from “Fabian Essays in Socialism”
The Basis of Socialism
edited by G. Bernard Shaw (1889)
The essays in this volume were prepared last year as a course of lectures for delivery before mixed audiences in London and the provinces. They have been revised for publication, but not recast. The matter is put, not as an author would put it to a student, but as a speaker with only an hour at his disposal has to put it to an audience. Country readers may accept the book as a sample of the propaganda carried on by volunteer lecturers in the work-men’s clubs and political associations of London. (In the year ending April, 1889, the number of lectures delivered by members of the Fabian Society alone was upwards of 700) Metropolitan readers will have the advantage of making themselves independent of the press critic by getting face to face with the writers, stripping the veil of print from their personality, cross-examining, criticising, calling them to account amid surroundings which inspire no awe, and before the most patient of audiences. For any Sunday paper which contains a lecture list will shew where some, if not all, of the seven essayists may be heard for nothing; and on all such occasions questions and discussion form part of the procedure.
The projection and co-ordination of these lectures is not the work of any individual. The nominal editor is only the member told off to arrange for the publication of the papers, and see them through the press with whatever editorial ceremony might be necessary. Everything that is usually implied by the authorship and editing of a book has in this case been done by the seven essayists, associated as the Executive Council of the Fabian Society; and not one of the essays could be what it is had the writer been a stranger to his six colleagues and to the Society. But there has been no sacrifice of individuality—no attempt to cut out every phrase and opinion the responsibility for which would not be accepted by every onof the seven. Had the sections been differently allotted, they would have been differently treated, though the net result would probably have been the same. The writers are all Social Democrats, with a common conviction of the necessity of vesting the organization of industry and the material of production in a State identified with the whole people by complete Democracy. But that conviction is peculiar to no individual bias: it is a Capitol to which all roads lead; and at least seven of them are represented in these Fabian Essays; so that the reader need not fear oppression here, any more than in the socialized State of the future, by the ascendancy of one particular cast of mind.
There are at present no authoritative teachers of Socialism. The essayists make no claim to be more than communicative learners.
London. December, 1889.
by G. Bernard Shaw
All economic analyses begin with the cultivation of the earth. To the mind’s eye of the astronomer the earth is a ball spinning in space without ulterior motives. To the bodily eye of the primitive cultivator it is a vast green plain, from which, by sticking a spade into it, wheat and other edible matters can be made to spring. To the eye of the sophisticated city man this vast green plain appears rather as a great gaming table, your chances in the game depending chiefly on the place where you deposit your stakes. To the economist, again, the green plain is a sort of burial place of hidden treasure, where all the forethought and industry of man are set at naught by the caprice of the power which hid the treasure. The wise and patient workman strikes his spade in here, and with heavy toil can discover nothing but a poor quality of barley, some potatoes, and plentiful nettles, with a few dock leaves to cure his stings. The foolish spendthrift on the other side of the hedge, gazing idly at the sand glittering in the sun, suddenly realizes that the earth is offering him gold—is dancing it before his listless eyes lest it should escape him. Another man, searching for some more of this tempting gold, comes upon a great hoard of coal, or taps a jet of petroleum. Thus is Man mocked by Earth his step-mother, and never knows as he tugs at her closed hand whether it contains diamonds or flints, good red wheat or a few clayey and blighted cabbages. Thus too he becomes a gambler, and scoffs at the theorists who prate of industry and honesty and equality. Yet against this fate he eternally rebels. For since in gambling the many must lose in order that the few may win; since dishonesty is mere shadowgrasping where everyone is dishonest; and since inequality is bitter to all except the highest, and miserably lonely for him, men come greatly to desire that these capricious gifts of Nature might be intercepted by some agency having the power and the goodwill to distribute them justly according to the labor done by each in the collective search for them. This desire is Socialism; and, as a means to its fulfilment, Socialists have devised communes, kingdoms, principalities, churches, manors, and finally, when all these had succumbed to the old gambling spirit, the Social Democratic State, which yet remains to be tried. As against Socialism, the gambling spirit urges man to allow no rival to come between his private individual powers and Stepmother Earth, but rather to secure some acres of her and take his chance of getting diamonds instead of cabbages. This is Private Property or Unsocialism. Our own choice is shewn by our continual aspiration to possess property, our common hailing of it as sacred, our setting apart of the word Respectable for those who have attained it, our ascription of pre-eminent religiousness to commandments forbidding its violation, and our identification of law and order among men with its protection. Therefore is it vital to a living knowledge of our society that Private Property should be known in every step of its progress from its source in cupidity to its end in confusion.
Let us, in the manner of the Political Economist, trace the effects of settling a country by private property with undisturbed law and order. Figure to yourself the vast green plain of a country virgin to the spade, awaiting the advent of man. Imagine then the arrival of the first colonist, the original Adam, developed by centuries of civilization into an Adam Smith, prospecting for a suitable patch of Private Property. Adam is, as Political Economy fundamentally assumes him to be, “on the make”: therefore he drives his spade into, and sets up his stockade around, the most fertile and favorably situated patch he can find. When he has tilled it, Political Economy, inspired to prophesy by the spectacle, metaphorically exhibits Adam’s little patch of cultivation as a pool that will yet rise and submerge the whole land. Let us not forget this trope: it is the key to the ever-recurring phrase “margin of cultivation”, in which, as may now be perceived, there lurks a little unsuspected poetry. And truly the pool soon spreads. Other Adams come, all on the make, and therefore all sure to pre-empt patches as near as may be to the first Adam’s, partly because he has chosen the best situation, partly for the pleasure of his society and conversation, and partly because where two men are assembled together there is a two-man power that is far more than double one-man power, being indeed in some instances a quite new force, totally destructive of the idiotic general hypothesis that society is no more than the sum of the units which compose it. These Adams, too, bring their Cains and Abels, who do not murder one another, but merely pre-empt adjacent patches. And so the pool rises, and the margin spreads more and more remote from the centre, until the pool becomes a lake, and the lake an inland sea.
