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gium; or this country with itself, on comparing the period from 1817 to 1824, when mills and furnaces were everywhere closed, with the period from 1824 to 1834, when mills were being built.

Capital being the instrument used by man in his efforts to obtain power over nature, whatever tends to increase his power over the instrument, tends equally towards equality and freedom, and towards the elevation of the laborer of the present, at the expense of the accumulations of the past. Whatever, on the contrary, tends to increase the power of the instrument over him, tends to elevate those accumulations at his expense. to produce inequality and to re-establish slavery. His power over the instrument growing with the growth of association, and that growing with the growth of diversity in the modes of employment, it follows, necessarily, that the road towards freedom for man, is found in the direction leading to the development of the various faculties of the individuals of whom society is composed.

§ 8. Throughout the process above described, we mark a perfect harmony in the interests of the various portions of society the laborer profiting largely by the proximity of the owner of the canoe, and the latter doing the same by that of the man who is both willing and able to use it. Neither profits at the expense of the other each obtaining a larger quantity of commodities- and both being enabled to devote more of time, and of mind, to improvement of the machinery by help of which to command the use of nature's services, and thus obtain increase of wealth. Both are equally interested in every measure looking to the maintenance of peace, and in the adoption of a policy tending to secure the most rapid circulation of services and products, and the greatest economy of labor-the highest power of association—the most perfect development of individuality— and the largest and most unrestricted commerce with their fellowmen. Moving in that direction, they find themselves enabled to cultivate the richer soils, with constant increase in the food at their command-the rich granary of nature abounding with supplies waiting for demand alone. The power of self-protection grows steadily, with constantly diminishing necessity for the services of the soldier or the sailor, the trader or the transporter,

and corresponding decline in the necessity for contributing to their support. The tendency towards equality increases from day to day nature always working gratuitously, and working equally for the strong and the weak, the poor and the rich. The more she is made to labor in man's service, the greater is the tendency towards the development of the peculiar faculties of all -the greater must be the reward of each-and the higher must become the standard of man himself. *

The beautiful harmony of this great law is thus exhibited in a work before referred to:

"It is a point worthy of particular attention, that the advantages secured by the capitalist and the laborer, in and through (or by means of) the progress of improvement, are not gained by either at the expense of the other. Both prosper together. Nor are they gained at the expense of any third person. On the contrary, persons who contributed, in no respect, to the improvement, nor to the co-operation of the laborer and the capitalist, by means of which improvement has been made, participate in the benefits thence resulting. The laborer who, at the second period, retained, after remunerating the capitalist for his assistance, a reward, in canoes or other things, equivalent to 4, for the same toil as that for which his predecessor had but 1-he who, in the third stage, after paying the capitalist, has 14, in the place of the 4 which his father had-naturally desires to exchange some of them for articles of a different kind, made by other laborers. He cannot, however, require of the latter, for any long period, that they should exchange services with him upon unequal terms, by giving him the product of much more labor than he has himself expended. If he did, he would make it the interest of some to build canoes, not only for their own use, but for the purpose of selling to others. Suppose that, after the second stage of improvement had been reached, values had so adjusted themselves, as that a canoe exchanged for venison the average product of a week's hunting; or for fish caught in seven days' labor with the net, the hook, and the spear. At the third stage, the canoe-builders would, as at first, obtain, in exchange for a given amount of labor, a quantity of venison or of fish, increased in the proportion of 14 to 4, or 3 times as much as formerly. At this rate, the hunters and fishermen would have no greater ability to procure canoes than before. The supply would increase rapidly, the means of third persons to purchase them remaining stationary. Great numbers would, consequently, be left unsold on the hands of the makers. If, desiring to avoid this result, the boat-builders should offer to take 9 saddles of venison in exchange for the same canoe, or the same share in a canoe, as that for which they at first asked 14-in other words, should surrender to the hunters and fishermen five-fourteenths of the advantage gained through the improvement of axes- the case would then stand thus: The laborers who work with the axe would still have increased their proportion of the product more than the capitalists who furnish the axes-the first obtaining 9 in place of 4, the second but 4 in place of 2, whether measured in canoes, venison, or fish. The first would obtain nine-fourteenths, or 24 times as much venison as before The second would have twice as many canoes to exchange for venison as before; but as the purchasing power of canoes is reduced in the proportion of nine-fourteenths, they would obtain but eighteen-fourteenths, or a fraction of four-fourteenths-about 28 per cent. more venison and fish than before. The purchasers of canoes would obtain 14 for the same labor as formerly procured but 9; or would get a canoe by the labor

§ 9. All the facts of history, as well as all those which at the present moment meet our view, prove that the advance of nations in wealth and happiness, morality, intelligence, and freedom, is in the inverse ratio of the rate of profit, and of interest. Turning, however, to Mr. McCulloch, we find that gentleman asserting directly the reverse of this, and in the following words :

