Distributive Justice: The Right And Wrong Of Our Present Distribution Of Wealth - free ebook by John A. (John Augustine) Ryan

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Distributive Justice: The Right And Wrong Of Our Present Distribution Of Wealth

John A. (John Augustine) Ryan

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DISTRIBUTIVE JUSTICE

DISTRIBUTIVE JUSTICE

THE MACMILLAN COMPANY NEW YORK · BOSTON · CHICAGO · DALLAS ATLANTA · SAN FRANCISCO MACMILLAN &amp; CO., Limited LONDON · BOMBAY · CALCUTTA MELBOURNE THE MACMILLAN CO. OF CANADA, Ltd. TORONTO DISTRIBUTIVE JUSTICE The Right and Wrong of Our Present Distribution of Wealth BY JOHN A. RYAN, D.D. Associate Professor of Political Science at the Catholic University of America; Professor of Economics at Trinity College; Author of "A Living Wage," "Alleged Socialism of the Church Fathers," Joint Autho

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PREFACE

PREFACE

Five of the nine members of the late Federal Commission on Industrial Relations united in the declaration that the first cause of industrial unrest is, "unjust distribution of wealth and income." In all probability this judgment is shared by the majority of the American people. Regarding the precise nature and extent of the injustice, however, there is no such preponderance of opinion. Even the makers of ethical and economic treatises fail to give us anything like uniform or definite pronounceme

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THE ELEMENTS AND SCOPE OF THE PROBLEM

THE ELEMENTS AND SCOPE OF THE PROBLEM

Distributive justice is primarily a problem of incomes rather than of possessions. It is not immediately concerned with John Brown's railway stock, John White's house, or John Smith's automobile. It deals with the morality of such possessions only indirectly and under one aspect; that is, in so far as they have been acquired through income. Moreover, it deals only with those incomes that are derived from participation in the process of production. For example; it considers the labourer's wages,

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Economic Rent Always Goes to the Landowner

Economic Rent Always Goes to the Landowner

All land that is in use, and for the use of which men are willing to pay a price yields rent, whether it is used by a tenant or by the owner. In the latter case the owner may not call the rent that he receives by that name; he may not distinguish between it and the other portions of the product that he gets from the land; he may call the entire product profits, or wages. Nevertheless the rent exists as a surplus over that part of the product that he can regard as the proper return for his labour

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Economic Rent and Commercial Rent

Economic Rent and Commercial Rent

It will be observed that the landowner's share of the product, or economic rent, is not identical with commercial rent. The latter is a payment for land and capital, or land and improvements, combined. When a man pays nine hundred dollars for the use of a house and lot for a year, this sum contains two elements, economic rent for the lot, and interest on the money invested in the house. Assuming that the house is worth ten thousand dollars, and that the usual return on such investments is eight

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The Cause of Economic Rent

The Cause of Economic Rent

The cause of economic rent is the fact that land is limited relatively to the demand for it. If land were as plentiful as air mere ownership of some portion of it would not enable the owner to collect rent. As landowner he would receive no income. If he cultivated his land himself the return therefrom would not exceed normal compensation for his labour, and normal interest on his capital. Since no one would be compelled to pay for the use of land, competition among the different cultivators woul

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No Private Ownership in Pre-Agricultural Conditions

No Private Ownership in Pre-Agricultural Conditions

Whenever and wherever men got their living by hunting and fishing, there was no inducement to own land privately, except possibly those portions upon which they built their huts or houses. "Until they become more or less an agricultural people they are usually hunters or fishermen or both, and possibly also to a limited extent keepers of sheep and cattle. Population is then sparse and unoccupied territory is plentiful, and questions of the ownership of particular tracts of land do not concern th

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How the Change Probably Took Place

How the Change Probably Took Place

The change from tribal to private landownership could have occurred in a great variety of ways. For example, the chief, patriarch, or king might have gradually obtained greater authority in making the allotments of land among the members of the tribe or group, and thus acquired a degree of control over the land which in time became practical ownership; he might have seized the holdings of deceased persons, or of those who were unable to pay him the tax or tribute that he demanded, or of those wh

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Limited Character of Primitive Common Ownership

Limited Character of Primitive Common Ownership

A great deal of the opposition to the theory of primitive common ownership of agricultural land, seems to be based upon an exaggerated conception of the scope of that institution. The average man who thinks or speaks of ownership to-day has in mind the Roman concept and practice of private property. This includes the unrestricted right of disposal; that is, the power to hold permanently, to transfer or transmit, to use or to abuse or not to use at all, to retain the product of the owner's use, t

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Private Ownership General in Historical Times

Private Ownership General in Historical Times

So much for land tenure in prehistoric times. During the historical period of the existence of the race, almost all civilised peoples have practised some form of private ownership in the matter of their arable lands. While differing considerably at various times and places, it has always excluded communal allotment of land and communal distribution of the product, and has always included private receipt of the product by the owner-user, or private receipt of rent when the owner transferred the u

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Conclusions from History

Conclusions from History

What conclusions does history warrant concerning the social and moral value of private landownership? Here we are on very uncertain ground; for different inferences may be drawn from the same group of facts if a different section of them be selected for emphasis. Sir Henry Maine and Henry George both accepted the theory of primitive agrarian communism, but the former saw in this assumed fact a proof that common ownership was suited only to the needs of rude and undeveloped peoples, while the lat

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Arguments by Socialists

Arguments by Socialists

Indeed, the orthodox or Marxian Socialists are logically debarred by their social philosophy from passing a strictly moral judgment upon property in land. For their theory of economic determinism, or historical materialism, involves the belief that private landownership, like all other social institutions, is a necessary product of economic forces and processes. Hence it is neither morally good nor morally bad. Since neither its existence nor its continuance depends upon the human will, it is en

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Henry George's Attack on the Title of First Occupancy

Henry George's Attack on the Title of First Occupancy

Every concrete right, whether to land or to artificial goods, is based upon some contingent fact or ground, called a title. By reason of some title a man is justified in appropriating a particular farm, house, or hat. When he becomes the proprietor of a thing that has hitherto been ownerless, his title is said to be original; when he acquires an article from some previous owner, his title is said to be derived. As an endless series of proprietors is impossible, every derived title must be tracea

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His Defence of the Title of Labour

His Defence of the Title of Labour

Thinking that he has shattered the title of first occupancy, Henry George undertakes to set up in its place the title of labour. "There can be to the ownership of anything no rightful title which is not derived from the title of the producer, and does not rest on the natural right of the man to himself." [15] The only original title is man's right to the exercise of his own faculties; from this right follows his right to what he produces; now man does not produce land; therefore he cannot have r

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The Right of All Men to the Bounty of the Earth

The Right of All Men to the Bounty of the Earth

"The equal right of all men to the use of land is as clear as their equal right to breathe the air—it is a right proclaimed by the fact of their existence. For we cannot suppose that some men have a right to be in the world, and others no right. "If we are here by the equal permission of the Creator, we are all here with an equal title to the enjoyment of his bounty—with an equal right to the use of all that nature so impartially offers.... There is in nature no such thing as a fee simple in lan

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The Alleged Right of the Community to Land Values

The Alleged Right of the Community to Land Values

In the foregoing pages we have confined our attention to the Georgean principle which bases men's common right to land and rent upon their common nature, and their common claims to the material gifts of the Creator. Another argument against private ownership takes this form: "Consider what rent is. It does not arise spontaneously from the soil; it is due to nothing that the landowners have done. It represents a value created by the whole community.... But rent, the creation of the whole communit

