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We have now arrived at a subject which in the actual position of society throughout the civilised world is, along with free trade, the most important and at the same time, in some respects, the most difficult in all Political Economy. The prosperity of nations and the welfare of all classes of the community are most closely associated with the direction which public feeling and national legislation may take on these two paramount questions. Yet here precisely, in reference to these very matters, we are driven to re-echo the lamentation which Mr Goschen poured forth in the House of Commons on June 29, 1877. Democratic feeling throughout the world rejects Political Economy. It is held to be hostile to the interests of the mass of the people. It is looked upon with indifference, as something unreal, as ignorant of the ways of human life. It is regarded as the idle talk of a set of doctrinaires, who know nothing of human nature, nor of its position in the actual world. People refuse to listen to what it has to say. Why busy one's self with that which has no claim to be considered? Even the House of Commons has learned to sympathise with popular feeling. The authority of Political Economy is on the wane there. It has gone into philanthropy. Its legislation has sought to protect the toiling labourers, who produce all the wealth the nation possesses, against the oppression of unfeeling theorists. It passes laws which rescue the poor man from the greedy tyranny of the capitalist.
This is a grave matter indeed—none can well be graver. A very plain and direct issue is raised. Political Economy is true or false. Let the question be tried with the utmost severity and sternness. But it must be tried at the bar of reason, not of sentiment. Much spurious science, as was shown in the first Chapter, has been thrust upon Political Economy. By all means let it be refuted and cleared away. That is not Political Economy. True Political Economy professes to recognise certain conditions imposed by the Creator on human existence on earth, and to analyse what is implied in them. If it does these two operations badly, if it mistakes error for truth, fond imagination for accurate fact, let it be rejected. Its teaching can then be only mischievous. But let the error be established by proof. If these conditions are the laws of human life in respect of its material well-being, sentiment cannot get rid of them by giving them bad names. Political Economy has exhibited false theory in plenty, but is false theory, theory contradicted by fact and having its root solely in the sense of the agreeable, unknown to philanthropy? Nay, is it not eminently rampant and peremptory in this very region of capital and labour over which democratic feeling claims such commanding authority? Sentiment might insist how nice it would be to forbid the day's work ever to exceed four hours. Would Political Economy deserve to be reviled, if it declared that in that case multitudes of human beings must go out of existence? Does sentiment refute the assertion by disliking it? In this most serious matter of the relations of the labouring classes to society, democratic sentiment finds powerful motives for the selfish side of human nature to fling contempt on Political Economy, and to invent doctrine and theory of its own; but where the very terms of existence are at stake, there can be but one supreme issue between Political Economy and its despisers. Are the assertions made on either side, —not generous, or philanthropic, or noble,—but true or false, as judged by the realities of man's nature, and of his position in the world? To err here, and to construct conduct on the error may mean for countless millions, misery, sickness and death.
Political Economy, however, and philanthropy have each of them their legitimate spheres by the side of one another. Political Economy is a subordinate body of knowledge only. It assumes wealth as its end, but does not compare that end with the other objects of human life. The pursuit of wealth is not the paramount duty of mankind to which everything else must give way. On the contrary philanthropy and morality and social philosophy are authorised to declare that there are states of life and practices which must be avoided at the cost of loss of wealth, or even of poverty. Political Economy can show with the greatest ease that nothing is more antagonistic to the production of wealth than war. Yet every nation at times prefers war to riches, and the voice of humanity does not condemn them. There might be social arrangements enacted for the production of wealth, or particular kinds of wealth-producing labour, which a people would prefer death rather than submit to. Human nature would be justified to reject wealth rather than endure such practices ; only let the judgment be fairly given on its true grounds. It would imply no condemnation of Political Economy. It would simply affirm that some processes which upon the principles of Political Economy might be shown to be capable of producing wealth are accompanied by evils of such a kind as to forbid the acquisition of such wealth. To pretend that in such cases things recommended by Political Economy had been scouted by reason and right feeling would be as grossly unjust as to rail at the science of medicine, because it might point out an effective poison to a murderer. Man is but an imperfect being, both individually and socially. All his organisations are subject to mischievous defects and errors, and those which he has framed for the production of that wealth without which life itself could not subsist can never be withdrawn from the legitimate criticism of those who think that they offend against right sentiment, or philanthropy or any other natural principle.
The materials of which wealth is composed are furnished by the earth and its atmosphere. They are transformed into new combinations by human labour, and the results are commodities ministering to the wants and desires of mankind. Labour requires that a previous supply of food and instruments should be provided beforehand. These things are called capital. Capital is obtained by saving and abstinence, and has for its motive a portion of the products which it creates. That portion is called profit. Equally must the labourer have a motive for the effort that he contributes. If he is in the savage state, he labours for himself and his family alone. He is capitalist and labourer in one. He does not think of a reward as such. He desires a thing, and he wins it or makes it. But another element makes its appearance in the situation when one man labours for another, when the second man is to be the owner of the product of the exertion. He must possess in some way the means of persuading the labourer to work for him. Reward for reciprocal services is the fundamental law of social life. In the case of labourers that reward is called wages.
Who are to be called labourers is a question which does not admit of an accurate answer. There are many who earn wages under the name of salary or pay who are not termed labourers, though they labour for another, and work under his direction. Ministers serving under the orders of Parliament, civil servants, soldiers and sailors of every grade, clergymen, and judges receive wages, but are not spoken of as labourers. Labourers in contradistinction to capitalists, are persons who commonly own little property, who derive their maintenance from the work of their hands in the mechanical manufacture of wealth, who are hired to perform this service for an employer, and live by the payment which they receive from him. Thus their income is practically derived solely from the service they render in labouring. But wages imply two conditions. They are given to free men as an offer made by the employer in return for a service and accepted by the workmen; and, secondly, they exclude all payments given as charity. The relation between employer and