Since Mill, in 1848, wrote his chapter on the future of the working classes, the question of the distribution of wealth has become of still greater importance. We cannot look round on the political phenomena of to-day without seeing that this question is at the root of them. We see the perplexity in which men stand, and the divisions springing up in our great political parties, because of the uncertainty of politicians how to grapple with it. Political power is now widely diffused; and whatever may be the evils of democracy, this good has come of it, that it has forced men to open their eyes to the misery of the masses, and to inquire more zealously as to the possibility of a better distribution of wealth. Economists have to answer the question whether it is possible for the mass of the working classes to raise themselves under the present conditions of competition and private property. Ricardo and Henry George have both answered, No; and the former has formulated a law of economic development, according to which, as we have seen, rent must rise, profits and interest fall, and wages remain stationary, or perhaps fall. Now is there any relation of cause and effect between this rise in rent and fall in wages? Ricardo thought not. According to his theory, profits and wages are fixed independently of rent; a rise in rent and a fall in wages might be due to the same cause, but the one was not the result of the other, and the rise in rent would not be at the expense of the labourers. Yet practical opinion goes in the opposite direction. From the evidence of farmers and land-agents we see that it is widely believed that the high rents exacted from farmers have been partly taken out of the pockets of the labourers. 'If there is a fall in the price of corn, agricultural wages will fall, unless there is a corresponding fall in rent,' was said before a Parliamentary Commission in 1834. Ten years ago the connection was admitted in Ireland; and the Land Act of 1870 was founded on the belief that rack-rents were not really the surplus left when capital and labour had received their fair returns, and that the only limit to the rise of rents was the bare necessities of the peasantry. In England it has been assumed that wages and profits have fixed lines of their own independent of rent, but this is not universally true; where the farmers have suffered from high rents, they in their turn have ground down the labourers. Thus even in England rent has been exacted from the labourer; and this is not an opinion but a fact, testified by the evidence of agents, clergy, and farmers themselves. What appears accurate to say about the matter is, that high rents have in some cases been one cause of low wages.
This direct effect of rent on wages under certain conditions is quite distinct from the 'brazen law of wages' which Lassalle took from Ricardo. It is impossible, according to Ricardo, for labourers to improve their position under existing industrial conditions, for if wages rise, population will advance also, and wages return to their own level; there cannot therefore be any permanent rise in them. Ricardo, indeed, did not deny that the standard of comfort varied in different countries, and in the same country at different times; but these admissions he only made parenthetically, he did not seem to think they seriously touched the question of population, and they did not affect his main conclusions. For instance, he argues that a tax on corn will fall entirely on profits, since the labourer is already receiving the lowest possible wages. This statement may be true with regard to the very lowest class of labourers, but it certainly does not apply to artisans, nor to a large proportion of English working men at the present time. With them, at any rate, it is not true that they are already receiving the lowest possible wage, nor that there is an invincible bar to their progress. Let us turn to the test of facts and see if wages have risen since 1846. Henry George says that free trade has done nothing for the labourer'. Mill, in 1848, predicted the same. Professor Cairnes came to a very similar conclusion; writing in 1874 he said, that 'the large addition to the wealth of the country has gone neither to profit nor to wages, nor yet to the public at large, but to swell... the rent-roll of the owner of the soil.' Yet it is a fact that though the cost of living has undoubtedly increased, wages have risen in a higher ratio. Take the instance of a carpenter as a fair average specimen of the artisan class. The necessaries of a carpenter's family in 1839 cost 24s. 10d. per week; in 1875 they cost 29s. But meanwhile the money wages of a carpenter had risen from 24s. to 35s. Thus there had been not only a nominal but a real rise in his wages. Turning to the labourer, his cost of living was about 15s. In 1839, it was a little under 15s. In 1875. The articles he consumes have decreased in cost, while in the case of the artisan they have increased, because the labourer spends a much larger proportion of his wages on bread. The labourer's wages meanwhile have risen from 8s. to 12s. or 14s.; in 1839 he could not properly support himself on his wages alone. These facts seem conclusive, but certainty is difficult from the very varying estimates of consumption and money wages. For strong proof of a rise in agricultural wages we may take a particular instance. On an estate in Forfar the yearly wages of a first ploughman were by the wages- in
1840... *28 2 0
1870... *42 5 0 1850... 28 15 0
1880... 48 9 0 1860... 39 7 0
According to his own admission the standard of comfort of the first ploughman employed on this estate in 1810 had risen, for he complained, in a letter describing his position, of his increased expenditure, increased not because things were dearer, but because he now needed more of them.
