Chapter II: Part 2

"5thly. It robs society by _accumulations_, artificial or not,
in consequence of which vast quantities of goods, collected in
one place, are damaged and destroyed for want of a sale. Fourier
(Th. des Quat. Mouv., p. 334, 1st ed.) says: 'The fundamental
principle of the commercial systems, that of _leaving full
liberty to the merchants_, gives them absolute right of property
over the goods in which they deal: they have the right to
withdraw them altogether, to withhold or even to burn them, as
happened more than once with the Oriental Company of Amsterdam,
which publicly burnt stores of cinnamon in order to raise the
price. What it did with cinnamon it would have done with corn;
but for the fear of being stoned by the populace, it would have
burnt some corn in order to sell the rest at four times its
value. Indeed, it actually is of daily occurrence in ports, for
provisions of grains to be thrown into the sea because the
merchants have allowed them to rot while waiting for a rise. I
myself, when I was a clerk, have had to superintend these
infamous proceedings, and in one day caused to be thrown into
the sea some forty thousand bushels of rice, which might have
been sold at a fair profit had the withholder been less greedy
of gain. It is society that bears the cost of this waste, which
takes place daily under shelter of the philosophical maxim of
_full liberty for the merchants_.'

"6thly. Commerce robs society, moreover, by all the loss,
damage, and waste that follows from the extreme scattering of
products in millions of shops, and by the multiplication and
complication of carriage.

"7thly. It robs society by shameless and unlimited
_usury_--usury absolutely appalling. The trader carries on
operations with fictitious capital, much higher in amount than
his real capital. A trader with a capital of twelve hundred
pounds will carry on operations, by means of bills and credit,
on a scale of four, eight, or twelve thousand pounds. Thus he
draws from capital _which he does not possess_, usurious
interest, out of all proportion with the capital he actually
owns.

"8thly. It robs society by innumerable _bankruptcies_, for the
daily accidents of our commercial system, political events, and
any kind of disturbance, must usher in a day when the trader,
having incurred obligations beyond his means, is no longer able
to meet them; his failure, whether fraudulent or not, must be a
severe blow to his creditors. The bankruptcy of some entails
that of others, so that bankruptcies follow one upon another,
causing widespread ruin. And it is always the producer and the
consumer who suffer; for commerce, considered as a whole, does
not produce wealth, and invests very little in proportion to the
wealth which passes through its hands. How many are the
manufactures crushed by these blows! how many fertile sources of
wealth dried up by these devices, with all their disastrous
consequences!

"The producer furnishes the goods, the consumer the money. Trade
furnishes credit, founded on little or no actual capital, and
the different members of the commercial body are in no way
responsible for one another. This, in a few words, is the whole
theory of the thing.

"9thly. Commerce robs society by the _independence_ and
_irresponsibility_ which permits it to buy at the epochs when
the producers are forced to sell and compete with one another,
in order to procure money for their rent and necessary expenses
of production. When the markets are overstocked and goods cheap,
trade purchases. Then it creates a rise, and by this simple
manoeuvre despoils both producer and consumer.

"10thly. It robs society by a considerable _drawing off_ of
_capital_, which will return to productive industry when
commerce plays its proper subordinate part, and is only an
agency carrying on transactions between the producers (more or
less distant) and the great centres of consumption--the
communistic societies. Thus the capital engaged in the
speculations of commerce (which, small as it is, compared to the
immense wealth which passes through its hands, consists
nevertheless of sums enormous in themselves), would return to
stimulate production if commerce was deprived of the
intermediate property in goods, and their distribution became a
matter of administrative organization. Stock-jobbing is the most
odious form of this vice of commerce.

"11thly. It robs society by the _monopolising_ or buying up of
raw materials. 'For' (says Fourier, Th. des Quat. Mouv., p. 359,
1st ed.), 'the rise in price on articles that are bought up, is
borne ultimately by the consumer, although in the first place by
the manufacturers, who, being obliged to keep up their
establishments, must make pecuniary sacrifices, and manufacture
at small profits in the hope of better days; and it is often
long before they can repay themselves the rise in prices which
the monopoliser has compelled them to support in the first
instance...."

"In short, all these vices, besides many others which I omit,
are multiplied by the extreme complication of mercantile
affairs; for products do not pass once only through the greedy
clutches of commerce; there are some which pass and repass
twenty or thirty times before reaching the consumer. In the
first place, the raw material passes through the grasp of
commerce before reaching the manufacturer who first works it up;
then it returns to commerce to be sent out again to be worked up
in a second form; and so on until it receives its final shape.
Then it passes into the hands of merchants, who sell to the
wholesale dealers, and these to the great retail dealers of
towns, and these again to the little dealers and to the country
shops; and each time that it changes hands, it leaves something
behind it.

