SOCIAL SCIENCE SERIES. Scarlet Cloth, eacJi 2s. 6d. 1. Work and Wages. Prof. J. E. THOROLD ROGERS " Nothing that Professor Rogers writes can fail to be of interest to thought- ful people." Athenceum. 2. Civilisation : its Cause and Cure. EDWARD CARPENTER.. "No passing piece of polemics, but a permanent possession." Scottish Review. 3. Quintessence of Socialism. Dr. SCHAFFLE. "Precisely the manual needed. Brief, lucid, fair, and wise." British Weekly. 4. Darwinism and Politics. D. G. RITCHIE, M.A. (Oxon.) "\Vith an Appendix, showing its applications to (1) The Labour Question ; (2) The Position of Women ; (3) The Population Question. " One of the most suggestive books we have met with." Literary Woild. 5. Religion of Socialism. E. BELFORT BAX. 6. Ethics of Socialism. E. BELFORT BAX. "Mr. Bax is by far the ablest of the English exponents of Socialism." Wes:minster Review. 7. The Drink Question. Dr. KATE MITCHELL. " Plenty of interesting matter for reflection." Graphic. 8. Promotion of General Happiness. Prof. M. MACMILLAN. " A reasoned account of the most advanced and most enlightened utilitarian doctrine in a clear and readable form." Scotsman. 9. England's Ideal, &c. EDWARD CARPENTER. " The literary power is unmistakable, their freshness of style, their humour, and their enthusiasm." Pall Mall. 10. Socialism in England. SIDNEY WEBB, LL.B. " The best general view of the subject from the moderate Socialist side." A thenccum. 11. Prince Bismarck and State Socialism. \V. H. DAWSON. "A succinct, well-digested review of German social and economic legislation since 1870." Saturday Review. 12. Godwin's Political Justice (On Property). Edited by H. S. SALT. " Shows Godwin at his best ; with an interesting and informing Introduc- tion." Glasgow Merald. a SOCIAL SCIENCE SERIES 13. Story of the French Revolution. E. BELFORT BAX. "A trustworthy outline." Scotsman. 14. The Co-Operative Commonwealth. LAURENCE GRONI.IJND. "An independent exposition of the Socialism of the Marx School." Con- temporary Review. 15. Essays and Addresses. BERNARD BOSANQUET, M.A. (Oxon.) " Ought to be in the hands of every student of the Nineteenth Century spirit." Echo. " No one can complain of not being able to understand what Mr. Bosanquet means." Pall Mall Gazette. 16. Charity Organisation. C. S. LOCH, Secretary to Charity Organisation Society. " A perfect little manual/' Athetuzum. " Deserves a wide circulation." Scotsman. 17. Thoreau's Anti-Slavery and Reform Papers. Edited by H. S. SALT. 18. Self-Help a Hundred Years Ago. G. J. HOLYOAKE. 19. The New York State Reformatory at Elmira. ALEXANDER WINTER ; with Preface by HAVELOCK ELLIS. 20. Common-sense about Women. T. W. HIGGINSON. 21. The Unearned Increment. W. H. DAWSON. 22. Our Destiny : The Influence of Socialism on Morals and Religion. LAURENCE GRQNLUND. 23. The Working-Class Movement in America. Dr. and ELEANOUR MARX AVELING. 24. Luxury. Prof. EM. DE LAVELEYE. 25. The Land and the Labourers. Rev. C. W. STUBBS, M.A. 26. Evolution of Property. PAUL LAFARGUE. 27. Crime and its Causes. W. DOUGLAS MORRISON. 28. Principles of State Interference. D. G. RITCHIE, M.A. (Oxon.) IN ACTIVE PREPARATION ARE: Origin of Property in Land. FUSTEL DE COULANGES. Edited by Prof. ASHLEY. Malthus's Essay on Population. Edited by A. K. DONALD. The Co-Operative Movement. BEATRICE POTTER. The Student's Marx: an Abridgment of his "Capital." Lange's The Labour Problem. Translated by Rev. T. CARTER (of Pusey House). Outlooks from the New Standpoint. E. BELFORT BAX. SWAN SONNENSCHEIN & CO., LONDON. THE PURSE AND THE CONSCIENCE. THE PURSE AND THE CONSCIENCE AN ATTEMPT TO SHOW THE CONNECTION BETWEEN ECONOMICS AND ETHICS BY HERBERT M. THOMPSON, B.A. LONDON SWAN SONNENSCHEIN & CO. PATERNOSTER SQUARE 1891 PREFATORY NOTE. A SUBJECT involving the consideration of some parts of two sciences necessarily touches on many points. The connection of these with the main thread of argument in this little book will not I think be lost sight of, if the reader keeps the syllabus before him ; it is intended to serve as a map. The portions of the quoted passages on pages 45 and 147 which are italicised are so empha- sised by myself, not by the writers from whom the quotations are made. I have been much indebted to Mr. Carveth Read, who was good enough to read these papers in manuscript and to suggest many improvements in them. H. M. T. 1C66569 SYLLABUS. N.B. The numbers in parentheses refer to the pages in the text. INTRODUCTORY - - page i The attention aroused by poverty. Evils intense and extensive resulting from it (i) The specialists who devote themselves to the subject are fully as attentive to the latter as to the former. But the sympathy and interest of the general public is more easily aroused by the former (3) This wide- ly extended wish to do good to the poor founds itsel f on differen t conceptions of the facts of the case, and follows various methods (4) These papers endeavour to investigate what the real conditions with which we have to grapple are, and what methods of amelioration can be adopted with security that they are well founded. They deal with the connection between Ethics and Econo- mics. This subject plainly in the first place includes the observance of Justice in monetary affairs (6) Consideration of the meaning of " Justice " in this connection. Different concep- tions of justice in the distribution of wealth. SYLLABUS. The idea is involved of a distribution proportion- ate to services rendered to the community. But who is to assess the value of such services? (7) And must their reward be enjoyed solely by the in- dividuals who have rendered them? (13) The following chapters attempt to unravel