Chapter XVIII: Eden Vale: Aug. 6,

Yesterday, accompanied by the two English agents, we inspected the Freeland Central Bank. The comprehensive and--as a necessary consequence-- exceedingly simple clearing system excited the highest admiration of the two experienced gentlemen. The remarkably small amount of cash required to adjust the accounts of the whole of the gigantic business transactions drew from Lord E---- the inquiry why Freeland retained gold as a measure of value. He thought that, as the Freelanders already made the value of a unit of labour-time the standard of calculation in their most important affairs, the simplest plan would be to universalise this method--that is, to declare the labour-hour to be the measure of value, the money-unit. This would, he thought, far better harmonise with the general social order of Freeland, in which labour is the source and basis of all value.

The director of the bank (Mr. Clark) replied: 'That is a view which has been repeatedly expressed by strangers; but it is based simply upon confounding the _measure of value_ with the _source of income_. For labour alone is not the source of value, though most Socialists adopt this error of the so-called classical economists as the ground of their demands. If all value were derived from labour and from labour alone, then even among you in the old exploiting world everything would be in favour of the workers, for even there the workers have control over their working power. The misery among you is due to the fact that the workers have no control over the other things which are requisite for the creation of value, namely, the product of previous work--_i.e._ capital, and the forces and materials derived from nature. We in Freeland have guaranteed to labour the whole of what it assists to produce. But we do not base this right upon the erroneous proposition that labour is the sole source of the value of what it produces, but upon the proposition that the worker has the same claim to the use of those other factors requisite for the creation of value as he has to his working-power. But this is only by the way. Even if labour were the only source of and the only ingredient in value, it would still be in any case the worst conceivable _measure_ of value; for it is of all things that possess value the one the value of which is most liable to variations. Its value rises with every advance in human dexterity and industry; that is, a labour-day or a labour hour is continuously being transformed into an increasing quantity of all imaginable other kinds of value. That the value of the product of labour differs as the labour-power is well or badly furnished with tools, well or badly applied, cannot be questioned, and never has been seriously questioned. Now, among us in Freeland _all_ labour-power is as well equipped and applied as possible, because the perfect and unlimited freedom of labour to apply itself at any time to whatever will then create the highest value brings about, if not an absolute, yet a relative equilibrium of values; but, in order that this may be brought about, there must exist an unchangeable and reliable standard by which the value of the things produced by labour can be measured. That the labour expended by us upon shoe goods and upon textile fabrics, upon cereals and turnery goods, possesses the same value is shown by the fact that these various kinds of wares produced in the same period of time possess the same value; but this fact can be shown, not by a comparison between the respective amounts of labour-time, but only by a comparison with something that has a constant value in itself. If we concluded that the things which required an equal time to produce were of equal value because they were produced in an equal time, we might soon find ourselves producing shoes which no one wanted, while we were suffering from a lack of textile fabrics; and we might see with unconcern the superfluity of turnery wares, the production of which was increasing, while perhaps all available hands were required in order to correct a disastrous lack of cereals. To make the labour-day the measure of value--if it were not, for other reasons, impossible--involves Communism, which, instead of leaving the adjustment of the relations between supply and demand to free commerce, fixes those relations by authority; doing this, of course, without asking anyone what he wishes to enjoy, or what he wishes to do, but authoritatively prescribing what everyone shall consume, and what he shall produce.