"... One of my friends who was lately exploring the Jura, where
much working in metal is done, had occasion to enter the house
of a peasant who was a manufacturer of shovels. He asked the
price. 'Let us come to an understanding,' answered the poor
laborer, not an economist at all, but a man of common sense; 'I
sell them for 8_d._ to the trade, which retails them at 1_s._
8_d._ in the towns. If you could find a means of opening a
direct communication between the workman and the consumer, you
might have them for 1_s._ 2_d._, and we should each gain 6_d._
by the transaction.'"[5]

To a similar effect Owen, in the _Book of the New Moral World_, part 2, chap. iii.

"The principle now in practice is to induce a large portion of
society to devote their lives to distribute wealth upon a large,
a medium, and a small scale, and to have it conveyed from place
to place in larger or smaller quantities, to meet the means and
wants of various divisions of society and individuals, as they
are now situated in cities, towns, villages, and country places.
This principle of distribution makes a class in society whose
business is to _buy from_ some parties and to _sell to_ others.
By this proceeding they are placed under circumstances which
induce them to endeavor to buy at what appears at the time a low
price in the market, and to sell again at the greatest permanent
profit which they can obtain. Their real object being to get as
much profit as gain between the seller to, and the buyer from
them, as can be effected in their transactions.

"There are innumerable errors in principle and evils in practice
which necessarily proceed from this mode of distributing the
wealth of society.

"1st. A general class of distributers is formed, whose interest
is separated from, and apparently opposed to, that of the
individual from whom they buy and to whom they sell.

"2nd. Three classes of distributers are made, the small, the
medium, and the large buyers and sellers; or the retailers, the
wholesale dealers, and the extensive merchants.

"3rd. Three classes of buyers thus created constitute the small,
the medium, and the large purchasers.

"By this arrangement into various classes of buyers and sellers,
the parties are easily trained to learn that they have separate
and opposing interests, and different ranks and stations in
society. An inequality of feeling and condition is thus created
and maintained, with all the servility and pride which these
unequal arrangements are sure to produce. The parties are
regularly trained in a general system of deception, in order
that they may be the more successful in buying cheap and selling
dear.

"The smaller sellers acquire habits of injurious idleness,
waiting often for hours for customers. And this evil is
experienced to a considerable extent even amongst the class of
wholesale dealers.

"There are, also, by this arrangement, many more establishments
for selling than are necessary in the villages, towns, and
cities; and a very large capital is thus wasted without benefit
to society. And from their number opposed to each other all over
the country to obtain customers, they endeavor to undersell each
other, and are therefore continually endeavoring to injure the
producer by the establishment of what are called cheap shops and
warehouses; and to support their character the master or his
servants must be continually on the watch to buy bargains, that
is, to procure wealth for less than the cost of its production.

"The distributers, small, medium, and large, have all to be
supported by the producers, and the greater the number of the
former compared with the latter, the greater will be the burden
which the producer has to sustain; for as the number of
distributers increases, the accumulation of wealth must
decrease, and more must be required from the producer.

"The distributers of wealth, under the present system, are a
dead weight upon the producers, and are most active demoralisers
of society. Their dependent condition, at the commencement of
their task, teaches or induces them to be servile to their
customers, and to continue to be so as long as they are
accumulating wealth by their cheap buying and dear selling. But
when they have secured sufficient to be what they imagine to be
an independence--to live without business--they are too often
filled with a most ignorant pride, and become insolent to their
dependents.

"The arrangement is altogether a most improvident one for
society, whose interest it is to produce the greatest amount of
wealth of the best qualities; while the existing system of
distribution is not only to withdraw great numbers from
producing to become distributers, but to add to the cost of the
consumer all the expense of a most wasteful and extravagant
distribution; the distribution costing to the consumer many
times the price of the original cost of the wealth purchased.

"Then, by the position in which the seller is placed by his
created desire for gain on the one hand, and the competition he
meets with from opponents selling similar productions on the
other, he is strongly tempted to deteriorate the articles which
he has for sale; and when these are provisions, either of home
production or of foreign importation, the effects upon the
health, and consequent comfort and happiness of the consumers,
are often most injurious, and productive of much premature
death, especially among the working classes, who, in this
respect, are perhaps made to be the greatest sufferers, by
purchasing the inferior or low-priced articles.

* * * * *

"The expense of thus distributing wealth in Great Britain and
Ireland, including transit from place to place, and all the
agents directly and indirectly engaged in this department, is,
perhaps, little short of one hundred millions annually, without
taking into consideration the deterioration of the quality of
many of the articles constituting this wealth, by carriage, and
by being divided into small quantities, and kept in improper
stores and places, in which the atmosphere is unfavorable to the
keeping of such articles in a tolerably good, and much less in
the best, condition for use."