these ques- tions. But as our subject is the connection of ethics with economics, we are not bounded by con- siderations of strict justice merely ; nor are we concerned to define very rigidly what justice is, for, however wide we may make our definition, the boundaries so set up will not be large enough to include all ethical considerations. These will step over such limits and enter the region that lies beyond that of generosity (14). CHAPTER I. - page 16 How the Competitive System tends to award Benefits in proportion to Services rendered to the Community. Competition a system of exchange resting upon divi- sion of labour (17) The conditions antecedent to exchange(i9) These conditions constantly being supplied by the division, i.e., the specialisation of labour (20) Meaning of "effective demand " and " price." Tendency of effort to concentrate itself on work for which there is an eager " effective SYLLABUS. xi demand," that is to say, a high price (23) Thus effort tends to concentrate itself on that for which the community expresses most need, and is most highly rewarded when it does so (25) Examination of the phenomenon (in apparent contra- diction to the theory put forward) of unequal reward for services to the community, which are in themselves equally arduous (26) This pheno- menon arises from "over-production" in particular industries, or, putting it more accurately, from production in particular industries, large out of 'pro- portion to the production in other industries (27) Immobility of labour results in "non-competing groups of industry." Cairnes and Prof. Walker on this subject(28) "Adaptability" must be counted as a service to the community (35) Effort to in- crease " adaptability " in the labourer is the most radical way of striving for a " fair wage," for it puts the worker in a position to secure it for himself (36) Necessity of distinguishing between tendencies and accomplished processes. The theory which is enunciated at the head of this chapter is one of tendency; it is not a statement of an accom- plished process (37) One hindrance to its be- coming so is the immobility of labour (41) Other hindrances are : Sudden changes in xii SYLLABUS. mechanical processes ; fashion, and consequent changes in demand for particular commodities. Hence arises scope for ethical action (41) To make the system in any way complete there remain on the community the duties of rendering the en- vironment of the competitive system such that it may work freely and fairly. This entails the necessity of: (a.) Suppression of crime, (b.) Provision of health for those who would other- wise be crippled for the want of it. (c.) Provi- sion of education for those who would otherwise be crippled for want of the mental equipment necessary in a complicated social system (42) We have had occasion to draw a distinction between tendencies and accomplished processes in econo- mic matters, and we have seen how ethical con- siderations are concerned in making allowance for the intermediate stages, how, too, they are further concerned in the necessity of perfecting the environment and conditions of the competitive system. Are the older economists right in think- ing that when due allowance has been made for these two sets of considerations, ethics will have no further part in the matter, since satisfactory results will be automatically secured by the action of the competitive system ? (43)- - SYLLABUS. CHAPTER II. - - page 51 Our Duty in relation to various existing Circum- stances wJiich tend to modify, and in some cases to nullify, the Justice ^vith which Services to the Com- munity are rewarded under the Competitive System. Some of the modifying or disturbing causes are partially removable. Under this head we may include : (a) Bad laws and bad customs sanc- tioned by law (51) [Opposed by political organi- sations.] (b) Fluctuations in the value of gold and of silver (55) [Remedy possibly not yet found.] (c) Ill-disbursed "charity" (63) [Charity Organisation Societies.] Others require reform rather than removal, (d) The poor law and the bankruptcy systems (65) [Possibility of a more satisfactory life for paupers. Dishonesty and fraud should not, because they end in bankruptcy, go unpunished.] (e) Mono- polies (68) [Difficult to maintain for long to- gether by means of combination. Possibly some- times best met by legislation.] (f) Custom (71) [Each custom must be considered on its own merits.] The subjectwe nowapproach requires not reform but complete removal ; but an alteration of ethical standards is first necessary. Full consideration xiv . SYLLABUS. of (g) Commercial immorality (73) The com- mercial code of honour. [What our attitude should betowards Badworkand adulteration(75) Immoral and useless business (76) Commercial bribery (77) Deception (78) The effect that chi- valrous honesty in commercial affairs would have.] Lastly, and in a measure inclusive of the rest, \ve have (h) Wealth inherited irrespectively of ser- vices rendered to community by inheritor (83) Hereditary wealth, moreover, perpetuates results of a, b, c, d, e,f, and g, and often of crime, infir- mity, and ignorance also. [Possibility of increas- ing the scope of the " Death Duties."] Taking into consideration the importance of the disturbing causes enumerated, it is no matter for surprise if we find that the unevenness of wealth- distribution is often not in accordance with the deserts of individuals (84). CHAPTER III. Socialism- - 86 Resume. In Chapter L, ethical action was shown to be necessary in relation to the competitive system to free it from hindrances within and without. In Chapter II. ethical action was shown to be necessary in relation to other economic forces. In Chapter IV. ethical action SYLLABUS. will be shown to be necessary to counteract the ill effects of evils at present irremovable. May all these difficult courses be superseded by the short-cut of Soc'alism ? (86) Definitions of Communism and of Socialism (89) As the evils complained of are not inherent in com- petition, the prim^i-facie case for its abolition is weak (94) Two reasons for thinking that the proposed remedy is inadmissible : 1. The competitive system at present ^.o. most power- ful available impetus to the due fulfilment of services to the community. 