Let us return from discussing the psychological aspect of the question, to the main substance of our discourse, which we have hitherto only grazed, or touched upon by way of illustrations. We have now to inquire whether the distribution of income and wealth is felt to be just or unjust at all and under what circumstances and conditions.
If we confine ourselves to the strictly philosophical reflections of ancient and modern times, there scarcely seems to be any controversy about the question. From Aristotle's doctrine of justice in distribution to the philosophers of to-day, there is controversy over the practical effect of the judgments in question, but hardly over the judgments themselves. Among more recent thinkers -- only to mention a few -- Herbart conceives the penal system and the economic conditions of a nation as a united whole; what elsewhere is called justice he denominates as equity. On equity his so-called system of wages, which comprises the economic conditions and the penal law of a nation, is built up; the judgment requires recompense for benefits and retribution for misdeeds. The conceptions of the wage system must, according to Hartenstein, be applied equally to benefits and misdeeds. "The general idea must be maintained, that the social institutions and actions should be capable and fitted to requite equally merit and offence." And Trendelenburg, in a similar fashion, affirms that the moral estimation of political and economic affairs is, at bottom, derived from the same standpoint. "Indeed," he says, "in the structure of the State the constant proportion between duties and rights is the fundamental idea of justice, and the same proportion between labor and earnings should be aimed at in private intercourse, but the market price makes the exponent so variable, that it causes a constant inequality." The execution thus seems dim to him; but it appears to him the ideal condition, that labor and earnings should accord, as duty does with right.
There is no doubt that this conception is confronted by another which results from the investigation of details, which is not the outgrowth of popular instincts and sentiment, and is even often involuntarily denied by its very representatives, but through the authority of certain doctrines has become nevertheless of great importance for practical life. I mean the conception which sees in the difference between rich and poor only an occurrence of nature. In the investigation of the immediate causes of the distribution of wealth, this conception is not able to discover the remoter causes. It sees only demand and supply, proportions, natural phenomena, climatic influences, the accidents of life and death; all these are unquestionably mechanical causes which influence this or that distribution of incomes. The earnings of the individual, it is said, are determined by the "strength and the luck of the individual." Free intercourse appears as the analogy of the Darwinian struggle for existence. Might makes right; purposes and moral judgments are not here in consideration, or only to a limited extent. So far as mankind demands a just distribution of incomes, their ideas ate in the main foolish; justice may at the most be demanded of the State when it intervenes directly; opposed as it is to free intercourse and the legitimate influence of fortune, this striving is wrong. "Shall we," we hear from this quartet, "censure our God, that He so frequently interferes unjustly? Shall we prescribe to Him where His lightnings shall strike and where He shall permit the bullets to hit? Shall we quarrel with nature because she grants the delicious fruits of the south and an olympic existence to one race, while she banishes another to the reeking hovels of the arctic?"
We will not dismiss this conception of things by the accusation of materialism, for, though materialistic, it nevertheless has the merit of being realistic and of having further detailed investigation in certain directions. But whatever its merits in this direction, our question is not really touched at all by these arguments. The individual scholar who, in his researches, considers only forces, proportions, demand and supply, and endeavors to grasp them, may ignore the question whether the result be just, but the popular mind will always repeat the question as long as it sees before it human actions.
But only to this extent and always to this extent; and furthermore the uncertain results of fortune and the course of natural processes also will appear just or unjust to him who believes that they are governed by a just Providence ruling analogously to human actions; may the compensation only occur in another world, it is expected and demanded by the soul.
When on the other hand the intellect sees but blind forces, it consoles itself with the argument that it is not the task of humanity to master them; then he will no longer demand justice from the flashing lightning, from the hostile bullet from the demon of cholera and the sunny zephyrs, but always from all conscious actions of human beings.
The distinction is therefore not, as has been claimed, between State and chance, State and free intercourse, governmental distribution and distribution by demand and supply, but the antithesis is this: As far as human action governs and influences the distribution of incomes, so far this action will create the psychological processes whose final result is the judgment which finds the distribution just or unjust; so far as blind extra-human causes interfere, reasonable reflection will demand that men should submit to them with resignation.
If it is objected that demand and supply distribute incomes, we reply in the first instance: Are demand and supply blind powers independent of human influence? This year's crops depend on rain and sunshine, but the average results of our crops are a product of our cultivation. Demand and supply are summary terms for the magnitudes of opposing groups of human wills. The causes and conditions of these magnitudes are partly natural, mostly however, human relations and powers, human deliberations and actions.
If it is objected that nature conditions the wealth of a nation, we answer: She certainly does in part, and as far as she does, no one thinks it unjust that one nation is rich and the other poor. But when one nation enslaves, plunders and keeps in subjection another, we immediately find the wealth of the former and the poverty of the latter unjust.
