ber of particular instances to the contrary, I do not think it will be denied, then the motives to reinvestment cannot be held to be necessarily equal to the motives to investment; and instead of covetousness being held in check by covetousness, luxuriousness comes in to consume a portion at least of such excessive gains.

It needs to be noted, moreover, that, upon Prof. Cairnes' own doctrine of "non-competing groups," it would not follow that the sums thus taken from one body of laborers in excessive profits will be restored in wages to the class or classes suffering such losses. Capital having, on Prof. Cairnes' statement, a much higher degree of mobility than labor, the body of laborers to be benefited by such restoration of profits to wages, will not necessarily, or even probably, be identical with that which was in the first instance depleted. And if a right distribution of the products of industry be important to secure the highest industry and zeal in future production, then incontestibly, in addition to all considerations of the iniquity of thus bleeding one class for the benefit of others, we have a strictly economic argument against the theory of the practical indifference of the present proportions of wages and profits.

But we may go further and say that all this kind of reasoning in economics which makes the employing or the capitalist class, in a state of imperfect competition, the guardians of the wages class, in such a way that it really doesn't matter whether the laborer gets all the wages he might, or even, at any specified time, gets any at all, because excessive profits will further enrich those other classes who hold their wealth as a sort of sacred trust for him, so that at another time he will get all the more, if he gets less or nothing now—all this sort of reasoning is much to be dis

1 See p. 194.

trusted. And I cannot sufficiently express my astonish ment that an economist of Prof. Cairnes' eminent ability. who made the most important contribution ever offered in modification of the theory of competition, and who pointed out the frightful hiatus in Bastiat's composition of the Economical Harmonies,' should have fallen into the trap at this point. Anything more contradictory of his own doctrine of the extensive failure of competition, and the want of harmony between the interests of the workman and the employer, as each understands his interests and is prepared to act with reference thereto, than this assumption of the certain restoration to wages of all sums taken for excessive profits, it would be impossible to conceive.

It is a poor rule that doesn't work both ways. Yet writers who hold it to be of no consequence at all that the "capitalists" should, by pressure brought upon the laborers, reduce their wages below the equitable point, since the extra profits thus acquired are certain to be restored to wages, seem to regard it as a subject of just apprehension lest laborers should, by trades unions or strikes, bring a pressure to bear, on their side, which might reduce profits unduly. But why should not such extra wages be restored to profits, just as certainly, peacefully, and automatically? What difference does it make if the "capitalist," in any given time or place, gets an inadequate profit, or indeed no profit at all? He will only get just so much more the next time. Certainly, if the laborer can wait to have excessive profits restored to wages, the "capitalist can wait to have extra wages restored to profits.

This notion of a see-saw between wages and profits is well hit-off in a story which Governor Winthrop tells: "1 may upon this occasion report a passage between one of Rowley and his servant. The master being forced to sell

1 See p 164.

a pair of oxen to pay his servant his wages, told his servant he could keep him no longer, not knowing how to pay him the next year. The servant answered him that he would serve him for more of his cattle. But how shall I do (saith the master) when all my cattle are gone? The servant replied, you shall then serve me, and so you may have your cattle again." Surely, if a man becomes an employer in industry, only because he is a capitalist, and as he is a capitalist, the servant in this story was not more of a wag than of a political economist.

1

No, in a state of imperfect competition, the employer is not the laborer's guardian, or the trustee of his earnings. The workman's legitimate wages are a great deal better in his own pocket, or standing in his own name on the books of the savings bank, than paid into the hands of the employer as extra profits. The reasoning to the contrary, on the assumption of a vital harmony of interests, cannot fail to remind one of the economical plea, with which it is point by point identical, once so widely urged, that the owner's interest would abundantly protect the slave against physical abuse or privation. It is also closely analogous with the political plea by which the privileged classes have always sought to show that it really didn't matter how much political power was entrusted to them; that the interests of rich and poor, high and low were indissolubly bound up together, so that if one suffered, all must suffer with it; and that, therefore, the class most intelligent, most apt for government, having most leisure for public affairs, with, moreover, the largest stake in society, might safely be trusted to make and execute all laws, their own true and permanent interests prohibiting them from any and every course prejudicial to the lower classes, who

1 History of New England, II. 219-20.

could not, it was urged, be in any way oppressed but that social and industrial disorders would afford immediate retribution for the neglect of duty or abuse of power on the part of their self-constituted guardians.

The argument is a very pretty one, but alas! and alas! what a dreary and sickening tale is that of the exactions and oppressions of the Old Régime! There is no class fit to determine its own rights and prescribe the duties of others. Inevitably will tyranny be engendered, whenever there is weakness or helplessness on the one side. Noblesse oblige; and the sentiments of compassion and charity go far to mitigate the natural severity of legislation and administration; but, after all, there is only one way in which the rights of any body of men can be secured, and that is by being placed in their own keeping.

CHAPTER XIV.

THE EMPLOYING CLASS: THE ENTREPRENEUR FUNCTION

THE PROFITS OF BUSINESS.

We have seen (Chapter I.) that much confusion has been introduced into the theory of wages by the economists carrying the classification which results from their analysis of functions in production over into the distribution of wealth, assuming, it would seem, that industrial functions must needs characterize distinct industrial classes. We have seen that, in fact, the laborer and the capitalist are largely the same person; and that no division of the product into shares, representing the claims of different parties, in such cases takes place. We have now to note a further source of error in the almost universal neglect by the text-book writers to make account of an industrial function which, while, the world over and history through, it characterizes a class no more than labor or capital, does yet, in the most highly organized forms of industry, especially in these modern times, characterize a distinct and a most important class. This class comprises the modern employers of labor, men of business, "captains of industry." It is much to be regretted that we have not a single English word which exactly fits the person who performs this office in modern industry. The word "undertaker,"

1

1 Thus the peasant proprietor takes all the responsibilities of pro duction, determines its courses and its methods, and acts, so to speak, as the entrepreneur in respect to his own little affairs, at the same time owning the capital employed and performing all the labor.