2. The competitive system, as far as I can see, always will be the only test of whether given work is re- quired by the community or not (95) 1. Supposed cases of the social motive, often the indi- vidualistic motive in disguise. Examination in this relation of Co-operation (96) Profit-shar- ing (97) Of socialism itself (98) Would not the abolition of competition intensify the evil of the overcrowding of certain industries ? A negative answer counts for nothing if given on account o the degradation of the people a SYLLABUS. degradation removable by the fulfilment of the ethical duties enumerated in Chapters I., II., and IV. (103) Examination of the proposal to pay those whose work is required to carry on an in- dustry a "fair wage" (105) Abnormally low wages the result of immobility of labour. Keep- ing this fact in mind, what would be the result of the " fair wage" proposals ? (107) " Fair wage " for all applicants inadmissible (108) " Fair wage" for a chosen number of applicants im- practicable. It would tend to force the residuum downwards into lower and still more crowded grades of industry, instead of making some (it may be inadequate) place for them by tempt- ing upwards the most competent (ioS) The idealists say that the social impetus ought to tempt upwards as powerfully as the individualis- tic. True it ought to do so, but AS YET it does not (ill) Still, why should not those to whom it is as strong a motive act accordingly ? Most certainly they will do well to do so, but do not let them take for granted that it is generally operative, e.g., do not take for granted that the entrepreneurs as. a class will feel the impulse of the socialistic motive (112) or that the individual workman will in general do the best work of which he is capable, if this impulse is alone relied SYLLABUS. xvii on(i 14) The new impulse must becomeoperative before we cease to rely on the old. Self-abnega- tion very easy to practise for individuals without assuming that it is the universal impulse (115) But if Socialism is inadmissible, how comes it about that we already have much successful legislation that is accounted "socialistic," and contemplate more? (116) Examination from this point of view of The Poor Law; (117) the Factory Acts; (120) the Post Office; (122) Free Education (123) 2. Examples of the difficulty of measuring the ex- tent to which certain work is demanded by the community, compared with other work, when we no longer have the test of competition to guide us (125) Before abolishing the competitive system we must provide ourselves with some other automatic measure of the necessity of any given work (128). CHAPTER IV. - - page 130 Taking it for granted that the ill effects resulting from the imperfect working of the Competitive System (consequent on the faulty nature of its en- vironment) and on various disturbing causes {considered in Chapter //.] co-existent with it) are SYLLABUS. not likely immediately, or perhaps ever, entirely to be removed or reformed, what courses of action are desirable as tending to do away with sucli ill effects ? First. Self-denial with regard to luxuries (130) Definition of luxury (130) Leisure a luxury (131) Self-denial with regard to luxuries should be practised because a smaller consumption by self gives the power of allowing to others a larger consumption (131) The subject confused by the wage-fund theory and the deductions from it (132) By relinquishing the wage-fund theory we are deprived of one argument for the limitation of luxury, but it was an argument that attempted to prove too much (134) In reality the main reason for limitation of our own luxuries is that we may be able to attend to the necessities of others (135) Are there solidly based ethical grounds for the preferring of investment to the luxurious spending of wealth ? Investment im- plies the postponement of spending. Postpone- ment always carries with it chances of less luxuri- ous expenditure (135) But if these chances do not take effect the advantages are most insigni- ficant (136) The conclusion is that the choice lies between : (i) Spending on self. (2) Spend- SYLLABUS. ing altruistically. And (3) Postponing spending, in which case we shall at a future time be again confronted with the choice between (i) and (2) but with a larger amount involved, the increase being the interest on the money which has accrued in the interval (140) Putting bounds to luxury, is therefore not enough ; it is merely the first step which puts us in a position for altruistic expenditure (141) [Parenthetical Note on accurate comprehension of the real significance of conduct in economic affairs. Popular judgment in this respect often much astray (142) Examination of particular cases. Papering a room with bank-notes (143) Making a present to the nation for the reduction of the national debt (144) Gambling (144) First and third class railway travelling contrasted (145) Money spent in the encouragement of art] (148)- Second. Discouragement of a disproportionate love of possession (149) Third. Recognition of our responsibility