchange.” He estops himself from saying that.—Hear him:

“The man who works for himself gets his wages in the things he produces, as he produces them, and exchanges this value into another form whenever he sells the produce. The man who works for another for stipulated wages in money, works under a contract of exchange.” (Pp. 61, 62.)

And in either case the product of the labor is “wealth in the course of exchange.” “In performing the labor he is advancing in exchange; when he gets his wages the exchange is completed.” ( Pp. 61, 62.) As proof of the proposition, on which Mr. George builds his book—a “doctrine on which so much important reasoning is based,” (p. 20.) namely, that wages are drawn directly from the product of the labor for which they are paid; is not the above “clear and conclusive”?

Take also his instance of the Gothard tunnel, (p. 59,) “in constructing which,” he says, “there is no advance of capital” and suppose that after expending some millions of dollars, the projectors were forced by some insurmountable obstacle to abandon the enterprise—would there not then have been “advance,” loss and lessening of capital? Ask the man who has sunk his fortune in a mining venture, whether he feels as though he had advanced and lost no capital?

In all these cases, Mr. George admits, (p. 60.) that capital “is required;” it is only not “advanced.” If he hire men to chop wood for him, and pay before the wood is sold, he “needs” the capital with which to pay the wages, but, mirabali dictu, “not for the payment of wages, but for the accumulation of a stock of wood!” (P. 61.) “Tenues parvi discriminis umbrae.”

“Capital thus required is not required for the payment of wages, nor for advances to labor, as it is always represented in the produce of labor.” (P. 61.)

Indeed!—Capital is not required for advances to labor, because capital is always represented in the produce of labor! Is it possible for solemn trifling to go further? Is it even true that capital is always represented in the produce of labor? Does the labor always produce its representative? Suppose that it does not produce: Suppose, taking the wood-pile example, (p. 60.) that the accumulated stock gets burnt up, or washed away before it is sold and paid for; the owner who has paid the wages for chopping it, has not, according to Mr. George, advanced or lost any capital; he has lost only his “accumulated stock of wood.” And the chopper, of course, took his wages out of the wood that was washed away! On page 62, he says:

“At no time, unless wages are paid before the work is done, is the employer advancing capital to him” [the laborer].

Are we permitted to infer from this, that the wages paid before the work is done, are advanced from Capital? That, if, for example, mechanics were paid every Saturday night during six months for labor on a Corliss engine before the work was done, would capital be advanced to them? One would suppose so; but Mr. George does not mean to concede even so little. He denies even that their maintenance is advanced to them from capital. (P. 53.)

“The assumption that it is so self-evident that labor must be subsisted from capital that the proposition has but to be stated to compel recognition,” upon “being resolved,” this and its cognate propositions “are seen to be, not self-evident, but absurd; for they involve the idea that labor cannot be exerted [“employed”] until the products of labor are saved—thus putting the product before the producer.” (Pp. 63, 64.)

We have already considered this latter point, (pp. 13-15,) and do not care to dwell on it here.

The best reason that Mr. George gives for denying the current doctrine, that labor is maintained by capital, is, that the subsistence of the laborer ceases to be capital as soon as it passes into the hands of the consumer. (P. 64.) The subsistence cannot be drawn from capital, because as soon as it is drawn and put “into the possession of those who will consume” it, it ceases to be capital. That is to say, if you put up cider for sale, it is capital; if you sell it to be sold again, it is still capital; but if you sell it to be drunk, it is not capital, and, as capital, is not lessened by its having been consumed. True, the cider is gone, but it was not drawn from capital, and so the barrel of liquid capital is just as full as ever. It is wealth all the way in the course of exchange, and therefore capital, till it comes to the drinker’s lips. And, because at that moment it ceases to be capital, it cannot have been drawn from the barrel. But if, “at the moment” of passing it to his lips, he should change his mind, and offer the draft for sale to the highest bidder, instantly it would become capital again. One thousand barrels of flour in the market, are capital. The instant they are sold to be consumed by the laborers in a Gothard tunnel, they cease to be capital—though they are not drawn from capital, nor is capital lessened by the instantaneous annihilation of a thousand barrels of capital! This is the kind of logic with which Mr. George beards the “great thinkers” in the science of Political Economy.

