The Society of To-morrow: A Forecast of Its Political and Economic Organisation

Gustave de Molinari
Molinari, Gustave de
(1819-1912)
BIO
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Editor/Trans.
P. H. Lee Warner, trans.
First Pub. Date
1899
Publisher/Edition
New York: G. P. Putnam's Sons
Pub. Date
1904
Comments
Appendix by Edward Atkinson, Introduction by Hodgson Pratt, Prefatory letter by Frédéric Passy.

Introduction

I.1

It is fortunate for the modern world that there is a considerable number of persons who have time, inclination, and ability to inquire how human communities may best secure a prosperous existence and ultimate salvation from disasters or even annihilation. It is fortunate that the necessity is so widely felt of making such inquiries, and that there is so great an accumulation of facts, and of arguments based thereon, as to enable thinkers to arrive at a complete knowledge of the dangers which menace society, and of the best way of dealing with them. We greatly need light from men who are capable of giving answers to such questions as the following: "What should be the definite aim of all human societies? Whither tend the communities and nations now in existence? What are their special dangers, and how can they best be averted? What should be the true ideals of every people, so that they may be kept clearly in view and realised?"

I.2

Such wise and thoughtful books as that of M. de Molinari, the well-known and most distinguished economist, should be carefully studied by all who care for the welfare of their fellow-men. He stimulates thought and consideration regarding these great problems, and produces masses of fact and argument, which enable his readers to think solidly and effectively.

I.3

Few can read his book without perceiving clearly how great are the problems which statesmen, philosophers, and philanthropists have to face. It is madness and treachery to trust to things "finding their level." Peoples, as well as individuals, must know to what point in the chart of humanity they should steer—where are the rocks and shoals, what is the best and shortest route. At all events in these days, more than ever before, there are moral, political, and social geographers, eager to point the true course and to awaken their fellows to the overwhelming importance of the inquiry.

I.4

There are, as we know, two great schools of social reformers, guides and teachers—the School of Individualists and the School of Organisers, if we may use the term: (1) Those who consider it sufficient to provide a fair field for liberty and free competition to all engaged in the "struggle for life"; and (2) those who say that there is no such thing as "equality of opportunity" for the millions, and that, without most perfect organisation in the interests of those millions, the poor only grow poorer and the rich richer—misery for the many, luxury for the few.

I.5

Here is the great question which should occupy the minds of all who desire that the human world should not be a ghastly failure. Here we have before us the question presented under the title of "The Future of Society," to quote the title of M. de Molinari's book. It may be termed the question of realising that long-desired end, the greatest happiness of the greatest number. To bring this great problem vividly before the reader, we cannot do better than make a quotation from an author who puts the whole case somewhat as follows: "Half a century ago, I conceived the possibility of coming to an understanding between the two Schools, and I addressed them as follows: 'What is the Ideal alike common to Socialists and Economists? It is surely this: the realisation of a state of society in which the production of all good and necessary things, advantages or welfare necessary to maintain and embellish life, shall be the most abundant possible, and wherein the distribution of these things amongst those who produce them shall be the most equitable possible—in a word, Abundance and Justice. But we proceed to this end by different routes—you by an obscure path which you call the organisation of labour; we, the economists, by the broad and well-known highway of Liberty. Why do you refuse the latter? "Because," say you, "it is injurious to the workers; because hitherto it has produced nothing but the oppression of the weak by the strong; because it has led to disastrous crises wherein millions have been ruined or have perished; because liberty without control is Anarchy." I reply, however, that you have to prove that the evils you attribute to liberty, or to what I call "free competition," have not their origin in monopoly, in undue restrictions.' "

I.6

What M. de Molinari desires to do is to set forth, with abundance of illustration, the fact that what human society needs is no such all-embracing organisation of industry and commerce as socialists desire, but a régime of absolute liberty, a fair field and no favour; and that this has hitherto been impeded by the despotism and interference of the State, the existence of powerful military and official classes whose personal interests are bound up with militarism, conquest, and war. What he writes under this last head is of the utmost value, and will strengthen the hands of those engaged in the crusade of Peace. His demonstration of the certain ruin impending over the most civilised states, in consequence of vast and growing military expenditure and the policy of annexation, is convincing, and deserves universal attention. It is to this state of things that he, of course, attributes the serious financial and economic condition of European nations; and he sees that it is indispensable to put an end to the rule of the privileged classes interested in maintaining the present policy of war and aggression. Then, and then only, will be set free the resources and the energies of the industrial populations, who, being released from the present burdens, will all have a fair share of the results of their labour. In effect, he says, "carry out this great change, and there will be no need for such fancied remedies as are promised by Socialism."

I.7

It is, indeed, of vital importance that the people of every country in Europe should seek a remedy for the enormous evils from which they suffer,—one which shall be complete and far-reaching. A great service, therefore, is rendered, as a first step in the reform needed, when an authoritative and trusted teacher of economic science denounces the rule of the militarist and governing classes. He does so because he knows it is hopeless to attempt the abolition of social misery and anarchy until the peoples are relieved from their present intolerable burdens.

