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then doing one-quarter of the usual daily stint, and each being thus enabled to loll or play for three-quarters of the time. The group as a whole, in other words, has its choice: it may either enjoy once for all on easy terms in the present or it may continue to work in the present, and so maintain the machinery of production for sustained enjoyment through the future.

This is precisely what "abstinence" or "waiting" must mean, with reference to a stage when laborers are not hired, but own and use their own tools. The first capital must have been made in spare time; that is, in time which did not have to be given to labor for satisfying immediate wants. There is, then, a choice between idleness (or play) and work which provides for the future.' That choice recurrently presents itself as tools wear out and materials are used up. The same choice would recurrently present itself to a collectivist or socialistic community. The whole body of socialists might for a time shorten their hours immensely, almost cease working, by simply using up the stocks on hand and doing nothing but put the finishing touches on the things nearly completed. But if they wish to keep their productive apparatus intact, they must refrain from this presumably agreeable relaxation, and work away at their tools and materials.

Of course, when the first irksome steps in the way of abstinence, or waiting, have once been taken, it is much easier to keep the process up. The primal savage who

1 I will not enter on the psychological and anthropological questions whether the very earliest work on tools in fact involved irksomeness and meant a sacrifice. Professor Clark assumes that the original making of capital involves an onerous waiting, and the same assumption has been made by most writers on this subject, including Professor Böhm-Bawerk (see the latter's Positive Theory, Book II., chap. iv.) All this very likely is, in Professor Veblen's phrase, “harmless misinformation" concerning the doings of primeval man. For the purposes of the present discussion its accuracy is not material. The only inquiry here is whether the first making of tools and their later maintenance call for radically different operations; and it is on this point that I must differ with Professor Clark.

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figures so commonly in representations of these operations surely finds it much easier to replace his canoe when he has got together, by the use of the first canoe, an abundant store of fish. But, tho it is easier, the irksome thing must still be done. He must work rather than bask in the sun. When tools have once been provided, the process both of getting new capital and of maintaining existing capital becomes progressively easier. Labor becomes productive; the available inflowing supply of consumable goods becomes larger; and less and less sacrifice of immediate relaxation is entailed in giving part of your labor to keeping up your apparatus or in making new apparatus.

When we leave these supposed simple conditions (of workmen owning and using their own tools) and come to the common situation of modern societies, we have a very different state of things to deal with. The farmer who digs his own drainage ditches "abstains' in the manner of the primal savage. But in the ordinary conditions of our complex societies, abstinence, or waiting, is vicarious, so to speak. It is done not by the workmen themselves, but by others who have present means and have the choice of hiring the workmen either for making things immediately enjoyable or for making tools. Professor Clark puts it thus: “Abstinence consists in taking one's income in the form of producers' goods,-electing to take draft horses instead of driving horses, trading vessels instead of steamyachts, factories instead of pleasure palaces, always as part of the income of the men who do the abstaining.'

This is true and well stated. But it should be supplemented by adding that the election in the end is between hiring laborers to do the one thing or the other. Neither trading vessels nor steam-yachts came into the world ready

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*Page 134.

made. They are fashioned by labor, and the direction to which the labor is turned rests upon the choice of those who have free income; in other words, on the direction of demand. Freight boats and factories wear out; so do yachts and palaces. Neither sort reproduces itself. Both are made by labor, both can be replaced only by labor. The same abstinence that is involved in the first making of a factory is involved in its remaking.

Take the concrete case of a cotton-mill. The owners know that it will wear out in time. The "life" of the machinery in such a mill is about ten years. At the end of that period it is nothing but scrap-iron. Therefore, the owners put aside every year something for “depreciation”; that is, they do not divide all that they might (say in the form of dividends, if the organization be that of a stock company), but reserve annually so much as will enable them at the end of the ten years to buy another set of machinery. There is nothing to compel them to do so. They may conclude that the business is not likely to be profitable, may wind up the whole thing, and turn over to the stockholders in cash what had been set aside for depreciation. The stockholders then can do as they please. They can reinvest in other directions—that is, cause laborers to be hired in making other capital-or they can "spend" on palaces or yachts; that is, cause laborers to be hired in making things of this sort. The strong probability of course is that the manufacturing corporation will be kept up as a going concern, and that the depreciation fund will be used in buying new machinery to replace the old. In other words, labor will be turned to making the new machinery. But there is nothing automatic in the process, no certainty of replacement, no difference between the mode in which existing capital is replaced and that in which new capital comes into existence.'

1 Professor Clark says (Distribution of Wealth, p. 133): "The loom in the factory that is worn out and is about to be replaced has, during its career, earned its share of dividends for the stockholders of the mill, and, besides this, has earned for them a rum that will buy a new loom. It is not necessary, therefore, to tako the cost of the new loom out of the stockholders' incomes. That would impose on them the necessity for a genuine act of abstinence." The italics here are mine. Is this "earned sum that will buy a new loom" necessarily committed to buying a new loom? Must it be reinvested ? Has not the stockholder precisely the same freedom as to what he will do with this as he has with his other income?

The substantial difference between Professor Clark's view on this point and my own can perhaps be best indicated by a practical application. Suppose a tax were levied precisely equal to the interest on capital now in existence. Would that capital continue in existence indefinitely? Surely, yes, according to Professor Clark. Existing capital, he says, replaces itself automatically or “virtually.” Its replacement, he believes, entails no further abstinence or sacrifice to the owner. Hence he must admit that society could appropriate the whole return without suffering ill results from a diminution of its outfit of capital. To me it seems clear that, since “abstinence" ordinarily entails some degree of sacrifice,or, to put it in more modern phraseology, since present goods or present income are ordinarily preferred to future goods or future income, -capital would cease to be maintained with the complete disappearance of return on it. This, of course, on the assumption that the régime of private property persists. I will not digress to the consideration of capital and its maintenance in a collectivist society.

The value of a distinction lies in its pointing to propositions which hold good of one of the things distinguished and do not hold good of the other. The particular propositions or conclusions which Professor Clark deduces from his distinction between capital and capital goods seem to me quite untenable,-thus, as to the "synchronizing” of labor and its product, or the replacement of capital

"I venture to refer on this whole subject to my Wages and Capital, pp. 56-63, 67, 225. The subject seems to me very simple.

without abstinence. There may be other conclusions from this sort of distinction, as to the social merit or justification of returns on “capital goods” as distinguished from returns on “capital.” I suspect, however, that the conclusions which might be deduced on such social questions would be very different from those which run through Professor's Clark's writings. They would point not to the same justification for all kinds of “capital” (such of course is the drift of Professor Clark's reasoning), but to a discrimination between “capital” and “capital-goods,” and to a still further discrimination between those capital goods which are fashioned by man and those agents which are the free gifts of nature. But these are matters not pertinent to the subject of the present discussion. So far as this is concerned, the distinction between capital and capital goods only beclouds the situation, in no way clarifies it.

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Let us return now to the question of advances. As the relation of present labor to past labor, and that of abstinence to the making and replacement of capital, presented themselves in different form according as we considered independent or hired laborers, so does the question of advances to laborers present itself differently.

Consider, first, the case where there are independent laborers only, and no employing capitalists. Professor Clark suggests that in the group A, A', A", A'", the last worker, A'", who puts the finishing touches in the series, may possibly be conceived as supporting the others whose work is in the earlier stages, and as making "advances" to them. I should not myself consider such a phraseology apt. A'"' of course turns out all the consumable goods, and is their proximate owner. But he must have had the tools and materials which A, A', A", are making. If, indeed, he is richer than the others, and owns once for all

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