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The Socialist Proposals Impracticable

The Socialist Proposals Impracticable

As now existing and as commonly understood, private landownership comprises four elements which are not found together in either Socialism or the Single Tax. They are: security of possession combined with the power to transfer and transmit; the use of land combined with the power to let the use to others; the receipt of revenue from improvements in or upon the land; and the receipt of economic rent, the revenue due to the land itself, apart from improvements. In its extreme form, and as formerly

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Inferiority of the Single Tax System

Inferiority of the Single Tax System

Of the four leading elements of private ownership enumerated above, the Single Tax scheme would comprise all but one. In the words of Henry George himself: "Let the individuals who now hold it still retain, if they want to, possession of what they are pleased to call their land. Let them continue to call it their land. Let them buy and sell, and bequeath and devise it. We may safely leave them the shell, if we take the kernel. It is not necessary to confiscate land; it is only necessary to confi

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Three Principal Kinds of Natural Rights

Three Principal Kinds of Natural Rights

Although natural rights are all equally valid, they differ in regard to their basis, and their urgency or importance. From this point of view, we may profitably distinguish three principal types. The first is exemplified in the right to live. The object of this right, life itself, is intrinsically good, good for its own sake, an end in itself. It is the end to which even civil society is a means. Since life is good intrinsically, the right to life is also valid intrinsically, and not because of

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Private Landownership Indirectly Necessary for Individual Welfare

Private Landownership Indirectly Necessary for Individual Welfare

In our present industrial civilisation, however, private landownership is indirectly necessary for the welfare of the individual. It is said to be indirectly necessary because it is necessary as a social institution , rather than as something immediately connected with individual needs as such. It is not, indeed, so necessary that society would promptly go to pieces under any other form of land tenure. As we have seen in the last chapter, it is necessary in the sense that it is capable of promot

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Excessive Interpretations of the Right of Private Landownership

Excessive Interpretations of the Right of Private Landownership

The indirect character of the right of private landownership, its relativity to and dependence upon social conditions, is not always sufficiently grasped by either its advocates or its opponents. In the writings of the former we sometimes find language which suggests that this right is as independent of social conditions as the right to marriage or the right to life. "The State has no right to abolish private property [in land] because private property is not a social right, but an individual ri

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The Doctrine of the Fathers and Theologians

The Doctrine of the Fathers and Theologians

Some of the Church Fathers, particularly Augustine, Ambrose, Basil, Chrysostom, and Jerome, denounced riches and the rich so severely that they have been accused of denying the right of private ownership. The facts, however, are that none of the passages upon which this accusation is based proves it to be true, and that in numerous other passages all of these writers explicitly affirm that private ownership is lawful. [38] Speaking generally, we may say that they taught the moral goodness of pri

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The Teaching of Pope Leo XIII

The Teaching of Pope Leo XIII

The official teaching of the Church on the subject is found in the Encyclical, "On the Condition of Labour," by Pope Leo XIII. In this document we are told that the proposals of the Socialists are "manifestly against justice"; that the right of private property in land is "granted to man by nature"; that it is derived "from nature not from man, and the State has the right to control its use in the interest of the public good alone, but by no means to abolish it altogether." These statements the

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The Tenant's Right to a Decent Livelihood

The Tenant's Right to a Decent Livelihood

The actual payments made by tenants to landowners sometimes leave the former without the means of decent living. Such had been the condition of a large part of the Irish tenant farmers before 1881, when the Land Courts were established. In the course of twenty-five years these courts reduced the rents by twenty per cent. on the average in upwards of half a million cases. While a part of the reductions was intended to free the tenants from the unjust burden of paying rent on their own improvement

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The Labourer's Claim Upon the Rent

The Labourer's Claim Upon the Rent

Should any part of the rent go to the labourer? Let us take first the case of the labourer who is employed by a tenant, and who is not occupied in personal service but in some productive task connected with the land. Like all other wage earners he has a right to a sufficient share of the product to afford him a decent livelihood. Since the tenant is the employer, the director of the business, and the owner of the product, he rather than the landowner is the person who is primarily charged with t

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Landownership and Monopoly

Landownership and Monopoly

In the literature of the Single Tax movement the phrase, "land monopoly," is constantly recurring. The expression is inaccurate; for the system of individual landownership does not conform to the requirements of a monopoly. There is, indeed, a certain resemblance between the control exercised by the owner of land and that possessed by the monopolist. As the proprietor of every superior soil or site has an economic advantage over the owner of the poorest soil or site, so the proprietor of a monop

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Excessive Gains from Private Landownership

Excessive Gains from Private Landownership

The second evil of private landownership to be considered here, is the general fact that it enables some men to take a larger share of the national product than is consistent with the welfare of their neighbours and of society as a whole. As in the matter of monopoly, however, so here, Single Tax advocates are chargeable with a certain amount of overstatement. They contend that the landowner's share of the national product is constantly increasing, that rent advances faster than interest or wage

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Exclusion from the Land

Exclusion from the Land

One of the most frequent charges brought against the present system of land tenure is that it keeps a large proportion of our natural resources out of use. It is contended that this evil appears in three principal forms: owners of large estates refuse to break up their holdings by sale; many proprietors are unwilling to let the use of their land on reasonable terms; and a great deal of land is held at speculative prices, instead of at economic prices. So far as the United States are concerned, t

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The Leasing System

The Leasing System

In many countries of Europe it has long been the policy of governments to retain ownership of all lands containing timber, minerals, oil, natural gas, phosphate, and water power. The products of these lands are extracted and put upon the market through a leasing system. That is; the user of the land pays to the State a rental according to the amount and quality of raw material which he takes from the storehouse of nature. Theoretically, the State could sell such lands at prices that would bring

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Public Agricultural Lands

Public Agricultural Lands

The leasing system cannot well be applied to agricultural lands. In order that they may be continuously improved and protected against deterioration, they must be owned by the cultivators. The temptation to wear out a piece of land quickly, and then move to another piece, and all the other obstacles that stand in the way of the Single Tax as applied to agricultural land, show that the government cannot with advantage assume the function of landlord in this domain. In the great majority of cases

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Public Ownership of Urban Land

Public Ownership of Urban Land

No city should part with the ownership of any land that it now possesses. Since capitalists are willing to erect costly buildings on sites leased from private owners, there is no good reason why any one should refuse to put up or purchase any sort of structure on land owned by the municipality. The situation differs from that presented by agricultural land; for the value of the land can easily be distinguished from that of improvements, the owner of the latter can sell them even if he is not the

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Appropriating Future Increases of Land Value

Appropriating Future Increases of Land Value

Let us examine, then, the milder suggestion of John Stuart Mill, that the State should impose a tax upon land sufficient to absorb all future increases in its value. [91] This scheme is commonly known as the appropriation of future unearned increment. Either in whole or in part it is at least plausible, and is to-day within the range of practical discussion. It is expected to obtain for the whole community all future increases in land values, and to wipe out the speculative, as distinguished fro

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Some Objections to the Increment Tax

Some Objections to the Increment Tax

The tax that we are now considering can be condemned as unjust on only two possible grounds: first, that it would be injurious to society; and, second, that it would wrong the private landowner. If it were fairly adjusted and efficiently administered it could not prove harmful to the community. In the first place, landowners could not shift the tax to the consumer. All the authorities on the subject admit that taxes on land stay where they are put, and are paid by those upon whom they are levied

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The Morality of the Proposal