'But we in Freeland strive after what is the direct opposite of Communism--namely, absolute individual freedom. Consequently we, more imperatively than any other people, need a measure of value as accurate and reliable as possible--that is, one the exchange-power of which, with reference to all other things, is exposed to as little variation as possible. This best possible, most constant, standard the civilised world has hitherto found rightly in gold. There is no difference in value between two equal quantities of gold, whilst one labour-day may be very materially more valuable than another; and there is no means of ascertaining with certainty the difference in value of the two labour-days except by comparing them both with one and the same thing which possesses a really constant value. Yet this equality in value of equal quantities of gold is the least of the advantages possessed by gold over other measures of value. Two equal quantities of wheat are of nearly equal value. But the value of gold is exposed to less _variation_ than is the value of any other thing. Two equal quantities of wheat are of equal value at the same time; but to-morrow they may both be worth twice as much as to-day, or they may sink to half their present value; while gold can change its value but very little in a short time. If its exchange-relation to any commodity whatever alters suddenly and considerably, it can be at once and with certainty assumed that it is the value not of the gold, but of the other commodity, which has suddenly and considerably altered. And this is a necessary conclusion from that most unquestionable law of value according to which the price of everything is determined by supply and demand, if we connect with this law the equally unquestionable fact that the supply and demand of no other thing are exposed to so small a relative variation as are those of gold. This fact is not due to any mysterious quality in this metal, but to its peculiar durability, in consequence of which in the course of thousands of years there has been accumulated, and placed at the service of those who can demand it, a quantity of gold sufficient to make the greatest temporary variations in its production of no practical moment. Whilst a good or a bad wheat harvest makes an enormous difference in the supply of wheat for the time being, because the old stock of wheat is of very subordinate importance relatively to the results of the new harvest, the amount of gold in the world remains relatively unaltered by the variations, however great they may be, of even several years of gold-production, because the existing stock of gold is enormously greater than the greatest possible gold-production of any single year. If all the gold-mines in the world suddenly ceased to yield any gold, no material influence would be produced upon the quantity of available gold; whilst a single general failure in the cereal crop would at once and inevitably produce the most terrible corn-famine. This, then, is the reason why gold is the best possible, though by no means an absolutely perfect, measure of value. But labour-time would be the worst conceivable measure of value, for neither are two equal periods of labour necessarily of equal value, nor does labour-time in general possess an unalterable value, but its exchange-power in relation to all other things increases with every step forward in the methods of labour.'

We were all convinced, but Lord E---- could not refrain from remarking that the Freelanders did nevertheless estimate the value of many things in labour-equivalents. He at once received from my father the pertinent answer that, according to all they had yet heard, this happened only in cases in which an increase of payment had to run parallel with a rise in the value of labour. Salaries and maintenance-allowances _ought_ to rise in proportion as the proceeds of labour and therewith the general consumption rose; and it was only when this relation had to be kept in view that the value of things could be estimated in labour-equivalents.

Mr. Clark now drew our attention to the comprehensive, transparent, and detailed publicity which marked all the pecuniary affairs of Freeland, in consequence of the entry in the bank books of all commercial and industrial relations. No one can deceive either himself or others as to his circumstances; and one of the most important social consequences of this is that no one has any desire to shine by extravagant spending. Extravagance is only too often prompted by a desire to make oneself appear in the eyes of the world richer than one really is; such an attempt in this country would only provoke a smile. And if anyone wished to spend in luxuries more than he earned, the bank would naturally refuse him credit for such a purpose; and without this credit the spendthrift would have to appeal to the liberality of his fellow-citizens before he could indulge in his extravagance. The amounts of all incomes and of all outgoings lie open to the day; all the world knows what everybody has and whence he gets it. And as everyone is free to engage in any branch of industry whatever, the difference of income can excite no one's envy.

But Lord E---- here asked whether the degree of authoritative arbitrariness inevitable in fixing salaries of different kinds--_e.g._ of officials--did not present some contradiction to the otherwise operative principle of unconditional freedom of choice of calling, and to the equilibrium in the proceeds of different kinds of labour which resulted from this freedom. 'When the profits of the woollen industry are higher than those of agriculture, fresh labour will be transferred to the former until an equilibrium has been established between the two profits; if a permanent excess of profit shows itself in one of these branches of production, it is evident under your institutions that this can be due solely to the fact that the labour in this more profitable industry is less agreeable, more exhausting, or demands a higher or rarer knowledge or skill. No one has the slightest ground to complain of injury; and so far the harmony produced by freedom is worthy of all admiration. But when it comes to appointments and salaries, this absolute freedom must cease. You, as the head of a department of the government, receive 1,400£, your neighbour the hand-worker earns merely 600£; how do you know that the latter does not feel that he is wronged thereby?'