But in the course of this inundation the caprices of Nature begin to operate. That specially fertile region upon which Adam pitched is sooner or later all pre-empted; and there is nothing for the newcomer to pre-empt save soil of the second quality. Again, division of labor sets in among Adam’s neighbors; and with it, of course, come^ the establishment of a market for the exchange of the products of their divided labor. Now it is not well to be far afield from that market, because distance from it involves extra cost for roads, beasts of burden, time consumed in traveling thither and back again. All this will be saved to Adam at the centre of cultivation, and incurred by the new comer at the margin of cultivation. Let us estimate the annual value of Adam’s produce at £1,000, and the annual produce of the new comer’s land on the margin of cultivation at £500, assuming that Adam and the new comer are equally industrious. Here is a clear advantage of £500 a year to the first comer. This £500 is economic rent. It matters not at all that it is merely a difference of income and not an overt payment from a tenant to a landlord. The two men labor equally; and yet one gets £500 a year more than the other through the superior fertility of his land and convenience of its situation. The excess due to that fertility is rent; and before long we shall find it recognized as such and paid in the fashion with which we are familiar. For why should not Adam let his patch to the new comer at a rent of £500 a year? Since the produce will be of £1,000, the new comer will have £500 left for himself, or as much as he could obtain by cultivating a patch of his own at the margin; and it is pleasanter, besides, to be in the centre of society than on the outskirts of it. The new comer will himself propose the arrangement; and Adam may retire as an idle landlord with a perpetual pension of £500 rent. The excess of fertility in Adam’s land is thenceforth recognized as rent and paid, as it is to-day, regularly by a worker to a drone. A few samples of the way in which this simple and intelligible transaction is stated by our economists may now, I hope, be quoted without any danger of their proving so difficult as they appear in the text books from which I have copied them.
Stuart Mill says that “the rent of land consists of the excess of its return above the return to the worst land in cultivation”. Fawcett says that “the rent of land represents the pecuniary value of the advantages which such land possesses over the worst land in cultivation.” Professor Marshall says that “the rent of a piece of land is the excess of its produce over the produce of an adjacent piece of land which would not be cultivated at all if rent were paid for it”. Professor Sidgwick cautiously puts it that ”the normal rent per acre of any piece” [of land] ”is the surplus of the value of its produce over the value of the net produce per acre of the least advantageous land that it is profitable to cultivate”.
General Walker declares that “specifically, the rent of any piece of land is determined by the difference between its annual yield and that of the least productive land actually cultivated for the supply of the same market, it being assumed that the quality of the land as a productive agent is, in neither case, impaired or improved by such cultivation.” All these definitions are offered by the authors as elaborations of that given by their master Ricardo, who says, ”Rent is that portion of the produce of the earth which is paid to the landlord for the use of the original and indestructible powers of the soil.”
The County Family.
Let us return to our ideal country. Adam is retiring from productive industry on £500 a year; and his neighbors are hastening to imitate him as fresh tenants present themselves. The first result is the beginning of a tradition that the oldest families in the country enjoy a superior position to the rest, and that the main advantage of their superior position is that they enjoy incomes without working. Nevertheless, since they still depend on their tenants’ labor for their subsistence, they continue to pay Labor, with a capital L, a certain meed of mouth honor; and the resultant association of prosperity with idleness, and praise with industry, practically destroys morality by setting up that incompatibility between conduct and principle which is the secret of the ingrained cynicism of our own time, and which produces the curious Ricardian phenomenon of the man of business who goes on Sunday to the church with the regularity of the village blacksmith, there to renounce and abjure before his God the line of conduct which he intends to pursue with all his might during the following week.
According to our hypothesis, the inland sea of cultivation has now spread into the wilderness so far that at its margin the return to a man’s labor for a year is only £500. But as there is always a flood tide in that sea, caused by the incessant increase of population, the margin will not stop there: it will at last encroach upon every acre of cultivable land, rising to the snow line on the mountains and falling to the coast of the actual salt water sea, but always reaching the barrenest places last of all, because the cultivators are still, as ever, on the make, and will not break bad land when better is to be had. But suppose that now, at last, the uttermost belt of free land is reached, and that upon it the yield to a man’s year’s labor is only £100. Clearly now the rent of Adam’s primeval patch has risen to £900, since that is the excess of its produce over what is by this time all that is to be had rent free. But Adam has yielded up his land for £5oo a year to a tenant. It is this tenant accordingly who now lets Adam’s patch for £900 a year to the new comer, who of course loses nothing by the bargain, since it leaves him the £100 a year with which he must be content anyhow. Accordingly he labors on Adam’s land; raises £1,000 a year from it; keeps £100 and pays £900 to Adam’s tenant, who pays £500 to Adam, keeping £400 for himself, and thus also becoming an idle gentleman, though with a somewhat smaller income than the man of older family. It has, in fact, come to this, that the private property in Adam’s land is divided between three men, the first doing none of the work and getting half the produce; the second doing none of the work and getting two fifths of the produce; and the third doing all the work and getting only one tenth of the produce. Incidentally also, the moralist who is sure to have been prating somewhere about private property leading to the encouragement of industry, the establishment of a healthy incentive, and the distribution of wealth according to exertion, is exposed as a futile purblind person, starting a priori from blank ignorance, and proceeding deductively to mere contradiction and patent folly.
All this, however, is a mere trifle compared to the sequel. When the inland sea has risen to its confines—when there is nothing but a strip of sand round the coast between the furrow and the wave—when the very waves themselves are cultivated by fisherfolk—when the pastures and timber forests have touched the snow line—when, in short, the land is all private property, yet every man is a proprietor, though it may be only of a tenant right. He enjoys fixity of tenure at what is called a fair rent: that is, he fares as well as he could on land wholly his own. All the rent is economic rent: the landlord cannot raise it nor the tenant lower it: it is fixed naturally by the difference between the fertility of the land for which it is paid and that of the worst land in the country. Compared with the world as we know it, such a state of things is freedom and happiness.