In further illustration of the contrariety of interests between person and person, class and class, which pervades the present constitution of society, M. Considerant adds:--

"If the wine-growers wish for free trade, this freedom ruins the
producer of corn, the manufacturers of iron, of cloth, of
cotton, and--we are compelled to add--the smuggler and the
customs' officer. If it is the interest of the consumer that
machines should be invented which lower prices by rendering
production less costly, these same machines throw out of work
thousands of workmen who do not know how to, and cannot at once,
find other work. Here, then, again is one of the innumerable
_vicious circles_ of civilisation ... for there are a thousand
facts which prove cumulatively that in our existing social
system the introduction of any good brings always along with it
some evil.

"In short, if we go lower down and come to vulgar details, we
find that it is the interest of the tailor, the shoemaker, and
the hatter that coats, shoes, and hats should be soon worn out;
that the glazier profits by the hail-storms which break windows;
that the mason and the architect profit by fires; the lawyer is
enriched by law-suits; the doctor by disease; the wine-seller by
drunkenness; the prostitute by debauchery. And what a disaster
it would be for the judges, the police, and the jailers, as well
as for the barristers and the solicitors, and all the lawyers'
clerks, if crimes, offences, and law-suits were all at once to
come to an end!"[6]

The following is one of the cardinal points of this school:--

"Add to all this, that civilisation, which sows dissension and
war on every side; which employs a great part of its powers in
unproductive labor or even in destruction; which furthermore
diminishes the public wealth by the unnecessary friction and
discord it introduces into industry; add to all this, I say,
that this same social system has for its special characteristic
to produce a repugnance for work--a disgust for labor.

"Everywhere you hear the laborer, the artisan, the clerk
complain of his position and his occupation, while they long for
the time when they can retire from work imposed upon them by
necessity. To be repugnant, to have for its motive and pivot
nothing but the fear of starvation, is the great, the fatal,
characteristic of civilised labor. The civilised workman is
condemned to penal servitude. So long as productive labor is so
organized that instead of being associated with pleasure it is
associated with pain, weariness and dislike, it will always
happen that all will avoid it who are able. With few exceptions,
those only will consent to work who are compelled to it by want.
Hence the most numerous classes, the artificers of social
wealth, the active and direct creators of all comfort and
luxury, will always be condemned to touch closely on poverty and
hunger; they will always be the slaves to ignorance and
degradation; they will continue to be always that huge herd of
mere beasts of burden whom we see ill-grown, decimated by
disease, bowed down in the great workshop of society over the
plow or over the counter, that they may prepare the delicate
food, and the sumptuous enjoyments of the upper and idle
classes.

"So long as no method of attractive labor has been devised, it
will continue to be true that 'there must be many poor in order
that there may be a few rich;' a mean and hateful saying, which
we hear every day quoted as an eternal truth from the mouths of
people who call themselves Christians or philosophers. It is
very easy to understand that oppression, trickery, and
especially poverty, are the permanent and fatal appanage of
every state of society characterized by the dislike of work,
for, in this case, there is nothing but poverty that will force
men to labor. And the proof of this is, that if every one of all
the workers were to become suddenly rich, nineteen-twentieths of
all the work now done would be abandoned."[7]

In the opinion of the Fourierists, the tendency of the present order of society is to a concentration of wealth in the hands of a comparatively few immensely rich individuals or companies, and the reduction of all the rest of the community into a complete dependence on them. This was termed by Fourier _la jeodalite industrielle_.

"This feudalism," says M. Considerant, "would be constituted as
soon as the largest part of the industrial and territorial
property of the nation belongs to a minority which absorbs all
its revenues, while the great majority, chained to the
work-bench or laboring on the soil, must be content to gnaw the
pittance which is cast to them."[8]

This disastrous result is to be brought about partly by the mere progress of competition, as sketched in our previous extract by M. Louis Blanc; assisted by the progress of national debts, which M. Considerant regards as mortgages of the whole land and capital of the country, of which "les capitalistes preteurs" become, in a greater and greater measure, co-proprietors, receiving without labor or risk an increasing portion of the revenues.

THE SOCIALIST OBJECTIONS TO THE PRESENT ORDER OF SOCIETY EXAMINED.

It is impossible to deny that the considerations brought to notice in the preceding chapter make out a frightful case either against the existing order of society, or against the position of man himself in this world. How much of the evils should be referred to the one, and how much to the other, is the principal theoretic question which has to be resolved. But the strongest case is susceptible of exaggeration; and it will have been evident to many readers, even from the passages I have quoted, that such exaggeration is not wanting in the representations of the ablest and most candid Socialists. Though much of their allegations is unanswerable, not a little is the result of errors in political economy; by which, let me say once for all, I do not mean the rejection of any practical rules of policy which have been laid down by political economists, I mean ignorance of economic facts, and of the causes by which the economic phenomena of society as it is, are actually determined.