'My lord,' said Mr. Clark, smiling, 'if you mean, how do I know whether my neighbour does not feel himself wronged _by nature_ because he is not able, like me, to earn 1,400£ a year, I must answer that I can speak only from conjecture, and that I really possess no certain knowledge as to his feelings. But if you think that my neighbour, or anyone else in Freeland, could find in my higher salary an advantage conferred on me by an arbitrary exercise of authoritative power, or by the favour of the electors, or for any inadequate reason, I can certainly show that you are mistaken. For my salary is, in the last resort, as much the result of free competition as is the labour-profit of my neighbour. Whether I am the right man for my post is a question which is decided by the corporations by whom my election is made, and whose choice is controlled or superseded by no automatically working contrivance; with what salary my office must be endowed, in order that qualified men, or let us say men who are held to be qualified, may be obtained, this is regulated by exactly the same automatic laws as is the labour-profit of a weaver or an agriculturist. And this holds good of the salary of the youngest official up to that of the heads of the departments of the Freeland government. The fixing of the salaries in every case depends upon the free judgment of the presidents or of the electoral colleges; but these presidents or electoral colleges must fix the salaries at such sums as will at any time attract a sufficient number of qualified candidates. Of course, a pound more or less a year would make no difficulty--it is a recognised principle that the salaries should be high enough to attract rather a superfluity than a lack of candidates; but when the number of candidates is greater than a certain ratio, the salaries are reduced, whilst a threatened lack of candidates is met by an increase of salaries. I will add, that it is to be taken as a matter of course that in Freeland the unsuccessful candidates are not breadless aspirants. Success or failure is never therefore a question of a livelihood, but of the gratification of inclination and sometimes of vanity. A man gives up his office when more profitable or more agreeable occupation attracts him elsewhere. The public officials are not paid the same salaries in all the branches of the public service. Specially trying work, or work demanding special knowledge, obtains here higher profits, just as in the various industries. And whilst the labour-earnings of ordinary manual labour are the measure of the salaries of the lower officials, so do the salaries of the various association-managers exercise a regulative influence upon the salaries of the higher public officials. You, also, have often experienced that the attractions of positions connected with public activity have in no small degree brought down the salaries of government officials, professors, &c., below the level of the incomes of those who hold the chief posts in associations. As a rule, it is found that with a rise in the general level of intelligence there is a _relative_--by no means an absolute--sinking of the higher salaries. While the directors of several large associations receive as much as 5,000 hour-equivalents a year, the highest officials in the Freeland central government at the present time receive only 3,600 more, and that because our persistent assertion of the relative depreciation of the higher salaries is met by the parliaments with an equally persistent resistance, and the parliaments yield to our importunities only very slowly and very reluctantly. To be just, it should be added that the same game is repeated in the associations. The directors would often be satisfied with much lower salaries, for they often really do not know what to do with their incomes, which, in comparison with prices in Freeland, are in some cases exorbitant, and increase with every increase in the value of labour. Particularly during the last decade, since the value of the hour-equivalent has increased so much, proposals from above to reduce salaries have become a standing rule. I repeat, this reduction must be understood to be merely relative--that is, to refer merely to the number of hour-equivalents. The value of a labour-hour has quadrupled within the last twenty years; those of us, therefore--we public officials, for example--who receive twenty-eight per cent. fewer hour-equivalents than we did originally, still have incomes which, when reckoned in money, have been nearly tripled. As a rule, however, the associations will not hear of even such a reduction. Though their directors openly avow their willingness to accept lower salaries, the associations are afraid of offending some one or other of the competing societies which pay higher salaries; and as a few hundred pounds are not worth considering in view of the enormous sums which a great association annually turns over, the reduction of the salaries goes on but slowly. Nevertheless there is a gradual lessening of the difference between the maximum and the minimum earnings, plainly proving that even in this matter of salaries the law of supply and demand is in full operation.'