But at this point there appears in the land a man in a strange plight— one who wanders from snow line to sea coast in search of land, and finds none that is not the property of some one else. Private property had forgotten this man. On the roads he is a vagrant: off them he is a trespasser: he is the first disinherited son of Adam, the first Proletarian, one in whose seed all the generations of the earth shall yet be blest, but who is himself for the present foodless, homeless, shiftless, superfluous, and everything that turns a man into a tramp or a thrall. Yet he is still a man with brain and muscle, able to devise and execute, able to deal puissantly with land if only he could get access to it. But how to get that access! Necessity is the mother of Invention. It may be that this second Adam, the first father of the great Proletariat, has one of those scarce brains which are not the least of Nature’s capricious gifts. If the fertile field yields rent, why not the fertile brain? Here is the first Adam’s patch still yielding its £1,000 a year to the labor of the tenant who, as we have seen, has to pay £900 away in rent. How if the Proletarian were boldly to bid £1,000 a year to that man for the property? Apparently the result would be the starvation of the Proletarian, since he would have to part with all the produce. But what if the Proletarian can contrive—invent—anticipate a new want—turn the land to some hitherto undreamt-of use—wrest £1,500 a year from the soil and site that only yielded £1,000 before? If he can do this, he can pay the full £1,000 rent, and have an income of £500 left for himself. This is his profit—the rent of his ability—the excess of its produce over that of ordinary stupidity. Here then is the opportunity of the cunning Proletarian, the hero of that modern Plutarch, Mr. Samuel Smiles. Truly, as Napoleon said, the career is open to the talented. But alas! the social question is no more a question of the fate of the talented than of the idiotic. In due replenishment of the earth there comes another Proletarian who is no cleverer than other men, and can do as much, but not more than they. For him there is no rent of ability. How then is he to get a tenant right? Let us see. It is certain that by this time not only will the new devices of the renter of ability have been copied by people incapable of inventing them; but division of labor, the use of tools and money, and the economies of civilization will have greatly increased man’s power of extracting wealth from Nature. All this increase will be so much gain to the holder of a tenant right, since his rent is a fixed payment out of the produce of his holding, and the balance is his own. Therefore an addition to the produce not foreseen by the landlord enriches the tenant. So that it may well be that the produce of land on the margin of cultivation, which, as we have seen, fixes the produce left to the cultivators throughout the whole area, may rise considerably. Suppose the yield to have doubled; then our old friends who paid £900 rent and kept £100 for themselves, have now, though they still pay £900 rent, £1,100 for themselves, the total produce having risen to £2,000. Now here is an opportunity for our Proletarian who is not clever. He can very well offer to cultivate the land subject to a payment of, for instance, £1,600 a year, leaving himself £400 a year. This will enable the last holder of the tenant right to retire as an idle gentleman receiving a net income of £700 a year, and a gross income of £1,600, out of which he pays £900 a year rent to a landlord who again pays to the head landlord £500. But it is to be marked that this £700 a year net is not economic rent. It is not the difference between the best and the worst land. It has nothing to do with the margin of cultivation. It is a payment for the privilege of using land at all—for access to that which is now a close monopoly; and its amount is regulated, not by what the purchaser could do for himself en land of his own at the margin, but simply by the landowner’s eagerness to be idle on the one hand, and the proletarian’s need of subsistence on the other. In current economic terms the price is regulated by supply and demand. As the demand for land intensifies by the advent of fresh proletarians, the price goes up; and the bargains are made more stringent. Tenant rights, instead of being granted in perpetuity, and so securing for ever to the tenant the increase due to unforeseen improvements in production, are granted on leases for finite terms, at the expiration of which the landlord can revise the terms or eject the tenant. The payments rise until the original head rents and quit rents appear insignificant in comparison with the incomes reaped by the intermediate tenant right holders or middlemen. Sooner or later the price of tenant right will rise so high that the actual cultivator will get no more of the produce than suffices him for subsistence. At that point there is an end of sub-letting tenant rights. The land’s absorption of the proletarians as tenants paying more than the economic rent stops.
And now, what is the next proletarian to do? For all his forerunners we have found a way of escape: for him there seems none. The board is at the door, inscribed “Only standing room left;” and it might well bear the more poetic legend, Lasciats ogni speranzas voi ch’ entrate. This man, born a proletarian, must die a proletarian, and leave his destitution as an only inheritance to his son. It is not yet clear that there is ten days life in him; for whence is his subsistence to come if he cannot get at the land? Food he must have, and clothing; and both promptly. There is food in the market, and clothing also; but not for nothing: hard money must be paid for it, and paid on the nail too; for he who has no property gets no credit. Money then is a necessity of life; and money can only be procured by selling commodities. This presents no difficulty to the cultivators of the land, who can raise commodities by their labor; but the proletarian, being landless, has neither commodities nor means of producing them. Sell something he must. Yet he has nothing to sell— except himself. The idea seems a desperate one; but it proves quite easy to carry out. The tenant cultivators of the land have not strength enough or time enough to exhaust the productive capacity of their holdings. If they could buy men in the market for less than these men’s labor would add to the produce, then the purchase of such men would be a sheer gain. It would indeed be only a purchase in form: the men would literally cost nothing, since they would produce their own price, with a surplus for the buyer. Never in the history of buying and selling was there so splendid a bargain for buyers as this. Aladdin’s uncle’s offer of new lamps for old ones was in comparison a catchpenny. Accordingly, the proletarian no sooner offers himself for sale than he finds a rush of bidders for him, each striving to get the better of the others by offering to give him more and more of the produce of his labor, and to content themselves with less and less surplus. But even the highest bidder must have some surplus, or he will not buy. The proletarian, in accepting the highest bid, sells himself openly into bondage. He is not the first man who has done so; for it is evident that his forerunners, the purchasers of tenant right, had been enslaved by the proprietors who lived on the rents paid by them. But now all the disguise falls off: the proletarian renounces not only the fruit of his labor, but also his right to think for himself and to direct his industry as he pleases. The economic change is merely formal: the moral change is enormous. Soon the new direct traffic in men overspreads the whole market, and takes the place formerly held by the traffic in tenant rights. In order to understand the consequences, it is necessary to undertake an analysis of the exchange of commodities in general, since labor power is now in the market on the same footing as any other ware exposed there for sale.