The Morality of the Proposal

However, it is neither necessary nor desirable to justify the proposal on the mere ground of taxation. Only in form and administration is it a tax; primarily and in essence it is a method of distribution. It resembles the action by which the State takes possession of a newly discovered territory by the title of first occupancy. The future increases of land value may be regarded as a sort of no man's property which the State appropriates for the benefit of the community. And the morality of this

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The German and British Increment Taxes

The German and British Increment Taxes

The first increment tax ( Werthzuwachssteuer ) was established in the year 1898 in the German colony of Kiautschou, China. In 1904 the principle of the tax was adopted by Frankfort-am-Main, and in 1905 by Cologne. By April, 1910, it had already been enacted in 457 cities and towns of Germany, some twenty of which had a population of more than 100,000 each, in 652 communes, several districts, one principality, and one grand duchy. In 1911 it was inserted in the imperial fiscal system, and thus ex

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Transferring Other Taxes to Land

Transferring Other Taxes to Land

Another taxation plan for reducing the evils of our land system consists in the imposition of special taxes on the present value of land. As a rule, these imply, not an addition to the total tax levy, but a transfer of taxes from other forms of property. The usual practice is to begin by exempting either partly or wholly buildings and other kinds of improvements from taxation, and then to apply the same measure to certain kinds of personal property. In most cases the transfer of such taxes to la

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The Morality of the Plan

The Morality of the Plan

The losses of various kinds that would result from the transfer of other taxes to land may be thus summarised. Land would depreciate in value by an amount equal to the capitalised tax. For example; if the rate of interest were five per cent., an additional tax of one per cent. would reduce land worth one hundred dollars an acre to eighty dollars. This decline might, indeed, be partly, wholly, or more than offset by a simultaneous rise due to economic forces. In any case, however, the land would

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Amount of Taxes Practically Transferable

Amount of Taxes Practically Transferable

According to Professor King's computations, the total rent of land in the United States in 1910 was $2,673,900,000, while the total expenditures of national, state, county and city governments were $2,591,800,000. [100] In his opinion (p. 162) "the rent would have been barely sufficient to pay off the various governmental budgets as at present constituted, and with the growing concentration of activities in the hands of the government, it appears that rent will soon be a quantity far too small t

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The Social Benefits of the Plan

The Social Benefits of the Plan

These may be summed up under three heads: making land easier to acquire; cheapening the products and rent of land; and reducing the burdens of taxation borne by the poorer and middle classes. An increase in the tax on land would reduce its value and price, or at least cause the price to be lower than it would have been in the absence of the tax. This does not mean that land would be more profitable to the purchaser, since he is enabled to buy it at a lower price only because it yields him less n

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A Supertax on Large Holdings

A Supertax on Large Holdings

Every estate containing more than a maximum number of acres, say, ten thousand, whether composed of a single tract or of several tracts, could be compelled to pay a special tax in addition to the ordinary tax levied on land of the same value. The rate of this supertax should increase with the size of the estate above the fixed maximum. Through this device large holdings could be broken up, and divided among many owners and occupiers. For several years it has been successfully applied for this pu

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Meaning of Capital and Capitalist

Meaning of Capital and Capitalist

Capital is ordinarily defined as, wealth employed directly for the production of new wealth. According as it is considered in the abstract or the concrete, it is capital-value or capital-instruments. For example, the owner of a wagon factory may describe his capital as having a value of 100,000 dollars, or as consisting of certain buildings, machines, tools, office furniture, etc. In the former case he thinks of his capital as so much abstract value which, through a sale, he could take out of th

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Meaning of Interest

Meaning of Interest

Interest is the share of the capitalist as capitalist. The man who employs his own capital in his own business receives therefrom in addition to interest other returns. Let us suppose that some one has invested 100,000 dollars of borrowed money and 100,000 dollars of his own money in a wholesale grocery business. At the end of the year, after defraying the cost of labour, materials, rent, repairs, and replacement, his gross returns are 15,000 dollars. Out of this sum he must pay five thousand do

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The Rate of Interest

The Rate of Interest

Is there a single rate of interest throughout industry? At first sight this question would seem to demand a negative answer. United States bonds pay about two per cent.; banks about three per cent.; municipal bonds about four per cent.; railway bonds about five per cent.; the stocks of stable industrial corporations about six per cent. net; real estate mortgages from five to seven per cent.; promissory notes somewhat higher rates; and pawnbrokers' loans from twelve per cent. upwards. Moreover, t

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The Labour Theory of Value

The Labour Theory of Value

This doctrine is sometimes formally based upon the Marxian theory of value, and is sometimes defended independently of that theory. In the former case its groundwork is about as follows: By eliminating the factors of utility and scarcity, Marx found that the only element common to all commodities is labour, and then concluded that labour is the only possible explanation, creator, and determinant of value. [116] Since capital, that is, concrete capital, is a commodity, its value is likewise deter

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The Right of Productivity

The Right of Productivity

But the claim is not necessarily dependent upon this foundation. Those Socialists who have abandoned the labour theory of value can argue that the labourer (including the active director of industry) is the only human producer, that the capitalist as such produces nothing, and consequently has no moral claim to any part of the product. Whatever theory of value we may adopt, or whether we adopt any, we cannot annul the fact that interest does not represent labour expended upon the product by the

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Socialist Inconsistency

Socialist Inconsistency

From the viewpoint of all but convinced Socialists, this position is indefensible. We are asked to believe that the collective ownership and operation of the means of production would be more just and beneficial than the present plan of private ownership and operation. Yet the Socialist party refuses to tell us how the scheme would bring about these results; refuses to give us, even in outline, a picture of the machine at work. As reasonably might we be expected to turn the direction of industry

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Expropriating the Capitalists

Expropriating the Capitalists

The first problem confronting a Socialist administration would be the method of getting possession of the instruments of production. In the early years of the Socialist movement, most of its adherents seemed to favour a policy of outright confiscation. Professor Nearing estimates the total property income now paid in the United States as, "well above the six-billion-dollar mark." [124] Were the Socialist State to seize all land and capital without compensation, it could conceivably transfer more

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Inefficient Industrial Leadership

Inefficient Industrial Leadership

Under Socialism the boards of directors or commissions which exercised supreme control in the various industries, would have to be chosen either by the general popular vote, by the government, or by the workers in each particular industry. The first method may be at once excluded from consideration. Even now the number of officials chosen directly by the people is far too large; hence the widespread agitation for the "short ballot." Public opinion is coming to realise that the voters should be r

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Inefficient Labour

Inefficient Labour

The same spirit of inefficiency and mediocrity would permeate the rank and file of the workers. Indeed, it would operate even more strongly among them than among the officers and superiors; for their intellectual limitations and the nature of their tasks would make them less responsive to other than material and pecuniary motives. They would desire to follow the line of least resistance, to labour in the most pleasant conditions, to reduce irksome toil to a minimum. Since the great bulk of their

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Attempted Replies to Objections

Attempted Replies to Objections

All the attempts made by Socialists to answer or explain away the foregoing difficulties may be reduced to two: the achievements of government enterprises in our present system; and the assumed efficacy of altruism and public honour in a régime of Socialism. Under the first head appeal is made to such publicly owned and managed concerns as the post office, railroads, telegraphs, telephones, street railways, water works, and lighting plants. It is probably true that all these enterprises are on t

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Restricting Individual Liberty

