Chapter II Of the Effect upon Distribution and Thence upon Production

But great as they thus appear, the advantages of a transference of all public burdens to a tax upon the value of land cannot be fully appreciated until we consider the effect upon the distribution of wealth.

Great as these advantages appear, we cannot fully appreciate the gain from moving all public burdens onto a tax on the value of land until we consider the effect on the distribution of wealth.

Tracing out the cause of the unequal distribution of wealth which appears in all civilized countries, with a constant tendency to greater and greater inequality as material progress goes on, we have found it in the fact that, as civilization advances, the ownership of land, now in private hands, gives a greater and greater power of appropriating the wealth produced by labor and capital.

We traced the unequal distribution of wealth found in all civilized countries, with its constant tendency toward greater and greater inequality as material progress goes on, to one cause. As civilization advances, the ownership of land, now in private hands, gives a greater and greater power to appropriate the wealth produced by labor and capital.

Thus, to relieve labor and capital from all taxation, direct and indirect, and to throw the burden upon rent, would be, as far as it went, to counteract this tendency to inequality, and, if it went so far as to take in taxation the whole of rent, the cause of inequality would be totally destroyed. Rent, instead of causing inequality, as now, would then promote equality. Labor and capital would then receive the whole produce, minus that portion taken by the state in the taxation of land values, which, being applied to public purposes, would be equally distributed in public benefits.

So relieving labor and capital of all taxation, direct and indirect, and throwing the burden on rent would, as far as it went, counteract this tendency to inequality. If it went so far as to take the whole of rent in taxation, the cause of inequality would be destroyed entirely. Rent, instead of causing inequality as it does now, would promote equality. Labor and capital would receive the whole produce, minus the portion the state takes in taxing land values. That portion, applied to public purposes, would be distributed equally in public benefits.

That is to say, the wealth produced in every community would be divided into two portions. One part would be distributed in wages and interest between individual producers, according to the part each had taken in the work of production; the other part would go to the community as a whole, to be distributed in public benefits to439 all its members. In this all would share equally—the weak with the strong, young children and decrepit old men, the maimed, the halt, and the blind, as well as the vigorous. And justly so—for while one part represents the result of individual effort in production, the other represents the increased power with which the community as a whole aids the individual.

That is, the wealth produced in every community would be divided into two portions. One part would go as wages and interest to the individual producers, according to the part each had taken in production. The other would go to the community as a whole, to be distributed in public benefits to439 all its members. All would share this equally: the weak with the strong, young children and decrepit old men, the maimed, the lame and the blind, as well as the vigorous. And justly so. One part represents the result of individual effort in production. The other represents the added power the community as a whole gives the individual.

Thus, as material progress tends to increase rent, were rent taken by the community for common purposes the very cause which now tends to produce inequality as material progress goes on would then tend to produce greater and greater equality. Fully to understand this effect, let us revert to principles previously worked out.

Material progress tends to increase rent. So if the community took rent for common purposes, the very cause that now produces inequality as material progress goes on would produce greater and greater equality. To understand this effect fully, let us go back to principles worked out earlier.

We have seen that wages and interest must everywhere be fixed by the rent line or margin of cultivation—that is to say, by the reward which labor and capital can secure on land for which no rent is paid; that the aggregate amount of wealth, which the aggregate of labor and capital employed in production will receive, will be the amount of wealth produced (or rather, when we consider taxes, the net amount), minus what is taken as rent.

We have seen that wages and interest are everywhere fixed by the rent line, or margin of cultivation. That is, they are fixed by the reward labor and capital can get on land for which no rent is paid. The total wealth that all the labor and capital employed in production will receive is the amount of wealth produced (or, when we consider taxes, the net amount) minus what is taken as rent.

We have seen that with material progress, as it is at present going on, there is a twofold tendency to the advance of rent. Both are to the increase of the proportion of the wealth produced which goes as rent, and to the decrease of the proportion which goes as wages and interest. But the first, or natural tendency, which results from the laws of social development, is to the increase of rent as a quantity, without the reduction of wages and interest as quantities, or even with their quantitative increase. The other tendency, which results from the unnatural appropriation of land to private ownership, is to the increase of rent as a quantity by the reduction of wages and interest as quantities.