It is evident that the custom of exchange will arise in the first instance as soon as men give up providing each for his own needs by his own labor. A man who makes his own tables and chairs, his own poker and kettle, his own bread and butter, and his own house and clothes, is jack of all trades and master of none. He finds that he would get on much faster if he stuck to making tables and chairs, and exchanged them with the smith for a poker and kettle, with bakers and dairymen for bread and butter, and with builders and tailors for a house and clothes. In doing this, he finds that his tables and chairs are worth so much—that they have an exchange value, as it is called. As a matter of general convenience, some suitable commodity is set up to measure this value. We set up gold, which, in this particular use of it, is called money. The chairmaker finds how much money his chairs are worth, and exchanges them for it. The blacksmith finds out how much money his pokers are worth, and exchanges them for it. Thus, by employing money as a go-between, chairmakers can get pokers in exchange for their chairs, and blacksmiths chairs for their pokers. This is the mechanism of exchange; and once the values of the commodities are ascertained it works simply enough. But it is a mere mechanism, and does not fix the values or explain them. And the attempt to discover what does fix them is beset with apparent contradictions which block up the right path, and with seductive coincidences which make the wrong seem the more promising.
The apparent contradictions soon shew themselves. It is evident that the exchange value of anything depends on its utility, since no mortal exertion can make a useless thing exchangeable. And yet fresh air and sunlight, which are so useful as to be quite indispensable, have no exchange value; whilst a meteoric stone, shot free of charge from the firmament into the back garden, has a considerable exchange value, although it is an eminently dispensable curiosity. We soon find that this somehow depends on the fact that fresh air is plenty and meteoric stones scarce. If by any means the supply of fresh air could be steadily diminished, and the supply of meteoric stones, by celestial cannonade or otherwise, steadily increased, the fresh air would presently acquire an exchange value which would gradually rise, whilst the exchange value of meteoric stones would gradually fall, until at last fresh air would be supplied through a meter and charged for like gas, and meteoric stones would be as unsaleable as ordinary pebbles. The exchange value, in fact, decreases with the supply. This is due to the fact that the supply decreases in utility as it goes on, because when people have had some of a commodity, they are partly satisfied, and do not value the rest so much. The usefulness of a pound of bread to a man depends on whether he has already eaten some. Every man wants a certain number of pounds of bread per week: no man wants much more; and if more is offered he will not give much for it—perhaps not anything. One umbrella is very useful: a second umbrella is a luxury: a third is mere lumber. Similarly, the curators of our museums want a moderate collection of meteoric stones; but they do not want a cartload apiece of them. Now the exchange value is fixed by the utility, not of the most useful, but of the least useful part of the stock. Why this^ is so can readily be made obvious by an illustration. If the stock of umbrellas in the market were sufficiently large to provide two for each umbrella carrier in the community, then, since a second umbrella is not so useful as the first, the doctrinaire course would be to ticket half the umbrellas at, say, fifteen shillings, and the other half at eight and sixpence. Unfortunately, no man will give fifteen shillings for an article which he can get for eight and sixpence; and when the public came to buy, they would buy up all the eight and sixpenny umbrellas. Each person being thus supplied with an umbrella, the remainder of the stock, though marked fifteen shillings, would be in the position of second umbrellas, only worth eight and sixpence. This is how the exchange value of the least useful part of the supply fixes the exchange value of all the rest. Technically, it occurs by “the law of indifference”. And since the least useful unit of the supply is generally that which is last produced, its utility is called the final utility of the commodity. The utility of the first or most useful unit is called the total utility of the commodity. If there were but one umbrella in the world, the exchange value of its total utility would be what the most delicate person would pay for it on a very wet day sooner than go without it. But practically, thanks to the law of indifference, the most delicate person pays no more than the most robust: that is, both pay alike the exchange value of the utility of the last umbrella produced—or of the final utility of the whole stock of umbrellas. These terms—law of indifference, total utility, and final utility—though admirably expressive and intelligible when you know beforehand exactly what they mean, are, taken by themselves, failures in point of lucidity and suggestiveness. Some economists, transferring from cultivation to utility our old metaphor of the spreading pool, call final utility “marginal utility”. Either will serve our present purpose, as I do not intend to use the terms again. The main point to be grasped is, that however useful any commodity may be, its exchange value can be run down to nothing by increasing the supply until there is more of it than is wanted. The excess being useless and valueless, is to be had for nothing; and nobody will pay anything for a commodity as long as plenty of it is to be had for nothing. This is why air and other indispensable things have no ex- change value, whilst scarce gewgaws fetch immense prices.
These, then, are the conditions which confront man as a producer and exchanger. If he produces a useless thing, his labor will be wholly in vain: he will get nothing for it. If he produces a useful thing, the price he will get for it will depend on how much of it there is for sale already. If he increases the supply by producing more than is sufficient to replace the current consumption, he inevitably lowers the value of the whole. It therefore behoves him to be wary in choosing his occupation as well as industrious in pursuing it. His choice will naturally fall on the production of those commodities whose value stands highest relatively to the labor required to produce them—which fetch the highest price in proportion to their cost, in fact. Suppose, for example, that a maker of musical instruments found that it cost him exactly as much to make a harp as to make a pianoforte, but that harps were going out of fashion and pianofortes coming in. Soon there would be more harps than were wanted, and fewer pianofortes: consequently the value of harps would fall, and that of pianofortes rise. Since the labor cost of both would be the same, he would immediately devote all his labor to pianoforte making; and other manufacturers would do the same, until the increase of supply brought down the value of pianofortes to the value of harps. Possibly fashion then might veer from pianofortes to American organs, in which case he would make less pianofortes and more American organs.