Restricting Individual Liberty

Even though human nature should undergo the degree of miraculous transformation necessary to maintain an efficient industrial system on Socialist lines, such a social organisation must soon collapse because of its injurious effect upon individual liberty. Freedom of choice would be abolished in the most vital economic transactions; for there would be but one buyer of labour, and one seller of commodities. And these two would be identical, namely, the State. With the exception of the small minori

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Attitude of the Church Toward Interest on Loans

Attitude of the Church Toward Interest on Loans

During the Middle Ages all interest on loans was forbidden under severe penalties by repeated ordinances of Popes and Councils. [135] Since the end of the seventeenth century the Church has quite generally permitted interest on one or more extrinsic grounds, or "titles." The first of these titles was known as " lucrum cessans ," or relinquished gain. It came into existence whenever a person who could have invested his money in a productive object, for example, a house, a farm, or a mercantile en

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Interest on Productive Capital

Interest on Productive Capital

On what ground does the Church or Catholic theological opinion justify interest on invested capital? on the shares of the stockholders in corporations? on the capital of the merchant and the manufacturer? In the early Middle Ages the only recognised titles to gain from the ownership of property were labour and risk. [137] Down to the beginning of the fifteenth century substantially all the incomes of all classes could be explained and justified by one or other of these two titles; for the amount

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The Claims of Productivity

The Claims of Productivity

It is sometimes asserted that the capitalist has as good a right to interest as the farmer has to the offspring of his animals. Both are the products of the owner's property. In two respects, however, the comparison is inadequate and misleading. Since the owner of a female animal contributes labour or money or both toward her care during the period of gestation, his claim to the offspring is based in part upon these grounds, and only in part upon the title of interest. In the second place, the o

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The Claims of Service

The Claims of Service

The second intrinsic ground upon which interest is defended, is the service performed by the capitalist when he permits his capital to be used in production. Without capital, labourers and consumers would be unable to command more than a fraction of their present means of livelihood. From this point of view we see that the service in question is worth all that is paid in the form of interest. Nevertheless it does not follow that the capitalist has a claim in strict justice to any payment for thi

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The Claims of Abstinence

The Claims of Abstinence

The third and last of the intrinsic justifications of interest that we shall consider is abstinence . This argument is based upon the contention that the person who saves his money, and invests it in the instruments of production undergoes a sacrifice in deferring to the future satisfactions that he might enjoy to-day. One hundred dollars now is worth as much as one hundred and five dollars a year hence. That is, when both are estimated from the viewpoint of the present. This sacrifice of presen

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Limitations of the Sacrifice Principle

Limitations of the Sacrifice Principle

Nevertheless these men would suffer no injustice if interest were now to be abolished. Up to the moment of the change, they would have been in receipt of adequate compensation; thereafter, they would be in exactly the same position as when they originally chose to save rather than consume. They would still be able to sell their capital, and convert the proceeds to their immediate uses and pleasures. In this case they would obviously have no further claim upon the community for interest. On the o

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The Value of Capital in a No-Interest Régime

The Value of Capital in a No-Interest Régime

The interest that we have in mind is pure interest, not undertaker's profit, nor insurance against risk, nor gross interest. Even if all pure interest were abolished the capitalist who loaned his money would still receive something from the borrower in addition to the repayment of the principal, while the active capitalist would get from the consumer more than the expenses of production. The former would require a premium of, say, one or two per cent. to protect him against the loss of his loan.

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Whether the Present Rate of Interest Is Necessary

Whether the Present Rate of Interest Is Necessary

It is sometimes contended that the interest rate must be kept up to the present level if the existing supply of capital is to be maintained. The underlying assumption is that some of the present savers would discontinue that function at any lower rate, with the consequence that the supply of capital would fall below the demand. Owing to this excess of demand over supply, the rate of interest would rise, or tend to rise, to the former level. Therefore, the rate existing at any given time is the s

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Whether at Least Two Per Cent. Is Necessary

Whether at Least Two Per Cent. Is Necessary

While admitting that the present rate is unnecessarily high, Professor Cassel maintains that a certain important class of savers would diminish very considerably their accumulations if the interest rate should fall much below two per cent. This class comprises those persons whose main object in saving is a fund which will some day support them from its interest. At six per cent. a person can accumulate in about twelve years a sum sufficient to provide him with an interest-income equal to the amo

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Whether Any Interest Is Necessary

Whether Any Interest Is Necessary

Perhaps the best known recent statement of the opinion that interest is inevitable, appears in Professor Irving Fisher's "The Rate of Interest." [144] While he does not assert explicitly that sufficient capital would not be provided without interest, and even admits that in certain circumstances interest might disappear, the general logic and implications of his argument are decidedly against the supposition that society could ever get along without interest. He lays such stress upon the factor

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The State Is Justified in Permitting Interest

The State Is Justified in Permitting Interest

If we assume that the suppression of interest would cause a considerable decline in saving and capital, we must conclude that the community would be worse off than under the present system. To diminish greatly the instruments of production, and consequently the supply of goods for consumption, would create far more hardship than it would relieve. While "workless" incomes would be suppressed, and personal incomes more nearly equalised, the total amount available for distribution would probably be

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Civil Authorisation not Sufficient for Individual Justification

Civil Authorisation not Sufficient for Individual Justification

This justification of the attitude of the State does not of itself demonstrate that the capitalist has a right to accept interest. The civil law tolerates many actions which are morally wrong in the individual; for example, the payment of starvation wages, the extortion of unjust prices, and the traffic in immorality. Obviously legal toleration does not per se nor always exonerate the individual offender. How, then, shall we justify the individual receiver of interest? As already pointed out mor

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How the Interest-Taker Is Justified

How the Interest-Taker Is Justified

Although the interest received by the non-sacrifice savers is not clearly justifiable on either intrinsic or social grounds, it is not utterly lacking in moral sanctions. In the first place, we have not contended that the intrinsic factors of productivity and service are certainly invalid morally. We have merely insisted that the moral worth of these titles has never been satisfactorily demonstrated. Possibly they have a greater and more definite efficacy than has yet been shown by their advocat

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Reducing the Rate of Interest

Reducing the Rate of Interest

No considerable diminution of the interest-volume can be expected through a decline in the interest rate. As far back as the middle of the eighteenth century, England and Holland were able to borrow money at three per cent. During the period that has since intervened, the rate has varied from three to six per cent. on this class of loans. Between 1870 and 1890, the general rate of interest declined about two per cent., but it has risen since the latter date about one per cent. The Great War now

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Need for a Wider Distribution of Capital

Need for a Wider Distribution of Capital

The main hope of lightening the social burden of interest lies in the possible reduction in the necessary volume of capital, and especially in a wider distribution of interest-incomes. In many parts of the industrial field there is a considerable waste of capital through unnecessary duplication. This means that a large amount of unnecessary interest is paid by the consumer in the form of unnecessarily high prices. Again, the owners of capital and receivers of interest constitute only a minority

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The Essence of Co-operative Enterprise

The Essence of Co-operative Enterprise

The most effective means of lessening the volume of interest, and bringing about a wider distribution of capital, is to be found in co-operative enterprise. Co-operation in general denotes the unified action of a group of persons for a common end. A church, a debating club, a joint stock company, exemplifies co-operation in this sense. In the strict and technical sense, it has received various definitions. Professor Taussig declares that it "consists essentially in getting rid of the managing em

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Co-operative Credit Societies