We have seen that, as material progress now goes on, rent advances in two ways. Both increase the proportion of the wealth produced that goes as rent, and decrease the proportion that goes as wages and interest. But the first, the natural tendency, which results from the laws of social development, raises rent as a quantity without reducing wages and interest as quantities, or even while they too grow. The other, which results from the unnatural appropriation of land to private ownership, raises rent as a quantity by reducing wages and interest as quantities.

Now, it is evident that to take rent in taxation for public purposes, which virtually abolishes private owner440ship in land, would be to destroy the tendency to an absolute decrease in wages and interest, by destroying the speculative monopolization of land and the speculative increase in rent. It would be very largely to increase wages and interest, by throwing open natural opportunities now monopolized and reducing the price of land. Labor and capital would thus not merely gain what is now taken from them in taxation, but would gain by the positive decline in rent caused by the decrease in speculative land values. A new equilibrium would be established, at which the common rate of wages and interest would be much higher than now.

Now it is clear that taking rent in taxation for public purposes, which virtually abolishes private ownership440 of land, would destroy the tendency to an absolute decrease in wages and interest. It would destroy the speculative monopolization of land and the speculative rise in rent. It would greatly raise wages and interest by opening natural opportunities now monopolized and lowering the price of land. Labor and capital would gain not only what taxation now takes from them, but also the positive decline in rent caused by the fall in speculative land values. A new equilibrium would be established, at which the common rate of wages and interest would be much higher than now.

But this new equilibrium established, further advances in productive power, and the tendency in this direction would be greatly accelerated, would result in still increasing rent, not at the expense of wages and interest, but by new gains in production, which, as rent would be taken by the community for public uses, would accrue to the advantage of every member of the community. Thus, as material progress went on, the condition of the masses would constantly improve. Not merely one class would become richer, but all would become richer; not merely one class would have more of the necessaries, conveniences, and elegancies of life, but all would have more. For, the increasing power of production, which comes with increasing population, with every new discovery in the productive arts, with every labor-saving invention, with every extension and facilitation of exchanges, could be monopolized by none. That part of the benefit which did not go directly to increase the reward of labor and capital would go to the state—that is to say, to the whole community. With all the enormous advantages, material and mental, of a dense population, would be united the freedom and equality that can now be found only in new and sparsely settled districts.

Once that new equilibrium was reached, further advances in productive power (and the tendency toward them would be greatly accelerated) would still raise rent. But the rise would come not at the expense of wages and interest but from new gains in production. Because the community would take rent for public uses, these gains would benefit every member of the community. So as material progress went on, the condition of the masses would constantly improve. Not one class alone but all would grow richer, and not one class alone but all would have more of the necessaries, conveniences and elegancies of life. For no one could monopolize the increasing power of production that comes with growing population, with every new discovery in the productive arts, with every labor-saving invention and with every extension and easing of exchanges. The part of the benefit that did not go directly to raise the reward of labor and capital would go to the state, which means to the whole community. All the enormous advantages, material and mental, of a dense population would be joined to the freedom and equality that can now be found only in new and thinly settled districts.

And, then, consider how equalization in the distribu441tion of wealth would react upon production, everywhere preventing waste, everywhere increasing power.

Then consider how equalizing the distribution441 of wealth would react on production, preventing waste and increasing power everywhere.

If it were possible to express in figures the direct pecuniary loss which society suffers from the social mal-adjustments which condemn large classes to poverty and vice, the estimate would be appalling. England maintains over a million paupers on official charity; the city of New York alone spends over seven million dollars a year in a similar way. But what is spent from public funds, what is spent by charitable societies and what is spent in individual charity, would, if aggregated, be but the first and smallest item in the account. The potential earnings of the labor thus going to waste, the cost of the reckless, improvident and idle habits thus generated; the pecuniary loss, to consider nothing more, suggested by the appalling statistics of mortality, and especially infant mortality, among the poorer classes; the waste indicated by the gin palaces or low groggeries which increase as poverty deepens; the damage done by the vermin of society that are bred of poverty and destitution—the thieves, prostitutes, beggars, and tramps; the cost of guarding society against them, are all items in the sum which the present unjust and unequal distribution of wealth takes from the aggregate which, with present means of production, society might enjoy. Nor yet shall we have completed the account. The ignorance and vice, the recklessness and immorality engendered by the inequality in the distribution of wealth show themselves in the imbecility and corruption of government; and the waste of public revenues, and the still greater waste involved in the ignorant and corrupt abuse of public powers and functions, are their legitimate consequences.