When these, too, had increased sufficiently, the exertions of the Salvation Army might create such a demand for tambourines as to make them worth four times their cost of production, whereupon there would instantly be a furious concentration of the instrument-making energy on the manufacture of tambourines; and this concentration would last until the supply had brought down the profit to less than might be gained by gratifying the public craving for trombones. At last, as pianofortes were cheapened until they were no more profitable than harps; then American organs until they were no more profitable than pianos; and then tambourines until they were level with American organs; so eventually trombones will pay no better than tambourines; and a general level of profit will be attained, indicating the proportion in which the instruments are wanted by the public. But to skim off even this level of profit, more of the instruments may be produced in the ascertained proportion until their prices fall to their costs of production, when there will be no profit. Here the production will be decisively checked, since a further supply would cause only a loss; and men can lose money, without the trouble of producing commodities, by the simple process of throwing it out of window.
What occurred with the musical instruments in this illustration occurs in practice with the whole mass of manufactured commodities. Those which are scarce, and therefore relatively high in value, tempt us to produce them until the increase of the supply reduces their value to a point at which there is no more profit to be made out of them than out of other commodities. The general level of profit thus attained is further exploited until the general increase brings down the price of all commodities to their cost of production, the equivalent of which is sometimes called their normal value. And here a glance back to our analysis of the spread of cultivation, and its result in the phenomenon of rent, suggests the question: What does the cost of production of a commodity mean? We have seen that, owing to the differences in fertility and advantage of situation between one piece of land and another, cost of production varies from district to district, being highest at the margin of cultivation. But we have also seen how the landlord skims off as economic rent all the advantage gained by the cultivators of superior soils and sites. Consequently, the addition of the landlord’s rent to the expenses of production brings them up even on the best land to the level of those incurred on the worst. Cost of production, then, means cost of production on the margin of cultivation, and is equalized to all producers, since what they may save in labor per commodity is counter- balanced by the greater mass of commodities they must produce in order to bring in the rent. It is only by a thorough grasp of this levelling-down action that we can detect the trick by which the ordinary economist tries to cheat us into accepting the private property system as practically just. He first shews that economic rent does not enter into cost of production on the margin of cultivation. Then he shews that the cost of production on the margin of cultivation determines the price of a commodity. Therefore, he argues, first, that rent does not enter into price; and second, that the value of commodities is fixed by their cost of production, the implication being that the landlords cost the community nothing, and that commodities exchange in exact proportion to the labor they cost. This trivially ingenious way of being disingenuous is officially taught as political economy in our schools to this day. It will be seen at once that it is mere thimblerig. So far from commodities exchanging, or tending to exchange, according to the labor expended in their production, commodities produced well within the margin of cultivation will fetch as high a price as commodities produced at the margin with much greater labor. So far from the landlord costing nothing, he costs all the difference between the two.
This, however, is not the goal of our analysis of value. We now see how Man’s control over the value of commodities consists solely in his power of regulating their supply. Individuals are constantly trying to decrease supply for their own advantage. Gigantic conspiracies have been entered into to forestall the world’s wheat and cotton harvests, so as to force their value to the highest possible point. Cargoes of East Indian spices nave been destroyed by the Dutch as cargoes of fish are now destroyed in the Thames, to maintain prices by limiting supply. All rings, trusts, comers, combinations, monopolies, and trade secrets have the same object. Production and the development of the social instincts are alike hindered by each man’s consciousness that the more he stints the community the more he benefits himself, the justification, of course, being that when every man has benefited himself at the expense of the community, the community will benefit by every man in it being benefited. From one thing the community is safe. There will be no permanent conspiracies to reduce values by increasing supply. All men will cease producing when the value of their product falls below its cost of production, whether in labor or in labor plus rent. No man will keep on producing bread until it will fetch nothing, like the sunlight, or until it becomes a nuisance, like the rain in the summer of 1888. So far, our minds are at ease as to the excessive increase of commodities voluntarily produced by the labor of man.
I now ask you to pick up the dropped subject of the spread of cultivation. We had got as far as the appearance in the market of a new commodity—of the proletarian man compelled to live by the sale of himself! In order to realize at once the latent horror of this, you have only to apply our investigation of value, with its inevitable law that only by restricting the supply of a commodity can its value be kept from descending finally to zero. The commodity which the proletarian sells is one over the production of which he has practically no control. He is himself driven to produce it by an irresistible impulse. It was the increase of population that spread cultivation and civilization from the centre to the snowline, and at last forced men to sell themselves to the lords of the soil: it is the same force that continues to multiply men so that their exchange value falls slowly and surely until it disappears altogether—until even black chattel slaves are released as not worth keeping in a land where men of all colors are to be had for nothing. This is the condition of our English laborers to-day: they are no longer even dirt cheap: they are valueless, and can be had for nothing. The proof is the existence of the unemployed, who can find no purchasers. By the law of indifference, nobody will buy men at a price when he can obtain equally serviceable men for nothing. What then is the explanation of the wages given to those who are in employment, and who certainly do not work for nothing? The matter is deplorably simple. Suppose that horses multi- plied in England in such quantities that they were to be had for the asking, like kittens condemned to the bucket. You would still have to feed your horse—feed him and lodge him well ii you used him as a smart hunter—feed him and lodge him wretchedly if you used him only as a drudge. But the cost oi keeping would not mean that the horse had an exchange value. If you got him for nothing in the first instance—if no one would give you anything for him when you were done with him, he would be worth nothing, in spite of the cost of his keep. That is just the case of every member of the proletariat who could be replaced by one of the unemployed to-day. Their wage is not the price of themselves; for they are worth nothing: it is only their keep. For bare subsistence wages you can get as much common labor as you want, and do what you please with it within the limits of a criminal code which is sure to be interpreted by a proprietary-class judge in your favor. If you have to give your footman a better allowance than your wretched hewer of match-wood, it is for the same reason that you have to give your hunter beans and a clean stall instead of chopped straw and a sty.