In the first place it is unhappily true that the wages of ordinary labor, in all the countries of Europe, are wretchedly insufficient to supply the physical and moral necessities of the population in any tolerable measure. But, when it is further alleged that even this insufficient remuneration has a tendency to diminish; that there is, in the words of M. Louis Blanc, _une baisse continue des salaires_; the assertion is in opposition to all accurate information, and to many notorious facts. It has yet to be proved that there is any country in the civilized world where the ordinary wages of labor, estimated either in money or in articles of consumption, are declining; while in many they are, on the whole, on the increase; and an increase which is becoming, not slower, but more rapid. There are, occasionally, branches of industry which are being gradually superseded by something else, and, in those, until production accommodates itself to demand, wages are depressed; which is an evil, but a temporary one, and would admit of great alleviation even in the present system of social economy. A diminution thus produced of the reward of labor in some particular employment is the effect and the evidence of increased remuneration, or of a new source of remuneration, in some other; the total and the average remuneration being undiminished, or even increased. To make out an appearance of diminution in the rate of wages in any leading branch of industry, it is always found necessary to compare some month or year of special and temporary depression at the present time, with the average rate, or even some exceptionally high rate, at an earlier time. The vicissitudes are no doubt a great evil, but they were as frequent and as severe in former periods of economical history as now. The greater scale of the transactions, and the greater number of persons involved in each fluctuation, may make the fluctuation appear greater, but though a larger population affords more sufferers, the evil does not weigh heavier on each of them individually. There is much evidence of improvement, and none, that is at all trustworthy, of deterioration, in the mode of living of the laboring population of the countries of Europe; when there is any appearance to the contrary it is local or partial, and can always be traced either to the pressure of some temporary calamity, or to some bad law or unwise act of government which admits of being corrected, while the permanent causes all operate in the direction of improvement.

M. Louis Blanc, therefore, while showing himself much more enlightened than the older school of levellers and democrats, inasmuch as he recognizes the connection between low wages and the over-rapid increase of population, appears to have fallen into the same error which was at first committed by Malthus and his followers, that of supposing that because population has a greater power of increase than subsistence, its pressure upon subsistence must be always growing more severe. The difference is that the early Malthusians thought this an irrepressible tendency, while M. Louis Blanc thinks that it can be repressed, but only under a system of Communism. It is a great point gained for truth when it comes to be seen that the tendency to over-population is a fact which Communism, as well as the existing order of society, would have to deal with. And it is much to be rejoiced at that this necessity is admitted by the most considerable chiefs of all existing schools of Socialism. Owen and Fourier, no less than M. Louis Blanc, admitted it, and claimed for their respective systems a pre-eminent power of dealing with this difficulty. However this may be, experience shows that in the existing state of society the pressure of population on subsistence, which is the principal cause of low wages, though a great, is not an increasing evil; on the contrary, the progress of all that is called civilization has a tendency to diminish it, partly by the more rapid increase of the means of employing and maintaining labor, partly by the increased facilities opened to labor for transporting itself to new countries and unoccupied fields of employment, and partly by a general improvement in the intelligence and prudence of the population. This progress, no doubt, is slow; but it is much that such progress should take place at all, while we are still only in the first stage of that public movement for the education of the whole people, which when more advanced must add greatly to the force of all the two causes of improvement specified above. It is, of course, open to discussion what form of society has the greatest power of dealing successfully with the pressure of population on subsistence, and on this question there is much to be said for Socialism; what was long thought to be its weakest point will, perhaps, prove to be one of its strongest. But it has no just claim to be considered as the sole means of preventing the general and growing degradation of the mass of mankind through the peculiar tendency of poverty to produce over-population. Society as at present constituted is not descending into that abyss, but gradually, though slowly, rising out of it, and this improvement is likely to be progressive if bad laws do not interfere with it.

Next, it must be observed that Socialists generally, and even the most enlightened of them, have a very imperfect and one-sided notion of the operation of competition. They see half its effects, and overlook the other half; they regard it as an agency for grinding down every one's remuneration--for obliging every one to accept less wages for his labor, or a less price for his commodities, which would be true only if every one had to dispose of his labor or his commodities to some great monopolist, and the competition were all on one side. They forget that competition is a cause of high prices and values as well as of low; that the buyers of labor and of commodities compete with one another as well as the sellers; and that if it is competition which keeps the prices of labor and commodities as low as they are, it is competition which prevents them from falling still lower. In truth, when competition is perfectly free on both sides, its tendency is not specially either to raise or to lower the price of articles, but to equalize it; to level inequalities of remuneration, and to reduce all to a general average, a result which, in so far as realized (no doubt very imperfectly), is, on Socialistic principles, desirable. But if, disregarding for the time that part of the effects of competition which consists in keeping up prices, we fix our attention on its effect in keeping them down, and contemplate this effect in reference solely to the interest of the laboring classes, it would seem that if competition keeps down wages, and so gives a motive to the laboring classes to withdraw the labor market from the full influence of competition, if they can, it must on the other hand have credit for keeping down the prices of the articles on which wages are expended, to the great advantage of those who depend on wages. To meet this consideration Socialists, as we said in our quotation from M. Louis Blanc, are reduced to affirm that the low prices of commodities produced by competition are delusive and lead in the end to higher prices than before, because when the richest competitor has got rid of all his rivals, he commands the market and can demand any price he pleases. Now, the commonest experience shows that this state of things, under really free competition, is wholly imaginary. The richest competitor neither does nor can get rid of all his rivals, and establish himself in exclusive possession of the market; and it is not the fact that any important branch of industry or commerce formerly divided among many has become, or shows any tendency to become, the monopoly of a few.

