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One point of fundamental importance is insisted on by Mr. Hobson, namely, the necessity for assigning coordinate influences to demand and supply ; to utility and cost of production. In his opposition to all, whoever they be, who propose theories of value resting on one of these two elements alone, he ranges himself with the soundest of economic writers.

When we have, further, stated the fact that in this volume the doctrine of what has been designated “the three rents” is maintained and developed, we have said almost sufficient for the present occasion on that point. It is a matter which has already been under discussion, and any originality of view belongs rather to earlier expositions than to the present work. The discussion of the relation of rent to price, and the dissent from the treatment of rent by some of the greatest modern teachers, cannot be so briefly passed over. Mr. Hobson maintains that the same process of argument by which, in considering the yield of land to successive doses of capital and labour, the product at the intensive margin ” is shown to have a cost unaffected by rent, will serve to prove that neither wages nor interest enter into price. Does not this rest on a misconception of the relation of the different factors to the result ? If we have rightly understood the theory of land-rent, it is based on the fact that land, as far as certain of its properties are concerned (of which extension in space may sufficiently serve to fix attention upon) is not driven out of use because the price obtainable for its use is less than its owner would wish, or has been accustomed to receive. It exists, and the price of its use is dependent on the excess of the value obtained by applying to it labour and capital over what is necessary to secure the co-operation of these last agents. That it may be diverted from one use to another may be important in considering the available supply for some special purpose, and in pointing out that the "determinant" element of supply may be other than the marginal, in virtue of such diversion, our author has presented to us a feature worth some attention. But, as is recognised by Mr. Hobson himself when engaged in another discussion (cf. pp. 323, 324) there are certain points of view from which we may profitably consider "a single supply of land." To refer to the cost of bringing prairie-land into use does not avoid the difficulty of accepting a doctrine of " marginal rent” for land. The problem is not the same as if all available land were actually in use, but the fact that in some directions more land may be brought into use will not compel the disuse of land able to yield enough to pay for labour and capital-used in its current cultivation, but yielding only a small surplus, unless the surplus be so uncertain that it is not worth effort to try to secure it.

The price at which land is withdrawn from use is a no-rent price. Now the case is not the same with labour or capital. Their supply is at once checked when the price obtainable falls below certain limits. In so far as existing material and existing human powers cannot be abandoned absolutely, the return to both capital and labour possess some of the characteristics of rent. But the supply of labour needs constant replenishing if it is to be maintained, while, as to capital, a transformation of form is in some cases possible and, in any case, a constant renewal is in general required for its efficient preservation, somewhat as in the case of labour. This leaves them in the position to secure at least a minimum price as the price of their co-operation, while the minimum price necessary to retain the co-operation of land is a no-rent price. In a way these facts are recognised by Mr. Hobson, but are clothed in such language as to enable him to express the doctrine of equality in the situation of the different factors.

Contributory to the delusive appearance of cogency in his exposition are the modes of treating both land and capital. Land is to be regarded as so many units of “net yield of land-power.” But it is the land which, though able to yield to its cultivator a reward for his labour and a recompense for the capital employed, leaves no surplus, which is no-rent land, and according to definition this land would contain no “net yield of land-power.” Does not this mode of treatment succeed in begging the whole question? As applied to the consideration of intensive cultivation the conception makes the handling of the problem so verbose, so lacking in apparent correspondence with facts, that we do not marvel that a belief in this as the right and only true conception renders a denunciation of the “ dosing” treatment easy, nay inevitable. Capital, again, is to be, properly enough, regarded as consisting of the actual instruments of production, &c.; not in the light of the value-equivalent of these things in new savings. The word “interest” is applied to the return to capital, and thus it becomes easy to see a rent in interest. The “returns” to actually existing forms of capital may be either more or less than sufficient to pay the market rate of interest on their original value, without causing either an instant withdrawal of their services or an immediate duplication of these forms. It is only in so far as actual returns on existing forms of capital give the measure of the reasonable reward to be anticipated for fresh savings that they can be regarded as affording a stimulus to greater or less saving effort. In identifying "interest” .with the returns obtained by the services of concrete forms of capital, the author must be regarded as eminently likely to arrive at results different in form from those expressed by other writers in reference to interest, even as a similar result may be anticipated in the problem of normal value from a writer who defines "normal" as a synonym of "average." (Cf., p. 56.)

In dealing with labour, Mr. Hobson is hardly more happy than in dealing with land and capital. He writes of a minimum wage (exemplified by 15s. per week) which is a proper constituent element of price, and upon which no taxation can ultimately fall. Beyond this various higher grades of labour secure a rent of superior powers. But such higher payments constitute in a multitude of cases as essential a condition for securing the labour in question as does the subsistence wage for securing labour of any kind whatever. This is even acknowledged where the reduction of the standard of whole classes of labourers is referred to as the result of reduction in their real wages through unwise taxation. And we suppose that Mr. Hobson will be as willing as any one to admit that higher wages, in the sense of higher weekly wages, do not of necessity mean dearer labour. How then shall we deal with the case of a marginal labourer at 15s. per week and another doing 40 per cent, more work at a guinea per week? Do the extra 6s. per week enter into the price of the product on the same terms as the 15s. or not? Can taxation fall on these 6s. with greater ease or certainty than on the 15s.? Might it not be well to deal with the labour as the land was dealt with, and speak of the purchase of so many units of "net-yield of labour-power?If once we admit a community between the marginal-wage and any excess which we call rent of superior powers," where shall we draw the line, and what payments for personal exertion may not be admitted to affect price and be subject to taxation in the same sense as are the 15s. per

week of subsistence wage ?

