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picture is in many respects undeniably Can he do so? It is true that during attractive. But to those who paint it the last six years (1907-13) there has and to those who gaze rapturously been a rapid rise in prices, and that upon it, I venture to suggest one or the rise has been particularly marked two considerations. That there is an- in those commodities which are imporother side to all idyllic pictures goes tant ingredients in the diet of the without saying; but it is more to the working classes; it is true also that point to recall the fact that pictures until the last two years wages have just as idyllic and just as regretful shown little disposition to adjust themwere painted of the fifteenth century selves to the increased cost of living; by the reformers who witnessed the though it is undeniable that since 1911 social dislocation and economic distress there has been a noticeable and in incidental to the agrarian revolution of some cases a rapid readjustment of the sixteenth. A study of the writings wages to prices. A part, however, of Sir Thomas More, Bishop Latimer, from this reiatively recent readjustand John Hales (if he be indeed the ment, it is instructive to recall the author of the Discourse of the Common- wise warning of the present Prime weal of England) may be commended to Minister. Less than a year ago Mr. the pessimists of to-day, and to all in Asquith, in receiving a deputation any age who are disposed to idealize from the Associated Chambers of Com. the immediate past in contrast to the merce, emphasized the danger of shortconfusion of the present. Periods of sighted generalizations. rapid economic transition, such as the
People [he said) do not always exsixteenth century and the nineteenth,
tend their view quite far enough are always apt to seem uncomfortable backwards or forwards. If you go to contemporaries. There is another back, say to the year 1881, you will point too frequently ignored. The Eng
find that there has been a very subland of the idyllic eighteenth century
stantial diminution in the prices of
food and drink. The figure for that carried a population less numerous
year was no less than 139 (as comthan that of the Greater London of to
pared with the index number of 100, day. If England had been content to
taking the year 1900 as a basis), while take rank with Denmark or Sweden or
there has been a very substantial inHolland she might undoubtedly have
crease of wages, for the figure for avoided many of the problems by that year for wages was 84.7, as comwhich she is now perplexed. The pared with 100.3 last year (1911) prestige of a world-empire is not a If you are looking at the experience of thing to be bought without price. The. a generation, therefore, you will find "capitalistic"
that there has been a diminution in era has synchronized
the cost of the necessaries of life and not only with the marvellous develop
a very substantial increase in the rate ment of commerce and the accumula
of wages. tion of wealth but also with the expan
Mr. Asquith was, of course, quoting sion of Great Britain into Greater
from the table of index numbers, faBritain. Can the economic system on
miliar to nomic students. which it rests be justly charged with
The point made by the Prime Minresponsibility for the poverty of the
ister is not, as far as I am aware, seripoor? If Canon Barnett's argument is his
ously disputed. The researches of sci
entific statisticians, like Sir Robert torically sound, he ought to be able to
Giffen and Professor A. L. Bowley, show that the poor have actually become poorer during the last century. "Wagos in the Nineteenth century.
: of Giffen, “Essays in Finance"; Bowley
have established beyond cavil than to hold up to execration the owndispute the fact that during the "cap- ers of urban house property. It is italistic” era the lot of the wage-earn- quite true that rent does form an ining classes has enormously improved, creasing item in the expenditure of the whether regard be paid to money. working classes. Rent is frequently an wages, or, what is infinitely more im- "intolerable burden" also upon the portant, to wages as measured in the lower middle class. The difference beprice of commodities. Not only has tween the position of the two classes is there been a steady rise in money- this. In the case of working-men, wages, but until the last few years a "rent" almost invariably includes virtually continuous fall in prices. Mr. “rates," and the rise is due, generally Money, whose authority Canon Barnett speaking, not to the accentuated greed will respect, does not dissent from this of the urban landlord, but to the mulconclusion. "Between the increase in tiplying demands of the municipal ratemoney-wages and the increase in the collector. The improved hygienic conpurchasing-power of money, there can dition of our towns, and the provision be no question that the actual position of public utilities and amenities, are of the wage-earner has considerably naturally reflected in increased rents. improved in the last forty years." : Despite, however, larger expenditure
It is, however, superfluous to elabo- upon rent, or rather upon rates, despite rate a point which is not open to con- the recent fall in the purchastradiction. But apart from the ratio be- ing-power of money, despite the tween wages and prices, the condition fact that in some occupations laof the poor has been substantially bor is still deplorably underpaid, there ameliorated by legislative and adminis. can be no question that the statistitrative effort: shorter hours of labor cians are justified in claiming that due to a long series of Factory Acts; their optimistic conclusions find an achealthier and safer conditions; com- curate reflex in the actual conditions pulsory compensation for accidents; in- of life among the working classes as a surance against sickness, and, in some whole. cases, against unemployment; a mod- These facts are undeniable. If, then, est provision for old age; gratuitous it is true that during the last hundred education for the children; the provi- years the poor have become richer, sion of public parks, museums, pic
have the "rich," during the same peture galleries, public libraries, and so riod, become poorer? It would be af. forth. All these things, and many fectation to assume any doubt as to more, have added enormously to the the answer to this question; and we amenities of working-class existence, may, therefore, pass on to consider the and most of them have been provided same problem from another standat the expense of the wealthier classes point. of the community. But not all. The