At this stage the acquisition of labor becomes a mere question of provender. If a railway is required, all that is necessary is to provide subsistence for a sufficient number of laborers to construct it. If, for example, the railway requires the labor of a thousand men for five years, the cost to the proprietors of the site is the subsistence of a thousand men for five years. This subsistence is technically called capital. It is provided for by the proprietors not consuming the whole excess over wages of the produce of the labor of their other wage workers, but setting aside enough for the subsistence of the railway makers. In this way capital can claim to be the result of saving, or, as one ingenious apologist neatly put it, the reward of abstinence, a gleam of humor which still enlivens treatises on capital. The savers, it need hardly be said, are those who have more money than they want to spend: the abstainers are those who have less. At the end of the five years, the completed railway is the property of the capitalists; and the railway makers fall back into the labor market as helpless as they were before. Sometimes the proprietors call the completed railway their capital; but, strictly, this is only a figure of speech. Capital is simply spare subsistence. Its market value, indicated by the current rate of interest, falls with the increase of population, whereas the market value of established « stock rises with it. If Mr. Goschen, encouraged by his success in reducing Consols, were to ask the proprietors of the London and North Western Railway to accept as full compensation for their complete expropriation capital just sufficient to make the railway anew, their amazement at his audacity would at once make him feel the difference between a railway and capital. Colloquially, one property with a farm on it is said to be land yielding rent; whilst another, with a railway on it, is called capital yielding interest. But economically there is no distinction between them when they once become sources of revenue. This would be quite clearly seen if costly enterprises like railways could be undertaken by a single landlord on his own land out of his own surplus wealth. It is the necessity of combining a number of possessors of surplus wealth, and devising a financial machinery for apportioning their shares in the produce to their shares in the capital contributed, that modifies the terminology and external aspect of the exploitation. But the modification is not an alteration: shareholder and landlord live alike on the produce extracted from their property by the labor of the proletariat.
The introduction of the capitalistic system is a sign that the exploitation of the laborer toiling for a bare subsistence wage has become one of the chief arts of life among the holders of tenant rights. It also produces a delusive promise of endless employment which blinds the proletariat to those disastrous consequences of rapid multiplication which are obvious to the small cultivator and peasant proprietor. But indeed the more you degrade the workers, robbing them of all artistic enjoyment, and all chance of respect and admiration from their fellows, the more you throw them back, reckless, on the one pleasure and the one human tie left to them—the gratification of their instinct for producing fresh supplies of men. You will applaud this instinct as divine until at last the excessive supply becomes a nuisance: there comes a plague of men; and you suddenly discover that the instinct is diabolic, and set up a cry of “over population”. But your slaves are beyond caring for your cries: they breed like rabbits; and their poverty breeds filth, ugliness, dishonesty, disease, obscenity, drunkenness, and murder. In the midst of the riches which their labor piles up for you, their misery rises up too and stifles you. You withdraw in disgust to the other end of the town from them; you appoint special carriages on your rail- ways and special seats in your churches and theatres for them; you set your life apart from theirs by every class barrier you can devise; and yet they swarm about you still: your face gets stamped with your habitual loathing and suspicion of them: your ears get so filled with the language of the vilest of them that you break into it when you lose your self-control: they poison your life as remorselessly as you have sacrificed theirs heartlessly. You begin to believe intensely in the devil. Then comes the terror of their revolting; the drilling and arming of bodies of them to keep down the rest; the prison, the hospital, paroxysms of frantic coercion, followed by paroxysms of frantic charity. And in the meantime, the population continues to increase!
It is sometimes said that during this grotesquely hideous march of civilization from bad to worse, wealth is increasing side by side with misery. Such a thing is eternally impossible: wealth is steadily decreasing with the spread of poverty. But riches are increasing, which is quite another thing. The total of the exchange values produced in the country annually is mounting perhaps by leaps and bounds. But the accumulation of riches, and consequently of an excessive purchasing power, in the hands of a class, soon satiates that class with socially useful wealth, and sets them offering a price for luxuries. The moment a price is to be had for a luxury, it acquires exchange value, and labor is employed to produce it. A New York lady, for instance, having a nature of exquisite sensibility, orders an elegant rosewood and silver coffin, upholstered in pink satin, for her dead dog. It is made; and meanwhile a live child is prowling barefooted and hunger-stunted in the frozen gutter outside. The exchange-value of the coffin is counted as part of the national wealth; but a nation which cannot afford food and clothing for its children cannot be allowed to pass as wealthy because it has provided a pretty coffin for a dead dog. Exchange value itself, in fact, has become bedevilled like everything else, and represents, no longer utility, but the cravings of lust, folly, vanity, gluttony, and madness, technically described by genteel economists as “effective demand”. Luxuries are not social wealth: the machinery for producing them is not social wealth: labor skilled only to manufacture them is not socially useful labor: the men, women, and children who make a living by producing them are no more self-supporting than the idle rich for whose amusement they are kept at work. It is the habit of counting as wealth the exchange values involved in these transactions that makes us fancy that the poor are starving in the midst of plenty. They are starving in the midst of plenty of jewels, velvets, laces, equipages, and racehorses; but not in the midst of plenty of food. In the things that are wanted for the welfare of the people we are abjectly poor; and England’s social policy to-day may be likened to the domestic policy of those adventuresses who leave their children half-clothed and half-fed in order to keep a carriage and deal with a fashionable dressmaker. But it is quite true that whilst wealth and welfare are decreasing, productive power is increasing; and nothing but the perversion of this power to the production of socially useless commodities prevents the apparent wealth from becoming real. The purchasing power that commands luxuries in the hands of the rich, would command true wealth in the hands of all. Yet private property must still heap the purchasing power upon the few rich and withdraw it from the many poor. So that, in the end, the subject of the one boast that private property can make—the great accumulation of so-called “wealth” which it points so proudly to as the result of its power to scourge men and women daily to prolonged and intense toil, turns out to be a simulacrum. With all its energy, its Smilesian “self-help”, its merchant-princely enterprise, its ferocious sweating and slave-driving, its prodigality of blood, sweat and tears, what has it heaped up, over and above the pittance of its slaves? Only a monstrous pile of frippery, some tainted class literature and class art, and not a little poison and mischief.