If we could put in figures the direct financial loss society suffers from the social maladjustments that condemn large classes to poverty and vice, the estimate would be appalling. England supports over a million paupers on official charity. The city of New York alone spends over seven million dollars a year in a similar way. But everything spent from public funds, by charitable societies and by individual charity, added together, would be only the first and smallest item in the account. There are the potential earnings of the labor thus going to waste, and the cost of the reckless, improvident and idle habits it breeds. There is the financial loss, to consider nothing more, that the appalling mortality statistics suggest, especially infant mortality among the poorer classes. There is the waste shown by the gin palaces and low groggeries that multiply as poverty deepens. There is the damage done by the vermin of society that poverty and destitution breed, the thieves, prostitutes, beggars and tramps, and the cost of guarding society against them. All these are items in the sum that the present unjust and unequal distribution of wealth takes from the total society might enjoy with its present means of production. Even then the account is not complete. The ignorance and vice, recklessness and immorality that inequality in the distribution of wealth engenders show themselves in the imbecility and corruption of government. The waste of public revenues, and the still greater waste in the ignorant and corrupt abuse of public powers and functions, are their natural consequences.

But the increase in wages, and the opening of new avenues of employment which would result from the appropriation of rent to public purposes, would not merely stop these wastes and relieve society of these442 enormous losses; new power would be added to labor. It is but a truism that labor is most productive where its wages are largest. Poorly paid labor is inefficient labor, the world over.

But taking rent for public purposes would raise wages and open new avenues of employment. That would not merely stop these wastes and relieve society of these442 enormous losses. It would add new power to labor. It is a truism that labor is most productive where its wages are highest. Poorly paid labor is inefficient labor the world over.

What is remarked between the efficiency of labor in the agricultural districts of England where different rates of wages prevail; what Brassey noticed as between the work done by his better paid English navvies and that done by the worse paid labor of the continent; what was evident in the United States as between slave labor and free labor; what is seen by the astonishing number of mechanics or servants required in India or China to get anything done, is universally true. The efficiency of labor always increases with the habitual wages of labor—for high wages mean increased self-respect, intelligence, hope, and energy. Man is not a machine, that will do so much and no more; he is not an animal, whose powers may reach thus far and no further. It is mind, not muscle, which is the great agent of production. The physical power evolved in the human frame is one of the weakest of forces, but for the human intelligence the resistless currents of nature flow, and matter becomes plastic to the human will. To increase the comforts, and leisure, and independence of the masses is to increase their intelligence; it is to bring the brain to the aid of the hand; it is to engage in the common work of life the faculty which measures the animalcule and traces the orbits of the stars!

The difference in the efficiency of labor between agricultural districts in England with different rates of wages shows this. So does what Brassey noticed between the work of his better paid English navvies and that of the worse paid labor of the continent. So does the difference between slave labor and free labor in the United States, and so does the astonishing number of mechanics or servants needed in India or China to get anything done. It is universally true. The efficiency of labor always rises with the habitual wages of labor, because high wages mean more self-respect, intelligence, hope and energy. Man is not a machine that will do just so much and no more. He is not an animal whose powers reach only so far. It is mind, not muscle, that is the great agent of production. The physical power of the human frame is one of the weakest of forces, but for human intelligence the resistless currents of nature flow, and matter becomes plastic to the human will. To increase the comforts, leisure and independence of the masses is to increase their intelligence. It is to bring the brain to the aid of the hand. It is to engage in the common work of life the faculty that measures the animalcule and traces the orbits of the stars!

Who can say to what infinite powers the wealth-producing capacity of labor may not be raised by social adjustments which will give to the producers of wealth their fair proportion of its advantages and enjoyments! With present processes the gain would be simply incalculable, but just as wages are high, so do the invention and utilization of improved processes and machinery go on with greater rapidity and ease. That the wheat crops443 of Southern Russia are still reaped with the scythe and beaten out with the flail is simply because wages are there so low. American invention, American aptitude for labor-saving processes and machinery are the result of the comparatively high wages that have prevailed in the United States. Had our producers been condemned to the low reward of the Egyptian fellah or Chinese coolie, we would be drawing water by hand and transporting goods on the shoulders of men. The increase in the reward of labor and capital would still further stimulate invention and hasten the adoption of improved processes, and these would truly appear, what in themselves they really are—an unmixed good. The injurious effects of labor-saving machinery upon the working classes, that are now so often apparent, and that, in spite of all argument, make so many people regard machinery as an evil instead of a blessing, would disappear. Every new power engaged in the service of man would improve the condition of all. And from the general intelligence and mental activity springing from this general improvement of condition would come new developments of power of which we as yet cannot dream.