towards others in the regulation of our own money affairs (150) The morals of investment. Investments which " pay on the average." c SYLLABUS. Fourth. Combating the social power of wealth. Mr. H. Spencer on this subject (155) The principal difficulty is, that if wealthy men are not conciliated, they may not use their wealth in desired ways (160) We must avoid allowing the treatment of wealthy men to be distinc- tive (162) In the application of ethics to economics, formu- lated thought is needful, but it should go hand in hand with discriminating generosity and im- agination (163) These papers urge the extension of ethics to economics ; they do not suggest that economics furnish the whole field for ethical action (165). THE PURSE AND THE CONSCIENCE. INTRODUCTORY. r I "HOSE who are outside the direct pressure * of being obliged to face for themselves the problems of distress and misery arising from poverty, are often occupied with them in their thoughts. Callousness on the subject is not characteristic of our time; many of the pleasures of life are shadowed by a sombre consciousness of trouble not far distant, though perhaps unseen. And indeed the subject is impressive enough whether we regard the intensity of the evils overcrowding (inconvenient and unhealthy always, but terrible when there is a savage or drunken head of the family, or when fever or death are present), lack of proper food, shelter, A 2 THE PURSE AND THE CONSCIENCE. and warmth, filthy conditions of life, merciless compulsion to ceaseless work, or whether we consider the extensiveness of the milder forms of the miseries of which these are the severe instances the monotony, the dreariness, the lack of interest surrounding so many lives ; the mediocrity which results. Some years ago, on the occasion of a royal visit to Liverpool, it was proposed that the Prince's procession should go through a poor part of the city ; the suggestion provoked a protest from one of the local newspapers ; a special reporter was sent to describe the district and show how unsuitable it was that a Prince should be asked to traverse it. The first street he visits he describes as "one in which fashion "and beauty would be out of place," of the next road on the proposed route he says, " a " more gloomy view than that which will first "meet their" (i.e., the Royal Party's) "eyes it THE PURSE AND THE CONSCIENCE. 3 "would be hard to imagine in a great city" ..." the vistas of which the royal visitors " will catch a glimpse will not add to their enjoy- '' ment." He goes on to speak of the dingy, crowded, smelling streets, " the normal ap- " pearance of which is certainly most repulsive." Thus some of the evils resulting from poverty are intense, some are extensive. We notice too that of the thought and endeavour directed towards their removal some is intense, some extensive. The intense thought is applied perhaps principally to the extensive evils ; statis- ticians watch phenomena and register facts which enable political economists to formulate theories concerning the causes of poverty, and their best remedies ; legislators and social re- formers are thus furnished with some ground for action. But extensive sympathy is certainly most 4 THE PURSE AND THE CONSCIENCE. easily excited by intense evils, and beyond those whose lives are devoted to grappling with the problems of poverty, w r e have a far extending interest in anything that is popularly recognised to have a direct bearing on the subject. When an endeavour is made to paint the picture of poverty in unusually vivid colours there is a quick response of interest, and without any such special appeals being made, a continued endeavour of some sort or other is always going on " to do good to the poor." But whilst we may acknowledge so much bond of union in the thought and in the deeds of many tender-hearted people, chaotic con- fusion exists in many of their minds concerning points which are fundamental if such thought and action are to be effective, confusion firstly as to facts, secondly as to methods. The only facts that appear to be established are that poverty exists, and that wretchedness THE PURSE AND THE CONSCIENCE. 5 results from it. If we ask further questions there is no unanimity in the answers. Are people poor by their own fault ? or are they poor because they are robbed by the rich? or is it a mixture of the two ? Again, if people are poor by their own fault, does that make it any the less incumbent on the rich to help them ? and most important of all, can the rich help them ? Is poverty remediable by altering the social conditions of life ? or is it dependent on individual character? In method there is equal diversity. One good man gives bread to every one that asks at his door ; another starts a penny-bank ; another founds scholarships for penurious students. Some people devote their time to bazaars, some are enthusiastic about land-reform, some about trade-unionism. There is diversity between the somewhat unenergetic methods of the acquiescer in things as they are, and the often ill-balanced 6 THE PURSE AND THE CONSCIENCE. courses of the man who is in constant revolt against existent conditions. This little book has been written in advocacy of facing differences of opinion concerning the facts of the problems of poverty, and the methods of grappling with them, and of en- deavouring to discover which are right. It is an attempt to make more clear for what part of their poverty the poor are, and for what part of it they are not, responsible ; it considers the attitude of mind of the well-to-do towards poverty arising from each of these causes ; it discusses, from the ethical standpoint, various aspects of the question of the distribution of wealth, and points of conduct and habit having to do with money affairs. It in fact deals with the connection between two sciences, that of Economics (the Science of Wealth), and that of Ethics (the Science of Right and Wrong) ; it accordingly attempts to show when and how THE PURSE AND THE CONSCIENCE. 