Co-operative Credit Societies

A co-operative credit society is a bank controlled by the persons who patronise it, and lending on personal rather than material security. Such banks are intended almost exclusively for the relatively helpless borrower, as, the small farmer, artisan, shopkeeper, and the small man generally. Fundamentally they are associations of neighbours who combine their resources and their credit in order to obtain loans on better terms than are accorded by the ordinary commercial banks. The capital is deriv

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Co-operative Agricultural Societies

Co-operative Agricultural Societies

The chief operations of agricultural co-operative societies are manufacturing, marketing, and purchasing. In the first named field the most important example is the co-operative dairy. The owners of cows hold the stock or shares of the concern, and in addition to dividends receive profits in proportion to the amount of milk that they supply. In Ireland and some other countries, a portion of the profits goes to the employés of the dairy as a dividend on wages. Other productive co-operatives of ag

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Co-operative Mercantile Societies

Co-operative Mercantile Societies

Co-operative stores are organised by and for consumers. In every country they follow rather closely the Rochdale system, so called from the English town in which the first store of this kind was established in 1844. The members of the co-operative society furnish the capital, and receive thereon interest at the prevailing rate, usually five per cent. The stores sell goods at about the same prices as their privately owned competitors, but return a dividend on the purchases of all those customers

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Co-operation in Production

Co-operation in Production

Co-operative production has occasionally been pronounced a failure. This judgment is too sweeping and too severe. "As a matter of fact," says a prominent London weekly, "the co-operators' success has been even more remarkable in production than in distribution. The co-operative movement runs five of the largest of our flour mills; it has, amongst others, the very largest of our boot factories; it makes cotton cloth and woollens, and all sorts of clothing; it has even a corset factory of its own;

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Advantages and Prospects of Co-operation

Advantages and Prospects of Co-operation

At this point it will perhaps be well to sum up the advantages and to estimate the prospects of the co-operative movement. In all its forms co-operation eliminates some waste of capital and energy, and therefore transfers some interest and profits from a special capitalist and undertaking class to a larger and economically weaker group of persons. For it must be borne in mind that all co-operative enterprises are conducted mainly by and for labourers or small farmers. Hence the system always mak

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The Functions and Rewards of the Business Man

The Functions and Rewards of the Business Man

Who is the business man, and what is the nature of his share of the product of industry? Let us suppose that the salaried manager of a hat factory decides to set up a business of the same kind for himself. He wishes to become an entrepreneur, an undertaker, a director of industry, in more familiar language, a business man. Let us assume that he is without money, but that he commands extraordinary financial credit. He is able to borrow half a million dollars with which to organise, equip, and ope

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The Amount of Profits

The Amount of Profits

In a preceding chapter we have seen that where the conditions of capital are the same, there exists a fairly uniform rate of interest. No such uniformity obtains in the field of profits. Businesses subject to the same risks and requiring the same kind of management yield very different amounts of return to their directors. In a sense the business man may be regarded as the residual claimant of industry. This does not mean that he takes no profits until all the other agents of production have bee

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Profits in the Joint-Stock Company

Profits in the Joint-Stock Company

Up to this point we have been considering the independent business man, the undertaker who manages his enterprise either alone or as a member of a partnership. In all such concerns it is easy to identify the business man. Who or where is the business man in a joint stock company? Where are the profits, and who gets them? Strictly speaking, there is no undertaker or business man in a corporation. His functions of ownership, responsibility, and direction are exercised by the whole body of stockhol

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The Canon of Equality

The Canon of Equality

According to the rule of arithmetical equality, all persons who contribute to the product should receive the same amount of remuneration. With the exception of Bernard Shaw, no important writer defends this rule to-day. It is unjust because it would treat unequals equally. Although men are equal as moral entities, as human persons, they are unequal in desires, capacities, and powers. An income that would fully satisfy the needs of one man would meet only 75 per cent., or 50 per cent., of the cap

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The Canon of Needs

The Canon of Needs

The second conceivable rule is that of proportional needs. It would require each person to be rewarded in accordance with his capacity to use goods reasonably. If the task of distribution were entirely independent of the process of production, this rule would be ideal; for it would treat men as equal in those respects in which they are equal; namely, as beings endowed with the dignity and the potencies of personality; and it would treat them as unequal in those respects in which they are unequal

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The Canon of Efforts and Sacrifice

The Canon of Efforts and Sacrifice

The third canon of distribution, that of efforts and sacrifices, would be ideally just if we could ignore the questions of needs and productivity. But we cannot think it just to reward equally two men who have expended the same quantity of painful exertion, but who differ in their needs and in their capacities of self development. To do so would be to treat them unequally in the matter of welfare, which is the end and reason of all distribution. Consequently the principle of efforts and sacrific

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The Canon of Productivity

The Canon of Productivity

According to this rule, men should be rewarded in proportion to their contributions to the product. It is open to the obvious objection that it ignores the moral claims of needs and efforts. The needs and use-capacities of men do, indeed, bear some relation to their productive capacities, and the man who can produce more usually needs more; but the differences between the two elements are so great that distribution based solely upon productivity would fall far short of satisfying the demands of

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The Canon of Scarcity

The Canon of Scarcity

It frequently happens that men attribute their larger rewards to larger productivity, when the true determining element is scarcity. The immediate reason why the engine driver receives more than the track repairer, the general manager more than the section foreman, the floorwalker more than the salesgirl, lies in the fact that the former kinds of labour are not so plentiful as the latter. Were general managers relatively as abundant as section foremen their remuneration would be quite as low; an

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The Canon of Human Welfare

The Canon of Human Welfare

We say "human" welfare rather than "social" welfare, in order to make clear the fact that this canon considers the well being of men not only as a social group, but also as individuals. It includes and summarises all that is ethically and socially feasible in the five canons already reviewed. It takes account of equality, inasmuch as it regards all men as persons, as subjects of rights; and of needs, inasmuch as it awards to all the necessary participants in the industrial system at least that a

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The Question of Indefinitely Large Profits

The Question of Indefinitely Large Profits

As a general rule, business men who face conditions of active competition have a right to all the profits that they can get, so long as they use fair business methods. This means not merely fair and honest conduct toward competitors, and buyers and sellers, but also just and humane treatment of labour in all the conditions of employment, especially in the matter of wages. When these conditions are fulfilled, the freedom to take indefinitely large profits is justified by the canon of human welfar

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The Question of Minimum Profits

The Question of Minimum Profits

Has the business man a strict right to a minimum living profit? In other words, have all business men a right to a sufficient volume of sales at sufficiently high prices to provide them with living profits or a decent livelihood? Such a right would imply a corresponding obligation upon the consumers, or upon society, to furnish the requisite amount of demand at the required prices. Is there such a right, and such an obligation? No industrial right is absolute. They are all conditioned by the pos

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The Question of Superfluous Business Men

The Question of Superfluous Business Men

Although we have rejected as impractical the proposal to set a legal limit to profit-incomes, we have to admit that many of the abler business men would continue to do their best work even if the profits that they could hope to obtain were considerably smaller in volume. These men hold a strategic position in industry, inasmuch as they are not subject to the same degree of constant competition as the other agents of production. [164] Were the supply of superior business capacity more plentiful,

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Surplus and Excessive Profits

Surplus and Excessive Profits

Several of the great industrial combinations of the United States have obtained profits which are commonly stigmatised as "excessive." For example, the Standard Oil Company paid, from 1882 to 1906, an average annual dividend of 24.15 per cent. on the capital stock, and had profits in addition at the rate of about 8 per cent. annually; [165] from 1904 to 1908 the American Tobacco Company averaged 19 per cent. on its actual investment; [166] and the United States Steel Corporation obtained an aver