The kind of policy described is sometimes possible where, as in the case of railways, the only competition possible is between two or three great companies, the operations being on too vast a scale to be within the reach of individual capitalists; and this is one of the reasons why businesses which require to be carried on by great joint-stock enterprises cannot be trusted to competition, but, when not reserved by the State to itself, ought to be carried on under conditions prescribed, and, from time to time, varied by the State, for the purpose of insuring to the public a cheaper supply of its wants than would be afforded by private interest in the absence of sufficient competition. But in the ordinary branches of industry no one rich competitor has it in his power to drive out all the smaller ones. Some businesses show a tendency to pass out of the hands of many small producers or dealers into a smaller number of larger ones; but the cases in which this happens are those in which the possession of a larger capital permits the adoption of more powerful machinery, more efficient by more expensive processes, or a better organized and more economical mode of carrying on business, and thus enables the large dealer legitimately and permanently to supply the commodity cheaper than can be done on the small scale; to the great advantage of the consumers, and therefore of the laboring classes, and diminishing, _pro tanto_, that waste of the resources of the community so much complained of by Socialists, the unnecessary multiplication of mere distributors, and of the various other classes whom Fourier calls the parasites of industry. When this change is effected, the larger capitalists, either individual or joint stock, among which the business is divided, are seldom, if ever, in any considerable branch of commerce, so few as that competition shall not continue to act between them; so that the saving in cost, which enabled them to undersell the small dealers, continues afterwards, as at first, to be passed on, in lower prices, to their customers. The operation, therefore, of competition in keeping down the prices of commodities, including those on which wages are expended, is not illusive but real, and, we may add, is a growing, not a declining, fact.

But there are other respects, equally important, in which the charges brought by Socialists against competition do not admit of so complete an answer. Competition is the best security for cheapness, but by no means a security for quality. In former times, when producers and consumers were less numerous, it was a security for both. The market was not large enough nor the means of publicity sufficient to enable a dealer to make a fortune by continually attracting new customers: his success depended on his retaining those that he had; and when a dealer furnished good articles, or when he did not, the fact was soon known to those whom it concerned, and he acquired a character for honest or dishonest dealing of more importance to him than the gain that would be made by cheating casual purchasers. But on the great scale of modern transactions, with the great multiplication of competition and the immense increase in the quantity of business competed for, dealers are so little dependent on permanent customers that character is much less essential to them, while there is also far less certainty of their obtaining the character they deserve. The low prices which a tradesman advertises are known, to a thousand for one who has discovered for himself or learned from others, that the bad quality of the goods is more than an equivalent for their cheapness; while at the same time the much greater fortunes now made by some dealers excite the cupidity of all, and the greed of rapid gain substitutes itself for the modest desire to make a living by their business. In this manner, as wealth increases and greater prizes seem to be within reach, more and more of a gambling spirit is introduced into commerce; and where this prevails not only are the simplest maxims of prudence disregarded, but all, even the most perilous, forms of pecuniary improbity receive a terrible stimulus. This is the meaning of what is called the intensity of modern competition. It is further to be mentioned that when this intensity has reached a certain height, and when a portion of the producers of an article or the dealers in it have resorted to any of the modes of fraud, such as adulteration, giving short measure, &c., of the increase of which there is now so much complaint, the temptation is immense on these to adopt the fraudulent practises, who would not have originated them; for the public are aware of the low prices fallaciously produced by the frauds, but do not find out at first, if ever, that the article is not worth the lower price, and they will not go on paying a higher price for a better article, and the honest dealer is placed at a terrible disadvantage. Thus the frauds, begun by a few, become customs of the trade, and the morality of the trading classes is more and more deteriorated.

