Distributive Justice: the Right and Wrong of Our Present Distribution of Wealth

SECTION I. The Morality of Private Landownership and Rent

THE MORALITY OF PRIVATE LANDOWNERSHIP AND RENT

CHAPTER PAGE

I THE LANDOWNER'S SHARE OF THE NATIONAL PRODUCT 3 Economic Rent Always Goes to the Landowner 4 Economic Rent and Commercial Rent 5 The Cause of Economic Rent 6

II LANDOWNERSHIP IN HISTORY 8 No Private Ownership in Pre-Agricultural Conditions 10 How the Change Probably Took Place 12 Limited Character of Primitive Common Ownership 14 Private Ownership General in Historical Times 15 Conclusions from History 17

III THE ARGUMENTS AGAINST PRIVATE LANDOWNERSHIP 19 Arguments by Socialists 19 Henry George's Attack on the Title of First Occupancy 21 His Defence of the Title of Labour 24 The Right of all Men to the Bounty of the Earth 30 The Alleged Right of the Community to Land Values 39

IV PRIVATE OWNERSHIP THE BEST SYSTEM OF LAND TENURE 48 The Socialist Proposals Impracticable 48 Inferiority of the Single Tax System 51

V PRIVATE LANDOWNERSHIP A NATURAL RIGHT 56 Three Principal Kinds of Natural Rights 57 Private Landownership Indirectly Necessary for Individual Welfare 59 Excessive Interpretations of the Right of Private Landownership 61 The Doctrine of the Fathers and the Theologians 62 The Teaching of Pope Leo XIII 64

VI LIMITATIONS OF THE LANDOWNER'S RIGHT TO RENT 67 The Tenant's Right to a Decent Livelihood 69 The Labourer's Claim Upon the Rent 71

VII DEFECTS OF THE EXISTING LAND SYSTEM 74 Landownership and Monopoly 75 Excessive Gains from Private Landownership 80 Exclusion from the Land 90

VIII METHODS OF REFORMING OUR LAND SYSTEM 94 The Leasing System 95 Public Agricultural Lands 97 Public Ownership of Urban Land 98 Appropriating Future Increases of Land Value 100 Some Objections to the Increment Tax 102 The Morality of the Proposal 108 The German and British Increment Taxes 114 Transferring Other Taxes to Land 117 The Morality of the Plan 120 Amount of Taxes Practically Transferable 122 The Social Benefits of the Plan 127 A Supertax on Large Holdings 130 References on Section I 133

SECTION II. The Morality of Private Capital and Interest

THE MORALITY OF PRIVATE CAPITAL AND INTEREST

IX THE NATURE AND THE RATE OF INTEREST 137 Meaning of Capital and Capitalist 137 Meaning of Interest 138 The Rate of Interest 141

X THE ALLEGED RIGHT OF LABOUR TO THE ENTIRE PRODUCT OF INDUSTRY 145 The Labour Theory of Value 146 The Right of Productivity 149

XI THE SOCIALIST SCHEME OF INDUSTRY 152 Socialist Inconsistency 152 Expropriating the Capitalists 154 Inefficient Industrial Leadership 158 Inefficient Labour 162 Attempted Replies to Objections 162 Restricting Individual Liberty 168

XII ALLEGED INTRINSIC JUSTIFICATIONS OF INTEREST 171 Attitude of the Church Toward Interest on Loans 172 Interest on Productive Capital 175 The Claims of Productivity 177 The Claims of Service 181 The Claims of Abstinence 182

XIII SOCIAL AND PRESUMPTIVE JUSTIFICATIONS OF INTEREST 187 Limitations of the Sacrifice Principle 187 The Value of Capital in a No-Interest Régime 188 Whether the Present Rate of Interest is Necessary 191 Whether at Least two Per Cent. is Necessary 193 Whether any Interest is Necessary 196 The State is Justified in Permitting Interest 199 Civil Authorisation not Sufficient for Individual Justification 201 How the Interest-Taker is Justified 204

XIV CO-OPERATION A PARTIAL SOLVENT OF CAPITALISM 210 Reducing the Rate of Interest 211 Need for a Wider Distribution of Capital 213 The Essence of Co-operative Enterprise 214 Co-operative Credit Societies 216 Co-operative Agricultural Societies 217 Co-operative Mercantile Societies 220 Co-operation in Production 222 Advantages and Prospects of Co-operation 228 References on Section II 233

SECTION III. The Moral Aspect of Profits

THE MORAL ASPECT OF PROFITS

XV THE NATURE OF PROFITS 237 The Functions and Rewards of the Business Man 237 The Amount of Profits 239 Profits in a Joint-Stock Company 241

XVI THE PRINCIPAL CANONS OF DISTRIBUTIVE JUSTICE 243 The Canon of Equality 243 The Canon of Needs 244 The Canon of Efforts and Sacrifice 246 The Canon of Productivity 247 The Canon of Scarcity 250 The Canon of Human Welfare 252

XVII JUST PROFITS IN CONDITIONS OF COMPETITION 254 The Question of Indefinitely Large Profits 255 The Question of Minimum Profits 258 The Question of Superfluous Business Men 260

XVIII THE MORAL ASPECT OF MONOPOLY 262 Surplus and Excessive Profits 263 The Question of Monopolistic Efficiency 265 Discriminative Underselling 267 Exclusive-Sales Contracts 270 Discriminative Transportation Arrangements 272 Natural Monopolies 273 Methods of Preventing Monopolistic Injustice 275 Legalised Price Agreements 277