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The Question of Monopolistic Efficiency

The Question of Monopolistic Efficiency

So much for the moral principle. What proportion of the surplus gains of monopoly are due to extortionate prices rather than to economies in production, cannot be known even approximately. According to Justice Brandeis, who is one of the most competent authorities in this field, only a very small part of these gains are derived from superior efficiency. [168] Professor E. S. Meade writes: "During a decade [1902-1912] of unparalleled industrial development, the trusts, starting with every advanta

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Discriminative Underselling

Discriminative Underselling

The first of these practices is exemplified when a monopoly sells its goods at unprofitably low rates in competitive territory, while maintaining higher prices elsewhere; and when it offers at very low prices those kinds of goods which are handled by competitors, while holding at excessively high prices the kinds of commodities over which it has exclusive control. Both forms of the practice seem to have been extensively used by most of the monopolistic concerns of America. [176] The Standard Oil

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Exclusive-Sales Contracts

Exclusive-Sales Contracts

The second unfair method employed by monopolies toward competitors is that of exclusive-selling contracts, sometimes called the "factor's agreement." It requires the dealer, merchant, or jobber to refrain from selling the goods produced by independent concerns, on penalty of being refused the goods produced by the monopoly. The merchant is compelled to choose between the less important line of wares to be had from the former, and the more important line obtainable from the latter. He will not be

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Discriminative Transportation Arrangements

Discriminative Transportation Arrangements

Concerning the third unfair method, discriminative advantages in transportation, the United States Industrial Commission declared: "It is incontestable that many of the great industrial combinations had their origin in railroad discrimination. This has been emphasised many times in the history of the Standard Oil Company, and of the great monopolies dealing in live stock, dressed beef, and other products." [181] The American Sugar Refining Company has been several times convicted of receiving il

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Natural Monopolies

Natural Monopolies

Up to this point we have been dealing with private and artificial monopolies. We turn now to consider briefly those natural and quasi-public monopolies which are either tacitly or explicitly recognised as monopolies by public authority, and whose charges are to a greater or less extent regulated by some department of the State. Such are, for example; steam railroads and municipal utilities. When the charges made for the services of these corporations are adequately regulated by public authority,

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Methods of Preventing Monopolistic Injustice

Methods of Preventing Monopolistic Injustice

How shall the injustices of monopoly be prevented in the future? So far as quasi-public monopolies are concerned, all students of the subject are now agreed that these should be permitted to exist under adequate governmental regulation as to prices and service. The reason is that in this field successful and useful competition is impossible. Public utility corporations are natural monopolies, and must be dealt with by the method of regulation until such time as they are brought under the ownersh

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Legalised Price Agreements

Legalised Price Agreements

President Van Hise advocates the regulation policy in a modified form. In substance his view is that, while no corporation should be permitted to control the greater part of any product, monopolistic price-agreements should be sanctioned and regulated by law. No amount of restrictive legislation, he maintains, can secure universal competition in the matter of prices. Experience shows that the destructive results of cut-throat competition compel the more powerful competitors to make price agreeme

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Injurious Effects of Stockwatering

Injurious Effects of Stockwatering

Stockwatering can become an instrument of unjust gains in two ways: first, through fraud inflicted upon some of the investors; second, through the imposition of exorbitant prices upon the consumers. The former cannot occur so long as the process of inflation does not go beyond earning power; for in that case all stockholders, barring dishonest manipulation of the company's receipts, will obtain the normal rate of interest on their investment. If, however, stock is sold in excess of the earning p

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The Moral Wrong

The Moral Wrong

When prices or charges are made high enough to provide returns on fictitious capital, the consumer is treated unjustly. As we have shown more than once, the consumer cannot rightfully be required to pay for the products of a monopoly at a greater rate than is necessary to provide the competitive rate of interest on capital in the average conditions of efficiency. If some concerns are able to sell at this price, and still obtain surplus gains, they have a right thereto on account of their excepti

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The "Innocent" Investor

The "Innocent" Investor

Is the State obliged to protect, or is even justified in protecting, the innocent victims of stockwatering? That is to say, should rate-making authorities fix the charges of public service corporations high enough to return some interest to the purchasers of fictitious securities? All the facts and presumptions of the case seem to demand an answer in the negative. In the first place, it is impossible to distinguish the "innocent" holders from those who were fully acquainted with the questionable

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Magnitude of Overcapitalisation

Magnitude of Overcapitalisation

Probably the majority of the great steam railroads, street railways, and gas companies that were organised during the last quarter of the nineteenth century inflated their capitalisation to a greater or less extent. Since the year 1900 the trusts have been the chief exponents and illustrations of the practice. According to President Van Hise, "the majority of the great concentrations of industry have gone through two or three stages of reorganisation, the promoters and financiers each time profi

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The Method of Direct Limitation

The Method of Direct Limitation

The law might directly limit the amount of property to be held by any individual. If the limit were placed fairly high, say, at one hundred thousand dollars, it could scarcely be regarded as an infringement on the right of property. In the case of a family numbering ten members, this would mean one million dollars. All the essential objects of private ownership could be abundantly met out of a sum of one hundred thousand dollars for each person. Moreover, a restriction of this sort need not prev

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Limitation Through Progressive Taxation

Limitation Through Progressive Taxation

Is it legitimate and feasible to reduce great fortunes indirectly, through taxation? There is certainly no objection to the method on moral or social principles. As we have seen in chapter viii, taxes are not levied exclusively for the purpose of raising revenue. Some kinds of them are designed to promote social rather than fiscal ends. Now, to prevent and diminish dangerous accumulations of wealth is a social end which is at least as important as most of the objects sought in license taxes. The

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The Proper Rate of Income and Inheritance Taxes

The Proper Rate of Income and Inheritance Taxes

While the principle of equality of sacrifices forbids a rate of tax that would reach or approximate confiscation, it gives no definite indication of the proper scale of progression, or of the maximum limit that justice would set to the rate. Under our Federal law the highest rate on incomes is now 13 per cent.; under the Wisconsin law it is 6 per cent.; under the law of Prussia it is 4 per cent.; and under the British act of 1909 it is about 8½ per cent. Evidently a much higher rate than any of

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Effectiveness of Such Taxation

Effectiveness of Such Taxation

The essential justice of the measures is not the only consideration affecting high income and inheritance taxes. There remain the questions of expediency and feasibility. Under the first head the objection is sometimes raised that taxes which appropriated a considerable portion of the larger incomes and inheritances would diminish very materially the social supply of capital. Immense sums of money would go into the public treasury which otherwise would have been invested in commerce and industry

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The Question of Distributing Some

The Question of Distributing Some

The authority of revealed religion returns to the first of these questions a clear and emphatic answer in the affirmative. The Old and the New Testaments abound in declarations that possessors are under very strict obligation to give of their surplus to the indigent. Perhaps the most striking expression of this teaching is that found in the Gospel according to St. Matthew, ch. 25, verses 32-46, where eternal happiness is awarded to those who have fed the hungry, given drink to the thirsty, recei

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The Question of Distributing All

The Question of Distributing All

Is a man obliged to distribute all his superfluous wealth? As regards the support of human life, Catholic moral theologians distinguish three classes of goods: first, the necessaries of life, those utilities which are essential to a healthy and humane existence for a man and his family, regardless of the social position that he may occupy, or the standard of life to which he may have been accustomed; second, the conventional necessities and comforts, which correspond to the social plane upon whi