II. charge falls, as a rule, upon the Im- If Canon Barnett's thesis derives atperial Exchequer-in some cases upon tenuated support from industrial histhe local rates. And this suggests a tory, does it fare better at the hands of consideration too frequently ignored. economic theory? What is, in truth, Few things can be more certainly re- the assumption upon which it rests? lied upon to evoke the enthusiastic "If the poor are to become richer, plaudits of a certain class of audience the rich must become poorer.” The
assertion seems to savor of economic 3"Riches and Poverty," p. 311. It is proper to point out that may edition is dated 1908. ideas analogous to that of the old
wages-fund doctrine, a doctrine which, management and the remuneration for as originally stated, is now discarded enterprise and risk-are no longer conby economic teachers and derided by founded with "Interest,” the fixed rethe more progressive of their disciples. muneration of mere capital; "profits" The theory of the wages fund rested are no longer regarded as a deduction upon the notion that all wages were from wages nor as an addition to paid out of a fixed and inelastic lump prices. When wages rise, said Ricardo, of capital. Consequently, if the wages profits fall; and vice versa. Is there of one set of laborers were increased any economist, or any man of business, It was bound to be at the expense of who would now subscribe to this dicanother set.
tum? There are, of course, particular Nothing did more to induce the industries of a non-productive characeconomic theorists to reconsider their ter, in regard to which the Ricardian position than the successful develop theory still holds. An increase of ment of the trade-union movement wages to the servants of a railway during the 'fifties and early 'sixties of company, whose charges are limited by the last century. Following the fa- !aw, may mean a diminution of profits mous example of J. S. Mill," who had for the shareholders. Even in this been a foremost advocate of the wages- case such a result will not necessarily fund doctrine, the economists plunged ensue; higher wages may lead to more into a perfect orgy of renunciation.
efficient service, or increased expendiWhether the abandoned doctrine de- ture in one direction may be neutralized served all the hard things said of it by economies in others. Still less must during the next few years is a question it ensue in a directly productive induswbich it is unnecessary to pursue. It is, try where the consumer can be made however, relevant to inquire whether to pay both for “high wages" and Canon Barnett is content to base his "high profits." argument upon an hypothesis similarly
Not that increased profits necessarily shifting and uncertain? Is the aggre- involve enbanced prices. If there is no gate wealth of the world a fixed, ine- essential antagonism between the inlastic, and immutable quantity? If in terests of employer and employed, so the distribution of that wealth certain there is no irreconcilable conflict beclasses
get more, must other tween producer and consumer. Botb classes go short? Are we at this time propositions may be brought to the of day to be called upon to revert to
test of experience. the Ricardian theory that “profits" and There are, I imagine, few readers of "wages" nust necessarily vary in in- this Review who will not recognize the verse ratio? So long ago as 1848 Mill accuracy of the following illustration. perceived that the Ricardian doctrine Two concerns are working side by side. demanded some modification in ter. They are engaged in the production or minology if not in substance. Since the distribution of the same commodity Mill's day the whole theory of "Profits" for the same market. The commodity has undergone profound modification, is sold by both firms at the same price. and modern economists have brought The capital of each concern is identitheir theory into line with the facts cal in amount; the rate of wages paid, disclosed by commercial experience. the conditions under which labor is “Profits"—the earnings of business employed-in both cases dictated by
• Mill's recantation appoarod, in tho first trade-union regulations are also ideninstance, in the form of a review of Thornton's book of Labor, and was subsequontly
tical. Concern A pays a dividend of roprinted in his “Dissertations and Discus
15 per cent., concern B a dividend of 3 sions," vol. Iv.
per cent. The divergence is due not to not, the whole movement would seem any variation in fixed charges for to assume a somewhat sinister aspect. rent or interest;
to varia- It would seem to be inspired less by tion in the remuneration of labor, benevolence for the have-nots than by to difference in price,
but spite against the “haves." I do not for solely to efficient management in the an instant suggest that such is the one case, and the lack of it in the motive of the highly placed ecclesiasother. It may even be the case that tics who countenance and encourage the conditions of employment are bet- this movement. Their record forbids ter in the more prosperous concern. the idea. I am concerned not with the
If this be true, and I appeal confi- motives, but with the results of their dently both to theory and to experi- teaching. Have they sufficiently conence to confirm the accuracy of my
sidered either the ethical or the economanalysis, what becomes of Canon Bar. ical results which are likely to accrue nett's contention that "if the poor are from the persistent propagation of to become richer the rich must become such doctrines as those to which Canon poorer ?” With his further statement Barnett lends his high authority? On nobody will quarrel: “Increase of pro- the ethical aspect of the qustion, it duction followed by an increased na- may be more discreet for a layman to tional income has under the present keep silence. But to those who share laws-as has been shown in the boom- my doubts, (still more to those who are ing trade of recent years meant that convinced of my wrong-headedness to the rich have become richer.” Does use no harsher word), I would venture Canon Barnett suggest that the poor respectfully to commend the wise have therefore and simultaneously be- words of the Dean of St. Paul's, concome poorer?