I.8

Hear what this careful master of statistics says: "Two-thirds of the European budgets consist of charges for war and debts. The premium paid for ensuring 'security' exceeds the risk." "The total expenditure, direct and indirect, absorbs half the wealth produced by the working classes." The governments must therefore be deprived of their unlimited power over the life and fortune of the citizens, and that power will continue so long as the existing state of war or armed peace continues. The States of Europe have accumulated more than 130 milliards of debt, or 5,900,000,000 in pounds sterling. Yet, while these charges continually rise, industrial productivity tends to fall off.

I.9

The object of the governing class has been to secure profit from fresh conquests, in order that the advantages may be divided between civil and military officers; while the loss involved has fallen in an increasing degree upon industry, and the flower of the race has been absorbed for purposes of war. "Hence," says our author, "the most urgent reform of the present time is to put an end to this latent state of conflict," and he asserts that the remedy is to be found in a "collective insurance " against war. There should be a joint insurance to provide for the collective protection of States, instead of the present "isolated insurance." He is further of opinion that the ruinous effects of war upon neutral and non-belligerent States gives them a right to intervene, whenever other States propose to engage in conflict. In fact, he proposes the substitution of "collective justice" for the present claim of each Government to be a judge of its own rights. M. de Molinari, therefore, suggests that Europe should constitute an association strong enough to oblige any single nation to submit its disputes to an arbitral court; and that this should be supplemented by troops sufficient to enforce the verdict of the tribunal. By such provisions individual governments would no longer claim that they have the duty of providing insurance against war, and all excuse for unlimited disposal of the lives and property of their peoples would cease. With the great political change thus inaugurated would come an immense increase in individual liberty, "individual sovereignty" being the required basis of the political institutions of the future; so that the resources of a nation would no longer be at the mercy of a class, and the individual would become his own master.

I.10

The "individualist ideal" is that under which all the citizens would be associated, not only for common security, but for all public ends connected with municipal life. Then State taxation would be greatly reduced, local services being provided for by rates. This would lead to a great extension of productive enterprise, at present hampered and impeded, and there would be a great impetus given to individual activity through increased freedom. M. de Molinari has a firm faith in the great results of unlimited "competition" which would tend to reduce prices to the level of the cost of production; and he says that, with growing enterprise, new markets will be found, and so a demand for skilled labour increase; while the growth of machinery will diminish existing inequalities in remuneration. The price of the product being diminished by machinery, new markets will grow up and, with them, more demand for skilled labour. This means an increase of consumption and increased means of providing for it.

I.11

We must leave students of economics to consider M. de Molinari's statement of the comparative advantages of a condition of things where competition shall have freer play and where the laws shall interfere as little as possible with the conditions under which industry is at present conducted (at least in some countries). He compares the results which will thus be obtained with the results of socialistic organisation—of course to the disadvantage of the latter.

I.12

His hope for the future is based not on any fundamental change in the organisation of industry, but on the greater control exercised over governments by the populations—in a word, on the growth of individual liberty.

I.13

Under the action of great "natural laws" which regulate the growth of society, civilisation has grown up, and M. de Molinari asks whether the progress accomplished has not diminished the sum of human suffering; but this question he leaves undecided. "Increased happiness for man may," he says, "be the result of progress but not the object. That object is the increase of the power of the human race, in view of a destiny which is unknown to us."

I.14

These are the final words of his book; and some philosophers may be content with that conclusion. It will not, however, satisfy the daily growing number of those who are in consternation at the existing condition of society, and who find their own lives made unhappy by the present order of things; one in which millions of men and women in the most "civilised" communities, lead an existence which makes them wish they had never been born, which makes the lot of the beast of the field seem enviable—lives, in which all that most distinguishes man from the animal is almost unattainable—lives from which all noble hopes and purposes, all glorious and divine enjoyments are utterly shut out.

I.15

This is truly the age of great cities; but what an amount of chaotic misery that implies! In those great cities of London, or Glasgow, or Liverpool, or Birmingham, how many thousands of parents rise every morning asking themselves how their sons and daughters are to live—it is a mere lottery whether it shall be success or failure. Their education is, in a vast number of cases, ill adapted to their respective needs; and their avocations will therefore be decided by mere chance. A lad will become a carpenter, a blacksmith, a shop assistant or a clerk, a soldier or a sailor by haphazard. "The square pegs are put into round holes, and the round into square." And in a vast number of cases nothing but failure is the result. To many it must seem to be a better lot for a man to be born in a Hindoo or Burmese village than in a London street. At all events, in the former a child's future trade or profession is settled beforehand by his caste or class, and he is prepared for it designedly from his first years.

I.16

In view of the justifiable dismay which many of us feel, I venture to think that M. de Molinari should not have dismissed the proposals of the Socialist schools with such scant reference as being simply the result of "ignorance," and the "negation of the natural laws which govern mankind." It seems to me that any attempt to frame a "Future of Society " should at least include an inquiry into the economic theory called "Collectivism."

I.17

What indeed is the Socialist demand, as the fundamental condition of a human society which professes to be governed by a desire for the moral welfare of all its members—for which right economic conditions are indispensable? The great revolution demanded is that of the substitution of Collectivism for Individualism. If the latter has quite failed to provide for the well-being of the great majority of the population in civilised countries, the demand for the former should be heard.