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Some Objections

Some Objections

The desirability of such a thoroughgoing distribution of superfluous incomes appears to be refuted by the fact that a considerable part of the capital and organising ability that function in industry is dependent upon the possession of superfluous goods by the richer classes. That surplus of the larger incomes which is not consumed or given away by its receivers at present, constitutes no small portion of the whole supply of savings annually converted into capital. Were all of it to be withdrawn

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A False Conception of Welfare and Superfluous Goods

A False Conception of Welfare and Superfluous Goods

If all the present owners of superfluous goods were to carry out their own conception of the obligation, the amount distributed would be only a fraction of the real superabundance. Let us recall the definition of absolute superfluity as, that portion of individual or family income which is not required for the reasonable maintenance of life and social position. It allows, of course, a reasonable provision for the future. But the great majority of possessors, as well as perhaps the majority of ot

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The True Conception of Welfare

The True Conception of Welfare

This working creed of materialism is condemned by right reason, as well as by Christianity. The teaching of Christ on the worth of material goods is expressed substantially in the following texts: "Woe to you rich." "Blessed are you poor." "Lay not up for yourselves treasures on earth." "For a man's life consisteth not in the abundance of things that he possesseth." "Be not solicitous as to what you shall eat, or what you shall drink, or what you shall put on." "Seek ye first the kingdom of God

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I. The Prevailing-Rate Theory

I. The Prevailing-Rate Theory

This is not so much a systematic doctrine as a rule of expediency devised to meet concrete situations in the absence of any better guiding principle. Both its basis and its nature are well exemplified in the following extract from the "Report of the Board of Arbitration in the Matter of the Controversy Between the Eastern Railroads and the Brotherhood of Locomotive Engineers:" [213] "Possibly there should be some theoretical relation for a given branch of industry between the amount of the incom

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II. Exchange-Equivalence Theories

II. Exchange-Equivalence Theories

According to these theories, the determining factor of wage justice is to be found in the wage contract. The basic idea is the idea of equality, inasmuch as equality is the fundamental element in the concept of justice. The principle of justice requires that equality should be maintained between what is owed to a person and what is returned to him, between the kinds of treatment accorded to different persons in the same circumstances. Similarly it requires that equality should obtain between the

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III. Productivity Theories

III. Productivity Theories

The productivity concept of wage justice appears in a great variety of forms. The first of them that we shall consider is advocated mainly by the Socialists, and is usually referred to as the theory of the "right to the whole product of labour." [224] We have seen that Adam Smith's belief in the normality and beneficence of free competition would have logically led him to the conclusion that competitive wages were just; and we know that this doctrine is implicit in his writings. On the other han

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The Principle of Needs

The Principle of Needs

Many of the early French Socialists of the Utopian school advanced this formula of distribution: "From each according to his powers; to each according to his needs." It was also put forward by the German Socialists in the Gotha Program in 1875. While they have not given to this standard formal recognition in their more recent platforms, Socialists generally regard it as the ideal rule for the distant future. [242] The difficulties confronting it are so great and so obvious that they would defer

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Three Fundamental Principles

Three Fundamental Principles

The validity of needs as a partial rule of wage justice rests ultimately upon three fundamental principles regarding man's position in the universe. The first is that God created the earth for the sustenance of all His children; therefore, that all persons are equal in their inherent claims upon the bounty of nature. As it is impossible to demonstrate that any class of persons is less important than another in the eyes of God, it is logically impossible for any believer in Divine Providence to r

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The Right to a Decent Livelihood

The Right to a Decent Livelihood

Every man who is willing to work has, therefore, an inborn right to sustenance from the earth on reasonable terms or conditions. This cannot mean that all persons have a right to equal amounts of sustenance or income; for we have seen on a preceding page that men's needs, the primary title to property, are not equal, and that other canons and factors of distribution have to be allowed some weight in determining the division of goods and opportunities. Nevertheless, there is a certain minimum of

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The Claim to a Decent Livelihood from a Present Occupation

The Claim to a Decent Livelihood from a Present Occupation

The claim of a worker to a decent livelihood from the goods of the earth does not always imply a strict right to a livelihood from one's present occupation. To demand this would in some circumstances be to demand a livelihood not on reasonable but on unreasonable terms; for the persons in control of the sources could not reasonably be required to provide a decent livelihood. Their failure to do so would not constitute an unreasonable hindrance to the worker's access to the earth in such circumst

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The Labourer's Right to a Living Wage

The Labourer's Right to a Living Wage

On the other hand, the wage earner's claim to a decent livelihood is valid, generally speaking, in his present occupation. In other words, his right to a decent livelihood in the abstract means in the concrete a right to a living wage. To present the matter in its simplest terms, let us consider first the adult male labourer of average physical and mental ability who is charged with the support of no one but himself, and let us assume that the industrial resources are adequate to such a wage for

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When the Employer Is Unable to Pay a Living Wage

When the Employer Is Unable to Pay a Living Wage

Evidently the employer who cannot pay a living wage is not obliged to do so, since moral duties suppose a corresponding physical capacity. In such circumstances the labourer's right to a living wage becomes suspended and hypothetical, just as the claim of a creditor when the debtor becomes insolvent. Let us see, however, precisely what meaning should reasonably be given to the phrase, "inability to pay a living wage." An employer is not obliged to pay a full living wage to all his employés so lo

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An Objection and Some Difficulties

An Objection and Some Difficulties

Against the foregoing argument it may be objected that the employer does his full duty when he pays the labourer the full value of the product or service. Labour is a commodity of which wages are the price; and the price is just if it is the fair equivalent of the labour. Like any other onerous contract, the sale of labour is governed by the requirements of commutative justice; and these are satisfied when labour is sold for its moral equivalent. What the employer is interested in and pays for,

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The Family Living Wage

The Family Living Wage

Up to the present we have been considering the right of the labourer to a wage adequate to a decent livelihood for himself as an individual. In the case of an adult male, however, this is not sufficient for normal life, nor for the reasonable development of personality. The great majority of men cannot live well balanced lives, cannot attain a reasonable degree of self development outside the married state. Therefore, family life is among the essential needs of a normal and reasonable existence.

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Other Arguments in Favour of a Living Wage

Other Arguments in Favour of a Living Wage

Thus far, the argument has been based upon individual natural rights. If we give up the doctrine of natural rights, and assume that all the rights of the individual come to him from the State, we must admit that the State has the power to withhold and withdraw all rights from any and all persons. Its grant of rights will be determined solely by considerations of social utility. In the concrete this means that some citizens may be regarded as essentially inferior to other citizens, that some may

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The Money Measure of a Living Wage

The Money Measure of a Living Wage

For self-supporting women a living wage is not less than eight dollars per week in any city of the United States, and in some of our larger cities it is from one to two dollars above this figure. The state minimum wage commissions that have acted in the matter, have fixed the rates not lower than eight nor higher than ten dollars per week. [247] These determinations are in substantial agreement with a large number of other estimates, both official and unofficial. When the present writer was maki

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Comparative Claims of Different Labour Groups

Comparative Claims of Different Labour Groups

In the division of a common wage fund, no section of the workers is entitled to anything in excess of living wages until all the other sections have received that amount of remuneration. The need of a decent livelihood constitutes a more urgent claim than any other that can be brought forward. Neither efforts, nor sacrifices, nor productivity, nor scarcity can justify the payment of more than living wages to any group, so long as any other group in the industry remains below that level; for the