With that subtle insight and acuteness of discrimination which have given Mr. George his present preeminence over all precedent great thinkers upon this subject, he sights a distinction of vital consequence between getting ones breakfast from wealth set apart for the “assistance of production” and that “set apart for subsistence ” of producers. (P. 64.) Your crackers and cheese are capital so long as you “propose to exchange them for other commodities or for productive services.” (P. 64.) If you give a tramp a breakfast for splitting a pile of wood, the breakfast is capital because you “propose to exchange it for productive services; “but as he “proposes” to eat it for his “subsistence,” it is not capital.—Nor is capital lessened by his having eaten it. Here is another remitting of the distinction to the mind: for there is nothing that is either capital or not capital, but thinking makes it so.

Again: what a man inherits

—”from his father, and on which we say he lives, is not actually wealth at all, but only the power of commanding wealth as others produce it” (P. 66.)

Thus, with one wave of Mr. Georges magic wand, are all the inherited possessions of the Vanderbilts—poor devils!—transformed into the mere—er—the mere—power of commanding some few hundred millions, or so, of, not wealth in general, but wealth as others produce it. How it must grieve these once wealthy men to see their fortunes thus shrunk up like a withered sapling! But possibly they do not see it, not looking with the gifted eye of a new politico-economical Daniel come to judgment. And not being in the straightened circumstances one might expect after the waving of the wand aforesaid; and neither knowing that they are robbed, nor wanting what is stolen, why, it follows as the night the day, that they are just as well off as if they had not been robbed at all. Besides they have the benefit of Mr. George’s doctrine of equivalents, (p. 48.) which he himself seems to have forgotten.

“If capital is not required for the payment of wages or the support of labor during production, what, then, are its functions?” (P. 71.)

“A question to be asked.” And we shall see how Mr. George answers it. Mr. Mill answers:

“Capital is wealth devoted to production.” But Mr. Mill is the dupe of a grave misapprehension, and is “entangled in a web of his own spinning.” Let us turn to a later and a brighter light—a new “Jovis arcanis Minos admissus.” Mr. George says: “Capital consists of wealth used for the procurement of more wealth,” or of “wealth in the course of exchange.” (P. 71.) Now, the advance that Mr. George has made from Mr. Mill may be measured by the difference in the meaning of the two words, “production” and “procurement.” That Mr. George himself does not think the distinction vital, may be inferred from the fact of his “immidiately abandoning it.” Not three lines away, he says: “Capital does not support labor; it increases the power of labor to produce [why not “procure”] wealth.” (P. 71.)

Capital does not support labor—”it enables labor to apply itself” etc.; it “enables labor to avail itself;” it permits the division of labor, etc. (P. 71.)

Capital does all these different things, he says, but, not tarrying to tell us how, he turns aside to say that “capital does not supply materials;” “the materials of wealth are supplied by Nature” (P. 71.) Without any outlay for chopping; sawing, digging, and transporting, Mr. George?

“Capital does not supply nor advance wages.” (P. 71.) Capital does not maintain laborers during the progress of their work;”—[unless they be paid before their work is done, remember.] (P. 62.) “Capital does not limit industry.”

Mr. George must have unbounded faith in the force of negation, else “why this damnable iteration” of “nots”? What we want to know, after our long waiting and wandering in this wilderness of nots, is, what it is that capital does? And how does it do it? But just as we suppose light is going to be flashed on us, the sky darkens again, and we are drenched with another shower of nots.

“Capital does not limit industry;” (p. 75;) it only “limits the form and productiveness of industry.” (Pp. 72, 73.) Would it be too curious to ask, What remains to be restricted after these? You see, we have to do with a genius of subtle discrimination, a fellow who has been at a great feast of distinctions and stolen all the scraps. He says that “the dictum of the current political economy, that ‘capital limits industry means’ … that it limits the exertion of labor.” The exertion of labor!  Limits the exertion of bodily exertion! Does the dictum mean that?

By ”industry” Mr. George means either effective “exertion of labor,” or merely sustained physical effort. If the former, then, to lessen or restrict the efficiency of labor, is to limit industry directly; and Mr. Georges negative proposition, that capital does not limit industry is not true—on his own admission, that it may limit the “productiveness” of industry. If capital be capable of “increasing the human factor of wealth,” (p. 71,) it must also be capable of diminishing it, and so of limiting industry. If he mean, by industry, mere physical exertion, then his other proposition, that “the only limit to industry is access to natural material,” is not true; for, give him standing room, and there is nothing but his own physical resources to hinder a man from exerting himself unlimitedly at trying to lift himself by his boot-straps.