I.18

The aim of every rightly constituted human society is the greatest possible happiness of the greatest possible number. But under the existing haphazard and non-organised conditions, there is none of that equality of opportunity which is essential if individual liberty is to suffice for the attainment of the end in view. At present all is confusion and waste of means, because there is no guarantee that each man shall do the work for which he is best fitted, and be properly trained for it. Unregulated competition is at present the only resource for the members of a community ignorant of the conditions which are essential to a right use of capital and labour. The result is that while some members of the community are idle, others are the slaves of excessive toil, and a third group are doing work for which they are unfitted. This is well pointed out by Mr. J. A. Hobson in his admirable work on "The Social Problem." He reminds us of the results of this want of intelligent adaptation of means to the end in England. Three-fourths of our town population live under unhealthy and almost intolerable conditions, and, as he says, no increase of the total amount of material wealth can compensate for such deterioration of work and life as is going on among millions of men and women. In view of such facts is it not justifiable to assert that there is no hope without organisation on the part of the community? Adoption of methods capable of providing a decent existence, on the doctrine of "All for each, and each for all," is an imperative requirement.

I.19

This is what the Socialist asserts, and he has a right to say to the orthodox economist, What plan have you for remedying the tremendous evils of modern society, beyond the mere affirmation of certain axioms? There is no sufficient remedy in individual liberty. A large proportion of the community are handicapped by general chaos and confusion, and are ignorant of everything needed to give certainty of remunerative labour—it is a blind struggle of rival workers and distributors.

I.20

Yet this is the competition which is to rescue vast populations from their present misery and hopelessness!

I.21

The error of orthodox economists, it seems to me, has been to consider only how the sum total of national wealth may be increased, while disregarding the question of its distribution. Yet it should be possible to provide, in a large degree, for every member of the community to do that particular work which best enables him to live up to a decent standard of existence. When we find a state of things exist in which needlewomen earn only eighteen pence a day for more than twelve hours' labour, the whole community suffers as well as the worker, both morally and physically. It is not true civilisation; it is a barbarism which disgraces every member of the community, especially those who have the knowledge and opportunity for bringing about a change. Those who grow rich and powerful out of such an industrial régime participate in robbery, and cannot justify their position in the world.

I.22

The realisation of the ideals of the Socialist reformers means, of course, an entire transformation of existing social conditions, especially in a country such as England. Here the monopoly of the land by hereditary owners involves loss to the whole community. These owners can waste it on private enjoyment, and claim an exclusive right to the enormous national wealth lying under the surface, for which their predecessors paid not one farthing. There can be no right conditions of existence so long as such a monopoly exists, and there can be no means of betterment for those who produce the national wealth by their daily labour, so long as this authorised injustice prevails. In the meantime the population becomes wholly urban, unable to live on the land.


I.23

It should be noted, however, that there has appeared during the last half-century a voluntary organisation known by the name of "Co-operation." It has accomplished remarkable results in diminishing the misery of a great number of hand-workers, and in laying the foundation of a new system of production, distribution, and exchange, while giving new hope of social and economic amelioration. This remarkable work has been carried out by the more enlightened and self-reliant members of the proletariat, aided, here and there, by a few servants of humanity such as Robert Owen, Leclaire, Godin, L. Vansittart Neale, Charles Robert, and Schultze Delitsch.

I.24

In Great Britain there are two million members of these societies, and their organisation is on a vast scale, carried out with great administrative ability, and the best social and moral aims are not overlooked. It appears to me that no student of "the Future of Society" should neglect to appraise the true value and possibilities of such an organisation. The great purpose to be kept in view is the realisation, in every community, of the highest kind of existence possible for all its members; and that object has never been lost sight of by the Central Union of Co-operators. It does credit to the representatives of Labour in several European countries, that this movement has made great progress. It is capable of much further development, alike in spheres of production and trade. It is the best school of training for those who will, in the future, be charged with the duty of conducting municipal life on an increasing scale. It will also train men for the realisation of the changes which the Socialists entertain.

I.25

Indeed, Co-operation is in some degree an adoption of socialistic principles, in so far as individual association can succeed, and in the absence of the direct agency of the State. Co-operation, as in the case of Socialism, has in view a new social order. Its greatest object is to accomplish the equitable distribution of the proceeds of labour amongst all who have contributed to its result. In co-operation the labourers provide the capital or hire it, instead of being themselves hired by capital, as its veteran prophet, G. J. Holyoake, has declared in hundreds of speeches. The material results of a half-century of these societies can be shown in figures, though not the moral results, which are of no small value. Looking at the last Annual Report of the Central Co-operative Board, we find that the number of members (in 1671 societies) is considerably upwards of two millions, and that they hold shares of the value of nearly ninety-six millions sterling; the sales for the year were eighty-five and a half millions, yielding profits of nine and a half millions. These represented what is called the "Distributive" part of the organisation; while the Productive and Farming Societies embraced 34,875 members, with a capital of £881,568, the sales amounting to upwards of three millions. The productive outturn of individual societies and of the wholesale societies of England and Scotland combined is estimated at seven millions and a half.