On this point, therefore, Socialists have really made out the existence not only of a great evil, but of one which grows and tends to grow with the growth of population and wealth. It must be said, however, that society has never yet used the means which are already in its power of grappling with this evil. The laws against commercial frauds are very defective, and their execution still more so. Laws of this description have no chance of being really enforced unless it is the special duty of some one to enforce them. They are specially in need of a public prosecutor. It is still to be discovered how far it is possible to repress by means of the criminal law a class of misdeeds which are now seldom brought before the tribunals, and to which, when brought, the judicial administration of this country is most unduly lenient. The most important class, however, of these frauds, to the mass of the people, those which affect the price or quality of articles of daily consumption, can be in a great measure overcome by the institution of co-operative stores. By this plan any body of consumers who form themselves into an association for the purpose, are enabled to pass over the retail dealers and obtain their articles direct from the wholesale merchants, or, what is better (now that wholesale co-operative agencies have been established), from the producers, thus freeing themselves from the heavy tax now paid to the distributing classes and at the same time eliminate the usual perpetrators of adulterations and other frauds. Distribution thus becomes a work performed by agents selected and paid by those who have no interest in anything but the cheapness and goodness of the article; and the distributors are capable of being thus reduced to the numbers which the quantity of work to be done really requires. The difficulties of the plan consist in the skill and trustworthiness required in the managers, and the imperfect nature of the control which can be exercised over them by the body at large. The great success and rapid growth of the system prove, however, that these difficulties are, in some tolerable degree, overcome. At all events, if the beneficial tendency of the competition of retailers in promoting cheapness is fore-gone, and has to be replaced by other securities, the mischievous tendency of the same competition in deteriorating quality is at any rate got rid of; and the prosperity of the co-operative stores shows that this benefit is obtained not only without detriment to cheapness, but with great advantage to it, since the profits of the concerns enable them to return to the consumers a large percentage on the price of every article supplied to them. So far, therefore, as this class of evils is concerned, an effectual remedy is already in operation, which, though suggested by and partly grounded on socialistic principles, is consistent with the existing constitution of property.

With regard to those greater and more conspicuous economical frauds, or malpractices equivalent to frauds, of which so many deplorable cases have become notorious--committed by merchants and bankers between themselves or between them and those who have trusted them with money, such a remedy as above described is not available, and the only resources which the present constitution of society affords against them are a sterner reprobation by opinion, and a more efficient repression by the law. Neither of these remedies has had any approach to an effectual trial. It is on the occurrence of insolvencies that these dishonest practices usually come to light; the perpetrators take their place, not in the class of malefactors, but in that of insolvent debtors; and the laws of this and other countries were formerly so savage against simple insolvency, that by one of those reactions to which the opinions of mankind are liable, insolvents came to be regarded mainly as objects of compassion, and it seemed to be thought that the hand both of law and of public opinion could hardly press too lightly upon them. By an error in a contrary direction to the ordinary one of our law, which in the punishment of offences in general wholly neglects the question of reparation to the sufferer, our bankruptcy laws have for some time treated the recovery for creditors of what is left of their property as almost the sole object, scarcely any importance being attached to the punishment of the bankrupt for any misconduct which does not directly interfere with that primary purpose. For three or four years past there has been a slight counter-reaction, and more than one bankruptcy act has been passed, somewhat less indulgent to the bankrupt; but the primary object regarded has still been the pecuniary interest of the creditors, and criminality in the bankrupt himself, with the exception of a small number of well-marked offences, gets off almost with impunity. It may be confidently affirmed, therefore, that, at least in this country, society has not exerted the power it possesses of making mercantile dishonesty dangerous to the perpetrator. On the contrary, it is a gambling trick in which all the advantage is on the side of the trickster: if the trick succeeds it makes his fortune, or preserves it; if it fails, he is at most reduced to poverty, which was perhaps already impending when he determined to run the chance, and he is classed by those who have not looked closely into the matter, and even by many who have, not among the infamous but among the unfortunate. Until a more moral and rational mode of dealing with culpable insolvency has been tried and failed, commercial dishonesty cannot be ranked among evils the prevalence of which is inseparable from commercial competition.

Another point on which there is much misapprehension on the part of Socialists, as well as of Trades Unionists and other partisans of Labor against Capital, relates to the proportions in which the produce of the country is really shared and the amount of what is actually diverted from those who produce it, to enrich other persons. I forbear for the present to speak of the land, which is a subject apart. But with respect to capital employed in business, there is in the popular notions a great deal of illusion. When, for instance, a capitalist invests L20,000 in his business, and draws from it an income of (suppose) L2,000 a year, the common impression is as if he was the beneficial owner both of the L20,000 and of the L2,000, while the laborers own nothing but their wages. The truth, however, is, that he only obtains the L2,000 on condition of applying no part of the L20,000 to his own use. He has the legal control over it, and might squander it if he chose, but if he did he would not have the L2,000 a year also. As long as he derives an income from his capital he has not the option of withholding it from the use of others. As much of his invested capital as consists of buildings, machinery, and other instruments of production, are applied to production and are not applicable to the support or enjoyment of any one. What is so applicable (including what is laid out in keeping up or renewing the buildings and instruments) is paid away to laborers, forming their remuneration and their share in the division of the produce. For all personal purposes they have the capital and he has but the profits, which it only yields to him on condition that the capital itself is employed in satisfying not his own wants, but those of laborers. The proportion which the profits of capital usually bear to capital itself (or rather to the circulating portion of it) is the ratio which the capitalist's share of the produce bears to the aggregate share of the laborers. Even of his own share a small part only belongs to him as the owner of capital. The portion of the produce which falls to capital merely as capital is measured by the interest of money, since that is all that the owner of capital obtains when he contributes nothing to production except the capital itself. Now the interest of capital in the public funds, which are considered to be the best security, is at the present prices (which have not varied much for many years) about three and one-third per cent. Even in this investment there is some little risk--risk of repudiation, risk of being obliged to sell out at a low price in some commercial crisis.

