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right of debt ought not to rest upon a basis of imagination, nor should the frame of a national currency vibrate with every miser's panic and every merchant's imprudence.” We ought, therefore, to base our currency upon several substances, not one, and upon “substances of true intrinsic value.” This insistence upon the superior stability of a composite basis is in accord with the teaching of Jevons and the most liberal economists. The theory of taking substances of intrinsic value as the basis of currency, implying, as it must and would, the ability of farmers, manufacturers, and other owners of “goods” to deposit these goods in “public storehouses” 1 and obtain credit notes for them, places Mr. Ruskin in line with the advocates of Free Money as a protection against the monopoly of private bankers and money-lenders, and the dangers and waste of our private credit notes. An honest government not issuing any currency of forced acceptance (a deceitful form of taxation), and permitting no dishonest speculation, would never find itself embarrassed in the theory or working of currency.
Mr. Ruskin lays his finger upon the chief source of our instability of values and our financial crises when he denounces speculation. His further treatment of the subject in “ Fors” proves his keen apprehension of the truth that speculation permeates the entire system of private credit in modern commerce, that such credit, though highly serviceable to the individual trader, is of doubtful benefit to society. Upon this matter, indeed, he expresses himself in no measured words. 66 This system of mercantile credit, invented simply to give
1 Fors, iii., Letter lviii.
power and opportunity to rogues, and enable them to live upon
the wreck of honest men - was ever anything like it in the world before? That the wretched, impatient, scrambling idiots, calling themselves commercial men, forsooth, should not be able to see this plainest of all facts, that any given sum of money will be as serviceable to commerce in the pocket of the seller of the goods, as of the buyer; and that nobody gains by credit in the long run! It is precisely as great a loss to commerce that every seller has to wait six months for his money, as a gain that every buyer should keep his money six months in his pocket. In reality there is neither gain nor loss — except by roguery, when the gain is all to the rogue, and the loss to the true man."1 Mr. Ruskin is probably right in holding that the common mode of swelling currency by private “ bills of exchange” is a socially foolish policy, and ought to be unnecessary even as an individual convenience, if the theory that “all commerce is exchange of commodities worked out properly by making it as easy to sell as it is to buy.
It is only the greater difficulty which owners of commodities experience in selling than owners of money experience in buying that impels manufacturers and merchants, competing with one another, constantly to tempt buyers by offering easy terms of payment. Such elasticity of credit is but one more testimony to the most salient defect of our present industrial mechanism, the existence of productive power in excess of what is needed to satisfy the demands of current consumption. Under-consumption, involving, as it must, the inability
1 Fors, Letter xxvi. (ii. 33).
of producers to find purchasers with ready money, is a constant stimulus of inflated credit. Sound business, as Mr. Ruskin clearly sees, does not rest upon credit. A striking testimony to this truth is afforded by the fact that the most important structural change in modern industry, the growth of joint-stock companies, is attended by a return to the custom of ready-money payments. Mr. Ruskin's persistent advocacy of ready money, both in wholesale and retail transactions, is not merely a sound moral principle but a true economic policy.
Finally, his insistence that all money means power over labour, authority over men, proves that he has brought his currency teaching into true organic relation with the rest of his political economy, which is more than can be said for most of our writers on the subject. The possession of money means, ultimately, the power to demand work, and Mr. Ruskin rightly insists that the true vital significance of a quantity of money depends upon the economic condition of the workers. Where a large, poor, and degraded class of workers exists, the possession of £5 gives me the power to force an injurious quantity of bad work out of weaklings who are unable to refuse my demands; in a fairly ordered society of skilled and comfortable workers, the possession of the same sum would only give me power to put some of those workers to wholesome and moderate labour. Thus, the mere knowledge of the quantity of money owned by a person or a nation tells us nothing of the underlying human facts. Money must be reduced to subjective or vital “cost” before its significance is understood.
THE COMPETITIVE SYSTEM.
$1. Denunciation of competition in general terms. § 2. Work
motived by pay injures the worker. § 3. Bad influence of competition upon quality of “goods." § 4. Qualifications of the charge of immorality. $5. Incisive exposure of the unfair nature of bargaining. $6. Proposal for a scientific basis of exchange. $7. Mr. Ruskin's doctrine of "No profit in exchange." $ 8. Doctrine of the illegitimacy of interest. $9. Source of error in Mr. Ruskin's economic reasoning. $ 10. Distinction of charitable loans for need and loans for investment.
§ 1. MR. Ruskin's attitude towards competition as a method of determining prices and payments of any kind is one of unqualified hostility. The disutility and the immorality of industrial competition are charges he is never tired of pressing. “Government and Co-operation are in all things the Laws of Life; Anarchy and Competition the Laws of Death.” 1 He accuses the current economic teaching of misrepresenting the processes of bargaining and competition so as to conceal their immoral and anti-social character. Adam Smith's doctrine of the invisible hand,” by whose guidance every industrial man, in following his own individual gain, was necessarily impelled to conduct which contributed to the welfare of society, indisputably underlay the current teaching, furnishing a utilitarian sanction.
1 Unto this Last, p. 102.
indeed, no business of theirs, economists averred, to justify the morality of economic processes, nor to defend the motive of enlightened self-interest, by which “economic men” were actuated ; but this analysis of industry did serve, in fact, to palliate self-seeking conduct by showing that it fulfilled, and by suggesting that it was intended” to fulfil, a social purpose, as well as by presenting such an account of the processes of bargains as to teach that each man got what he deserved, and that substantial justice was done by the existing methods of appointment of wealth.
§ 2. Now, addressing himself first to this defence of the competitive system” of industry, Mr. Ruskin vehemently repudiates both its morality and its utility, the latter not only because he believes that what is immoral cannot be ultimately useful, but because he denies that the self-seeking motive of the “economic man” does actually impel him to a socially profitable line of conduct. Competitive industry, he contends, is doubly degrading to the character of those engaging in it, both in the conscious motive it indulges and in the character it imposes upon work. Since profit, not excellence of work, is the admitted motive, the individual producer is purely self-engrossed, his selfishness not being tempered by any sense of social service; in all the processes of buying and selling this selfishness is accentuated by the constant sharp antagonism between himself and his competitors. Any dim perception that competition involves some indirect co-operation towards a common social end is kept in the background of consciousness by the unceasing sense of struggle. A system which thus concentrates all thought upon profit, instead