Who can say to what infinite powers the wealth-producing capacity of labor may not be raised by social adjustments that give the producers of wealth their fair share of its advantages and enjoyments! With present processes the gain would be simply incalculable. And the higher wages are, the faster and more easily improved processes and machinery are invented and put to use. The wheat crops443 of Southern Russia are still reaped with the scythe and beaten out with the flail simply because wages there are so low. American invention and American aptitude for labor-saving processes and machinery result from the comparatively high wages that have prevailed in the United States. Had our producers been condemned to the low reward of the Egyptian fellah or the Chinese laborer, we would be drawing water by hand and carrying goods on men's shoulders. A higher reward for labor and capital would stimulate invention still further and speed the adoption of improved processes. These would then appear what they really are in themselves, an unmixed good. The harm that labor-saving machinery now so often does the working classes would disappear. That harm makes many people regard machinery as an evil rather than a blessing, whatever the arguments. Every new power engaged in the service of man would improve the condition of all. And the general intelligence and mental activity that spring from this general improvement of condition would bring new developments of power that we cannot yet dream of.

But I shall not deny, and do not wish to lose sight of the fact, that while thus preventing waste and thus adding to the efficiency of labor, the equalization in the distribution of wealth that would result from the simple plan of taxation that I propose, must lessen the intensity with which wealth is pursued. It seems to me that in a condition of society in which no one need fear poverty, no one would desire great wealth—at least, no one would take the trouble to strive and to strain for it as men do now. For, certainly, the spectacle of men who have only a few years to live, slaving away their time for the sake of dying rich, is in itself so unnatural and absurd, that in a state of society where the abolition of the fear of want had dissipated the envious admiration with which444 the masses of men now regard the possession of great riches, whoever would toil to acquire more than he cared to use would be looked upon as we would now look on a man who would thatch his head with half a dozen hats, or walk around in the hot sun with an overcoat on. When every one is sure of being able to get enough, no one will care to make a pack-horse of himself.

I shall not deny, and do not wish to lose sight of, the fact that while thus preventing waste and adding to the efficiency of labor, the equalization of wealth that would result from the simple plan of taxation I propose must lessen the intensity with which wealth is pursued. It seems to me that in a society where no one need fear poverty, no one would desire great wealth. At least, no one would take the trouble to strive and strain for it as men do now. The spectacle of men with only a few years to live, slaving away their time to die rich, is in itself so unnatural and absurd that in a society where the abolition of the fear of want had dissipated the envious admiration with which444 the masses now regard great riches, whoever toiled to acquire more than he cared to use would be looked on as we now look on a man who would thatch his head with half a dozen hats, or walk around in the hot sun with an overcoat on. When everyone is sure of being able to get enough, no one will care to make a pack-horse of himself.

And though this incentive to production be withdrawn, can we not spare it? Whatever may have been its office in an earlier stage of development, it is not needed now. The dangers that menace our civilization do not come from the weakness of the springs of production. What it suffers from, and what, if a remedy be not applied, it must die from, is unequal distribution!

And if this incentive to production is withdrawn, can we not spare it? Whatever its office in an earlier stage of development, it is not needed now. The dangers that menace our civilization do not come from weak springs of production. What civilization suffers from, and what it must die from if a remedy is not applied, is unequal distribution!

Nor would the removal of this incentive, regarded only from the standpoint of production, be an unmixed loss. For, that the aggregate of production is greatly reduced by the greed with which riches are pursued, is one of the most obtrusive facts of modern society. While, were this insane desire to get rich at any cost lessened, mental activities now devoted to scraping together riches would be translated into far higher spheres of usefulness.

Nor, looking at production alone, would removing this incentive be an unmixed loss. It is one of the most obtrusive facts of modern society that the greed with which riches are pursued greatly reduces the total of production. If this insane desire to get rich at any cost lessened, the mental activity now devoted to scraping riches together would move into far higher spheres of usefulness.