If it is objected that the one man is wealthier than the other because he was not compelled to divide his inheritance with brother and sister, that the one has the good fortune to possess a healthy wife, the other not, we answer: No normal feeling of right wishes to do away with such chance of fortune. But the question is, if such effects of nature, not subject to our influence, which we call fortune or chance, are indeed the essential causes of the distribution of incomes and wealth. In such a case there could be no science of political economy or social policy, for the irregular game of chance cannot be brought under general points of view.
If it is objected that labor and not the State distributes incomes, we answer that this is a surprising objection in the mouth of one who declares strength and fortune both at the same time to be the causes of distribution. For the objection has meaning only when it signifies that different labor and different accomplishments produce correspondingly different compensation. In our eyes, labor produces goods, builds houses, bakes bread, but it does not directly distribute incomes. The different kinds of labor will affect distribution only by their different valuations in society. The demand for this or that labor will influence its market price, but the moral valuation of this or that labor will influence the judgment whether this price is just. Thus labor influences, indirectly it is true, the distribution of incomes; but in such a case, and so far as it does so, it excludes the notion of luck or chance.
Both assertions, however, confine themselves too closely to the individual distribution of incomes, whereas for the economist the essential point is the distribution among the classes of society. For every more general scientific or practical inquiry it is not the important point whether Tom, the day laborer, has more than Dick or Harry, whether the grocer, Jones, earns more than Brown, whether the banker, Bleichroder, has better luck in his speculations than the banker, Hanseman; about this general judgments will only occasionally be formed. The average wages of the day laborer, the average condition of domestic workers, the average profits of the class of promoters, the average profits of grocers, of landed proprietors, of farmers on the other hand are considered by public opinion and judged to be justified or not. And these earnings are surely not dependent on fortune or chance; they are the result of the average qualities of the respective classes in connection with their relations to the other classes of society; they are in the main the result of human institutions.
The prevailing rights of property, inheritance and contract form the centre of the institutions which govern the distribution of incomes. Their forms for the time being determine a democratic or aristocratic distribution of wealth. Who, for instance, has made the division of landed property, which generally determines the distribution of both wealth and income? Is it nature, luck or chance, or demand and supply? No, in the first place the social and agrarian institutions of the past and present. Wherever small peasant proprietorship prevails to-day, it is derived from the mediaeval village community system and the law of peasant succession. Wherever we meet with a system of large estates we see a result of the baronial and feudal system, of the later manorial regime and of the system of estates; at present the institutions of mortgages and leases play a part; the legislation touching the commutation of tenures and system of cultivation were of the same importance to Germany as the colonial system of other governments to their colonies. In the distribution of personal property individual qualities are more prevalent than in that of real estate. But nevertheless the institutions of ancient and modern times seem to us the most important. The forms of undertakings and the legal status of the laboring classes are the essential points : wherever slavery prevailed it governed at all times the whole economic life, the whole social classification and the distribution of incomes; guilds were, at the time of their consistent maintenance, as much an institution of distribution of incomes as an organization of labor; and the same is true of the domestic system of industry of the seventeenth and eighteenth century with its governmental regulation; the ruling considerations were the needs of commerce and technical practice on the one hand, the situation of the laborers in a domestic system of industries on the other. And are not to-day the institutions of unrestricted trade and interest on loans, of the exchanges and the system of public debts, the forms of undertakings, the system of joint stock companies, of co-operative associations, the unions and corporations of employers and laborers, all labor law, the institutions of friendly and similar societies the material foundation and cause of our present distribution of incomes? The individual causes and the chance of luck effect within the bounds of these institutions the little aberrations of personal destiny; the position of social classes in general is determined by the institutions.
What are economic institutions but a product of human feelings and thought, of human actions, human customs and human laws? And just this causes us to apply the standard of justice to their results, just this makes us inquire whether they and their effects are just or unjust. We do not require the distribution of incomes or wealth to be just absolutely; we do not require it of technical economic acts which do not concern others; but we do require the numerous economic acts which on the basis of barter and division of labor concern others and entire communities to be just.
Where such acts come into consideration our observations discern moral communities, their common aims and the human qualities, which are connected with these aims.
The most primitive barter is impossible, unless. between the parties practising it regularly, a certain moral understanding exists. There must have been an express or silent mutual agreement to preserve peace. The barterers must have common conceptions of value, must recognize a common law. Every seller forms with the purchaser, who stands before him at the moment of the transaction, a moral union of confidence.