This, then, is the economic analysis which convicts Private Property of being unjust even from the beginning, and utterly impossible as a final solution of even the individualist aspect of the problem of adjusting the share of the worker in the distribution of wealth to the labor incurred by him in its production. All attempts yet made to construct true societies upon it have failed: the nearest things to societies so achieved have been civilizations, which have rotted into centres of vice and luxury, and eventually been swept away by un-civilized races. That our own civilization is already in an advanced stage of rottenness may be taken as statistically proved. That further decay instead of improvement must ensue if the institution of private property be maintained, is economically certain. Fortunately, private property in its integrity is not now practicable. Although the safety valve of emigration has been furiously at work during this century, yet the pressure of population has forced us to begin the restitution to the people of the sums taken from them for the ground landlords, holders of tenant right, and capitalists, by the imposition of an income tax, and by compelling them to establish out of their revenues a national system of education, besides imposing restrictions—as yet only of the forcible-feeble sort—on their terrible power of abusing the wage contract. These, however, are dealt with by Mr. Sidney Webb in the historic essay which follows. I should not touch upon them at all, were it not that experience has lately convinced all economists that no exercise in abstract economics, however closely deduced, is to be trusted unless it can be experimentally verified by tracing its expression in history. It is true that the process which I have presented as a direct development of private property between free exchangers had to work itself out in the Old World indirectly and tortuously through a struggle with political and religious institutions and survivals quite antagonistic to it. It is true that cultivation did not begin in Western Europe with the solitary emigrant pre-empting his private property, but with the tribal communes in which arose subsequently the assertion of the right of the individual to private judgment and private action against the tyranny of primitive society. It is true that cultivation has not proceeded by logical steps from good land to less good; from less good to bad; and from bad to worse: the exploration of new countries and new regions, and the discovery of new uses for old products, has often made the margin of cultivation more fruitful than the centre, and, for the moment (whilst the centre was shifting to the margin), turned the whole movement of rent and wages directly counter to the economic theory. Nor is it true that, taking the world as one country, cultivation has yet spread from the snowline to the water’s edge. There is free land still for the poorest East End match-box maker if she could get there, reclaim the wilderness there, speak the language there, stand the climate there, and be fed, clothed, and housed there whilst she cleared her farm; learned how to cultivate it; and waited for the harvest. Economists have been ingenious enough to prove that this alternative really secures her independence; but I shall not waste time in dealing with that. Practically, if there is no free land in England, the economic analysis holds good of England, in spite of Siberia, Central Africa, and the Wild West. Again, it is not immediately true that men are governed in production solely by a determination to realize the maximum of exchange value. The impulse to production often takes specific direction in the first instance; and a man will insist on producing pictures or plays although he might gain more money by producing boots or bonnets. But, his specific impulse once gratified, he will make as much money as he can. He will sell his picture or play for a hundred pounds rather than for fifty. In short, though there is no such person as the celebrated “economic man”, man being wilful rather than rational, yet when the wilful man has had his way he will take what else he can get; and so he always does appear, finally if not primarily, as the economic man. On the whole, history, even in the Old World, goes the way traced by the economist. In the New World the correspondence is exact. The United States and the Colonies have been peopled by fugitives from the full-blown individualism of Western Europe, pre-empting private property precisely as assumed in this investigation of the conditions of cultivation. The economic relations of these cultivators have not since put on any of the old political disguises. Yet among them, in confirmation of the validity of our analysis, we see all the evils of our old civilizations growing up; and though with them the end is not yet, still it is from them to us that the great recent revival of the cry for nationalization of the land has come, articulated by a man who had seen the whole tragedy of private property hurried through its acts with unprecedented speed in the mushroom cities of America.
On Socialism the analysis of the economic action of Individualism bears as a discovery, in the private appropriation of land, of the source of those unjust privileges against which Socialism is aimed. It is practically a demonstration that public property in land is the basic economic condition of Socialism. But this does not involve at present a literal restoration of the land to the people. The land is at present in the hands of the people: its proprietors are for the most part absentees. The modern form of private property is simply a legal claim to take a share of the produce of the national industry year by year without working for it. It refers to no special part or form of that produce; and in process of consumption its revenue cannot be distinguished from earnings, so that the majority of persons, accustomed to call the commodities which form the income of the proprietor his private property, and seeing no difference between them and the commodities which form the income of a worker, extend the term private property to the worker’s subsistence also, and can only conceive an attack on private property as an attempt to empower everybody to rob everybody else all round. But the income of a private proprietor can be distinguished by the fact that he obtains it unconditionally and gratuitously by private right against the public weal, which is incompatible with the existence of consumers who do not produce. Socialism involves discontinuance of the payment of these incomes, and addition of the wealth so saved to incomes derived from labor. As we have seen, incomes derived from private property consist partly of economic rent; partly of pensions, also called rent, obtained by the subletting of tenant rights; and partly of a form of rent called interest, obtained by special adaptations of land to production by the application of capital: all these being finally paid out of the difference between the produce of the worker’s labor and the price of that labor sold in the open market for wages, salary, fees, or profits. The whole, except economic rent, can be added directly to the incomes of the workers by simply discontinuing its exaction from them. Economic rent, arising as it does from variations of fertility or advantages of situation, must always be held as common or social wealth, and used, as the revenues raised by taxation are now used, for public purposes, among which Socialism would make national insurance and the provision of capital matters of the first importance.