Lord E---- thanked him for this explanation. But now Sir B---- proposed a far weightier question. 'What struck me most,' said he, 'when I was examining the enormous operations of your central bank, and what I am not yet able to understand, is how it is possible, without arbitrary exercise of authority and communistic consequences, to accumulate the immense capital which you require, and yet neither pay nor reckon any interest. That interest is the necessary and just reward of the capitalist's self-denial I do not indeed believe; but I hold it to be the tribute which has to be paid to the saver for sparing the community, by his voluntary thrift, the necessity of making thrift compulsory. What I now wish to know is, what were your reasons for forbidding the payment of interest? Or are you in Freeland of opinion that it is unjust to give to the saver a share of the fruits of his saving?'

'We are not of that opinion,' answered the director. 'But first I must assure you that you have started from an erroneous assumption. We _forbid_ the payment of interest as little as we "forbid" the undertaker's profit or the landlord's ground-rent. These three items of income do not exist here, simply because no one is under the necessity of paying them. If our workers needed an "undertaker" to organise and discipline them for highly productive activity, no power could prevent them from giving up to him what belonged to him--namely, the profit of the undertaking--and remaining satisfied themselves with a bare subsistence. Nothing in our constitution, and no one among us, would interfere with such an undertaker in the peaceable enjoyment of his share of the produce. If the land needed--'

'Pardon my interruption,' said Sir B----. '"If our workers needed an undertaker to organise and discipline them, no power could prevent them from giving up to him the whole of the produce"--these were your words. In the name of heaven, do not your workers need such a man? Do they need none over them to organise, discipline, guide, and overlook the process of production? And when I hear you so coolly and distinctly assert that such a man has a right to the produce, and that neither for God's sake nor in the name of justice need he leave to the worker more than a bare subsistence, I am compelled to ask myself whether you, an authority in Freeland, are pleased to jest, or whether what we have hitherto seen and heard here rests upon a mere delusion?'

'Forgive me for not having expressed myself more plainly,' answered the director to Sir B---- and to the rest of us who, like him, had shown our consternation at the apparent contradiction between the last words of our informant and the spirit of Freeland institutions. 'I said, "If our workers needed an _undertaker_": I beg you to lay emphasis upon the word "undertaker." A man or several men to arrange, organise, guide the work, they certainly need; but such a man is not an undertaker. The difference between our workers and others consists in the fact that the former allow themselves to be organised and disciplined by persons who are dependent upon them, instead of being their masters. The conductors of our associations are not the masters, but the officials--as well as shareholders--of the working fellowship, and have therefore as little right to the whole produce as their colleagues abroad. The latter are appointed and paid by the "owner" of what is produced; and in this country this owner is the whole body of workers as such. An undertaker in the sense of the old industrial system, on the other hand, is a something whose function consists in nothing but in being master of the process of production; he is by no means the actual organiser and manager, but simply the owner, who, as such, need not trouble himself about the process of production further than to condescend to pocket the profits. That the undertaker at the same time bears the risks attendant upon production has to be taken into account when we consider the individual undertaker, but not when we consider the institution as such, for we cannot speak of the risk of the body of undertakers as a whole, I called the undertaker, not a man, but a something, because in truth it need not be a man with flesh and blood. It may just as well be a scheme, a mere idea; if it does but appropriate the profits of production it admirably fulfils its duty as undertaker, for as such it is nothing more than the shibboleth of mastership. Let us not be misled by the fact that frequently--we will say, as a rule--the undertaker is at the same time the actual manager of the work of production; when he is, he unites two economic functions in one person, that of the--mental or physical--labour and that of the undertakership. Other functions can just as well be associated together in him: the undertaker can be also capitalist or landlord; nevertheless, the undertaker, as economic subject, has no other function than that of being master of other men's labour and of appropriating to himself the fruits of the process of production after subtracting the portions due to the other factors in production.