7 in monetary affairs questions of right and wrong are involved. They are in the first place clearly involved to the extent that justice is concerned in dis- tribution of wealth. But what is meant by a just distribution of wealth ? It may be defined to be such a distribution as is proportional to services rendered to the community. But this definition is a wide one, and admits of various interpretations ; we are at once faced with the question, Who is to determine the worth of a service rendered to the community? Is it to be estimated by the average opinion of the community at large ? Such an assessment may be said to be carried out under the competitive system, where the more a service, or a material object resulting from work or from any other service, is valued, the higher price or reward it commands. Sometimes however individuals thrust aside 8 THE PURSE AND THE CONSCIENCE. this public assessment, and reward what appears to them to be merit, on a scale different to that which the play of supply and demand shows to be in force with the community at large. When for example princes have patronised the arts, they have often paid more than their market value for pictures, statues, or operas. Such departures from market-prices are made by those who believe that they possess ex- ceptional judgment or enlightenment, and .pre- sumably with the idea, that the world in general will with further progress endorse them as being in the direction of justice. Other departures have been made and are still being made from those rewards of service settled by the average opinion of the com- munity as shown by the effective demand, or by the price which will be generally given for a particular commodity. These departures are not made merely in anticipation of what a more THE PURSE AND THE CONSCIENCE. g enlightened public judgment may some day endorse, they are to a great extent irrespective of public judgment present or future. Where wages and prices are fixed by custom and not by competition (as for instance is to a great extent the case in India) we have the most striking example of a distribution of wealth effected otherwise than by the public opinion of the community as shown in the play of supply and demand. Tradition is here powerful, and rewards for service which have once been adopted, become as it were crystal- lised. There is however reason to think that even here the laws of supply and demand do gradually make themselves felt, though changes that take generations or centuries to be consummated in India, might be brought about in a year or two in a highly organised commercial State. It is the flow of the glacier compared to the flow of the river. io THE PURSE AND THE CONSCIENCE. In communities which are for the most part competitive the same phenomena are partially observable ; thus we had the mediaeval attempts to fix by legislation the price of bread, the rate of interest, and the wages of labourers. The fixed tariffs of the old guilds have some counterpart in the "minimum wage " of the Trade- Unions of to-day, and the Socialists wish to carry the same methods of assessment very much further. Of these modern instances it is especially observable that while there is a certain amount of a priori reasoning in the fixing of particular rewards for particular services (it is said for example that every able- bodied man oiight to be able to earn enough to maintain himself and his family " in comfort"), the main lines of assessment are similar to those which govern what economists call normal wages and normal THE PURSE AND THE CONSCIENCE. n prices in the competitive community. 1 The difficulty of rendering- the service is taken into account. Work that is arduous is to be re- warded more highly than that which is light, work that is difficult more highly than that which is easy. It asks of the worker, what strength of muscle, what power of brain does the service you propose to render, entail ? Similarly of commodities, it inquires, is there here embodied much or little strength of body or of intellect ? In actual life we find that services to the 1 Wages are normal when each wage-earner renders service to the community of a kind that is more valued than any other service he is (with equal endeavour) capable of render- ing, and when each is paid the full amount the community will give rather than command other s.rvices. Prices of commodities are normal when no particular commodity is produced by endeavour or abstinence that would have been more highly rewarded if otherwise applied, and when for each commodity is paid the full amount the consumer would give for it rather than spend the amount on other commodities. 12 THE PURSE AND THE CONSCIENCE. community of a particular kind (embodied per- haps in some particular commodity), are con- tinually becoming more or less plentiful than the wants of the community, taken in conjunction with all its other wants, justify. Under the competitive system wages or prices then depart from the normal level, they sink or they rise as the case may be ; a special discouragement, or a special encouragement, is thus extended to the particular form of service in question, which tends to decrease or increase its supply till the normal level in regained. The non-competitive method of assessment complains of this as unjust. " Why" it asks, ''should a woman in " a match-factory be paid so much less than a "shop-woman for work that is at least as ''arduous ? " No inquiry is made concerning the workwomen, as to whether there are many or few who will perform this service and no other for us. There is neglect to inquire of a parti- THE PURSE AND THE CONSCIENCE. 