tained in a modest volume lately given If this is not the intended inference, to the world. To the economic aspect what is the conclusion to which the I revert. argument leads? It is, in truth, rather It is not difficult by taxation to didifficult to avoid the suspicion that it minish the wealth of the rich-particuis nothing more than an elaborate re- larly of certain classes among the rich. iteration of the incitement to confisca- You can hit very hard the professional tory legislation and taxation with man, the pensioner, the rentier-all, in which we
are painfully familiar in fact, who are not directly engaged in less responsible quarters.
productive industry; but it will de
mand much ingenuity to prevent the III.
producers, however wealthy, from As to the efficacy of such legislation passing on the increased burden of and taxation a word may be said. No taxation to the consumers, and among one doubts that it is possible, by the those consumers the majority of employment of such methods, to make
course, are the poor. There is another the rich poorer. Unquestionably you point worth consideration. So long as can diminish both the income and the taxation is imposed with a single eye accumulated wealth of the classes to the collection of revenue it will, which are relatively rich. But the generally speaking, be paid, if not really important question--for all seri- cheerfully, at least honestly. Once let it ous-minded inquirers—is whether the be understood, however, that the moemployment of these weapons will tive behind it is vindictive, and evasion diminish the poverty or increase the
5 "Tbo Church and the Ago." Longmanı, prosperity of the relatively poor. If Green and Co., 1912. cf. espocially pp. 22-83
will be regarded as legitimate, if not a property tax of 28. 6d. in the pound positively praiseworthy. Chancellors of is levied on an income of 50001. a year. the Exchequer, like other people, must Such an income can well afford, it is “play the game." If they depart from said, to pay tribute to the Government the unwritten rules, they must not be to the extent of 6251. a year. Be it so. surprised if other people try to evade But the essential point under discusthose which are written. And evasion sion is this: will such taxation amelioris much easier for the very rich, hand- ate the condition of the poor? In order ling capital which is extraordinarily to answer that question we must purmobile, than for the middle classes. sue the matter a little further. The So far there has been no serious revolt demand of the State for 6251, can be against the burden of taxation on the met only from one of three sources: part of the wealthy classes as a whole. either by a deduction from current exOf course there has been grumbling, penditure; or out of current savings, and no doubt, in isolated cases, means i. e. potential capital; or out of accuhave been taken to counteract the mulated savings, i. e. actual capital, Can effect of imposts which are regarded as any one of these deductions or subexcessive and unfair. But the spirit tractions be made without injury to of revolt has not spread widely. Is those who live by labor? From the the danger of such a revolt entirely point of view of "labor” the least obIllusory and remote?
jectionable alternative would be to Apart, however, from any question meet the fiscal demand by a deduction of revolt or evasion, it passes the wit from current expenditure. If the taxof man to devise a system of taxation payer were living “up to his income" the effects of which can be so circum- the enhanced taxation would be paid scribed as to fall exclusively upon the for by a curtailment of expenditure actual payers of the tax. “The burden upon luxuries. In this case little if of taxation," as Lord Morley of Black- any harm would ensue. A certain burn once said, “however spread, how- amount of labor engaged in the proever disguised, at last falls heaviest duction of luxuries would be thrown upon the shoulders of the industrial out of employment; but the State community.” The warning words of would have as much more to spend as such an authority cannot be carelessly the individual had less, and the net reregarded. Without, however, entering sult as regards the em yment of laupon a discussion of the precise point bor would be nil. If, indeed, the State raised by Lord Morley's words, this were to invest its tax-revenue in promuch will be generally admitted: the ductive undertakings the result of incidence of any given impost involves the process would, in the case supcalculations of the utmost nicety, and posed, be net
gain to lathe result is, at the best, uncertain. bor. But such result would In the case of indirect taxation the pre- be, in the last degree, improbable. cise incidence is a matter of notorious Government expenditure is very rarely uncertainty. It is not really much "productive" in the economic sense. more certain in the case of direct taxa- The ordinary effect of taxation is to tion. At first sight it seems tolerably withdraw money from productive and obvious that an income tax or death apply it to unproductive purposes. duties will be actually paid by the “When the State takes from the earnpersons upon whom they are levied. ings of the community money which it A closer examination dispels the initial needs for national purposes, however simplicity. Suppose, for example, that vital, it withdraws that money from