The economic problem of Socialism is thus solved; and the political question of how the economic solution is to be practically applied does not come within the scope of this essay. But if we have got as far as an intellectual conviction that the source of our social misery is no eternal well-spring of confusion and evil, but only an artificial system susceptible of almost infinite modification and readjustment—nay, of practical demolition and substitution at the will of Man, then a terrible weight will be lifted from the minds of all except those who are, whether avowedly to themselves or not, clinging to the present state of things from base motives. We have had in this century a stern series of lessons on the folly of believing anything for no better reason than that it is pleasant to believe it. It was pleasant to look round with a consciousness of possessing a thousand a year, and say, with Browning’s David, “All’s love; and all’s law”. It was pleasant to believe that the chance we were too lazy to take in this world would come back to us in another. It was pleasant to believe that a benevolent hand was guiding the steps of society; overruling all evil appearances for good; and making poverty here the earnest of a great blessedness and reward hereafter. It was pleasant to lose the sense of worldly in- equality in the contemplation of our equality before God. But utilitarian questioning and scientific answering turned all this tranquil optimism into the blackest pessimism. Nature was shewn to us as “red in tooth and claw”: if the guiding hand were indeed benevolent, then it could not be omnipotent; so that our trust in it was broken: if it were omnipotent, it could not be benevolent; so that our love of it turned to fear and hatred. We had never admitted that the other world, which was to compensate for the sorrows of this, was open to horses and apes (though we had not on that account been any the more merciful to our horses); and now came Science to shew us the comer of the pointed ear of the horse on our own heads, and present the ape to us as our blood relation. No proof came of the existence of that other world and that benevolent power to which we had left the remedy of the atrocious wrongs of the poor: proof after proof came that what we called Nature knew and cared no more about our pains and pleasures than we know or care about the tiny creatures we crush underfoot as we walk through the fields. Instead of at once perceiving that this meant no more than that Nature was unmoral and indifferent, we relapsed into a gross form of devil worship, and conceived Nature as a remorselessly malignant power. This was no better than the old optimism, and infinitely gloomier. It kept our eyes still shut to the truth that there is no cruelty and selfishness outside Man himself; and that his own active benevolence can combat and vanquish both. When the Socialist came forward as a meliorist on these lines, the old school of political economists, who could see no alternative to private property, put forward in proof of the powerlessness of benevolent action to arrest the deadly automatic production of poverty by the increase of population, the very analysis I have just presented. Their conclusions exactly fitted in with the new ideas. It was Nature at it again—the struggle for existence—the remorseless extirpation of the weak—the survival of the fittest—in short, natural selection at work. Socialism seemed too good to be true: it was passed by as merely the old optimism foolishly running its head against the stone wall of modern science. But Socialism now challenges individualism, scepticism, pessimism, worship of Nature personified as a devil, on their own ground of science. The science of the production and distribution of wealth is Political Economy. Socialism appeals to that science, and, turning on Individualism its own guns, routs it in incurable disaster. Henceforth the bitter cynic who still finds the world an eternal and unimprovable doghole, with the placid person of means who repeats the familiar misquotation, “the poor ye shall have always with you”, lose their usurped place among the cultured, and pass over to the ranks of the ignorant, the shallow, and the superstitious. As for the rest of us, since we were taught to revere proprietary respectability in our unfortunate childhood, and since we found our childish hearts so hard and unregenerate that they secretly hated and rebelled against respectability in spite of that teaching, it is impossible to express the relief with which we discover that our hearts were all along right, and that the current respectability of to-day is nothing but a huge inversion of righteous and scientific social order weltering in dishonesty, uselessness, selfishness, wanton misery, and idiotic waste of magnificent opportunities for noble and happy living. It was terrible to feel this, and yet to fear that it could not be helped—that the poor must starve and make you ashamed of your dinner—that they must shiver and make you ashamed of your warm overcoat. It is to economic science—once the Dismal, now the Hopeful—that we are indebted for the discovery that though the evil is enormously worse than we knew, yet it is not eternal—not even very long lived, if we only bestir ourselves to make an end of it.
 Principles of Political Economy Vol. I., Index to chap. xvi. (1865).
 Manual of Political Economy, Book IL, chap. iii., p. 116 (1876).
 Economics of Industry, Book II., chap, iii., sec. 3, p. 84 (1879).
 Principles of Political Economy, Book II., chap, vii., p. 301 (1883).
 Brief Text Book of Political Economy, chap. ii.. sec. 216, p. 173 (1885).
 Principles of Political Economy and Taxation, chap, ii., p 34 (1817}.
 Profit is here used colloquially to denote the excess of the value of an article over its cost.
 When one of the conditions of earning a wage is the keeping up of a certain state, subsistence wages may reach a figure to which the term seems ludicrously inappropriate. For example, a fashionable physician in London cannot save out of £1,000 a year; and the post of Lord Lieutenant of Ireland can only be filled by a man who brings considerable private means to the aid of his official salary of £20,000.
 The current rate must, under present conditions, eventually fall to zero, and even become “negative”. By that time shares which now bring in a dividend of 100 per cent., may very possibly bring in 200 or more. Yet the fall of the rate has been mistaken for a tendency of interest to disappear. It really indicates a tendency of interest to increase.
 This excess of the product of labor over its price is treated as a single category with impressive effect by Karl Mars, who called it “surplus value”.