13 cular commodity, whether it is easy or whether it is difficult to get that particular embodiment of services (work and others) multiplied. Yet it is not difficult to show that as a particular form of service becomes disproportionally multiplied, it approaches more and more nearly to uselessness, and to anyone recognising a utilitarian standard of morality no injustice is involved in rewarding unequally work of like arduousness but unequal utility. A point of greater difficulty is that though it is said that under the competitive system wages and prices continually tend to the normal, it is known as a matter of actual experience that in certain occupations and trades they never arrive at that bourn. Can it be said to be just that certain occupations shall be chronically underpaid ? This is a point which the following chapters examine with some care. Another point of controversy arising from 14 THE PURSE AND THE CONSCIENCE. our definition of a just distribution of wealth is, whether the reward of a service must be enjoyed solely by the individual who has rendered it, or whether justice allows him to transfer it during life or after death to other individuals ? It is plain then, that to determine what is a "just" distribution of wealth is a matter of great complexity, and in fact an unravelment of the difficulties thus presented involves an investigation of the problems this book considers. Clearly it concerns ethics to determine at the least what in economic matters is, and what is not, just, but it is not incumbent on us here, I think, to pin ourselves down to any rigid defini- tion of justice ; for the field of ethics is wide enough to embrace generosity beyond the bounds of actual justice, and our investigation is that of the connection between economics and THE PURSE AND THE CONSCIENCE. 15 ethics, between monetary affairs and considera- tions of right, irrespective of whether right be involved in an attempt to be just, or in a more extended attempt to be generous. I. How the Competitive System tends to award benefits in proportion to services rendered to the Community. I ENDEAVOUR in the first part of this chapter (pages 16-26), very briefly to recapitulate the fundamental economic points which bear on our purpose. These of course are rendered familiar by the text-books, and an apology is perhaps needed for reiterating them here, but those who write speculatively on the ethical aspects of economics allow themselves such a large amount of freedom, that it has seemed to me advisable that we should remind ourselves on the threshold of the subject that the prices of services and commodities are not in the main fixed arbitrarily. 16 THE PURSE AND THE CONSCIENCE. 17 The Competitive System is in a wide sense a system of exchange resting in the first place on division of labour. If we suppose it possible for a State to exist in which each individual by his own unaided efforts produced exactly enough of the things that were required to satisfy his own wants, and those things of the precise kinds he required, if further he did not in any particular produce a superfluity above his own requirements, there could be no likelihood of the establishment of any system of exchange between individuals. But the divi- sion of labour places one set of advantages in the hands of one set of men, another in those of another, and some system under which they may barter amongst themselves becomes in- evitable. It is theoretically conceivable that all such advantages should be traceable to the results of labour or other services to the community B 1 8 THE PURSE AND THE CONSCIENCE. handed by gift, or transmitted by bequest, from one person to another. There is no inherent absurdity in supposing that even the private ownership in land might have originated in (as in fact the modern acquirement of land not unfrequently results from) individual industry. To maintain that the private ownership in land in this country originated and has survived as an equitable payment for services rendered to the community would no doubt be to strain unduly after what may be called historic justice, especially as the military services actually given were in the first instance rendered against those who at that time formed the community. But the fact that in the past landed and other property has resulted from violence and fraud, does not affect the condi- tions under which the advantages accruing from possession of such property may be bartered against other advantages in a state of THE PURSE AND THE CONSCIENCE. 