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Wages Versus Profits

Wages Versus Profits

Let us suppose that the wage fund is properly apportioned among the different classes of labourers, according to the specified canons of distribution. May not one or all of the labour groups demand an increase in wages on the ground that the employer is retaining for himself an undue share of the product? As we have seen in the last chapter, the right of the labourers to living wages is superior to the right of the employer or business man to anything in excess of that amount of profits which wi

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Wages Versus Interest

Wages Versus Interest

Turning now to the claims of the labourers as against the capitalists, or interest receivers, we perceive that the right to any interest at all is morally inferior to the right of all the workers to the "equitable minimum." As heretofore pointed out more than once, the former right is only presumptive and hypothetical, and interest is ordinarily utilised to meet less important needs than those supplied by wages. Through his labour power the interest receiver can supply all those fundamental need

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Wages Versus Prices

Wages Versus Prices

The right of the labourers to the "equitable minimum" implies obviously the right to impose adequate prices upon the consumers of the labourer's products. This is the ultimate source of the rewards of all the agents of production. Suppose that the labourers are already receiving the "equitable minimum." Are they justified in seeking any more at the cost of the consumer? If all the consumers were also labourers the answer would be simple, at least in principle: rises in wages and prices ought to

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Concluding Remarks

Concluding Remarks

All the principles and conclusions defended in this chapter have been stated with reference to the present distributive system, with its free competition and its lack of legal regulation. Were all incomes and rewards fixed by some supreme authority, the same canons of justice would be applicable, and the application would have to be made in substantially the same way, if the authority were desirous of establishing the greatest possible measure of distributive justice. The main exception to this

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The Minimum Wage in Operation

The Minimum Wage in Operation

Happily the advocate of this measure is no longer required to meet the objection that it is novel and utterly uncertain. For more than twenty years it has been in operation in Australasia. It was implicit in the compulsory arbitration act of New Zealand, passed in 1894; for the wages which the arbitration boards enforce are necessarily the lowest that the affected employers are permitted to pay; besides, the district conciliation boards are empowered by the law to fix minimum wages on complaint

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The Question of Constitutionality

The Question of Constitutionality

The principal reason why the minimum wage laws on the statute books of the other seven states have not been carried into effect, is the uncertainty of the validity of minimum wage legislation in our constitutional system. In November, 1914, a district judge granted a writ of injunction, restraining the Minimum Wage Commission of Minnesota from enforcing their wage determinations, on the ground that the law attempted to delegate legislative power, and that its provisions violated that section of

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The Ethical and Political Aspects

The Ethical and Political Aspects

Whether it be considered from the viewpoint of ethics, politics, or economics, the principle of the legal minimum wage is impregnable. The State has not only the moral right but the moral duty to enact legislation of this sort, whenever any important group of labourers are receiving less than living wages. One of the elementary functions and obligations of the State is to protect citizens in the enjoyment of their natural rights; and the claim to a living wage is, as we have seen, one of the nat

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The Economic Aspect

The Economic Aspect

Now the question of expediency is mainly economic. A great deal of nonsense has been written and spoken about the alleged conflict between the legal minimum wage and "economic law." Economists have used no such language, indeed; for they know that economic laws are merely the expected uniformities of social action in given circumstances. The economists know that economic laws are no more opposed to a legal minimum wage than to a legal eight hour day, or legal regulations of safety and sanitation

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Opinions of Economists

Opinions of Economists

When the present writer made an argument for the legal minimum wage something more than ten years ago, he was able to find only one American economist who had touched the subject, and the verdict of that one was unfavourable. [261] A little over a year ago, Dr. John O'Grady sent an inquiry to one hundred and sixty economists of the United States to ascertain their opinions on the same subject. Of the ninety-four who replied seventy were in favour of a minimum wage law for women and minors, thirt

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Other Legislative Proposals

Other Legislative Proposals

The ideal standard of a minimum wage law is a scale of remuneration adequate not only to the present needs of individuals and families, but to savings for the contingencies of the future. Until such time as the compensation of all labourers has been brought up to this level, the State should make provision for cheap housing, and for insurance against accidents, sickness, invalidity, old age, and unemployment. The theory underlying such measures is that they would merely supplement insufficient r

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Labour Unions

Labour Unions

The general benefits and achievements of labour organisations in the United States down to the beginning of the present century, cannot be more succinctly nor more authoritatively stated than in the words of the United States Industrial Commission: "An overwhelming preponderance of testimony before the Industrial Commission indicates that the organisation of labour has resulted in a marked improvement in the economic condition of the workers." [268] Some of the most conspicuous and unquestionabl

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Organisation Versus Legislation

Organisation Versus Legislation

In the opinion of some labour leaders, the underpaid workers should place their entire reliance upon organisation. The arguments for this position are mainly based upon three contentions: it is better that men should do things for themselves than to call in the intervention of the State; if the workers secure living wages by law they will be less likely to organise, or to remain efficiently organised; and if the State fixes a minimum wage it may some day decide to fix a maximum. Within certain l

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Participation in Capital Ownership

Participation in Capital Ownership

While those workers whose remuneration is below the level of decent maintenance are not ordinarily in a position to become owners of any kind of capital, many of them, especially among the unmarried men, can accumulate savings by making large sacrifices. As a matter of fact, hundreds of thousands of the underpaid have become interest receivers through the medium of savings banks, real estate possessions, and insurance policies. Every effort in this direction is distinctly worth while, and deserv

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The Landowner and Rent

The Landowner and Rent

We began this inquiry with the landowner and his share of the product, i.e., rent. We found that private ownership of land has prevailed throughout the world with practical universality ever since men began to till the soil in settled communities. The arguments of Henry George against the justice of the institution are invalid because they do not prove that labour is the only title of property, nor that men's equal rights to the earth are incompatible with private landownership, nor that the so-

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The Capitalist and Interest

The Capitalist and Interest

The Socialist contention that the labourer has a right to the entire product of industry, and therefore that the capitalist has no right to interest, is invalid unless the former alleged right can be effectuated in a reasonable scheme of distribution; and we know that the contemplated Socialist scheme is impracticable. Nevertheless, the refutation of the Socialist position does not automatically prove that the capitalist has a right to take interest. Of the titles ordinarily alleged in support o

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The Business Man and Profits

The Business Man and Profits

Just remuneration for the active agents of production, whether they be directors of industry or employés, depends fundamentally upon five canons of distribution; namely, needs, efforts and sacrifices, productivity, scarcity, and human welfare. In the light of these principles it is evident that business men who use fair methods in competitive conditions, have a right to all the profits that they can obtain. On the other hand, no business man has a strict right to a minimum living profit, since t

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The Labourer and Wages

The Labourer and Wages

None of the theories of fair wages that have been examined under the heads of "the prevailing rate," "exchange-equivalence," or "productivity" is in full harmony with the principles of justice. The minimum of wage justice can, however, be described with sufficient definiteness and certainty. The adult male labourer has a right to a wage sufficient to provide himself and family with a decent livelihood, and the adult female has a right to remuneration that will enable her to live decently as a se

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Concluding Observations

Concluding Observations

No doubt many of those who have taken up this volume with the expectation of finding therein a satisfactory formula of distributive justice, and who have patiently followed the discussion to the end, are disappointed and dissatisfied at the final conclusions. Both the particular applications of the rules of justice and the proposals for reform, must have seemed complex and indefinite. They are not nearly so simple and definite as the principles of Socialism or the Single Tax. And yet, there is n

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