Though we find a difficulty in accepting either the point of view or the bulk of the conclusions of Mr. Hobson, we find much that stimulates to careful and precise thought in his book, were it only that one is driven to try to follow the process by which, with premises in many respects of the soundest, he finds himself at variance with the mode of treatment and many of the results of sound thinkers. In some respects we have been pleasantly surprised to find that this book not only did not repeat some conclusions in previous works of the same author which we believe to be faulty, but even set forth, in some sort, a refutation of them. The position that indefinite saving demands an indefinite durability of forms of capital seems to be abandoned and replaced by the idea of a persistence of capital through constant renewal, a renewal which may possibly not involve the maintenance of identity of form. The wear-and-tear allowance, or replacement fund, for a given machine, may be ultimately invested in an improved machine when the original is worn out, and the improved machine may yet be considered as economically the same capital as was previously repre. sented by the less perfect instrument. We trust we are not reading into the author's words what we would fain believe him to hold, inasmuch as we believe it to be the truth.

It is worth while to call attention to Mr. Hobson's protest against bringing in the consumer as a fourth party in distribution. A rearrangement of the relative shares of the owners of the different factors of production may operate through a change in the position of any or all of them as consumers rather than as contributors to production, but that is only the direct and obvious phase of what is in reality a re-arrangement of their shares as owners of productive agents.

The last chapter, on the Theory of Surplus Value, enters into questions of tax-incidence. Mr. Hobson agrees with Dr. Commons whose mathematical treatment of the problem of Distribution appeared some five or six years since. Taxation should properly fall on rents say both (including " forced gains” in Mr. Hobson's case). But Mr. Hobson himself shows how, in attempts to effect this, results which are not merely a pocketing of a part of these rents by the State may be produced. He freely admits the difficulty of assessing the amount of much of the gain which he regards as the legitimate object of taxation, and the problem of practical statemanship in regard to taxation does not seem much advanced.

A. W. FLUX

The Effect of the Recent Changes in Monetary Standards upon

the Distribution of Wealth. (American Economic Association. Economic Studies.) By FRANCIS S. KINDER. (New York: Macmillan Co.) 1899. Pp. 499.

This is an outcome of the bimetallic controversy, though it is very different from the mass of the literature thus produced. It is an honest and painstaking attempt to determine how the changes in the value of standard do affect the various classes of the community.

In Part I. the arguments brought forward by writers like Mr. D. A. Wells, who have endeavoured to show that the fall in prices since 1870 is almost entirely due either to the increase in production, or to the increase in the facilities for transportation, are dealt with. Kinder's contention is that, if these two sets of facts are in truth correlated in the way represented, we ought to find that the change from rising to falling prises, which occurred about 1870, was coincident with a great increase in the rate of production; whereas, as he clearly proves by means of numerous tables, the rate of the increase in the production of many of the most important commodities was as great or greater before that date. Neither was there any great change in the rate of the increase of the facilities for transport when prices began to fall. The author, therefore, comes to the conclusion that the change in prices must have been mainly due to changes in the monetary standards of the world.

In Part II. the effect of changes in prices on distribution is discussed. As regards income, the author points out that rising prices are injurious to the creditor, and that high rates of interest are injurious to the debtor; but that these two conditions, as a general rule, occur simultaneously. No doubt the influences thus produced are in a sense antagonistic; but to say that a tendency “to afford the lender the same real income” under rising and falling prices is thus produced is an example of the loose statements somewhat too common in this volume. The author goes on to prove by means of statistics (quoting Professor Irving Fisher and others) that the rate of real interest, taking changes in the real value of the principal into account, is lower under rising than under falling prices, and that the debtor is therefore injured by an appreciation of the standard.

The influence of price movements on the wages of the working classes is discussed in a separate chapter. The author commences by pointing out, as a reason for believing that the labourer will not be injured by a rise in average prices, that the effect of such a rise, if from monetary causes, is to increase the demand for raw material and machinery, whilst “ the demand for the commodities of common consumption would be little affected in a direct way.” The price of the necessaries of life will not rise before there is a rise in wages; because that rise could only be caused by an increase in demand, and that “increased demand must come in the main by and through an increased purchasing power in the hands of the masses.” Then follows a consid. erable amount of carefully collected statistical information, which tends to confirm this theoretical conclusion that real wages rise as fast or faster during long periods of rising prices than during long periods of falling prices. In such a discussion as this, disputable points arise at every turn. For example, the author hardly appears to perceive that it is difficult to ascertain what are the effects of a rapid rise in prices if only the changes taking place during long periods are studied; for prices do not rise rapidly the whole time. Then again, we ought to look to the supply as well as to the demand in considering the causes of rising prices during periods of inflation. For example, freights are certain to rise at such times, and imported wheat will be placed on the English market at a higher price, even though the effect of such a putting up of the price is to diminish imports. An increased demand for machinary and raw material is not inconsistent with a slight decrease in the supply of the “necessaries" of life, a decrease quite sufficient to “explain” the rise in price. It is true that such a check in supply would probably not last long. On the whole, these tables do tend to confirm the view that a slow and steady rise in prices from monetary causes is not injurious to the working classes. From these theoretical arguments, in conjunction with the facts, other interesting conclusions might perhaps be drawn. It appears that the poorer the class of wage earner, the more their needs are confined to articles of ordinary consumption (which are less likely than luxuries to rise in price during periods of inflation), and the more their well-being is dependent on the regularity of employment rather than on the rate of wages; and, if this is so, it follows that the lower we go down in the social scale, the less likely is it that the labourer will be injuriously affected by a rise in prices from monetary causes.

Many classes undoubtedly do suffer from rising prices. Their case is but very lightly touched on in this work; and the effect is to make the whole statement of the case seem somewhat unbalanced. This is intensified by the fact that there is no summary of general conclusions, and one closes the volume with a rather unsatisfied appetite.

L. DARWIN

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