I.26

"The co-operative conception of life," says the organ of the movement, the Co-operative News, "embraces the absence of all preventable waste through needless competition in social and political strife; when realised wholly, there would be no idle shopkeepers, no strikes and lockouts. Co-operation, when applied to national life, would not stop short at distribution, production and carriage, but would apply itself to planning or replanning cities, to education, to houses. The co-operative conception of life does not admit of any industrial hands remaining idle or of any capable minds lying fallow." It was because the Rochdale pioneers set out with the avowed aim of "making the world better than they found it," that their successors, labouring men and artisans, have done a work unsurpassed of its kind because spontaneous and without any reliance upon outside help or Government interference. Necessarily there are limits to such individual organisation; and this is the justification of the desire to revolutionise the whole industry of a nation as proposed by the Socialists.


I.27

The above reference to the moral elements at work in co-operation and to their frank recognition by its foremost leaders brings us to the greatest question of all: How far will any proposed change of economic conditions secure the truest welfare of men?—in other words, How far can man's progress in all that is highest and best be secured? However ingeniously devised new schemes of social and industrial improvement may be, whatever provision may be made for individual liberty, the rule of the Moral Law is the one condition of all true and sound progress. The Economic "laws," referred to by M. de Molinari, however fully recognised and followed by action, will not secure society from catastrophes, even when an enlightened self-interest may lead to the abolition of war. It will not wholly diminish strife and violence, either within or without, unless the moral law is generally observed. The "old Adam" will frequently reappear without it; and it is a profound error to ignore the fact.

I.28

The hope that the realisation of Socialism may rescue human communities from the tremendous evils which now oppress them is based on the fact that its aim is profoundly ethical, if not religious. It recognises the essential need of justice in all the departments of human life. It is because right conditions of life are necessary for the formation of human character that they are so important; and without character there is no guarantee of right conduct; and conduct is the basis of all well-being in society. The aim of socialism may therefore fairly be said to be the moral welfare of society. And under what other system of society, under what so-called laws is it proposed to secure right economic conditions? What other and better methods are suggested by those who profess to be economists?

I.29

Mr. Frederic Harrison has said that the real cause of all industrial evils is to be found in the want of a higher moral spirit in those engaged in industry. "The kingdom of God," it has been said, "is on the earth, and is concerned with all departments of human life." Altruism, not egoism, is the highest good of the individual, and its realisation is to be found in making the good of all the end of our individual action. "All for each, and each for all"—as the Co-operators have always said. No nobler watchword could have been adopted.

I.30

The highest self-interest, whether for individuals or communities, is fidelity to moral principle. To realise one's own highest good we must live for the good of others; and Christianity makes all things subservient to Brotherhood. "The toughest economic, social, and political questions must be solved by ethics—which teach that solidarity rooted in fraternity must be the basis of social relations."*1

I.31

M. de Molinari and other economists treat their science as a study of men's actions in the business of life, and infer that men will at all times act in the same way and from the same motives. But is this true? Are there not elements at work in modern communities which were absent at previous periods? There exists now a widespread feeling of moral solidarity and fraternity which was once unknown, and which exercises an increasing influence on laws, on conduct, and on institutions. It is, therefore, a profound error to separate the study of economics from that of ethical, social, political, and religious science.

I.32

There are immense possibilities within reach of that future "new moral world" which will be based on the universal recognition of Fraternity. Every man that hath that hope in him will become the nobler, and will work the harder for its realisation. There will be an ever-increasing approach to a perfect state of society, "when man shall be liker man through all the cycles of the Golden Year."

HODGSON PRATT.

Le Pecq (Seine et Oise), France.


Notes for this chapter


1.
"The Foundations of Society," by John Wilson Harper.

Preface

End of Notes


Prefatory Letter
TO MR. FISHER UNWIN

L.1

You are about to publish an English version of my friend M. de Molinari's book, "La Société Future," and you do me the honour to request a few lines of introduction from my pen. To a write adequately of such a book would require time that my age and obligations do not, unfortunately, permit me to give. Since, however, the opportunity does occur, I should be most unwilling to let the book appear without at least testifying my esteem and admiration for the character and talent of the man who is to-day, unless I am mistaken, the doyen of our economists—I should say of our liberal economists—of the men with whom, though, alas! few in number, I have been happy to stand side by side during more than half a century.

L.2

Their principles were proclaimed and defended in England through the mouths of Adam Smith, Fox, Cobden, Gladstone, and Bright. In France they were championed by Quesnay, Turgot, Say, Michel Chevalier, Laboulaye, and Bastiat. And my belief grows yearly stronger that, but for these principles, the societies of the present would be without wealth, peace, material greatness, or moral dignity.