19 society in which it is supposed that violence and fraud no longer hold a recognised place. The competitive system then supposes a free exchange amongst individuals of the ad- vantages which are their particular possession, whether such advantages result immediately from work, from work done by the individual in the past, from work the advantage derived from which has been transferred from others alive or dead, or from advantages transferred in the same way which owed their origin to violence, to fraud, or merely to good luck. The greater the advantage an individual seeks to attain in an exchange, the greater will be the advantage he will be prepared to sur- render, but it will be his own estimation of value in each case that will guide him. Exchange then will only take place where each party to the transaction esteems what he is to receive more highly than what he is to 2o THE PURSE AND THE CONSCIENCE. part with. The number of bargains that can at any given moment be made in the world on these terms, though considerable, is limited, and would in time suffer exhaustion were it not that their number is constantly being recruited by specialised work. The result of specialised work (and practi- cally all work is specialised) is to accumulate in single hands, or sets of hands, advantages of the same kind more numerous than can be utilised to the full by their owners. Thus one man has the power of digging, and has the con- sequent advantage of having behind him every evening a well-ordered garden which lay before him in the morning untilled ; another man has the power of cutting coal in mines ; another that of writing business letters with rapidity and accuracy ; another that of making watches and clocks ; another that of organising commercial operations. THE PURSE AND THE CONSCIENCE. 21 But any one of these will shortly produce more of his speciality than he himself desires to utilise, at any rate in proportion to his other needs. Let us take the clock-maker for ex- ample. The value to him of his clocks for his personal use falls, as he goes on making more, and as the value of advantages resulting from other people's work remains as far as he is concerned constant, the conditions for bringing about an exchange are on his side ripe, that is to say, he esteems what he is to part with at less than what he is to receive. If a similar depreciation of property so far as they them- selves are concerned takes place in the produc- tions of the other workers, the conditions antecedent to exchange are perfected on both sides for several transactions in what we may suppose to be a little community. 1 Now, if the 1 I am imagining a state of barter as showing the case more directly than if the intermediary of money is introduced, 22 THE PURSE AND THE CONSCIENCE. community is one of very small size, all its members will very soon be supplied with time- pieces ; whilst the clock-maker has been making them, he has had his garden well cared for, his coal-cellar filled, his business letters written for him, and his money managed for him. The little circle now begin to order each a second clock or watch ; this, though possibly a con- venience, is not nearly so valuable as the first. The gardener who has up to this time done as much for the clock-maker as for the collier, now begins to feel that the former can be less useful to him than the latter, and though he receives (in work) as much from the clock-maker as he did before, he gives him less in return. As time goes on and the clock-maker's work be- comes more and more de trop, his position but the principles under consideration are unaffected by the introduction of a standard of value as a medium of ex- change. THE PURSE AND THE CONSCIENCE. 23 becomes worse and worse. This is because the community we have supposed is too small to support a clock-maker. It usually happens however that communities are not so well supplied in proportion to their needs with the skilled work of the artizan as with the unskilled work of the labourer, so that in the experiences of actual life, it is more likely that we shall find the gardener than the watch- maker de trop, and in distress because his industry is "overcrowded." At any given moment the demand for a commodity which results in acquirement by purchase is called the effective demand, and the amount of counter advantage which is bartered for the advantage arising from the possession of a commodity, may be called its price. So far as men are influenced by the desire to barter their advantages on the best possible terms, they will tend to devote their energies to 24 THE PURSE AND THE CONSCIENCE. those kinds of work, the price of which is regulated by an effective demand more eager than the average, or in other words the price of which rewards the work more highly than other work that might have been done by the same individuals with an equal amount of effort. Reverting to our example, if instead of imagin- ing a small community we take the whole industrial system, we shall find that although the majority of mankind have more pressing needs than clocks to absorb their small incomes, yet, amongst those who are not the very poor, a certain proportion of what is spent they will wish to expend in clocks, at a price sufficiently tempting, when compared with the wages of other work, to induce men to enter the occupation of clock-maker. If we imagine the supply to be inadequate to the demand, the price rises, more young men are attracted into the field of occupation, and the supply becomes THE PURSE AND THE CONSCIENCE. 2$ larger as the demand (in consequence of the enhanced price) becomes smaller. If on the contrary there are too many clock-makers for the demand, a converse process will theoretically take place. Now the commodities, or the kinds of service for which there is the most eager effective demand (i.e., the price of which is highest com- pared with that of other work that might have been done with equal effort by the same individuals), are those of which the community are in most need ; that is if we are prepared to accept the united judgment corporately ex- pressed by the community of its own needs ; (in special instances we may think this much at fault for example, the widely diffused prefer- ence for gin over classical music). Still, however much some of us may think our judgments wiser than those of the average of the com- munity, we must admit that the latter is 26 THE PURSE AND THE CONSCIENCE. entitled to much weight in such points as the quantitative and relative desire for such things as bread and beef, house-room and clothes in fact it would be difficult to measure the extent of the need for certain services by the com- munity in any other way than by examining the amount of sacrifice it was prepared to make, or counter-advantage to yield, in order to command them. But the kinds of service for which there is most eager effective demand are also, as we have observed, those which are most highly re- warded. Hence it arises that there is a proportion between the value of services rendered to the community, and the reward of such services. The phenomenon which does more than any- thing else to obscure the operation of the process, and the one which is most often cited as confuting the accuracy of the theory, is the THE PURSE AND THE CONSCIENCE. 