'And this master, whose function consists simply of an abstract mastership, is an inexorable necessity so long as the workers are servants who can be disciplined, not by their enlightened self-interest, but only by force. To throw the blame of this exclusively or only mainly upon "capital" was a fatal error, which for a long time prevented the clear perception of the real cause--the servile habits and opinions that had grown stronger and stronger during thousands of years of bondage. Capital is indispensable to a highly developed production, and the working masses of the outside world are mostly without capital; but they are without it only because they are powerless servants, and even when in exceptional cases they possess capital they do not know how to do anything with it without the aid of masters. Yet it is frequently the capital of the servants themselves by means of which--through the intervention of the savings-banks--the undertaker carries on the work of production; it none the less follows that he pockets the proceeds and leaves to the servants nothing but a bare subsistence over and above the interest. Or the servants club their savings together for the purpose of engaging in productive work on their own account; but as they are not able to conceive of discipline without servitude, cannot even understand how it is possible to work without a master who must be obeyed, because he can hire and discharge, pay and punish--in brief, because he is master; and as they would be unable to dispose of the produce, or to agree over the division of it, though this might be expected from them as possessors of the living labour-power,--they therefore set themselves in the character of a corporate capitalist as master over themselves in the character of workmen. In these productive associations, which the workers carry on with money they have saved by much self-denial or have involved themselves in worry and anxiety by borrowing, they remain as workers under a painful obligation to obey, and the slaves of wages; though certainly in their character of small capitalists they transform themselves into masters who have a right to command and to whom the proceeds of production belong--that is, into undertakers. The example of these productive associations shows, more plainly than anything else can, that it was nothing but the incapacity of the working masses to produce without masters that made the undertaker a necessity. We in Freeland have for the first time solved the problem of uniting ourselves for purposes of common production, of disciplining and organising ourselves, though the proceeds of production belonged to us in our character of workers and not of capitalists. And as the experiment succeeded, and when undertaken by intelligent men possessing some means must succeed, we have no further need of the undertaker.

'But undertakership is not forbidden in Freeland. No one would hinder you from opening a factory here and attempting to hire workers to carry it on for wages. But in the first place you would have to offer the workers at least as much as the average earnings of labour in Freeland; and in the second place it is questionable if you would find any who would place themselves under your orders. That, as a matter of fact, no such case has occurred for the past eighteen years--that even our greatest technical reformers, in possession of the most valuable inventions, have without exception preferred to act not as undertakers, but as organisers of free associations--this is due simply to the superiority of free over servile labour. It has been found that the same inventors are able to accomplish a great deal more with free workers who are stimulated by self-interest, than with wage-earners who, in spite of constant oversight, can only be induced to give a mechanical attention to their tasks. Moreover, the system of authoritative mastership was as repugnant to the feelings of the masters as to those of the men under them, and both parties found themselves uncomfortable in their unfamiliar _rôles_--as uncomfortable as formerly in the _rôles_ of absolutely co-equal associates in production. So considerable was this mutual feeling of discomfort, and so evident was the inferiority of the servile form of organisation, that all such attempts were quickly given up, though no external obstacle of any kind had been placed in their way. Certainly it must not be overlooked that every undertaker who needs land for his business is in constant danger of having claims made by others upon the joint use of the land occupied by him, for, of course, we do not grant him a privilege in this respect; neither he nor anyone else in Freeland can exclude others from a co-enjoyment of the ground. Nevertheless, as we have plenty of space, it would have been long before the undertaker would have had to strike his sail on this account. That the few who in the early years of our history made such attempts quickly transformed themselves into directors of associations, was due to the fact that, in spite of any advantages which they might possess, they could not successfully compete with free labour. Three of these undertakers failed utterly; they could fulfil their obligations neither to their creditors nor to their workmen, and must have had to submit to the disgrace of bankruptcy if their workmen, distinctly perceiving the one defect from which the undertakings suffered, had not taken the matter in hand. Since the inventions and improvements for the introduction of which these three undertakers had founded their businesses, were valuable and genuine, and the masters had during their short time of mastership shown themselves to be energetic and--apart from their fancy for mastership--sensible men, the workers stepped into the breach, constituted themselves in each case an association, took upon themselves all the liabilities, and then, under the superintendence of the very men who had been on the brink of ruin, carried on the businesses so successfully that these three associations are now among the largest in Freeland. Four other several individuals--also notable industrial inventors--avoided a threatened catastrophe only by a timely change from the position of undertakers to that of superintendents of associations; and they stand at present at the head of works whose workers are numbered by thousands, and have since realised continuously increasing profits, high enough to satisfy all their reasonable expectations. Thus, as I have said, undertakership is not forbidden in Freeland; but it cannot successfully compete with free association.'