XIX THE MORAL ASPECTS OF STOCKWATERING 279 Injurious Effects of Stockwatering 281 The Moral Wrong 284 The "Innocent" Investor 286 Magnitude of Overcapitalisation 288

XX THE LEGAL LIMITATION OF FORTUNES 291 The Method of Direct Limitation 292 Limitation Through Progressive Taxation 296 The Proper Rate of Income and Inheritance Taxes 299 Effectiveness of Such Taxation 300

XXI THE DUTY OF DISTRIBUTING SUPERFLUOUS WEALTH 303 The Question of Distributing Some 303 The Question of Distributing All 308 Some Objections 311 A False Conception of Welfare and Superfluous Goods 314 The True Conception of Welfare 316 References on Section III 318

SECTION IV. The Moral Aspects of Wages

THE MORAL ASPECTS OF WAGES

XXII SOME UNACCEPTABLE THEORIES OF WAGE-JUSTICE 323 I The Prevailing-Rate Theory 323 Not in Harmony with Justice 325 II Exchange-Equivalence Theories 326 The Rule of Equal Gains 326 The Rule of Free Contract 328 The Rule of Market Value 330 The Mediæval Theory 332 A Modern Variation of the Mediæval Theory 337 III Productivity Theories 340 Labour's Right to the Whole Product 341 Clark's Theory of Specific Productivity 347 Carver's Modified Version of Productivity 351

XXIII THE MINIMUM OF JUSTICE; A LIVING WAGE 356 The Principle of Needs 356 Three Fundamental Principles 358 The Right to a Decent Livelihood 360 The Claim to a Decent Livelihood from a Present Occupation 362 The Labourer's Right to a Living Wage 363 When the Employer is Unable to Pay a Living Wage 366 An Objection and Some Difficulties 370 The Family Living Wage 373 Other Arguments in Favour of a Living Wage 376 The Money Measure of a Living Wage 378

XXIV THE PROBLEM OF COMPLETE WAGE JUSTICE 381 Comparative Claims of Different Labour Groups 381 Wages Versus Profits 388 Wages Versus Interest 390 Wages Versus Prices 393 Concluding Remarks 398

XXV METHODS OF INCREASING WAGES 400 The Minimum Wage in Operation 400 The Question of Constitutionality 405 The Ethical and Political Aspects 407 The Economic Aspect 408 Opinions of Economists 412 Other Legislative Proposals 416 Labour Unions 417 Organisation Versus Legislation 420 Participation in Capital Ownership 423 References on Section IV 425

XXVI SUMMARY AND CONCLUSION 426 The Landowner and Rent 426 The Capitalist and Interest 427 The Business Man and Profits 428 The Labourer and Wages 430 Concluding Observations 431

INDEX 453

INTRODUCTORY CHAPTER

THE ELEMENTS AND SCOPE OF THE PROBLEM

Distributive justice is primarily a problem of incomes rather than of possessions. It is not immediately concerned with John Brown's railway stock, John White's house, or John Smith's automobile. It deals with the morality of such possessions only indirectly and under one aspect; that is, in so far as they have been acquired through income. Moreover, it deals only with those incomes that are derived from participation in the process of production. For example; it considers the labourer's wages, but not the subsidies that he may receive through charity or friendship. Its province is not the distribution of all the goods of the country among all the people of the country, but only the distribution of the products of industry among the classes that have taken part in the making of these products.

These classes are four, designated as landowners, capitalists, undertakers or business men, and labourers or wage earners. The individual member of each class is an agent of production, while the instrument or energy that he owns and contributes is a factor of production. Thus, the landowner is an agent of production because he contributes to the productive process the factor known as land, and the capitalist is an agent of production because he contributes the factor known as capital; while the business man and the labourer are agents not only in the sense that they contribute factors to the process, but in the very special sense that their contributions involve the continuous expenditure of human energy. Now the product of industry is distributed among these four classes precisely because they are agents of production; that is because they own and put at the disposal of industry the indispensable factors of production. We say that the agents of production "put the factors of production at the disposal of industry," rather than "exercise or operate the factors," because neither the landowner nor the capitalist, as such, expend continuous energy in the productive process. All that is necessary to enforce a claim upon the product is to contribute an instrument or factor without which production cannot be carried on.

The product distributed in any country during a single year is variously described by economists as the national product, the national income, the national dividend. It consists not merely of material goods, such as houses, food, clothing, and automobiles, but also of those non-material goods known as services. Such are the tasks performed by the domestic servant, the barber, the chauffeur, the public official, the physician, the teacher; or any other personal service "that is valued, as material commodities are valued, according to their selling prices." Even the services of the clergyman are included in the national income or product, since they are paid for and form a part of the annual supply of good things produced and distributed within the country. In the language of the economist, anything that satisfies a human want is a utility, and forms part of the national wealth; hence there can be no sufficient reason for excluding from the national income goods which minister to spiritual or intellectual wants. The services of the clergyman, the actor, the author, the painter, and the physician are quite as much a part of the utilities of life as the services of the cook, the chambermaid, or the barber; and all are as clearly utilities as bread, hats, houses, or any other material thing. In a general way, therefore, we say that the national product which is available for distribution among the different productive classes comprises all the utilities, material and non-material, that are produced through human agents and satisfy human desires.

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