27 inequality of reward of efforts that are equally arduous, and in a sense equally serviceable to the community. Thus we find a woman employed as a massage nurse earning perhaps 403. or 505. a week. We find other women doing work equally laborious in kitchen gardens at possibly 93. aweek. Not only do the women work equally hard, but, it is argued further, the kitchen-garden labourers do work that is as much wanted by the community. We should no more be willing to give up eating vegetables than we should be to do without the massage nurse. The case here supposed is a repetition of that of the clock-maker in the small community, but, as we before remarked, it is usually the un- skilled, not the skilled work that is dispro- portionately plentiful. Thus in the case of the women garden-labourers, though it is true that a very large number might be engaged in the 28 THE PURSE AND THE CONSCIENCE. industry, and yet the effective demand for their work be so great that their labour would be rewarded proportionately well to other labour (of similar skill and arduousness), yet the number who actually enter its ranks is even greater, and their wages accordingly sink. The industry is, in fact, OVERCROWDED, that is, pro- portionately to other industries. It is without doubt possible to put one's finger on instances where it may be said with certainty that the amount of work and skill expended is less highly rewarded than the same amount of work and skill in some other departments of labour. The London needlewoman is an instance. How comes it about that this state of things does not right itself by the supposed automatic action of the competitive system, but that on the other hand it continues through generations ? In examining how the competitive system puts right inequalities of remuneration, we have THE PURSE AND THE CONSCIENCE. 29 supposed that wherever work is paid more highly than the average the necessary number of additional workers are attracted into that field of occupation. This assumes what is called perfect " mobility " of labour ; that it is available exactly where it is wanted, and immediately it is wanted. But as a matter of actual experience the difficulties encountered by those who endeavour that they themselves or their children shall enter into an employment far removed socially from the one they have been accustomed to, are so great that Cairnes, elaborating the expression of the same idea by J. S. Mill and others, divides work into certain groups of employments which he calls " non- " competing groups," regarding it as a moral impossibility for any considerable number of workers in one group to leave it for another where the conditions are more favourable. " Of the disposable labour each element, that 30 THE PURSE AND THE CONSCIENCE. ''is to say each individual labourer, can only " choose his employment within certain tolerably " well-defined limits. These limits are the limits ''set by the qualifications required for each " branch of trade and the amount of preparation '' necessary for their acquisition. Take an " individual workman whose occupation is stilj " undetermined, he will, according to circum- " stances, have a narrower or wider field of " choice; but in no case will this be co-extensive " with the entire range of domestic industry. '' If he belongs to the class of agricultural " labourers, all forms of mere unskilled labour "are open to him, but beyond this he is '' practically shut out from competition. The " barrier is his social position and circum- " stances, which render his education defective, " while his means are too narrow to allow of ''his repairing the defect or of deferring the "return upon his industry till he has qualified THE PURSE AND THE CONSCIENCE. 31 " himself for a skilled occupation. Mounting a "step higher in the industrial scale to the "artisan class, including with them the class of o " small dealers whose pecuniary position is " much upon a par with artisans, here also "within certain limits there is complete freedom " of choice, but beyond a certain range practical '' exclusion ; " practically the man brought up to be an ordinary carpenter or mason " has no "power to compete in those higher departments " of skilled labour for which a more elaborate "education and larger training are necessary, " for example, mechanical engineering." Simi- larly ascending a step higher, "persons com- " petent to take part in any of the higher skilled '' industries " are practically excluded from the professions. ''It is true indeed that in none " of these cases is the exclusion absolute. The " limits imposed are not such as may not be "overcome by extraordinary energy, self-denial, 32 THE PURSE AND THE CONSCIENCE. " and enterprise ; and by virtue of these " qualities individuals in all classes are escaping " every day from the bounds of their original