Again, can it be true, that capital can have anything to do with cultivation and transportation, and nothing to do in supplying labor with material and maintenance? And we may ask Mr. George, with an eye to his logic, if it might not be strictly true, to say that “capital limits industry,” while it would be obviously false to say that “there could be no industry without capital”?

And let us ask, also, while our hand is in, if he can refer to any writer who has ever said that there can be no industry without capital—or anything that by fair construction can be made to mean that? And also, if he himself thinks that to limit, and wholly negate, mean the same thing?—Or, if he thinks that any but the most hasty and unwary of his readers are to be caught by these petty, sophistical subterfuges? In one way, there is nothing more instructive nor humiliating than Mr. George’s chapter on the “Real Functions of Capital.”

When Mr. George says: ( p. 74:)

“So long as there is sufficiency of capital in the community at large, the real limitation is not the want of capital, but the want of its proper distribution;”

he has, of course, mistaken his word. He means “wealth,” according to his own, as well as other definitions. “Wealth, devoted to production, is capital,” or, “wealth in the course of exchange is capital.” Labor—according to Mr. George—has no crow to pick with capital. They are always on the best of terms with each other. The limitation of which Mr. George complains comes from the non-conversion of wealth into capital. It is the “proper distribution” of wealth that is to set the laborer right. All the remainder of the paragraph in which this passage occurs, shows that Mr. George has “blundered,” since he seems to know when wealth is, and when “it ceases to be capital.”

“Wages are relatively the lowest where capital is most abundant.” ( P. 77.) For the very reason that abundance of capital implies redundancy of population—productive power—and the competition which cuts down wages. No matter how much capital an employer has, he will not pay five dollars a day for labor when hungry men are standing by, ready to work for “two dollars a day and roast beef.” This is the very fact which Mr. George is continually thrusting before our eyes, and which he himself does not seem to see.

The exact measure of confidence to be placed in Mr. George’s statements and methods, may be discerned in the latter part of his chapter on the “Real Functions of Capital” It reads thus:

“If each laborer in performing the labor really creates the fund from which his wages are drawn, then wages cannot be diminished by the increase of laborers, but, on the contrary, as the efficiency of labor manifestly increases with the number of laborers, the more laborers, other things being equal, the higher should wages be.”

All that is required to expose the fallacy of the position and put an element of truth into the statement, is to interpolate after the word “drawn” this pregnant little if, with these words:

“And if the fund so created were all appropriated to the payment of wages, then,” etc. And that, we suppose, is precisely what Mr. George insists upon having done. But how could that be compatible with the existence of any capital whatever? Wages are not capital—nor even drawn from capital—says Mr. George. Give the laborer all the product, the earnings, of his labor, and there would be no capital—no “wealth in the course of exchange.” There would be nothing but wages; a thing wholly devoid of any element of capital—which does not “even trench on capital.” But, perhaps, Mr. George would say: “The laborer would be his own capitalist.” Then he would cease to be a laborer, pro tanto, and wholly so as soon as possible, on Mr. George’s bed-rock “principle of least exertion.” And thus the whole people would be converted into a community of capitalists; and, since there then would be no person to be employed in productive labor, capital would lapse into wealth; the capitalist himself then cease to be; wealth degenerate into a mere power of commanding what there is no longer any body to produce; and, by this declension, the whole industrial world sink into hopeless stagnation and collapse. True, it is a pity, and pity ’tis ’tis true!

[1] An atrocious discrimination against the cabin boy, seeing that he, according to Mr. George, devotes his labor as much towards the catching of whales as those that actually take the fish. (P. 24.)

[2] Mr. George involves this matter in some confusion by failing to discriminate, or at least to use with the proper discrimination, the words product and procure. After promising to prove that wages are the direct product of labor, he keeps on treating the question as if, to obtain a thing directly by digging it out of the ground, knocking it from a rock, or picking it from a bush, were just the same as to obtain it by one, two, three or a “thousand exchanges.” (P. 25.)

Continued: The Malthusian…