Estimating these risks at 1/3 per cent., the remaining 3 per cent. may be considered as the remuneration of capital, apart from insurance against loss. On the security of a mortgage 4 per cent. is generally obtained, but in this transaction there are considerably greater risks--the uncertainty of titles to land under our bad system of law; the chance of having to realize the security at a great cost in law charges; and liability to delay in the receipt of the interest even when the principal is safe. When mere money independently of exertion yields a larger income, as it sometimes does, for example, by shares in railway or other companies, the surplus is hardly ever an equivalent for the risk of losing the whole, or part, of the capital by mismanagement, as in the case of the Brighton Railway, the dividend of which, after having been 6 per cent. per annum, sunk to from nothing to 1-1/2 per cent., and shares which had been bought at 120 could not be sold for more than about 43. When money is lent at the high rates of interest one occasionally hears of, rates only given by spend-thrifts and needy persons, it is because the risk of loss is so great that few who possess money can be induced to lend to them at all. So little reason is there for the outcry against "usury" as one of the grievous burthens of the working-classes. Of the profits, therefore, which a manufacturer or other person in business obtains from his capital no more than about 3 per cent. can be set down to the capital itself. If he were able and willing to give up the whole of this to his laborers, who already share among them the whole of his capital as it is annually reproduced from year to year, the addition to their weekly wages would be inconsiderable. Of what he obtains beyond 3 per cent. a great part is insurance against the manifold losses he is exposed to, and cannot safely be applied to his own use, but requires to be kept in reserve to cover those losses when they occur. The remainder is properly the remuneration of his skill and industry--the wages of his labor of superintendence. No doubt if he is very successful in business these wages of his are extremely liberal, and quite out of proportion to what the same skill and industry would command if offered for hire. But, on the other hand, he runs a worse risk than that of being out of employment; that of doing the work without earning anything by it, of having the labor and anxiety without the wages. I do not say that the drawbacks balance the privileges, or that he derives no advantage from the position which makes him a capitalist and employer of labor, instead of a skilled superintendent letting out his services to others; but the amount of his advantage must not be estimated by the great prizes alone. If we subtract from the gains of some the losses of others, and deduct from the balance a fair compensation for the anxiety, skill, and labor of both, grounded on the market price of skilled superintendence, what remains will be, no doubt, considerable, but yet, when compared to the entire capital of the country, annually reproduced and dispensed in wages, it is very much smaller than it appears to the popular imagination; and were the whole of it added to the share of the laborers it would make a less addition to that share than would be made by any important invention in machinery, or by the suppression of unnecessary distributors and other "parasites of industry." To complete the estimate, however, of the portion of the produce of industry which goes to remunerate capital we must not stop at the interest earned out of the produce by the capital actually employed in producing it, but must include that which is paid to the former owners of capital which has been unproductively spent and no longer exists, and is paid, of course, out of the produce of other capital. Of this nature is the interest of national debts, which is the cost a nation is burthened with for past difficulties and dangers, or for past folly or profligacy of its rulers, more or less shared by the nation itself. To this must be added the interest on the debts of landowners and other unproductive consumers; except so far as the money borrowed may have been spent in remunerative improvement of the productive powers of the land. As for landed property itself--the appropriation of the rent of land by private individuals--I reserve, as I have said, this question for discussion hereafter; for the tenure of land might be varied in any manner considered desirable, all the land might be declared the property of the State, without interfering with the right of property in anything which is the product of human labor and abstinence.

It seemed desirable to begin the discussion of the Socialist question by these remarks in abatement of Socialist exaggerations, in order that the true issues between Socialism and the existing state of society might be correctly conceived. The present system is not, as many Socialists believe, hurrying us into a state of general indigence and slavery from which only Socialism can save us. The evils and injustices suffered under the present system are great, but they are not increasing; on the contrary, the general tendency is towards their slow diminution. Moreover the inequalities in the distribution of the produce between capital and labor, however they may shock the feeling of natural justice, would not by their mere equalisation afford by any means so large a fund for raising the lower levels of remuneration as Socialists, and many besides Socialists, are apt to suppose. There is not any one abuse or injustice now prevailing in society by merely abolishing which the human race would pass out of suffering into happiness. What is incumbent on us is a calm comparison between two different systems of society, with a view of determining which of them affords the greatest resources for overcoming the inevitable difficulties of life. And if we find the answer to this question more difficult, and more dependent upon intellectual and moral conditions, than is usually thought, it is satisfactory to reflect that there is time before us for the question to work itself out on an experimental scale, by actual trial. I believe we shall find that no other test is possible of the practicability or beneficial operation of Socialist arrangements; but that the intellectual and moral grounds of Socialism deserve the most attentive study, as affording in many cases the guiding principles of the improvements necessary to give the present economic system of society its best chance.