Sir B---- and the others declared themselves perfectly satisfied with this explanation, and begged the bank director to proceed with his account which they had interrupted. 'You were saying,' intimated my father, 'that in Freeland interest was no more forbidden than undertaker's gains and ground-rent. As to undertaker's gains we now understand you; but before you proceed to the main point of your exposition--to interest--I would like to ask for fuller details upon the question of ground-rent. How are we to understand that this is not forbidden in Freeland?'

'How you are to understand that,' was the answer, 'will best be made plain to you if I take up my train of thought where I left off. If, in order to labour productively, we required the undertaker, no power in heaven or earth could save us from giving up to him what was due to him as master of the process of production, while we contented ourselves with a bare subsistence--that is what I said. I would add that we should also be compelled to pay the tribute due to the landlord for the use of the ground, if we could not till the ground without having a landlord. For property in land was always based upon the supposition that unowned land could not be cultivated. Men did not understand how to plough and sow and reap without having the right to prevent others from ploughing and sowing and reaping upon the same land. Whether it was an individual, a community, a district, or a nation, that in this way acquired an exclusive right of ownership of the land, was immaterial: it was necessarily an _exclusive_ right, otherwise no one would put any labour into the land. Hence it happened, in course of time, that the individual owner of land acquired very considerable advantages in production over the many-headed owner; and the result was that common property in land gradually passed into individual ownership. But this distinction is not an essential one, and has very little to do with our institutions. With us, the land--so far as it is used as a means of production and not as sites for dwelling-houses--is absolutely masterless, free as air; it belongs neither to one nor to many: everyone who wishes to cultivate the soil is at liberty to do so where he pleases, and to appropriate his part of the produce. There is, therefore, no ground-rent, which is nothing else than the owner's interest for the use of the land; but a prohibition of it will be sought for in vain. In the fact that I have no right to prohibit anything to others lies no prohibition. It cannot even be said that I am prohibited from prohibiting anything, for I may do it without hindrance from anyone; but everybody will laugh at me, as much as if I had forbidden people to breathe and had asserted that the atmospheric air was my own property. Where there is no power to enforce such pretensions, it is not necessary to prohibit them; if they are not artificially called forth and upheld, they simply remain non-existent. In Freeland no one possesses this power because here no one need sequestrate the land in order that it may be tilled. But the magic which enables us to cultivate ownerless land without giving rise to disputes is the same that enables us to produce without undertakers--free association.