L.3

Monsieur de Molinari has maintained these principles from his youth, from the day when—at the epoch of our Revolution of 1848—he first upheld them at the Soirées de la Rue St. Lazare. His "Conversations Familières sur la Commerce des Grains" gave them a new and attractive shape. He has defended his convictions both in his regular courses of lectures and also in those other lectures by means of which he has spread his principles even within the borders of Russia. Month by month the important Review of which he is editor-in-chief repeats them in a fresh guise; and annually, so to speak, a further book, as distinguished for clearness of grasp as for admirable literary style, goes out to testify to the constancy of his convictions no less than to the unimpaired vigour of his mental outlook and the virile serenity of his green old age.

L.4

The book which you are about to introduce to the English public is, in some sort, a summing-up of his long studies of the past, his clear-sighted observations upon the present, and his shrewd predictions for the future. You, Sir, do well when you endeavour to obtain for it that additional publicity which it deserves; and I count myself fortunate that you have permitted me to contribute, in however small a degree, to so admirable an end.

Frédéric Passy.

Preface
THE LAWS OF NATURE

P.1

"If," wrote Condorcet, "there is a science which forecasts, guides, and promotes the advance of the human race, it must be based on the records of past progress."*2 But we must go back still further. We must return to the first causes of that progress which the human race has realised since its appearance upon earth, and of the progress that it is still destined to realise. We must have an understanding of man, the laws which determine and govern his activities, the nature and circumstances of the environment in which he has been placed for the fulfilment of a purpose still hidden from his eyes.

I. The Motive of Human Activity.

P.2

Man is an organism composed of vital, physical, intellectual, and moral forces. This matter and these forces, which form the individual and the species, can only be preserved and developed by the assimilation, or, to use the economic term, the consumption of materials and forces of like nature. Failing this consumption, their vitality wastes and is finally extinguished. But waste and extinction of vitality cause pain and suffering, and it is the stimulus of pain and suffering which impels man to acquire the materials necessary for the development and preservation of his life. All these materials are present in his environment, air, &c.; and nature gives him a small number free of cost. But with the exception of this minority they must be discovered, acquired, and adapted to the purposes of consumption. Man must be a producer.

P.3

Man is also subject to a further necessity, one which is again inherent in his environment. He must defend both life and the means of its support from the attacks of numerous spoilers and agents of destruction. The risks to which he is exposed under this head entail more pain and more endurance.

P.4

It is to meet this twofold need—sustenance and self-defence—that man labours, labours to produce the necessaries of consumption and to destroy the agents or elements that menace his security. Labour therefore implies waste of vital force, and this more endurance and more pain. Humanity is, however, compensated by the pleasure and enjoyment which it derives from consuming the materials that support life, and from providing the services that safeguard it. But always, whether there be question of nourishment or self-defence, the pleasure of these actions is bought with a pain. It is an exchange, and, like every other exchange, it may result in a profit or loss. It is profitable when the sum of vitality, acquired or preserved, exceeds the amount of vital force expended in the task. The product may be concrete or one of service, but it is always subject to the costs of production which are inseparable from every expenditure of force.

P.5

Excess of expenditure over receipts means, on the other hand, loss, so that man is only stimulated to work when he expects that his receipts will exceed his expenses, that the pleasure will outweigh the pain. The degree of the stimulus naturally varies with the sums involved and the rate of expected profit; the prime motive of human activity, no less than that of all other creatures, is, therefore, the hope of profit. This motive, or motor-power, has been called interest.*3

II. The Natural Law of the Economy Of Power, or the Law of Least Expenditure.

P.6

From the motive of which we have spoken, the roots of which lie deep in human nature and the conditions of human existence, we derive a first natural law, the Law of Economy in Production, or the Law of Least Expenditure. Under the spur of interest, man first satisfies his most pressing needs, those that appeal with the greatest urgency, or penalise deficient supply with the greatest amount of suffering. It is only after this that he endeavours to decrease expenditure by selecting the more remunerative spheres of activity, and by setting himself to perfect processes, or invent tools, which enable him to enhance the profits of production. By increasing the margin of gain, enlarging the excess Of material acquired or saved over the outlay of vital force, he also insures the preponderance of compensatory pleasure over the discomfort, which is inseparable from effort.

P.7

The individual whose income exceeds expenditure, who possesses a profit, may sink it in the purchase of immediate enjoyment, or collect it as capital to be employed in a further increase of his productive capacity. He may, also, simply hoard it against future need. It, then, serves the purpose of a twofold reserve, drafts upon which may obviate privations, or furnish the means of repelling such chances as may, hereafter, menace vitality. When individuals of the same, or of alien races, join issue as to who shall obtain the materials of subsistence, the victor is he who has devoted most profits to remunerative ends, to measures best fitted to conserve, or augment, his vital force.

III. The Natural Law of Competition For a Subsistence.

P.8

1. Animal Competition.—A struggle to acquire the means of living has been called competition for a subsistence. It invariably appears so soon as the natural supply of material ceases to suffice for the demands of every member of the community, the weak and strong alike. Early man, as yet uninstructed in artificial production, depended solely upon the provision of nature, and the consequences of a deficit were soon felt in a society living on the products of hunting and the natural fruits of the earth. The more effective members, the fleet hunter and skilled forager, excelled and lived; the feeble and less fitted for these tasks languished and passed away. Hence the original struggle, first manifestation of a principle which rules all created things, and which we have named Animal Competition.

