Chapter LIX: Section CCI

HARMONY OF THE THREE BRANCHES OF INCOME.--INDIVIDUAL DIFFERENCE IN THEM.

As national-economical civilization advances, the personal difference of the three branches of income is wont to become more and more sharply defined.[201-1] The struggle between landowners, farmers and workmen, which Ricardo necessarily assumed, did not exist at all in the middle ages; since landowners and farmers were then usually one and the same person, and since workmen, either as slaves or peasants, were protected against competition properly so called. And so in the industry of that time, based on the trades or on domestic industry.[201-2] [201-3]

When, later, the division of labor increases, all the differences of men's aptitudes are turned to more advantage, and are more fully developed. In the same proportion that a working class is developed, the members of which are nothing but workmen, and can scarcely hope to possess capital or land,[201-4] there grows up, side by side with it, a class of mere capitalists, who come to obtain an ever-increasing importance.

Considered from a purely economic point of view, this transition has its great advantages. How much must the existence of a special class of capitalists facilitate the concentration of capital and the consequent promotion of production, as well as its (capital's) price-leveling influx and outflow! Even "idle" capitalists have this of good, that, without them, no competent man, destitute of means could engage in any independent enterprise. When, indeed, the gulf between these two classes passes certain bounds, it may, politically and socially, become a great evil. (§ 63.)[201-5]

[Footnote 201-1: Among nations in their decline, rent and
interest fall into one possession again, because capitalists
here are wont to buy the land. (_Roscher_, Nationalökonomik
des Ackerbaues, § 140 ff.)]

[Footnote 201-2: Related to this peculiarity of the middle
ages is the fact that the canon law looked with disfavor on
the personal separation of the three factors of production.
So also in the prohibition of the _Weddeschat_ referred to §
161, instead of rent-purchase (_Rentekauf_), also by
extending the idea of partnership to a number of
transactions which are only forms of loan. (_Endemann_ in
_Hildebrand's_ Jahrb., 1863, 176 ff.) Antiquity also, with
the independence of its oikos, with its slavery, etc., had
not developed the difference between the three branches of
industry to any extent. _Rodbertus_, in _Hildebrand's_
Jahrbb., 1865, I, 343.]

[Footnote 201-3: If older writers, like _Steuart_, etc.,
speak so little of capital, labor and rent, and so much of
city and country, it is not on account of ignorance simply.
The contrast between the latter was then much more important
than to-day, and that between the former much less
developed. When, indeed, _Colton_, Public Economy of the
United States, 1848, 155 ff., claims that because in America
the three branches of income do not exist in so separated a
condition as in Europe, therefore European Political Economy
and its theories are not applicable to America, he forgets
that science should not be simply a description or
impression made of the reality, but an analysis of it.]

[Footnote 201-4: It is a very characteristic fact that, in
our days, when workmen are spoken of, it is generally day
laborers and tradesmen that are understood. In Prussia, in
1804, 17.8 per cent. of the population earned their living
by letting out their labor; in 1846, 22.8 per cent. as
day-laborers, servants, journeymen, tradesmen and factory
hands. (_Dieterici._)]

[Footnote 201-5: _Ricardo_, Principles, ch. 4, recognizes
the bright side as well as _Sismondi_, N. P., I, 268, or
_Buret_, De la Misère des Classes laborieuses en Angleterre
et en France, 1841, its dark side. _Sismondi_ thinks that
land and the capital employed in its cultivation are found
to the greatest disadvantage in the hands of the same
person. The existence of a thrifty peasant class (also of a
class of tradesmen) is one of the best means to prevent the
too wide separation of the three branches of income.]