'Just as little do we forbid interest. No one in Freeland will prevent you from asking as high a rate of interest as you please; only you will find no one willing to pay it you, because everyone can get as much capital as he needs without interest. But you will ask whether, in this placing of the savings of the community at the disposal of those who need capital, there does not lie an injustice? Whether it is not Communism? And I will admit that here the question is not so simple as in the cases of the undertaker's gains and of ground-rent. Interest is charged for a real and tangible service essentially different from the service rendered by the undertaker and the landowner. Whilst, namely, the economic service of the two latter consists in nothing but the exercise of a relation of mastership, which becomes superfluous as soon as the working masses have transformed themselves from servants working under compulsion into freely associated men, the capitalist offers the worker an instrument which gives productiveness to his labour under all circumstances. And whilst it is evident that, with the establishment of industrial freedom, both undertaker and landowner become, not merely superfluous, but altogether objectless--_ipso facto_ cease to exist--with respect to the capitalist, the possessor of savings, it can even be asserted that society is dependent upon him in an infinitely higher degree when free than when enslaved, because it can and must employ much more capital in the former case than in the latter. Moreover, it is not true that service rendered by capital--the giving wings to production--is compensated for by the mere return of the capital. After a full repayment, there remains to the worker, in proportion as he has used the capital wisely--which is his affair and not the lender's--a profit which in certain circumstances may be very considerable, the increase of the proceeds of labour obtained by the aid of the capital. Why should it be considered unreasonable or unjust to hand over a part of this gain to the capitalist--to him, that is, to whose thrift the existence of the capital is due? The saver, so said the earlier Socialists, has no right to demand any return for the service which he has rendered the worker; it costs him nothing, since he receives back his property undiminished when and how he pleases (the premium for risk, which may have been charged as security against the possible bad faith or bankruptcy of the debtor, has nothing to do with the interest proper). Granted; but what right has the borrower, who at any rate derives advantage from the service rendered, to retain all the advantage himself? And what certainty has he of being able to obtain this service, even though it costs the saver nothing to render it, if he (the borrower) does not undertake to render any service in return? It is quite evident that the interest is paid in order to induce the saver to render such a friendly service. How could we, without communistic coercion, transfer capital from the hands of the saver into those of the capital-needing producer? For the community to save and to provide producers with capital from this source is a very simple way out of the difficulty, but the right to do this must be shown. No profound thinker will be satisfied with the communistic assertion that the capital drawn from the producers in one way is returned to them in another, for by this means there does not appear to be established any equilibrium between the burden and the gain of the individual producers. The tax for the accumulation of capital must be equally distributed among all the producers; the demand for capital, on the other hand, is a very unequal one. But how could we take the tax paid by persons who perhaps require but little capital, to endow the production of others who may happen to require much capital? What advantage do we offer to the former for their compulsory thrift?

'And yet the answer lies close at hand. _It is true that in the exploiting system of society the creditor does not derive the slightest advantage from the increase in production which the debtor effects by means of the creditor's savings; on the other hand, in the system of society based upon social freedom and justice both creditor and debtor are equally advantaged._ Where, as with us, every increase in production must be equably distributed among all, the problem as to how the saver profits from the employment of his capital solves itself. The machinist or the weaver, whose tax, for example, is applied to the purchase or improvement of agricultural machines, derives, with us, exactly the same advantage from this as does the agriculturist; for, thanks to our institutions, the increase of profit effected in any locality is immediately distributed over all localities and all kinds of production.

'If anyone would ask what right a community based upon the free self-control of the individual, and strongly antagonistic to Communism, has to coerce its members to exercise thrift, the answer is that such coercion is in reality not employed. The tax out of which the capitalisation is effected is paid by everyone only in proportion to the work he does. No one is coerced to labour, but in proportion as a man does labour he makes use of capital. What is required of him is merely an amount proportional to what he makes use of. Thus both justice and the right of self-control are satisfied in every point.

'You see, it is exactly the same with interest as with the undertaker's gains and with ground-rent: the guaranteed right of association saves the worker from the necessity of handing over a part of the proceeds of his production to a third person under any plea whatever. Interest disappears of itself, just like profit and rent, for the sole but sufficient reason that the freely associated worker is his own capitalist, as well as his own undertaker and landlord. Or, if one will put it so, _interest, profit, and rent remain, but they are not separated from wages, with which they combine to form a single and indivisible return for labour_.'

And with this, good-night for the present.

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