THE DIFFICULTIES OF SOCIALISM.

Among those who call themselves Socialists, two kinds of persons may be distinguished. There are, in the first place, those whose plans for a new order of society, in which private property and individual competition are to be superseded and other motives to action substituted, are on the scale of a village community or township, and would be applied to an entire country by the multiplication of such self-acting units; of this character are the systems of Owen, of Fourier, and the more thoughtful and philosophic Socialists generally. The other class, who are more a product of the Continent than of Great Britain and may be called the revolutionary Socialists, propose to themselves a much bolder stroke. Their scheme is the management of the whole productive resources of the country by one central authority, the general government. And with this view some of them avow as their purpose that the working classes, or somebody in their behalf, should take possession of all the property of the country, and administer it for the general benefit.

Whatever be the difficulties of the first of these two forms of Socialism, the second must evidently involve the same difficulties and many more. The former, too, has the great advantage that it can be brought into operation progressively, and can prove its capabilities by trial. It can be tried first on a select population and extended to others as their education and cultivation permit. It need not, and in the natural order of things would not, become an engine of subversion until it had shown itself capable of being also a means of reconstruction. It is not so with the other: the aim of that is to substitute the new rule for the old at a single stroke, and to exchange the amount of good realised under the present system, and its large possibilities of improvement, for a plunge without any preparation into the most extreme form of the problem of carrying on the whole round of the operations of social life without the motive power which has always hitherto worked the social machinery. It must be acknowledged that those who would play this game on the strength of their own private opinion, unconfirmed as yet by any experimental verification--who would forcibly deprive all who have now a comfortable physical existence of their only present means of preserving it, and would brave the frightful bloodshed and misery that would ensue if the attempt was resisted--must have a serene confidence in their own wisdom on the one hand and a recklessness of other people's sufferings on the other, which Robespierre and St. Just, hitherto the typical instances of those united attributes, scarcely came up to. Nevertheless this scheme has great elements of popularity which the more cautious and reasonable form of Socialism has not; because what it professes to do it promises to do quickly, and holds out hope to the enthusiastic of seeing the whole of their aspirations realised in their own time and at a blow.

The peculiarities, however, of the revolutionary form of Socialism will be most conveniently examined after the considerations common to both the forms have been duly weighed.

The produce of the world could not attain anything approaching to its present amount, nor support anything approaching to the present number of its inhabitants, except upon two conditions: abundant and costly machinery, buildings, and other instruments of production; and the power of undertaking long operations and waiting a considerable time for their fruits. In other words, there must be a large accumulation of capital, both fixed in the implements and buildings, and circulating, that is employed in maintaining the laborers and their families during the time which elapses before the productive operations are completed and the products come in. This necessity depends on physical laws, and is inherent in the condition of human life; but these requisites of production, the capital, fixed and circulating, of the country (to which has to be added the land, and all that is contained in it), may either be the collective property of those who use it, or may belong to individuals; and the question is, which of these arrangements is most conducive to human happiness. What is characteristic of Socialism is the joint ownership by all the members of the community of the instruments and means of production; which carries with it the consequence that the division of the produce among the body of owners must be a public act, performed according to rules laid down by the community. Socialism by no means excludes private ownership of articles of consumption; the exclusive right of each to his or her share of the produce when received, either to enjoy, to give, or to exchange it. The land, for example, might be wholly the property of the community for agricultural and other productive purposes, and might be cultivated on their joint account, and yet the dwelling assigned to each individual or family as part of their remuneration might be as exclusively theirs, while they continued to fulfil their share of the common labors, as any one's house now is; and not the dwelling only, but any ornamental ground which the circumstances of the association allowed to be attached to the house for purposes of enjoyment. The distinctive feature of Socialism is not that all things are in common, but that production is only carried on upon the common account, and that the instruments of production are held as common property. The _practicability_ then of Socialism, on the scale of Mr. Owen's or M. Fourier's villages, admits of no dispute. The attempt to manage the whole production of a nation by one central organization is a totally different matter; but a mixed agricultural and manufacturing association of from two thousand to four thousand inhabitants under any tolerable circumstances of soil and climate would be easier to manage than many a joint stock company. The question to be considered is, whether this joint management is likely to be as efficient and successful as the managements of private industry by private capital. And this question has to be considered in a double aspect; the efficiency of the directing mind, or minds, and that of the simple workpeople. And in order to state this question in its simplest form, we will suppose the form of Socialism to be simple Communism, _i.e._ equal division of the produce among all the sharers, or, according to M. Louis Blanc's still higher standard of justice, apportionment of it according to difference of need, but without making any difference of reward according to the nature of the duty nor according to the supposed merits or services of the individual. There are other forms of Socialism, particularly Fourierism, which do, on considerations of justice or expediency, allow differences of remuneration for different kinds or degrees of service to the community; but the consideration of these may be for the present postponed.