P.9

2. Destructive Competition, or the State of War.—A progressive restriction in the natural sources of supply soon compelled even the most effective individual to pay a higher price for his accustomed share, and increased cost entailed increased suffering. With the amount of labour and effort, required for the purchase of a livelihood, increasing in inverse ratio to the shrinkage of supply, palliative measures became inevitable. Two alternatives presented themselves—to restrict competition, or to multiply the sources of subsistence.

P.10

Now the sum of knowledge required for artificial production of the material necessaries of life is such that the highest intelligence fails unless accompanied by long experience. This is so true that, to this present day, it is beyond the capabilities of many backward tribes. Very simple, on the contrary, is the alternative as viewed by a strong man. Strength knows its own value as against a weak competitor. When, more, we see how incapable is the rest of brute creation to grasp this elementary calculation, we may find the first glimmering of man's superiority in his early appreciation of its truth.

P.11

The enterprise did, without doubt, involve a certain amount of labour and a certain risk. But victory in the struggles of unequals—and nowhere is there greater inequality than between members of the human race—does not always entail profound exertion, or the taking of dangerous risks. In any case, the strong soon learned that it was more profitable to prey upon the weak than to continue the previous system of sharing an inadequate food supply. Where it was customary to devour the actual body of the defeated, the new system was by so much the more productive. In other words, the effort or suffering involved in destroying an inferior was held preferable to the alternative of dwelling in amity but eating insufficiently. The invariable choice of this alternative measures the expectation of profit which it offered. Where cannibalism intervened as an accident, the person of every victim was at once a meal gained and a meal—very many meals—saved.

P.12

This second form of destructive competition is the pure State of War. First originating in man's struggle for mastery over the beasts, the issue became one as between man and man. A State of War was, thenceforward, inseparable from human existence. As the prime motive of the construction of a vast armoury of destructive agencies, it directly assured the triumph of humanity over the beasts, though nature had often endowed them far more efficiently. Indirectly, it determined those industrial discoveries which have enabled man to multiply and artificially supplement nature's provision of the material bases of existence, instead of bowing his head with the beasts when spontaneous production lags in the race with his demands. Thus it came to pass that the strong no longer found it profitable to massacre, despoil, or yet devour his victims. Instead, obligations are imposed, and the victim survives as a serf or slave. Political States are formed and competition in the form of war is waged between communities, possessing territory and subject peoples, against the hordes, still in a state of savagery and dependent upon the chase or pillage. The communities afterwards compete among themselves, seeking in territorial expansion either an extended area of supply or an increased holding in slaves, serfs, or subjects. Self-aggrandizement and self-protection are practically the sole ends of modern warfare.*4

P.13

Progress, under the direct or indirect impulse of this second form of competition has engendered a third form—Productive or Industrial competition. A brief survey of its history shows us that a continual menace of destruction, or at least of dispossession, compelled the communities which founded, and owned, political States, to apply themselves to the improvement of their instruments, and the consolidation of the material bases of their power. These instruments, and this fabric, may be divided into two categories. Their first constituent is a destructive apparatus, an army; their second is a productive apparatus, capable of assuring subsistence to the proprietary community within the State, and also to its dependents. It must, in addition, furnish those advances which are necessary, first for the erection, and subsequently for the maintenance in working order, of the destructive apparatus. Under pressure of the State of War—and the more so as that pressure grew and increased—State-owning communities were impelled not merely to improve the art and engines of warfare, but also to promote the productive capacities of industries whose function was not merely to provide sustenance, but, through the support of the defensive establishment, to become the final foundation of their powers of political aggrandizement. Now expansion in the productive capacity of any industry depends upon two conditions—Security, and Liberty.

P.14

Without some assured title to the fruits of his progress, a producer has no motive for undertaking such costly labours as the discovery of new processes, or the invention of tools and machines, which will increase his output. It is further essential that a manufacturer should be true to devote himself to that particular industry to which his abilities are best fitted, and to offer his wares in those markets which yield the highest returns. The highest place in the hierarchy of the nations has gone to that State which secured the fullest liberty, and the greatest security, to its industrial population. The dominion of such a State increases with its strength, and the security and liberty which it guarantees initiated and developed the third form of competition—Productive or Industrial competition. This form displaces the State of War as naturally as that replaced its predecessor in the series.

P.15

3. Productive or Industrial Competition.—Competition in the field of production, as in all others, benefits the species by affirming that: "The race is to the fleet, the battle to the strong." But if the rivalries of war and of peace lead to one goal, it is by very different roads.

P.16

The means by which competition of the destructive, or warlike, kind proceeds, are direct. Two starveling tribes come to blows over a patch of vegetation or a tract of hunting ground, and the stronger—driving off, if it does not actually destroy, the weaker—seizes the means of subsistence which were the cause of their struggle. At the later stage, when mankind has learned artificial production of the material needs of life, the communities of strong men, which founded the commercial enterprises called States, fight for the possession of a territory and the subjection of its inhabitants. They, like their predecessors, seek the means of subsistence, and they hope to obtain them by appropriating the entire nett profit earned by the labour of their slaves, their serfs, or their subjects. They may annex this in the guise of forced labour, or under the name of taxes, and they may style their conduct political competition, but it differs in no single particular from the actions of a hunting or of a marauding tribe. Both move along the straight road of direct competitive destruction, and both actions are of the class of destructive or warlike competition.