In epochs of primitive culture, in the social communities of families, of kinship, of tribes, of leagues, there exists an uncommonly strong feeling of solidarity which therefore leads to very far-reaching demands of justice within these circles, as well as to a complete obtuseness of the same feeling beyond them. With a higher degree of culture these small communities lose, the individual and the greater communities gain in importance. Now the individual and now the community appears more in the foreground, and accordingly the consciousness of the community of interests will change in intensity. In the periods in which the individual's or the family's technical economic life still forms, without more extensive intercourse, without more elaborate division of labor, the centre of gravity in economics, the feeling of community in economic matters will recede. The further the division of labor progresses, the more inextricably will the threads of intercourse involve the individual in an insoluble social community, the more the whole production will assume the character of a general, not an individual concern. Then the common functions of the local and the national community will thrive, individuals will be more and more dislodged by social leaders. Every larger undertaking, whenever it unites continuously a certain number of men for a common economic purpose, reveals itself as a moral community. It governs the external and internal life of all participants, determines their residence, school, division of time, family life, to a certain degree their mental horizon, education and pleasure. The relations of those concerned necessarily exchange a merely economic for a generally moral character. And therefrom the conception arises; here a common production exists, hence a moral community. And that leads to the question: Is the relation between the participants, is the division of the products a just one? And similar considerations follow for whole industries, for whole social classes, and this all the more; the more frequently the employers and the laborers are organized into associations and societies. They also result for whole States and unions of States.
The moral communities, which play a part in economics, follow sometimes purely economic purposes, sometimes other purposes, as above all do local communities and the State. The narrower their circle, the simpler and clearer their purpose, the more evident become the qualities, according to which moral judgment compares and classifies men. The more comprehensive they are, the more manifold their purposes, the more complicated becomes the question which qualities are concerned, the more fluctuating becomes the judgment of what is just, the more indispensable for customs and laws become conventional presumptions and standards in order to attain something definite at all.
In times of primitive culture, in the small circles of economic and moral communities all men, or at least all men able to bear arms, may readily appear equal, and so it there appears just to give each the same allotment of land, the same share of booty. The guild sought to secure to each member as nearly as possible an equal share of profit. With higher culture begins the necessary discrimination. Formerly the greater allotments were often given to the bravest soldier and to the noble families, distinctions now become more general. All inherited preference is considered just, in the measure in which public sentiment values not the qualities of the single individual, but of families as a whole, a conception which decreases more and more with higher culture. Inherited wealth, as long as it appears necessarily and obviously coupled with its possessor, is under some conditions regarded as a just standard of the distribution of goods. So the distribution of public lands according to the possessions in cattle and real estate appeared quite just to many a day laborer and "kossaeth" in the eastern provinces of Prussia, while to one who knew the public land systems in France or southern Germany it seemed an outrageous injustice.
For all community of production, labor is the most obvious standard; hence perhaps it is the most usual, most generally comprehensible. As soon as it becomes necessary to compare many different kinds of labor, only an abstraction totally foreign to public sentiment will conceive the idea of reducing all this labor to mere quantities of handiwork; natural public sentiment will simply value more highly the labor which requires more education or talent.
Those qualities will always be most highly considered which serve the common objects; those which only relate to the individual and his selfish aims are less esteemed. Only a complete misconception therefore could establish individual needs as a standard of distributing justice. Older socialism wisely held aloof at all times from this aberration. Even the first really social-democratic platform in Germany, that of Eisenach of 1869, did not vet venture to commit such a folly. The progressive victory of vulgarity and rudeness first demanded in the Gotha platform of 1875 the division of the aggregate labor products among individuals according to their "reasonable needs." The proviso of reasonableness was intended to prevent excesses; it does not remove the low conception. With his needs a man serves himself only; with his labor, his virtue, his accomplishments, he serves, mankind, and these determine the judgment which esteems them as just.
When the great social communities which follow the most various interests and what is just in them are concerned, the attempt will always be made, more or less, to weigh the different qualities and accomplishments of men in their result and in their connection with the objects of the community. Talents and knowledge, virtues and accomplishments, merit in short is considered. Moral qualities are often apparently overlooked, great talents whose achievements and deeds are generally visible are apparently over-estimated. But only because one is more noticed than the other, and the moral judgment which values individuals according to what they are to the whole can naturally only judge by what it sees.
And therein lies the contrast between moral and economic value. In the ordinary economic valuation activities and products have value in the same measure, as individuals covet them for the satisfaction of their personal needs. In the moral valuation, on which the judgment as to justice depends, the activities of individuals receive their value, according as they serve the inherent ends of the whole. True justice, says Ihering, is a balancing between consequences and acts, which is weighed equally to all citizens according to the measure of the value of these acts to society. Both valuations go in life side by side, combating and influencing one another. The one rules the market, the other moral judgments and conceptions. They approach each other as mankind grows more perfect. Through what mechanism the arising conflicts are lessened and mitigated, we still have to discuss.
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