We may take as further evidence the statistics of the savings of the working classes; it is impossible to get more than an approximate estimate of them, but they probably amount to about *130,000,000. To these we may add the savings actually invested in houses. In Birmingham there are 13,000 houses owned by artisans. All this is small compared with the whole capital of the country, which, in 1875, was estimated at *8,500,000,000 at least, with an annual increase of *235,000,000 - this latter sum far exceeding the total savings of the working classes. The comparison will make us take a sober view of their improvement; yet the facts make it clear that the working classes can raise their position, though not in the same ratio as the middle classes. Mr Mulhall also estimates that there is less inequality between the two classes now than forty years ago. He calculates that the average wealth of a rich family has decreased from *28,820 to *25,803, or 11 per cent.; that of a middle-class family has decreased from *1439 to *1005, or 30 per cent.; while that of a working-class family has increased from *44 to *86, or nearly 100 per cent. But without pinning our faith to any particular estimate, we can see clearly enough that the facts disprove Ricardo's proposition that no improvement is possible; and there are not wanting some who think that the whole tendency of modern society is towards an increasing equality of condition.
Was Ricardo any more correct in saying that interest and profits (between which he never clearly distinguished) must fall? As a matter of fact, for the last century and a half interest in England has been almost stationary, except during the great war. In Walpole's time it was three per cent.; during the war it doubled, but after the peace it dropped to four per cent., and has remained pretty steady at that rate ever since. Ricardo thought that the cost of the labourer's subsistence would necessarily increase, owing to the necessity of cultivating more land, and as he would thus require a greater share of the gross produce, less wealth would be left for the capitalist. He overlooked the fact that the rate of interest depends not merely on the cost of labour, but on the field of employment as well. As civilisation advances, new inventions and new enterprises create a fresh demand for capital: some *700,000,000 have been invested in English railways alone. No doubt, if the field for English capital were confined to England, the rate of interest might fall; but Ricardo forgot the possibility of capital emigrating on a large scale. Thus Ricardo's teaching on this point is deficient both in abstract theory and as tested by facts. What we really find to have taken place is, that though rent has risen, there is good reason to suppose that in the future it may fall; that interest has not fallen much; and that the standard of comfort and the rate of wages, both of artisans and labourers-of the former most decidedly, and to a certain extent also of the latter, has risen.
I wish next to examine Mr George's theory of economic progress. Mr George is a disciple of Ricardo, both in his method and his conclusions; he has as great a contempt for facts and verification as Ricardo himself. By this method he succeeds in formulating a law, according to which, in the progress of civilisation, interest and wages will fall together, and rents will rise. Not only is the labourer in a hopeless condition, but the capitalist is equally doomed to a stationary or declining fortune. 'Rent,' he says, 'depends upon the margin of cultivation, rising as it falls, and falling as it rises. Interest and wages depend on the margin of cultivation, falling as it falls, and rising as it rises.' The returns which the capitalist obtains for his capital and the labourer for his work depend on the returns from the worst land cultivated; that is, on the quality of land accessible to capital and labour without payment of rent.
Now Mr George's observations are derived from America, and what he has done is to generalise a theory, which is true of some parts of America, but not of old countries. His seems conclusive enough at first sight. There is little flaw in the reasoning, if we grant the premisses; but there are great flaws in the results when tested by facts. Do interest and wages always rise and fall together? As an historical fact they do not. Between 1715 and 1760, while rents (according to Professor Rogers) rose but slowly (Arthur Young denies that they rose at all), interest fell, and wages rose. Between 1790 and 1815 rent doubled, interest doubled, wages fell. Between 1846 and 1882 rents have risen, interest has been stationary, wages have risen. Thus in all these three periods the facts contradict Mr George's theory. Rent indeed has generally risen, but neither profits nor wages have steadily fallen, nor have their variations borne any constant relation to one another. Coming to Mr George's main position, that rent constantly tends to absorb the whole increase of national wealth, how does this look in the light of fact? Does all the increase of wealth, for instance, in the Lancashire cotton manufactures, go simply to raise rents? Evidently not. Wages have risen owing to improvements in machinery'. and in most cases profits have also risen. We can prove by statistics that in England the capitalists' wealth has increased faster than that of the landowners". for in the assessments to the income-tax there has been a greater increase under Schedule D, which comprises the profits of capitalists and the earnings of professional men, than under Schedule A, which comprises revenues from land. At the same time, Mr George has made out a strong case against private property in land in great towns; but here he has only restated more forcibly what Adam Smith and Mill advocated, when they recommended taxes on ground rents as the least objectionable of all taxes. Under existing conditions the working people in great towns may be said to be taxed in the worst of ways by the bad condition of their houses. An individual or a corporation lets a block of buildings for a term of years; the lessee sublets it, and the sub-lessee again for the third time. Each class is here oppressing the one beneath it, and the lowest unit suffers most. This is why the problem of the distribution of wealth is sure, in the near future, to take the form of the question, how to house the labourers of our towns.
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