P.17

Very different are the processes of industrial competition, although they too issue in the survival of the strongest, of the fittest. The most powerful rival still takes the first place, but it no longer rests with the victor to proclaim, or to assess, his own victory. This function has passed to a third party—to those who consume the products or services which the competitors offer. The consumer always buys in the cheapest market. When he has once ascertained the precise nature of the wares competing for his custom, his own merchandise—and this may be actual produce, service, or the monetary equivalent of either—invariably selects that market in which it can command the highest return. When two markets are equal in this respect, the balance of trade inclines to that in which the purchaser's needs, or demands, are supplied with goods of the better quality.

P.18

The cheapest seller—all else being equal—commands the market, and the cheapest seller is the most powerful or effective producer. Productive or industrial competition, therefore, acts upon the producer by stimulating his powers and capacities of production. The less effective producer—whether of merchandise or services—is penalised by failing to sell; he cannot, that is, obtain those other services and goods which he himself needs, and upon which his very existence depends. To increase their powers or capacities of production, producers apply the principle known as the Division of Labour. They also seek to invent, and make practical use of, processes, tools, and machines, by the use of which an identical expenditure of labour and suffering are enabled to return products, or services, in a constantly increasing ratio.

P.19

Productive competition is supported by the Law of the Economy of Power, and these two co-operate in furthering the advance of productive capacity. But while acting as a propeller, this same rivalry fulfils a second, and no less useful, function. As the pivot of a balance, it supports the scales that maintain equilibrium between supply and demand, between outlay and return, at the level of the price required to induce the creation of products or services. The motor-force, of our first view, now appears as a "governor," and its supporter in this regard is a new law—the Law of Value.

IV. The Natural Law of Value.

P.20

Value is a power whose source resides in man himself. Its seat is the sum of those forces, vital, physical, and moral, with which man is endowed, and which he applies to the purposes of production or destruction. Applied to destruction, it constitutes military or war value, and while war was the sole sanction of security in the world this (aspect of) value was of most use to the species, and thus the most esteemed.*5 It does not, however, appear in the guise of an agency which regulates competition, until viewed from the standpoint of production.

P.21

Production acts through labour, and labour is an outlay of vital force, consequently of suffering. Also, the motive of this outlay is the expectation of profit. Profit is thus seen as a product of labour, which enables a man to purchase enjoyment, or to obviate a sum of suffering which is greater than the similar factor in his original outlay. Vital power expended in this manner is not lost, but re-embodied. It reappears, plus profit earned, in the product, and it constitutes the value of that product.

P.22

An isolated man consumes this value so soon as he has produced it. But to-day is the day of division of labour and of exchange—systems under which the producer offers commodities, in which value has been invested, for other commodities which he does not possess, or for that which will enable him to obtain those commodities—for money.

P.23

The ultimate motive of all exchange is identical, being the hope of obtaining a greater amount of vital power than was expended in producing the commodity offered by the seller. In economical language, it is the hope of recovering the costs of production plus a profit. The product offered by the seller must also furnish the consumer, the purchaser, with sufficient vital power—certainly with a sufficient restorative of his vitality, to induce him to purchase it with an equivalent sufficient to replace the vital power expended in production plus a profit. The degree of this profit varies with the relative value of the products in question. The producer seeks to raise it to the highest possible point, and the purchaser struggles to limit it to a minimum. The rate of profit is, however, determined by the point at which the comparative intensity of the needs, or desires, of the two parties to a bargain meet—the intensity of the seller's desire to sell and the intensity of the purchaser's desire to buy. These measures of desire translate themselves into terms of exchange as the quantity of his product which either party offers—the amount of wares offered by the seller, and the amount of money offered by the purchaser. At this point we may conceive several variations in the position of seller and buyer.

One producer may meet one consumer.
One consumer may be met by several producers, or the position may be exactly reversed.
There may be sufficient consumers and sufficient producers to erect real competition on either side.

P.24

In every one of these hypothetical markets, prices, or the rate of exchange, will be determined by the comparative urgency of opposing desires. We shall, at the present moment, confine our attention to the third alternative. Then, if there are several sellers, and each carries a more or less full stock, the fear of being undersold by a rival will compel the merchants to successively increase the amounts which they offer at a given price. But the purchasers, having no fear of a failure in supply, will continually reduce the price which they are willing to pay. Prices will fall since there is no approximation of demand to supply. In a seller's market, where the sum of the desire to purchase outruns that of the desire to sell—of supply, a buyer's refusal to increase his bids may result in his failure to complete a purchase, and the tendency of price is upwards.