"As capital is nothing more than the accumulated produce of previous industry, it is evident its increase will be most rapid when industry is most productive; or, in other words, when the profits of stock are highest.* The man who can produce a bushel of wheat in three days, has it in his power to accumulate twice as much as the man who, either from a deficiency of skill, or from his being obliged to cultivate a bad soil, is forced to labor six days to produce the same quantity; and the capitalist who can invest stock so as to yield him a profit of ten per cent., has it equally in his power to accumulate twice as fast as the capitalist who can only obtain five per cent. for his capital. Conformably to this statement, it is found that the rate of profit, or, which is the same thing, the power to accumulate capital, is always greatest in those countries which are most rapidly aug

of 4 days instead of 7-substituting silver dollars, in the place of saddles of venison. We have only the same facts, presented under an aspect rendered more familiar by the use of coin as the medium of exchange. The great truth will remain, that wages have increased. Profits have increased also, although in an inferior degree, as to their absolute amount; while the value and the price of the commodity, out of the proceeds of the exchange or sale of which both profits and wages are paid, has been diminished. Availing themselves of the gratuitous bounty of nature, by making use of the forces which she freely lends to human intelligence, the workman may take an increase of his wages, the capitalist may appropriate an addition to his profits-leaving a surplus to be distributed for the benefit of the entire community of consumers. Daily experience verifies the truth, that high prices are not essential to high wages and high profits. These come from cheap production, and being entirely consistent with it, their existence in any community does not preclude the idea that it may vie in cheapness, in an untried mode of production, with other regions where wages and profits are at a lower rate. It is, moreover, of material importance to observe that, while the capitalist's proportionate share of the PRODUCTS diminishes in consequence of an improvement in machinery, it does not follow that his share must bear a smaller proportion to his capital than before."-SMITH: Manual of Political Economy.

Mr. McCulloch adds to this passage the following note:

To avoid all chance of misconception, it is necessary to observe that this refers to net profit, or to the sum which remains to the capitalist after all his outgoings are compensated, including therein a sum sufficient to insure his capital against risk, and to make up for whatever may be peculiarly disagreeable in his business."

menting their wealth and population. *** We have no hesitation in laying it down, as a principle which holds good in every case, and from which there is really no exception, that if the governments of any two or more countries be equally liberal, and property in each equally well secured, their comparative prosperity will depend on the rate of profit. Wherever profits are high, there is a great demand for labor, and the society rapidly augments both its population and its riches. On the other hand, wherever they are low, the demand for labor is proportionably reduced, and the progress of society rendered so much the slower."?*

In all this, there is an absence of clearness that is most remarkable-coming, as it does, from a gentleman who has attained so high a position in the Ricardo-Malthusian school. The man above referred to as raising wheat, is a producer of things to be given in exchange. He is earning wages. Giving a part of his products to B, his landlord, who receives rent, he retains for himself another portion, to be exchanged at the shop, by aid of C, the shopkeeper, who receives profits. The fund, out of which all are to be paid, being the wheat itself, and nothing else, it would seem quite clear, that its producer is to be benefited, by whatever diminishes the proportion taken by the parties who stand between himself and D, the consumer of the bread; whereas, both are to be injured, by whatever increases that proportion. The interests of A and D being thus antagonistic to those of B and C, they, of course, desire that the rate of profit may be low-holding, as they must do, that the less the friction on the road between them, the larger will be the quantity of commodities falling to the share of each. B and C desire, on the contrary, to increase the friction-buying the laborer's services, and his products, at the smallest price, and selling them at the largest one-thus securing a high rate of profit; and the more perfectly that object can be accomplished, the more rapid, in Mr. McCulloch's view, must be the increase of capital. Were this so, capital would increase far more rapidly in Minnesota than in Massachusetts-the rate of profit in the former being thrice greater than in the latter. The reverse of all this, fortunately, is the fact. Where the rate of profit, is * Principles of Political Economy, p. 85.

high, the quantity of profit received is always very small-capital there increasing very slowly. Where it is low, the quantity is large capital there increasing with great rapidity. The more perfect the approximation of the prices of raw materials and finished products, the lower will be the rate, but the larger will be the quantity as is proved by the rapid growth of capital, at the present moment, in France and Germany, Sweden and Denmark. The more remote these prices, the higher will be the rate of profit, but the slower will be the growth of capital—as is, at this moment, being proved by Turkey, Portugal, Ireland, and every other of the free-trade countries of the world.

The facts, and Mr. McCulloch's theory, are, thus, as inconsistent with each other, as are the desires of the trader, who would buy wheat cheaply and sell it dearly, with those of the producer and consumer, who feel that the smaller his rate of profit, the larger will be the fund from which their families are to be fed and clothed. Inconsistency, however, is the essential characteristic of modern political economy; and for the reason, that all its teachings are based upon the assumption, that man commences the work of cultivation on rich soils- a fact that never did, and never can, exist. Following Mr. Ricardo, Mr. McCulloch asserts, that as the productiveness of labor decreases, rent increasesthe landlord receiving much when production is small, although he received little when it was large. The laborer's proportion, according to this theory, is, therefore, a steadily diminishing one. The fact, however, being known to be exactly the reverse of this -the laborer's proportion in all advancing countries being a regularly increasing one-it is accounted for on the plea of necessity, as here is shown:

"It is plain that the decreasing productiveness of the soils to which every improving society is obliged to resort, will not, as was previously observed, merely lessen the quantity of produce to be divided between profits and wages, but will also increase the proportion of that produce falling to the share of the laborer. It is quite impossible to go on increasing the cost of raw produce, the principal part of the subsistence of the laborer, by forcing good, or taking inferior lands into cultivation, without increasing wages.

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* Principles of Political Economy, p. 486.

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