P.25

It is most essential to note that market prices do not solely follow the quantities offered, but develop according to a geometrical progression. A short supply not only reduces market offers, but it also increases the effectiveness of demand; a glut in supply produces the opposite result, since the urgency of the seller increases while demand slackens. In one case the value of the product offered rises to a point which yields more than the required profit, over and above the actual costs of production; in the other, prices fall until profits may vanish and an actual loss set in.*6 It is now easy to understand the regulative action of competition. It is continually tending to "fix" exchange-value—in other words, to maintain prices at a point which is equal to the cost of production plus the amount of profit necessary to induce the producer to create the product, or service, which he seeks to sell. Adam Smith characteristically termed this the natural price. Over-supply and over-production cause a fall in the price-current, and as this fall results from an impulse which develops according to a geometrical progression, it very soon drops below the natural price. As soon as this point is reached production naturally tends to diminish, and the consequent gradual rise in the price-current frequently repasses the natural price and erects a surplus profit. But the movements of capital and labour invariably follow profits. As soon as a particular industry promises to return more than the normal rate of profit, capital and labour flow in; production is forced up by leaps and bounds, and the markets are once more filled to repletion. The socialistic cry for regulation, whether by the State or any other artificial authority, is therefore entirely absurd. Regulation is essential, but the two natural laws of Production and Value have long since joined to secure it. We need only refrain from throwing obstacles in the way of their regulative operation; or, if an artificial obstruction opposes that action, to guarantee their freedom in removing the obstruction, according to their own methods. Their action must be secured, but it is to be secured only by refraining from all interference.

P.26

Such is the motive, and such the laws, which govern human activity. The motive is Interest, and the laws are those of Least Expenditure, or Economy of Power, of Competition in its several forms, and of Value. Under the spur of this motive, and guided by these laws, man has achieved that progress which has raised him from the level of the brutes to civilisation, and has advanced through the State of War to the State of Peace.

P.27

As long as the State of War was an integral condition of existence, and of progress, this motive, and these laws, worked for the adaptation of political and social economies to that state. When civilisation became the guarantee of security, and the State of War yielded to the State of Peace, the motive and the laws remained, but they worked to another end. And from the point at which to-day stands on the long high-road of evolution, we may already look forward and prophecy concerning the political and economical organisation of the Society of To-morrow. Earlier volumes from my pen have foreshadowed that future. The arbitrary conceptions of the Socialist will have no part in it, for it will not be founded on laws which issue from the brain of man, but upon laws which are of one origin with those that govern the physical world. Of them Quesnay, one of the fathers of Political Economy, has said, "These Laws of the Physical World were ordained for good alone, and these must be no attribution to them of ills which are the just and inevitable penalty for their violation."


Notes for this chapter


2.
Condorcet, "Esquisse d'un Tableau Historique des Progrès de l'Esprit Humain," p. 17.
3.
The economist must riot confound interest with selfishness, still less with the satisfaction of such needs as are purely material. It signifies rather the sum of the requirements of human nature, material as well as moral. A man does not impose upon himself the sufferings which are inseparable from effort, nor abstain from enjoying the fruits of his toil, for the sole purpose of satisfying selfish wants, whether present or future. Altruistic intention is a frequent and often the more powerful factor in determining labours or abstentions. Altruism includes the love of family and the race, of truth and justice; and its scope is only limited by that of the moral sentiment. Under its spur men have died for each other, a cause, even a cherished idea. There is no real warrant for the opposition between interest and duty, a contradiction that has been too often reiterated. Duty is no more than the obligation to act in conformity with justice, the criterion of which is the general and permanent interest of the species. The sense of justice—in other words the moral sense—naturally predisposes us to conform action to duty. This sense is, no doubt, distributed most unequally. Certain individuals find that obedience to its dictates yields a joy which outweighs any pain, and such men pursue duty at all costs and in face of every obstacle; others are less conscious of the stimulus. A sense of obligation is often disobeyed, but every lapse is followed by that feeling of pain which is called remorse. Finally, there are many persons whose moral sense, the sense of justice, is quite rudimentary; they commit every kind of injustice or immorality to satisfy their passions or vices, and are a menace to society and the race. Mere self-defence compels society to supplement such enfeebled sense of the obligations. It therefore imposes penalties, regulating their incidence in such a way that the amount of pleasure obtained by comitting an injustice is more than neutralised by the punishment which follows.

Society's first duty is, therefore, to foster the sense of justice—the moral sense. And it is equally imperative to define the distinction between just and unjust, moral and immoral, since the hurt or benefit of society and the species is bound up with the opposition between these two ideas. The interests of the individual and the species are, in their regard, identical. (See the present author's "La Morale Economique," book i.—The Relation of Morality to Political Economy; see also his "Religion," chapter xii.—Religion and Science.)

4.
See the author's "Les Notions Fondamentales de l'Economie Politique," Introduction, page 5.
5.
It need scarcely be added that destruction in the interests of security is a necessary factor in production. The ability to destroy constitutes military value. Whether manifested in clearing a territory of the wild beasts which infested it, or as a guarantee against the incursions of predatory tribes, it roots itself in the soil, and forms, so to speak, the first grounds for attaching value to that soil. (See the author's "Les Notions Fondamentales d'Economie Politique," chapter iv.-The Produce of the Earth.)
6.
See the author's "Cours d'Economie Politique," Third Lesson—Value and Price.

End of Notes


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